Momentum sees 39% jump in Heps

Although the group remains wary about the pressures on its operating environment.

JSE-listed financial services group Momentum recorded a 39% jump in headline earnings per share for the 12 months ended 30 June 2024, but the profitability of its new business edged lower.

In a trading statement released on Sens on Friday, the group says that although its business remained resilient in the 2024 financial year, its current new business margin is getting attention, as it is not at “desirable levels”.

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The group’s new business margin was 0.7% in the period under review, down from 0.9% in the prior year.

“Management is giving attention to new business profitability,” it notes.

The group declared a final dividend of 125 cents per share – up 4% from the corresponding period in 2023.

Momentum’s share price dropped by more than 4% in mid-morning trade to R28.30.

Momentum share price 

New business 

The group’s value of new business – a measure to evaluate the expected profitability of business written during the year – declined to R589 million. “[This was] predominantly due to the strengthening of persistency and expense basis at the end of June 2023, which mostly affected Metropolitan Life.”

Despite the marginal decline year on year, the group says there was a solid improvement in the value of new business in the second half of the financial year.

It further notes that there were positive contributions from most of its business units, including a recovery in Momentum Insure’s earnings, solid life annuity profits from Momentum Investments, improved persistency experience (albeit not yet at targeted levels) in Metropolitan Life, and strong underwriting experience in Momentum Corporate and Guardrisk.

Read: More Momentum Metropolitan share buybacks 

The claims ratio in Momentum Insure improved to 67% from 77% in the prior year, notwithstanding adverse weather-related events. According to the group, this reflects the positive impact of underwriting measures.

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Two-pot withdrawals 

As of Wednesday, 25 September, Momentum has received approximately 150 000 withdrawal requests worth R2.5 billion from fund members under the two-pot retirement system. The company credits its significant investments in digital solutions for successfully handling the high volume of client interactions.

Since the system’s introduction in early September, fund managers have processed thousands of claims from members seeking to withdraw from the savings portion of their pension funds.

Read:
Two-pot is a ‘good, pragmatic’ solution for SA Inc – Old Mutual
Those aged 35 to 44 lead the way in two-pot withdrawals – Sanlam

Looking ahead 

Regarding prospects for the financial year ahead, Momentum remains concerned about the pressure on its operating environment, given South Africa’s subdued economic growth. There are however “encouraging signs of improvement”,  it adds.

“With inflation expected to ease, the environment should be more conducive to interest rate cuts, which will bring financial relief to clients, and the absence of load shedding should all gradually improve confidence levels.”

Listen/read: Sentiment is improving under the GNU – JSE CEO

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