Old Mutual Bank hits 1-million customer mark

Old Mutual’s OM Bank is closing in on a major milestone, with CEO Jurie Strydom predicting it will surpass 1 million customers before the end of the year. As of June, the bank—Old Mutual’s re-entry into the banking sector after exiting nearly a decade ago—had 742,000 customers and R1.4 billion in deposits. Half of those customers are new to the Old Mutual group, signaling broader market traction beyond its existing ecosystem.

The bank’s growth comes as the broader South African banking sector becomes more competitive, with competitors like Discovery Bank also making inroads in attracting customers and deposits. OM Bank’s CEO Clarence Nethengwe has set ambitious targets: 2.5 million to 2.8 million customers and up to R10 billion in deposits by the 2028 financial year. Strydom framed the bank’s progress as a shift from establishing credibility to competing for market share, noting that half of its customers are new to Old Mutual, a key indicator of its appeal outside the group’s traditional base.

He emphasized that OM Bank is now at a stage where it must actively contest the banking profit pool, rather than simply proving its operational viability. Strydom’s confidence aligns with Old Mutual’s broader financial performance. The group’s interim results for the first half of the year showed 11% growth in earnings per share, reaching 126.3 cents, driven by gains in life insurance, investments, and its African operations.

Life insurance sales, measured by annual premium equivalent (APE), rose 21%, while the value of new business jumped 32% to R569 million. Excluding one-time corporate risk sales, APE growth was 12%, and the value of new business margin improved by 10 basis points due to stronger sales volumes and a more profitable mix in wealth management and corporate segments. The group’s results from operations rose 7% to R5.28 billion, reflecting sustained momentum across its core divisions.

Old Mutual Africa Regions contributed to growth, with strong money market inflows in Malawi and improved unit trust flows in East Africa. However, gross loans and advances remained flat year-over-year, while gross written premiums rose only 3%, held back by currency fluctuations and lower renewals in Africa due to underwriting adjustments. The underwriting management actions, which reduced renewals, were deliberate to improve long-term profitability in the insurance segment. The group’s cost-cutting efforts are also on track.

It achieved R936 million in savings against its 2024 expense base and remains on pace to hit its R2.5 billion target by 2027. Shareholder returns include an 8% dividend increase—40 cents per share—and a R1 billion share buyback, following the completion of a R3 billion program in May. The board also announced the appointment of Ranen Thakurdin as the incoming CFO, set to replace Casper Troskie next year pending regulatory approval.

Thakurdin’s appointment shows the group’s focus on maintaining financial discipline while scaling OM Bank’s operations. Old Mutual’s push into retail banking reflects a broader industry shift, where traditional insurers and fintechs are competing for market share. The bank’s ability to convert half of its customers into new-to-group clients hints at a strategy beyond relying on existing relationships. For now, Old Mutual’s financials remain strong, with life insurance and investment segments driving performance.

The group’s cost discipline and shareholder-friendly moves, dividends and buybacks, could help fund OM Bank’s expansion, but the real test will be whether it can maintain momentum as competition intensifies. The next major milestone, 1 million customers by year-end, will be a key indicator of whether the bank is more than a niche player, or a serious contender in South Africa’s retail banking race. Success will depend on OM Bank’s ability to balance rapid customer acquisition with sustainable profitability in a sector where margins remain under pressure.