Sanlam’s earnings fall on weak equity and bond markets


Financial services group Sanlam said on Thursday that earnings fell 8% in the year ended December, partly because of the downturn in global equity and fixed-interest markets.

The JSE all share’s negative return of 9% for the year, versus a positive return of 21% in 2017, had a “pronounced impact” on earnings growth in 2018, it said.

Equity markets in other key emerging economies also fell, “placing severe pressure on our ability to grow earnings and create value for our clients”.

“The currencies of oil-producing countries — Nigeria and Angola in particular — remained weak.”

However, the group said it delivered “robust overall growth in key performance indicators, supported by our diversification across geographies, market segments and lines of business”.

Despite a 4% increase in the net result from financial services, to R8.9bn, normalised headline earnings declined 8% to R9.1bn in 2018.

Sanlam said net investment returns plunged 57% to R707m, while its numbers were also hurt by a sharp increase in project costs and amortisation.

Net investment returns were dented by the decline in equity and fixed-interest markets, an impairment of corporate credit exposures in Kenya of about R86m, and “investment return lost on capital redeployed for strategic acquisitions in 2017 and 2018”.

Meanwhile, normalised attributable earnings rose 5% to R11.5bn, thanks to profits from the disposal of subsidiaries and associates worth R2.8bn. This came from a change in the accounting treatment of Saham Finances and Nucleus, which are now deemed subsidiaries.

The group increased its normal dividend per share by 7.6% to R3.12.

“We made major progress in executing on our strategic pillars during 2018,” Sanlam said.

The group said the acquisition of the remaining stake in Saham Finances in October 2018, and the approval of a package of broad-based BEE transactions, had set it up “for sustainable future growth”.