Old Mutual Group reports strong earnings and unveils more on OM Bank strategy

OM Bank, which opened to staff in the first half of 2025, will leverage the 180-year-old group’s existing banking capabilities that includes R1.5 billion in deposits, R15.5bn in lending operations, a 346-branch network, an in-branch advisor force, and some 400,000 money account customers, the new CEO, Jurie Strydom, said on Wednesday.

“This allows us to expand relationships with our Mass and Foundation customers while attracting new customers through a compelling banking proposition,” he said at the release of the group results for the six months to June 30. Some R1.6bn would be allocated to cover the bank’s likely capital needs for 2026.

OM Bank will form the basis of one of four key focus areas for the group that has been identified by Strydom, who became CEO effective June 1, 2025. The other three areas are to drive the competitiveness of the South African business, deepen market leadership in Southern Africa, and evaluate and pivot on growth markets.

He said they would sharpen their focus on a shift to creating shareholder value, earning the right to deploy capital to grow markets such as in East and West Africa, and demonstrate resolve on costs. Operating model changes had been announced from August 1 to simplify the group structure to enable the group to compete better, said Strydom.

The group reported a 29% increase in adjusted headline earnings to R4.2bn for the six months ended June 30, 2025, amid sales and persistence pressures.

Results from operations increased by 16%, driven by good growth in Old Mutual Insure - its underwriting margin improved from 0.9% to 9.7% - and strong equity market performance, particularly in South Africa and Malawi.

This growth was partially offset by the negative impact of a persistency basis change in the Mass and Foundation Cluster and higher central costs, which include a once-off restructuring provision incurred to reduce future expenditures.

The growth in adjusted headline earnings of 29% was supported by an 88% increase in shareholder investment returns. Return on net asset value was 15.5%, within the target range, supported by earnings and balance sheet optimisation. Excluding higher than expected market returns, return on net asset value would have been below target.

Strong cash generation enabled the announcement of a R3bn share buyback. An interim dividend of 37 cents per share was up by 9%.

Sales in the life businesses experienced subdued growth, with Life APE sales up by 1%. This was due to higher retail risk volumes in the Mass and Foundation Cluster and good sales in Old Mutual Africa Regions, largely offset by lower guaranteed annuity sales in Personal Finance.

Gross written premiums increased by 5%, driven by good growth in Old Mutual Insure.

He said a smooth CEO transition had enabled “us to make rapid shifts with clarity and alignment. We are pivoting to return on group equity value and cash generation as value creation metrics.”

Old Mutual is home to the largest umbrella fund in South Africa with R187bn of assets under management and administration, the second-largest retail mass in-force book by number of policies, and a large Wealth Management business with assets under management and administration of R442bn. These businesses form part of the new Life and Savings segment.

The peer-leading Alternatives business continued to outperform and deliver sustained growth, with assets under management increasing to R122.5bn and strong revenue growth of 33%, supported by robust capital raising.

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