HARARE – First Mutual Holdings (FML)’s investment income in the five months to May 2017 surged from $581 000 to $5,5 million, driven by a rebounding Zimbabwe Stock Exchange (ZSE), a company official said.
The financial services group’s chief executive, Douglas Hoto, told shareholders on Wednesday that as a result of the investment income surge, the firm’s net income for the five-month period had risen 44 percent to $4,36 million.
“Investment income rose to an impressive $5,52 million. Of course, this is largely attributed to activity on the ZSE, which has been recording steady gains lately.
“In fact, it is interesting to note that while it got depressed somewhere along the five months, it is now rebounding. Naturally, this had a positive impact on our investment income,” the FML boss said.
The local bourse has been steadily gaining in the past few months with equities analysts attributing the bull-run to inflows from foreign investors who hold local stocks on the ZSE and are re-investing as they have been unable to retrieve declared dividend on the back of foreign payment delays.
“Offshore investors failing to access their dividend can even invest on other platforms… I am sure you have noticed the ZSE has been on a rebound and this is one of the reasons behind this,” equities analyst Ranga Makwata told the businessdaily.
On Wednesday, the market rose a further 1,49 percent to close the day at a total market capitalisation of $5,5 billion as the industrial index firmed 1,51 percent to 183,10, buoyed by gains in stalwart counters Delta Beverages, Econet Wireless Zimbabwe and Innscor Africa.
However, FML’s operating profit for the five-month period dropped 14 percent from $3,2 million prior comparable period to $2,8 million.
FML’s Gross Premiums Written (GPW) was down two percent to $47,9 million from $49 million prior comparable period on the back of depressed market conditions.
In the five-month period, the group’s rental income at $2,6 million, was down on prior comparable period from $2,8 million.
“This was primarily because of downward reviews of rentals. With the depressed economic conditions, tenants have been asking for lease reviews with some moving out, leaving us with voids,” Hoto said, adding occupancy had remained flat at around 72 percent throughout the group’s property portfolio.
Total expenses were lower at $10,9 million from $11 million incurred in the same period last year as the claims ratio fell below 80 percent in the period under review.
This comes as the financial services group recorded a 496 percent surge in profit after tax for the six months to June 30, 2016 from $442 000 to $2,6 million, driven by strong performance from the life assurance and health businesses.
Some of the group’s subsidiaries include listed property firm; Pearl Properties, health insurance unit; First Mutual Health Company Limited, First Mutual Life Assurance Company, FMRE Life and Health, Property insurance unit; Tristar Insurance as well as the Botswana unit, FMRE Property and Casualty Botswana.