Old Mutual Bank to launch in 2025, hopes for profitability after two years

South African insurer Old Mutual expects to launch its bank in three stages by 2025, after receiving regulatory approval in April this year.

Group CEO Iain Williamson told a news conference on Thursday that technical and operational progress in building the bank is ahead of schedule, with industry testing and integration into the national payments system completed.

The company will start with a public launch in the first quarter of 2025, followed by a campaign to convert existing money account customers, and finally, the commencement of full-scale operations before the end of the year, Williamson said.

On projections for the bank breaking even, he told Reuters that clearer targets will be provided in March, but he was hopeful.

“Any start-up business is likely to run on losses for a year or two then turn to profitability,” he said.

The bank will compete against the big five lenders, including Absa Bank, FirstRand's First National Bank and Standard Bank. It will also compete with digital banks such as Discovery Bank, which was launched in 2021.

“We acknowledge the existence of the competition ... and we believe that we are well set up to both compete and to thrive,” said Williamson.

Old Mutual has a transactional account with about 500,000 users, he told Reuters.

The company earlier reported a 38% rise in half-year headline earnings per share, while life insurance sales rose 6% to R6.6bn and gross written premiums were up 9% in the period ended June 30.

Williamson said claims have been “volatile” since the introduction of new pension rules in September, which allow retirement fund members to make partial withdrawals before retirement.

“We expect a net drawdown in the first year or two, and then stabilisation in the longer term,” Williamson said.