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CABS half year performance shows resilience: MD
Staff Writer
Banking institution, CABS, a member of the Old Mutual Group recorded a surplus of Zig110,3 million in the half year to June 30, 2024 despite a challenging operating environment.
Group managing director Mehluli Mpofu in a statement of the financials said the performance demonstrated resilience in the reporting period in an environment characterised by high ZWL inflation in the first quarter of the year.
He said net interest income for the bank was 33% lower at Zig78,96 million while fee and commission income increased by 55,64%.
“The variances between the two comparative periods have been influenced by the impact of the application of IAS 29 on prior year numbers,” he said.
Mpofu noted that the bank recorded a 4,2% growth on balance sheet mainly due to credit line drawdowns amounting to US$34 million.
The managing director said on investing in innovation, the Society continues to foster agile innovation through its transformation programs to enhance customer experience and improve efficiencies in processes through process optimisation and automation.
Mpofu said during the first half of 2024, the Society introduced several projects to enhance customer experience through use of digital platforms.
Some of the initiatives include session resumption on USSD and this has aided in providing clients with a seamless process in the event of timeout caused by slow connections.
The CABS mobile application was upgraded and now offers improved performance, faster loading times, simplified navigation and access.
“As part of enhancing customer experience, our digital channels (USSD, WhatsApp Banking, Mobile App and Internet Banking) incorporated additional bill payments and EazySend on their platforms,” said Mpofu.
He said going forward, the Society will continue to explore and implement more solutions to improve both customer and employee experience.
In terms of investing in the economy, Mpofu said the Society embarked on a series of initiatives projects to add value to the development of the economy.
Some of the initiatives include when CABS secured offshore long-term funding for development into the productive sectors of the economy.
“During the first half of the year, CABS drew down facilities from Afreximbank and the Trade and Development Bank. These loans were deployed into key sectors of the sectors of the economy,” said Mpofu.
He added that being long-term, the funding is benefiting key sectors such as mining and agriculture by enhancing trade, enabling capital investment and generating employment.
“In partnership with AfDB, the Society progressed conducting research to develop a value proposition for Women-led SME’s. The outcome of this is to further capacitate the Society to effectively assist women-led businesses,” said Mpofu.
He added that as part of food security and to counter the effects of the El Nino induced drought, the Society has worked with customers in the grain supply chain to provide funding for this year’s farmer cropping seasons.
Mpofu said nearly US$10 million has been disbursed to support production of grain. Meanwhile, CABS is currently celebrating its 75th anniversary.
According to the Bank, the milestone is testament to an unwavering commitment to innovation, together with exceptional customer service, while turning a profitable financial service organization.
“Since our founding in 1949, we have grown and evolved, yet always staying true to our core values and mission.
“Over the past 75 years, we have faced challenges and celebrated successes, all the while maintaining our dedication to excellence,” reads part of the financial statement.
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Zimre Holdings in profitable half year
Staff Writer
Zimre Holdings Limited profit for the interim period to June 30, 2024 surged 52% to US$6,8 mln compared to US$4,5 mln in 2023 driven by robust revenue growth and effective cost containment.
In the period under review, the group achieved a 16% increase in total income, reaching US$15.0 mln, primarily driven by impressive growth in insurance contract revenue and substantial fair value gains from investment properties and equities.
Group chairman D Matete in a statement of the financials said the group’s insurance contract revenue surged 63% from US$19.3 million in June 2023 to US$31.6 million in June 2024.
“This robust growth was fuelled by impressive real business expansion in regional reinsurance units and the Life and Pension segment. Reinsurance operations accounted for 75% of revenue, with Zimbabwe and Mozambique being key contributors at 26% and 14% respectively,” he said.
He added that the Life and Pension continued to perform well at 22% contribution to revenue, while the short-term business unit showed signs of recovery at 3% contribution.
Matete said the regional expansion strategy is yielding positive results, with reinsurance operations in the region contributing 49% to total revenue.
During the interim period under review, group total assets reached US$204.1 million, reflecting a 20% increase and notably, the group maintained a strong cash position, generating US$10.6 million from operations, a 79% increase from US$5.9 million in the prior period.
The cash to profit ratio ended the period at 1.55 times against a benchmark of 1.2 times.
