Trustco’s African insurance haemorrhages EPS
Trustco’s intentions of growing its insurance business beyond Africa appears to be eating away at its earnings per share and perhaps proves the adage, ‘Africa is not for sissies’. According to a quarterly report for the period ended 31 December 2014, insurance operations in the rest of Africa contributed a loss of 9.07 cents per share to earnings per share for the period.
The loss however shows a slight improvement of the same period in 2013 when a loss of 9.48 cents was witnessed. Said Trustco, “the loss is due to the on-going operational cost of the insurance business in South Africa with the launch of a new product line and distribution channel in the 2015 financial year.” Back home however, the picture is much rosier. Said Trustco, “the insurance business in Namibia contributed 9.80 cents per share to EPS for the 9 months to 31 December 2014, which represents a 9.7% decrease on the prior comparative period [2013: 10.85 cents per share]. Added Trustco, “the decrease is attributed to a higher insurance claims ratio percentage experienced during the reporting period. The investment portfolio in the Namibian insurance segment contributed 12.65 cents per share to earnings per share for the period which represents 95.8% growth on the prior comparative period. The profits derived from this segment’s passive income rely primarily on market forces driven by the segment’s investment strategy [2013: 6.46 cents per share]. The banking operation delivered good results, achieving 58.4% growth, contributing 7.68 cents to earnings per share against the comparative period in December 2013. Another plus for the group is the sharp rise in gross advances as at 31 December 2014. A 32.3% increase was recorded, growing the loan book from N$634 million to N$839 million. Trustco Group certainly seems to be enjoying a good stride with total net revenue rising 28.8% as at 31 December 2014. Total net revenue for the quarter was N$475 million while net profit after tax was N$146.6 million. Total headline earnings closed at N$125.3 million. Said Trustco, “the above resulted in headline earnings per share of 17.99 cents and basic earnings per share of 21.06 cents for the 9 months to 31 December 2014. The comparative 9 month period in the 2014 financial year generated headline earnings per share of 7.12 cents and EPS of 12.69 cents.”