Old Mutual reports solid Nedbank results, UK IFA acquisition

Old Mutual has reported solid annual results for 54%-owned South African banking subsidiary Nedbank and revealed that its wealth management arm has struck a deal to acquire Manchester-based financial adviser network Caerus Capital Group.

Caerus represents more than 300 advisers and is responsible for more than £4bn of assets under advice.

Old Mutual Wealth said the acquisition will extend its existing controlled distribution footprint in the UK, which includes Intrinsic, and Old Mutual Wealth Private Client Advisers, the branded national adviser firm established in 2015.

Meanwhile in South Africa, Nedbank grew headline earnings growth of 5.9% to 11.47bn rand, amid slowing of South African gross domestic product and a volatile rand reflecting the decline in business and investor confidence in the country and the risk of the sovereign credit rating being downgraded to subinvestment-grade levels by at least one of the rating agencies.

Nedbank's solid earnings performance was derived from good revenue growth, with net interest income up by 10.6% to R26.4bn and non-interest revenue up by 8.1% to R23.5bn.

It reported strong credit risk management, with a credit loss ratio of 68 basis points, below the mid-point of management's through-the-cycle range.

Earnings growth from its managed operations was an excellent 16.2% if excluding the attributable loss from 20%-owned associate Ecobank (ETI).

Excluding ETI, ROE, excluding goodwill, was 18.1%, driven by strong revenue generation and good credit risk management.

ETI was hit by weaker economic conditions in West Africa and currency volatilities, particularly in Nigeria, which led to the carrying value of Nedbank's investment decreasing to R4.0bn at year-end, including an impairment provision of R1.0bn.

"Conditions in the key markets in which ETI operates are currently expected to remain difficult in 2017, before improving in 2018 and beyond. Our performance guidance for the full year in 2017 is currently for growth in diluted headline earnings per share to be greater than the consumer price index plus GDP growth," said Nedbank CEO Mike Brown.