Matete however said ZHL remains positive that the measures the group has put in place, which cut across the different markets within which it operates, will ensure it remains relevant and profitable on a sustained basis.
He said relevance of the group’s value proposition will be maintained through digitalisation. “The Group’s B2C units have invested significantly into making the customer experience accessible, intuitive and seamless while preserving the human and relational touch that is vital and akin to our line of business,” said Matete.
In terms of sustainability Matete said through the Eagle REIT, the group is practicing what it preaches by applying ESG practices into its projects.
He said the group anticipates commissioning phase 1 of Mazowe Mall in Q4 2024 which project was not only built in a manner that is sympathetic to the environment but also addresses a number of social ills and peculiarities of the ecosystem already in existence within the surrounding community.
In order to maintain profitability, Matete said the creation of new markets through the anticipated listing of the Eagle REIT in Q4 2024.
“This listing aligns with the ethos of the group to make financial security instruments accessible to and therefore inclusive of all Zimbabweans,” he said.
Matete said with a history that spans over 40 years, the ZHL Group is posed to continue delivering on its promise of Security, Growth and Profitability and making a significant contribution in different facets of the economy to uplift the standard of living of the communities from where we derive value and growth.
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Fidelity insurance revenue up 277% in half year on USD business growth
Staff Writer
Fidelity Life Assurance (FLA) says growth in USD business drove the group’s insurance contract revenue which rose 277% to US$8,2 million in the interim period to June 30, 2024 compared to US$2,2 million in prior year.
Group chairman Livingston Gwata in a statement of the financials said innovative product sales brought in new business and organic expansion as customers increasingly embraced the group’s offerings.
“Vaka Yako’s strengthening market position was a notable highlight, underpinning the group’s insurance revenue growth,” he said.
Gwata said the group’s insurance service result improved significantly from negative US$4,4 million to positive US$2,0 million, driven by impressive growth in insurance contract revenue, reduced claims experience and effective expense management.
“These resulted in lower insurance service expenses a 7 percent decrease from same period in prior year which enhanced the insurance service result position for the period under review,” he said.
During the period under review, the group achieved a 135 percent profit increase to US$5,2 million up from US$2,2 million recorded in prior year, driven by a trifecta of growth in insurance contract revenue, low insurance service expenses, and fair value gains from the property portfolio.
According to Gwata, the business managed to achieve the set targets despite the challenging environment as strong performance was recorded across all the business units with the Life and Pensions business being the flagship of the Group.
He said the actuarial and microlending units have continued to grow albeit at a slower pace while the Asset Management unit launched the Eagle Real Estate Investment Trust (REIT) which has been well received in a market as a desirable alternative investment instrument.
“The REIT is expected to be listed in the last quarter subject to regulatory approvals,” said Gwata.
Going forward, Gwata said despite forecasts of a broader economic slowdown, the group is confident that it will achieve strong revenue and profitability growth.
He said the key driver of this performance will be the Vaka Yako/Yakha Eyakho housing scheme, which has seen a surge in demand following the successful commissioning of Stoneridge Park residential stands in August 2024.
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Pensions and Economics – When the Tail Wags the Dog?
By Gandy Gandidzanwa & Itai Mukadira
That economic misfortunes have a direct impact on the pension fund sector has never been questioned or doubted. Could the reverse be true though – that pension fund sector sub-par management could negatively hurt an economy?
That economic misfortunes have a direct impact on the pension fund sector has never been questioned or doubted. Could the reverse be true though – that pension fund sector sub-par management could negatively hurt an economy? Or put slightly positively, could a more efficiently run and managed pension fund industry had helped defend the economic turmoil of the past two decades? Seems very few have ventured to probe that, as economics has been traditionally accepted as the driver of the fortunes of the pensions sector. But what if, on the extreme, it wasn’t, or rather put more moderately, that the relationship was not as one directional as most have assumed it to be. While the thoughts are deep, and the viewpoint, admittedly, foreign and stretched in the minds of many, there is a firm school of thought that asserts that if we had managed our pension funds differently, we could have helped alleviate some of the economic pains that we have endured. Let’s dig in. Pensions and Economics – When the Tail Wags the Dog
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FMHL to continuously update products to remain relevant
Staff Writer
HARARE, First Mutual Holdings (FMHL) says the existing economic environment requires continuous engagement with customers to maintain the relevance of products.
