RMBH reports strong growth in earnings on the back of positive results from its banking interests
RMB Holdings, separately listed in the Banks sector with a current market capitalisation of some R42 billion, holds strategic investments in a portfolio of leading financial services franchises in South Africa, including:
· banking and insurance group FirstRand (30%);
· health and life assurer Discovery (25%);
· personal lines insurer OUTsurance (59%); and
· specialist insurer RMB Structured Insurance (76%).
FINANCIAL HIGHLIGHTS
RMBH’s key outcomes for the year to 30 June 2010 were as follows:
Cents per %
R billion
share
Change
Normalised earnings 3.6 295 +42%
Dividends 1.5 124 +25%
Intrinsic Value 38.7 3 202 +28%
Chairman GT Ferreira commented that, “RMBH’s diversified portfolio of banking and insurance businesses produced a strong outcome against a volatile and difficult macro background that is only now starting to show signs of improving.”
RMBH’s normalised earnings were drawn from the following main sources:
· FirstRand, which reported a 39% increase in normalised earnings of some R9.9 billion reflecting the positive results from underlying strategies being executed by its operating franchises.
· Discovery, which produced a pleasing outcome with a 25% increase in headline earnings of R1.5 billion, as a result of sound performances across all its SA business units.
· OUTsurance, which produced excellent results in South Africa where it grew headline earnings by 17%. Its final outcome was muted by the start up costs of its Australian initiative, culminating in a 11% decrease in headline earnings of R580 million.
PROSPECTSRMBH remains hopeful that the South African economic environment has stabilised.
Ferreira comments: “We believe the combination of their current growth strategies and the quality of their underlying client franchises will allow the groups in which RMBH is invested to take full advantage of any major improvements in the cycle.”
RMBH continues to trade under a cautionary, as it mulls over the appropriate structure for its investment portfolio, in the light of the impending merger between Momentum and Metropolitan.
Comments Ferreira: “While we have made significant progress in our discussions regarding the proposed restructuring of RMBH, it is not yet appropriate to make a more detailed announcement in this regard.”
