Momentum reports strong earnings, hikes dividend

Listed financial services group Momentum Metropolitan on Wednesday (14 September) reported strong earnings growth for the year ended June 2022, lifting its dividend by 2.5 times over the previous year.

The group reported normalised headline earnings of R4.38 billion during the financial year, with operating profit up to R3.36 billion from R73 million in the prior year as the company had to contend with far fewer Covid related payouts.

The group said that all its primary local businesses performed very well. The strong growth was supported by improved mortality results and positive growth in investment variances, it said.

Normalised headline earnings per share grew from 67.1 cents to 287.2 cents per share; return on equity increased to 22.7% from 4.9% the previous year; and a total dividend of 100 cents per ordinary share was declared.

“These strong results in year one of the three-year Reinvent and Grow strategy are encouraging and confirm our solid competitive position. It was a real team effort, with almost all our businesses performing at, or close to potential,” said group CEO, Hillie Meyer.

“It is important to note that this set of results is not directly comparable to the previous year, due to the impact of the Covid-19 pandemic,” said Meyer.

“Even so, we posted a solid performance and executed well on a range of strategic initiatives – the impact of which is not yet fully reflected in this set of results. With these results, we are giving ourselves a sporting chance to deliver on the F2024 objectives set in our Reinvent and Grow strategy.”

New business volumes increased by 10% to R72.7 billion, driven by strong growth in Momentum Corporate’s recurring premiums on group risk products and single premium investments from large corporate clients.

“Given our strong capital position, we have initiated a share buyback programme of R750 million,” said Risto Ketola, group finance director.

“Subject to the capital and liquidity requirements of the group, and provided ordinary shares can be bought back at an attractive discount to embedded value per share, it is anticipated that the share repurchase programme could be increased once the current R750 million programme has been completed.”

Looking ahead, Meyer said that the group remains cautious about the effect that the lack of economic growth, continued unemployment and pressure on disposable household income could have on our operations.

“The timing and magnitude of future Covid 19 waves remain uncertain and could still impact our earnings in future. Although it appears that the disease has now become endemic, mortality has not returned to pre-Covid levels, and it might take a long time do so.”

“We are beginning to see employees returning to the office in much larger numbers, which we welcome. However, we foresee that the hybrid way of work will be the new normal, and our spatial planning allows for the fact that many employees will work from home – to varying degrees. Due to the pandemic, we fast-tracked plans we had to renovate our offices and extended our ideas to create an environment where our employees can come to connect, collaborate, and innovate.”

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