Old Mutual CEO Peter Moyo. Picture: SUPPLIED
Old Mutual CEO Peter Moyo. Picture: SUPPLIED

Old Mutual plans to spend up to R2bn on buying back its own shares, the banking group said on Monday.

“We have identified sufficient excess capital available to conduct on-market share buybacks for up to R2bn,” the financial services group said.

The company had cash and cash equivalents worth R32.3bn at the end of December, from R30.8bn a year before, it said in its financial statements published on Monday.

Old Mutual said it might return more capital to shareholders in the future as it expected further cash inflows from the sale of its Latin American operations, as well as more intercompany dividends.

“We will assess the capacity for further returns when such proceeds are received, taking into account our solvency capital position and projections at the time,” it said.

Old Mutual said earnings fell in the year ended December partly because of the JSE’s decline through the year.

Adjusted headline earnings decreased by 11% to R11.5bn, partly due to lower investment income in SA as a result of weaker equity markets. The JSE’s shareholder-weighted index fell 14% in the year, the company said.

Old Mutual said its numbers were also hurt by the change in Zimbabwe’s functional currency in the fourth quarter.

“This decrease was partially offset by higher income from associates, reflecting higher earnings from our stake in Nedbank,” Old Mutual said.

In October 2018, Old Mutual unbundled 32% of Nedbank as part of its managed separation process.

“Sadly we did not meet our results from operations growth target of GDP plus 2%,” said Old Mutual CEO Peter Moyo.

Results from operations fell 4% to R10bn.

“We are still confident that we will meet all our targets in the medium term, noting that the results from operations target will be difficult given the negative growth in 2018,” Moyo said.

hedleyn@businesslive.co.za