Nico Holdings Limited’s 57 percent revenue growth to K41.6 billion (about $104m) has failed to push up after-tax profit, financial results for the year ended December 2012 have shown.
The Malawi Stock Exchange (MSE)-listed financial services group has blamed this scenario on exchange rate losses due to the 49 percent devaluation of the kwacha and its subsequent floatation in May 2012, increased receivable impairments and policy holders’ benefits payments.
In the year under review, after-tax profit slumped to K1.2 billion (about $3m), a 58.6 percent drop from the previous year’s K2.9 billion (about $7.2m).
Nico Holdings Limited, the first company to list on MSE in 1996, regionally owns Nico Insurance Zambia Limited, Niko Insurance Tanzania, Nico Insurance Uganda, SFG Holding (private) Limited, a general insurance company in Zimbabwe and has recently set up Life Insurance and Pension Company in Mozambique.
Locally, the group ,whose assets in the year have ticked up to K124.3 billion (about $310m), a 25 percent increase from last year’s K99.4 billion (about $248m), is involved in banking services through the listed NBS Bank, Nico General Insurance, Nico Life Insurance Company and Nico Technologies.
In the general insurance business, the group achieved a premium growth of 15 percent over the prior year, but registered high claims expenses in Malawi, Tanzania and Zimbabwe operations.
The group’s results show that gross revenue in life insurance and pension business grew by 99 percent thanks to product innovation and diversification which will also be a major focus to drive business performance.
Profitability in NBS Bank declined compared to the year before because of exchange rate losses, shortage of foreign exchange and the impact of liquidity squeeze which affected a number of banks in the year.
Returns in their investment portfolio anchored by Nico Asset Managers Limited, despite operating in turbulent conditions, were good thanks to the diverse and robust nature of their portfolio.
In the year, the group did not conclude talks on a strategic partnership in general insurance business, but is confident for conclusion of the talks soon.
The group is, however, looking into the future with hope.
“We believe the strategies we have implemented will enable us take advantage of opportunities in the various market that we operate in so that the group will register significant progress in both business and profitability,” said a statement jointly signed by board chairperson George Jaffu and managing director Felix Mlusu.
Nico Holdings, whose share price traded at K14.30 on Monday, intend to recommend a dividend of 24 tambala per share, which is a drop from the prior year’s 99 tambala.