Momentum Group has announced record earnings for the year ending June, demonstrating the strength of its diversified portfolio and effective execution of its Impact strategy.
Normalized headline earnings rose by 41% to R6.26 billion, with normalized headline earnings per share climbing 46% to 451 cents. Overall, headline earnings per share improved by 50% to 446.9 cents.
The group attributed its solid operational performance to contributions from various sectors, including:
- Momentum Investments: Noteworthy annuity profits
- Metropolitan Life: Improved new business profitability
- Momentum Corporate: Higher earnings from the group risk business
- Momentum Insure: Significantly improved underwriting results
- Guardrisk: Strong underwriting performance
Operating profit surged by 52% to R5.48 billion, further supported by positive actuarial assumption changes and favorable investment market returns.
However, the group noted a decline in Africa’s operating profit due to lower market variances, higher new business strain, and increased support costs. In India, the operating loss narrowed, buoyed by strong gross written premium growth and an improved combined ratio.
New Business Sales and Return on Equity
New business sales, measured by the present value of new business premiums, decreased by 3% to R79.8 billion. Momentum Retail showed growth in long-term savings volumes, while Africa reported strong new business volumes, particularly in Lesotho and Namibia.
Return on equity (ROE) increased to 21.2% from 15.5% in the previous year, reflecting the higher normalized headline earnings.
Given its robust capital and liquidity position, the board approved an additional R1 billion for its share buyback program. As of September 12, Momentum had completed share buybacks totaling R2 billion, including the previously announced amounts.
The board revised its dividend policy to target an ordinary dividend payout range of 40%-60% of normalized headline earnings, up from the previous 33%-50% range. This change underscores the group’s strengthened cash generation and solid financial standing.
Momentum declared a final dividend of 90 cents per share, bringing the total dividend for the financial year to 175 cents.
Market Outlook
Looking ahead, the group anticipates that the high cost of living in South Africa will continue to impact new business volumes, exerting pressure on margins. However, it believes that lower inflation, easing interest rates, and improved energy availability could gradually restore consumer confidence and boost disposable income.
The group expressed optimism about its earnings performance, stating, “While pleased with the earnings performance, we recognize the importance of sustaining this momentum.” They emphasized their commitment to enhancing the value of new business (VNB) and driving profitable sales volume growth.
Momentum believes that its targets for the 2027 financial year—normalized headline earnings of R7 billion, ROE of 20%, and a VNB margin of 1%-2%—are achievable.