Old Mutual deepens funding support to economic sectors

Nelson Gahadza

Senior Business Reporter

OLD Mutual Zimbabwe is stepping up financial support to agriculture, mining, manufacturing, energy and tourism while mobilising long-term capital to fund key sectors and pursuing new markets to sustain stronger growth and drive economic growth.

The group is targeting growth through customer acquisition, increased lending to resilient sectors and greater penetration of previously underserved markets, while investing in newer businesses and platforms that are expected to strengthen profitability over the longer term.

Presenting the group’s half-year financial results to analysts on Friday, chief executive Mr Samuel Matsekete said Old Mutual’s strategy was centred on achieving real growth by bringing new customers into the business and expanding its reach in segments where it had historically had limited penetration.

“We are focusing on real growth. Real growth means acquiring new customers. In that, we are also saying, which segments have we not been serving well and we need to increase our penetration into those spaces,” he said.

The strategy comes as the financial services sector continues to face pressure on margins, particularly in banking, where customers are demanding more competitive pricing while the cost of funding, including offshore lines of credit, remains elevated.

Old Mutual banking unit CABS’s deposits increased 17 percent year-on-year during the six months to June 30, 2026, while net loans and advances rose 32 percent, resulting in a 30 percent increase in interest income.

However, interest income growth remained below the pace of loan-book expansion because of margin compression.

Mr Matsekete said the group was responding by targeting higher-yielding segments and increasing transaction volumes to offset pressure on banking fees and margins.

“We are trying to attend to yields and margins. If you look at banking, there is margin compression as the customers themselves are more demanding and the cost of finance, especially if you are relying on lines of credit, is not necessarily responding as fast,” he said.

Despite the pressure, asset quality remained sound, with the bank’s non-performing loan ratio at 1,1 percent. Mr Matsekete said the quality of the loan book reflected the bank’s deliberate decision to direct funding towards sectors considered more resilient.

The bank’s profit before tax declined 14 percent during the period, partly reflecting fee reviews and increased expenditure on strategic investments.

Mr Matsekete said the increased costs were largely a consequence of investments being made to strengthen the business and create capacity for future growth.

Non-funded income, however, increased 24 percent, supported by stronger transaction volumes and improvements in the group’s digital platforms.

Old Mutual has continued to invest in internet banking and other technology platforms as it seeks to improve customer convenience and increase the use of multiple products across its businesses.

Mr Matsekete said the long-term objective was to create an integrated customer experience in which clients could access the group’s broad range of financial services through a single platform.

“If they can enter through one door and access the full range of what we offer, that’s the ultimate objective,” he said.

Beyond its banking operations, Old Mutual is positioning itself to play a key role in mobilising capital for the wider economy, using its insurance, pension, investment and banking businesses to aggregate savings and channel them towards productive investments.

“We play the role of mobilising funds and resources. If you look at what we do in the insurance and investment space, we are really just aggregating resources through the products that we have and when we pull that money, we invest in the economy,” he said.

He said the growth of pension and insurance funds was particularly important because such resources provided patient capital that could be invested in long-term economic projects.

Old Mutual has also expanded its ability to mobilise external capital through lines of credit, bringing additional resources into Zimbabwe for onward lending to productive sectors.

Mr Matsekete said the bank had played a defining role in helping international financiers understand Zimbabwe’s investment opportunities, contributing to the expansion of its funding partnerships.

He noted that Old Mutual now has a growing network of funding partners, including the African Development Bank, Trade and Development Bank and European Investment Bank, among others.

According to Mr Matsekete, a significant portion of the funding is being channelled towards agriculture, which is one of the most important sectors in Old Mutual Bank’s lending portfolio.

“Agriculture accounts for about 30 percent of the bank’s financing, with a substantial portion directed towards food production. Within that 30 percent, you will actually see a third, so about 40 percent is going into food production, which talks to food security. But it also talks about enhancing agro-exports and promoting export generation.”

“Mining has also remained a major beneficiary of Old Mutual financing, particularly projects involved in gold and lithium production,” he said.

In manufacturing, Mr Matsekete said the group had financed the expansion of plants, acquisition of equipment and upgrading of production infrastructure, while tourism had received support through both equity investments and debt financing.

Mr Matsekete said the group’s renewable energy investments were currently contributing just under 80 megawatts to the national grid through projects it owns or manages, with additional capacity in the pipeline.

He said the group has also established a renewable energy fund aimed at mobilising additional capital for projects in the sector.

He said Old Mutual’s contribution to the energy sector went beyond direct investment in generation projects, with the group also supporting the national electricity utility through syndicated facilities and other funding arrangements.

“The financing has been used to support working capital requirements and certain capital expenditure needs at the utility, with Old Mutual’s commitments in such arrangements exceeding US$50 million,” said Mr Matsekete.

The group is also identifying opportunities in Zimbabwe’s expanding services sector, particularly businesses that use local human capital and technology to provide services to customers outside the country.

Mr Matsekete said Old Mutual had already provided premises and working capital facilities to some of these operators as it seeks to support new sources of foreign currency generation.

“Outside the real sector, we are also now seeing a services sector, which is a growing sector, presenting opportunities,” he said.

Meanwhile, the group’s newer businesses are beginning to contribute to the broader growth strategy, with its online and funeral services operations performing ahead of their original business cases.

Old Mutual also completed the restructuring of its legacy debt of US$86 million during the period, strengthening its balance sheet and creating greater room for investment.

In life insurance, annual premium equivalent sales more than doubled, while pension contributions increased 11 percent, largely driven by new business. Net new money rose 33 percent, while policyholder funds increased to US$1,1 billion from US$929 million a year earlier.

The general insurance business recorded a 23 percent increase in gross written premiums as Old Mutual continued diversifying towards retail and small and medium enterprises.

Its underwriting margin improved to 15 percent from 11 percent, while market share increased to 24 percent from about 20 percent.

Asset management funds under management increased 23 percent, while the group recorded a US-dollar portfolio return of 19,3 percent.

Property occupancy also improved to 81 percent from 78 percent, while collections increased to 89 percent from 81 percent.

Mr Matsekete said diversification was important not only for growth but also for strengthening the resilience of the group’s earnings.

“We seek to continue to diversify wherever it aligns. Part of that is to respond to how we think the market is on pricing of products, but also to ensure that we can build in more resilience,” he said.