Nico Holdings plc profit after tax before comprehensive income declined by eight percent to K7 billion in the half year ended June 30 2021 from K7.64 billion registered the same period last year.
In a published statement on Monday, the Malawi Stock Exchange-listed firm said its profitability was affected by an increase in Covid-19-related claims in the life insurance business and the delay to resolve a reinsurance dispute on a large claim in the life insurance business.
Reads the statement in part: “Total profit and other comprehensive income of K7.2 billion was one percent above the K7.1 billion recorded for the same period in 2020.
“Other comprehensive income was positive in the period compared to a loss reported in 2020 due to translation losses on consolidation of Nico Zambia.
“A strong performance of the banking business anchored performance of the group despite the challenging operating environment.”
During the period under review, Nico Holdings plc subsidiary Nico General Insurance Company registered a loss after tax of K859.93 million during the period under review, from K102.3 million registered the same period last year. The loss was driven by the delay to resolve a reinsurance dispute of K1.8 billion incurred by the Malawi subsidiary.
Nico Life Insurance Company Limited saw its profit decline by 29 percent from K3.4 billion during the same period last year to K2.4 billion on account of rising death claims, mainly from Covid-19 from K655 million ro K3.4 billion, representing a 290 percent jump.
Nico Pension Administration Company also saw its profit decline by 32 percent to K159.6 million from K235.3 million recorded the same period last year due to increased operational costs.
Likewise, Nico Asset Managers profit after tax for also declined by 25 percent to K900 million from K1.2 billion as a result of low volume transactions and the delay in commencement of projects on which fee income could have been earned.
It’s banking business, NBS Bank plc, however, grew its profit after tax by 55 percent to K4.4 billion on account of its five-year strategy aimed at accelerating digital transformation, building a strong balance sheet and enhancing efficiencies across the bank.
Despite rising pressure on inflation emanating from kwacha depreciation and rising global oil prices and the Covid-19 pandemic, the group is however, optmistic for the second half of the year.
“The group is well -positioned to manage the risk appropriately and expects to report satisfactory performance for the rest of the year,” said the group in the statement.