Old Mutual's robust growth trajectory likely to continue into 2025

Old Mutual is looking forward to another year of strong growth after reporting a solid 14% increase in adjusted headline earnings in 2024, which supported a 6% higher final dividend.

Adjusted headline earnings per share increased by 17%. Operating profits increased by 4% to R8.7 billion. Funds under management grew 10% to R1.5 trillion. CEO Iain Williamson said in an interview that the group has maintained a strong growth trajectory since 2020, continuing into 2024.

"Since our primary listing on the JSE in 2018, we have returned R89bn to shareholders. We have also made substantial investments in building future capabilities and funding growth businesses, including the launch of OM Bank," he said.

The Reserve Bank’s Prudential Authority has confirmed that OM Bank had fulfilled its license conditions and the bank had started business this week, and would begin accepting deposits initially from a small group of customers made up of a small number of Old Mutual staff, he said.

He said the “digital first” bank had an all-in-one bundled banking facility in one app, which would be broadened in time. The app would feature a customised service to each customer, he said.

He said Old Mutual's digital and technology transformation journey was on track to deliver improved shareholder returns. The group successfully decommissioned 21 legacy systems and increased active digital users by 22% in 2024.

Looking ahead to 2025, the return on net asset value would be a focus through margin-accretive sales growth, expense management, and improving collections and persistency, said Williamson. “Everything points to a slightly easier environment in 2025 at this stage,” he said.

He said 2024’s financial performance had reflected their strategic focus on profitable organic growth in the core business units, disciplined capital allocation to new growth engines, and investment in operational efficiencies.

The performance was also despite the fact that market sentiment improvements following the formation of the Government of National Unity, early momentum in the macroeconomic environment, less loadshedding, and benign inflation, did not translate into a broad recovery in consumer confidence through 2024, he said.

Household debt to disposable income remained high at 62.2%, and the high interest rate environment continued to pose challenges for the group's retail businesses.

While the second half was stronger than the first, generally, consumers were still hesitant to use their disposable incomes outside the spending required for their daily general living, he said.

However, with the possibility of further interest rate cuts this year, and with the public service wage settlement anticipated in April, the consumer environment should begin to lift, he said.

Strong cash generation, which included a R1bn cash remittance from Old Mutual Africa Regions, supported a final dividend of 52 cents per share declared. Total dividends for 2024 amounted to 86 cents per share.

Return on net asset value, a measure of shareholder capital efficiency, increased by 160 basis points to 12.7%, underpinned by double-digit growth in adjusted headline earnings, driven by "stellar profits" from Old Mutual Insure, Old Mutual Wealth, and Old Mutual Investments; supported by steady growth from the retail Mass and Foundation Cluster, and Old Mutual Africa Regions.

“All customer-facing group segments delivered operating profits in excess of R1bn each. Return on net asset value excluding new growth initiatives improved to 15.6%, indicating the underlying profitability of our operations before the impact of our current investments,” said Williamson.

The group also made progress in the build phase of a new Savings and Income proposition, including initiating a pilot with select advisers.

The implementation of a digital two-pot retirement solution in South Africa was a key delivery in 2024 for Old Mutual, with over 275,000 claims processed, of which 99% were submitted via WhatsApp. 

Looking to 2025, Williamson said they would prioritise enhancing return on net asset value through margin-accretive sales growth, better expense management, improving collections, and driving management actions to improve persistency and capital efficiencies.

IN 2024, gross flows increased by 9% to R216.2bn. Good inflows in Wealth Management, Old Mutual Investments, and Old Mutual Africa were partially offset by a decline in Old Mutual Corporate. Wealth Management performed well across all platforms. Private Clients and Cash and Liquidity Solutions, which was launched towards the end of 2024, saw higher international fund inflows in Namibia and strong unit trust inflows in Uganda.

Old Mutual Investment had recorded good inflows into the Equity and Multi-Asset capabilities and higher Alternatives flows.

BUSINESS REPORT