FMHL is a financial management group in Zimbabwe offering services in risk management, wealth creation, wealth management, insurance, reinsurance, and property.
Group chief executive Douglas Hoto, in a statement of financials for the half-year period to June 30, 2024, said the business has a solid financial position and will continue to invest in technology.
“This, coupled with diversified revenue streams as well as the growing contribution of regional businesses, is expected to contribute towards sustainable growth and value creation for our stakeholders.
“We will continue investing in technology to improve service delivery channels and product innovations as part of our strategy to meet evolving market requirements,” he said.
Hoto said the group focused on maintaining the relevance of its products in the core pillars of risk management, wealth creation, and wealth management.
“There was an increasing preference by clients for USD-denominated products to ensure that the value of the insurance benefit was retained. 83 percent of the group’s insurance contract revenue was in USD for the six months ended June 30, 2024,” he said.
The group’s insurance contract revenue (ICR) for the half-year period increased by 160 percent compared to the prior period, mainly due to the International Financial Reporting Standards (IFRS)-related distortions that result in the understatement of the revenue for 2023.
During the period under review, Hoto said the group incurred a loss after tax of US$33 million compared to a profit of US$56 million.
“The significant drop from prior year stems from distortions arising from following the provisions of IFRS,” he said.
He noted that major distortions to the group’s performance were noted on investment property that was valued in the prior year in ZWL, which, when translated to USD, following IFRS guidelines, resulted in a valuation of US$178 million on 31 December 2023 compared to the independent USD valuation of U$128 million.
“This was the driver for the fair value loss on investment property of US$50 million,” said Hoto.
In terms of individual operations review, First Mutual Health Company’s insurance contract revenue (ICR) for the period to June 2024 was US$27,9 million, 25 percent above the previous year figure of US$22,4 million.
“The growth in revenue was largely driven by the higher contribution of the more stable USD and increased membership,” said Hoto.
During the interim period, the business achieved a profit for the period of US$3.7 million, representing a 29 percent decrease from the prior year, with the decline mainly due to lower investment income and an increase in the company’s claims experience following the migration to USD policies, which provide relatively stable benefits.
Hoto said the business continues to expand its network of medical services—clinics, pharmacies, hospitals, dental and optometry—as a long-term strategic priority.
“Our objective is to complement government efforts to provide greater access for Zimbabweans to quality healthcare at affordable prices,” he said.
First Mutual Life achieved an ICR of US$6 million, which represents a growth of 43 percent compared to the prior year.
Hoto said the positive variance from the comparative period was largely due to client migration from local currency-denominated policies on the Group Life Assurance Policy in line with the general trend to convert a portion of USD-denominated allowances to pensionable basic salaries.
“The business achieved a lower profit for the period of US$0.4 million relative to US$1.9 million in the prior year. The negative variance mainly arose from lower investment income and exchange losses on local currency-denominated assets in the first quarter of the year when there was accelerated depreciation of the ZWL,” he said.
In the general insurance cluster, NicozDiamond Insurance ICR grew by 25 percent to US$19.8 million from the prior year due to increased foreign currency-denominated business and organic growth.
“…as well as the upward review of statutory covers to track the local currency depreciation and premium rate reviews for specific accounts mainly driven by unfavourable loss ratios.,” said Hoto.
The business recorded a profit after tax of US$0.7 million, 65 percent higher than the same period last year, and the improved performance was mainly driven by a notable ICR increase, which compared favourably to the lower growth on the main expense items.
The Diamond Seguros business recorded ICR of US$2.3 million, which was 17 percent above the prior year amount, and the growth was a result of continued improvements in broker business following the recapitalisation of the business by the group in 2021.
First Mutual Reinsurance: Zimbabwe’s ICR declined to US$6.6 million from US$8 million following a deliberate decision to limit exposure to certain classes as part of risk mitigation.
FMRE Property and Casualty—Botswana ICR for the period went up by 7 percent to US$11.7 million, and the year-on-year growth was 11 percent in Botswana Pula (“BWP”), at BWP158.7 million from BWP143 million in the prior period.
Friday, Oct 4, 2024
