Momentum Group delivered strong normalised headline earnings (NHE) of R4.4 billion for the year ended 30 June 2024, up 27% on the prior year, with operating profit increasing by 31% to R3.6 billion.
NHE per share increased by 32% from 235.2 cents to 309.7 cents, reflecting the positive impact of the share buyback programme over the year.
Headline earnings per share increased by 39% from 215.5 cents to 298.6 cents and earnings per share improved by 29% from 220.0 cents to 282.9 cents.
The group declared a final dividend of 65 cents per ordinary share, resulting in a full-year dividend of 125 cents per share.
Momentum Group CEO, Jeanette Marais, said: “We are pleased that, despite the continued challenging economic backdrop, our results and earnings are strong. This was the outcome of positive contributions from most business units, including a recovery in Momentum Insure and Metropolitan’s earnings, solid life annuity profits from Momentum Investments, and strong underwriting experience in Momentum Corporate and Guardrisk.”
Momentum Group pointed to significant outflows from retirement funds following the introduction of the two-pot retirement system.
Starting in September, one-third of all retirement savings are allocated to a savings pot, which can be accessed before retirement. The remaining two-thirds are placed in a retirement pot, accessible only upon retirement.
Additionally, a third vested pot will hold all retirement savings until the system’s implementation, minus R30,000 used as seed capital in the savings pot, adhering to pre-September 1 legislation.
Momentum reported receiving nearly 150,000 withdrawal applications, amounting to R2.5 billion.
The group’s new business sales as measured by the present value of new business premiums increased by 19% to R82.1 billion. Businesses that contributed significantly to the increase in sales volumes were Momentum Corporate which increased sales by 47%, Momentum Investments by 19% and Momentum Retail by 11%.
Value of new business (VNB) marginally declined by 2% to R589 million. Risto Ketola, Group Finance Director, said: “Even though the VNB improved significantly in the second half of the year, our new business margins are not yet where they should be. Management will continue to focus on increasing sales volumes, improving new business pricing and the sales mix, and reducing acquisition costs. Each business unit has clear plans in place to address the VNB.”
The share buyback programme communicated to investors in the F2024 interim results announcement was completed on 12 June 2024. The group bought back 23.6 million shares at an average price of R21.11 per share, representing a 43% discount to the 30 June 2023 embedded value per share of R36.94. The Board approved a further R1 billion for the buyback programme of the Group’s ordinary shares, which will take place now that the Group is no longer in a closed period.
Most recently, the group’s corporate and retail savings businesses were well prepared for the implementation of the two-pot retirement system and were able to process and pay withdrawals from the very first business day.
By 25 September, the Momentum Group had received close to 150 000 withdrawal applications worth R2.5 billion. “Our investment in digital solutions helped our teams manage the significant volume of client interactions,” said Marais.
Future outlook
While Marais remains concerned about the pressure on the group’s operating environment given the subdued economic growth, recently some encouraging signs of improvement became visible in the South African economy. Inflation is expected to ease, the latest interest rate cut will start to bring financial relief to clients, and the absence of loadshedding should all gradually improve confidence levels.
“The fact that we were able to deliver these results in spite of the tough economy has boosted our confidence in our ability to deliver significant value to our clients and shareholders.”
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