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Weak markets hurt Sanlam
Weak markets hurt Sanlam
Published Date: 2018-12-06 | Source: Stephen Gunnion | Author: Stephen Gunnion | Comments
The financial services group expects the economic and operating environment for its business to remain tough.
Tough markets over the past few months, and particularly in October, have resulted in lower earnings for Sanlam. In an operational update yesterday, the financial services group said normalised headline earnings for the 10 months to end-October fell by 10%. It attributes that to a 55% decline in net investment return for the period.
Sanlam said the JSE's shareholder-weighted SWIX Index recorded a negative return of 16% in the first 10 months of 2018, compared to gains of 15% over the same period last year. It said equity hedges in the Sanlam capital portfolios protected it from negative investment returns. The SWIX lost 6% in October alone.
It said its operating business units delivered an overall resilient performance for the 10 months despite weak economic conditions in a number of the countries where it operates and signifiant volatility in global investment and currency markets. New business volumes rose 3% over the period to R188 billion, in line with its first-half performance. Sanlam Personal Finance recorded new business sales growth of 7%, while new business volumes at Sanlam Sky jumped 80%, supported by new distribution agreements with Capitec. Glacier increased its new business contribution by 4%.
Sanlam Emerging Markets recorded overall new business growth of 14%, with volumes up 17% in constant currency and excluding structural activity.
New business volumes at Sanlam Investments Group declined by 10%, however. While its international businesses attracted 43% higher new mandates, this was offset by lower volumes at the SA wealth and asset management businesses, reflecting the difficult operating environment, it said.
Sanlam Employee Benefits attracted large new mandates subsequent to the end of June, resulting in new life business volumes more than doubling.
Since its June half-year, Sanlam said it had made significant strategic progress elsewhere in its business as it wound up the purchase of the remaining stake in Morocco's Saham Finances. It said this would give it a competitive advantage across the continent to drive future growth. It used excess capital of some R10 billion at the end of June as a partial payment for Saham. The proceeds from its proposed top-up empowerment deals will be used to settle short-term debt incurred as partial funding for Saham and to restore discretionary its capital portfolio to an appropriate level.
Its shares closed 4.1% down at R76.84.
Sanlam operational update. HEPS down 10%. Guides to subdued markets and no improvements operationally. Share drops in the update-- Bruno van Eck (@brunovaneck) December 5, 2018