5th Nov 2014 09:43
LONDON (Alliance News) - Anglo-South African financial services group Old Mutual PLC Wednesday reported a rise in funds under management to the end of the third quarter, bolstered by growth within its wealth division.
In a statement, the investment, savings, insurance and banking group said it had GBP307.6 billion of funds under management in its core operations at the end of September, an increase from the GBP300.5 billion reported at the beginning of the quarter.
The increase was driven by GBP800 million of net inflows into Old Mutual's wealth division, which, together with GBP1.9 billion of net inflows into OM Asset Management, the holding company for its majority-owned US-based institutional asset management business, more than offset GBP1.9 billion of net outflows from its non-US-based asset-management boutique and GBP200 million of net outflows from Nedbank, the South African banking subsidiary in which it holds a 52% stake. Funds under management also benefited from positive market movements.
Old Mutual reported gross sales of GBP6.19 billion in the third quarter, lower than the GBP6.51 billion reported in the corresponding period last year, as a 13% decline in emerging markets more than offset a 1% rise in emerging markets.
The group said third-quarter net client cash flows fell to GBP600 million from GBP2.6 billion.
Old Mutual has been pursuing a strategy of finding ways its operations in South Africa can work more closely together and build further across Africa. Last month, Nedbank took a 20% stake in Ecobank Transnational, in a move that will create a banking network of more than 2,000 branches and offices in 39 countries.
The group has also been growing its wealth management division, last month agreeing to acquire Quilter Cheviot, a UK-based discretionary investment manager, as it looks to build up its retail investment business, while it has also floated OM Asset Management in the US, though it retains a majority stake.
Chief Executive Julian Roberts said the group has made "good progress" on its strategic agenda to transform and improve its "sustainable growth profile". He said the recent wave of corporate activity has been comprised of "highly significant milestones" in Old Mutual's future development.
"We have delivered a resilient performance in our South African businesses despite slower growth in the economy. We are starting to see signs of improved performance in property and casualty. Nedbank's good performance reflects its early action taken in anticipation of the challenging macro-economic environment," Roberts said in a statement.
"Old Mutual Wealth had another strong quarter, with a greater proportion of assets flowing through the platform into Old Mutual Global Investors. OM Asset Management generated good quality net client cash flow in the quarter," Roberts said.
"While economic activity remains subdued in South Africa, with consumers remaining under pressure, the government's medium term budget policy statement is positive for the economy as a whole. Growth remains robust elsewhere in Africa. The UK retail financial services market is large and developing fast. Old Mutual Wealth's vertically integrated business means it is well positioned to deliver profitable growth," the CEO said.
In an interview with Alliance News, Chief Financial Officer Ingrid Johnson said the level of corporate activity at Old Mutual has kept everybody on their toes.
"The corporate activity will change the shape and profile of Old Mutual's earnings," Johnson said. "There's been a lot of change in a very short period of time and we need to make them work for us and integrate them into the group."
Asked whether the group is building up Old Mutual Wealth with a view to spinning it off, Johnson said: "At the moment we're focused on building a quality business. It's exciting to see what we are building and the value we're bringing to society at a time of reform."
"We're at the forefront of that. Part of what we're here to do is create value and that's what we'll continue to do," Johnson added.
Johnson is the successor to Philip Broadley, the former group finance director who joined in 2008 after leaving Prudential PLC in the same year and helped to steer the group through a restructuring that saw a numerous business sold off in a simplification to lower debt and risk in the group after it was hit by the financial crisis. The new finance director acknowledged that the task at hand today represents a different challenge to that faced by Broadley when he took on the job.
"The group's at an inflection point on the back of strengthening the franchise in terms of capital and liquidity," Johnson said, adding that the group is now focused on building compelling market share in its chosen countries of operation.
Old Mutual shares were down 0.3% at 191.50 pence Wednesday morning.
By Samuel Agini; [email protected]; @samuelagini
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