Old Mutual expects its interim adjusted headline earnings to rise by as much as 33%, boosted by buoyant equity markets and a higher interest-rate environment.
Favourable markets boosted investment fees Old Mutual earned on assets it manages on behalf of its clients.
Adjusted headline earnings are likely to rise to between R2.9bn and R3.4bn in the six months ended June versus R2.57bn in the previous period, Old Mutual said in a statement on Wednesday.
However, the results from operations (RFO) — a measure of its operating profit — will probably rise as much as 13%.
The company’s share price fell 5% to R12.10 in early afternoon trade on the JSE, the biggest fall since mid-March on a closing basis. However, it is still up 16% year to date.
Other insurance stocks including Sanlam, Discovery and Momentum Metropolitan have held up despite volatility in investment markets.
After more than two years of being distracted by the Covid-19 pandemic, Old Mutual is looking to expand its sources of income by launching a digitally enabled mass-market lender capable of taking on Capitec in the second half of 2024.
CEO Iain Williamson is overseeing efforts to capture a share of the retail banking market, which is dominated by Capitec with a client base of more than 20-million.
The company has completed the first phase of regulatory processes required to begin its application for a banking licence ahead of a planned public market launch of the lending unit by no later than the end of 2024.
As part of the process Old Mutual has also reduced the 19.4% stake it held in Nedbank before an unbundling process that began in November 2021, and plans to offload the 3.56% it still holds.
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