South African financial services group Old Mutual said on Monday its earnings so far in the second half of the year had been sustained at ”satisfactory” levels but were lower than in the first half.
The group said it expected the balance of the year broadly to follow recent trends.
In August, Old Mutual reported a 16% drop in operating profit for the first half of the year as its earnings were hit by a weak South African rand and stock market falls.
”Poor equity markets around the world have made conditions difficult for those of our operations that are equity oriented,” Old Mutual said in a scheduled trading update, adding that a diverse earnings base had helped partly to offset weak markets.
”In the US in particular, our equity-oriented businesses are balanced by the fixed interest focus of life insurance businesses. This, together with our leading position in South Africa has sustained earnings at a satisfactory level, although somewhat lower than in the first half,” Old Mutual said.
Old Mutual’s businesses include insurance, banking, stockbroking and fund management. It makes about 70% of its profits in South Africa but has gradually built up a UK presence after buying Gerrard in 2000.
Its shares were barely changed in opening Johannesburg trade at R13,85.
Old Mutual said assets under management worldwide for retained businesses declined 16% for the year to date, primarily because of the decline in markets.
A strengthening in the value of the rand would also hit 53-percent owned subsidiary Nedcor, it said.
Banking group Nedcor surprised the market on Thursday when it said in a trading statement its annual earnings would take a knock from greater bad debt provisions and a stronger rand.
Old Mutual said new business sales and earnings at its South African life assurance business might continue to be adversely impacted for the remaining two months of the year if poor market conditions persisted.
The financial services group said it expected cost saving initiatives in the UK, including staff cuts and branch restructuring, to result in a charge of up to 5 million pounds this year. – Reuters