Old Mutual takes its time to grow in UK

Old Mutual, the South African financial giant, unveiled results yesterday which showed the strength of the rand was both a blessing and a curse for the group.

The surge in the exchange rate over the past year meant operating profits in the first half of the year jumped 4 per cent in sterling terms, but they fell 15 per cent in the South African currency.

The company said the rand's strength had reduced investment into South Africa, depressing the local stock market and leading to a reduction in merger and acquisition work at its investment bank and in sales of equity-linked insurance and savings products.

Nedcor, its 53 per cent-owned South African banking subsidiary, posted disappointing earnings last week.

Old Mutual still makes about three-quarters of its profit in South Africa. Julian Roberts, finance director, warned investors they would have to be patient for the promised deal to boost its presence in the UK, where it has been listed since 1999.

Old Mutual has been persistently linked with Britannic, the troubled mid-cap life insurer.

Mr Roberts said: "We are still very small in the UK and our strategy is to have a balanced group with South Africa, the UK and the US. We need to have a bigger base in the UK as part of that strategy, but we are in no rush, we can take our time. Only fools rush in."

Old Mutual owns Gerrard, the stockbroker, in the UK and job cuts and office closures last year helped the division hold profits at £3m despite the 25 per cent fall in the FTSE 100 since the first half of 2002.

Jim Sutcliffe, Old Mutual's chief executive, said Gerrard had shown signs of an upturn in activity since stock markets began their rebound in March, and that he believed improved market sentiment would feed through into consumer confidence. "The recent recoveries of the US, UK and South African equity markets from the low points earlier in the year hold out the prospect of better times ahead," he said.

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