Momentum Metropolitan share price decline by almost 8%
DURBAN - Momentum Metropolitan share price declined by almost 8 percent on the JSE in the morning after the group reported that its results for the nine months to end March were negatively impacted by the Covid-19 outbreak in the last two weeks of the third quarter.
The group said the disruptive impact of Covid-19 was evident only in the last two weeks of the quarter to end March.
“In line with global financial markets, the South African markets reacted sharply with the JSE falling by 22 percent and liquidity coming under severe strain in various funding markets. The impact of Covid-19 on operations, however, was muted,” the group said.
After a good start to the nine-month period, the negative impact of investment markets nullified the good operational performance and moved the group’s normalised headline earnings for the quarter into a loss of R284 million.
The loss in the third quarter resulted in the year-to-date normalised headline earnings falling by 39 percent to R1.49 billion compared to last year.
Chief executive Hillie Meyer said they had business continuity plans in place for dealing with the crisis before the pandemic broke out, and the activation of these plans led to minimal disruption.
“More than 90 percent of our employees were fully enabled to continue serving our clients from home during Level 5 of the lockdown,” Meyer said.
Before the pandemic outbreak Momentum Metropolitan said it showed good operational performance during the third quarter and it was slightly better than the previous two quarters.
“Excluding the impact of market-related items in March, earnings from operations for the quarter were R947 million.
Looking ahead Meyer said the impact of Covid-19 on the economy and the financial services industry will be severe but it is too early to arrive at any final conclusions given the uncertainty that remains.
“The long-term impact will largely depend on the country’s ability to limit the depth of the economic recession. We do not foresee a rapid economic recovery and we expect this to cause lower new business volumes and weaker persistency over the next twelve to eighteen months, perhaps even longer,” Meyer said.
As a result Momentum Metropolitan is not expecting to achieve its Reset and Grow target for financial year 2021, which is to deliver normalised headline earnings of between R3.6 billion and R4 billion.
The share price declined to R16.24 a share in the morning, down from Wednesday’s closing price of R17.60. It recovered in the afternoon to R17.
BUSINESS REPORT ONLINE