South Africans may still be suffering amidst intensified load shedding, but Sanlam, one of the nation’s largest financial service providers, says the country has moved past a period of extreme difficulty.

According to Stats SA, South Africa’s GDP grew by 0.6% in Q2 2023, which is better than the 0.4% many economists expected.

Overall, the reduction in load shedding and the increased investment in backup power, such as solar, helped the economy grow.

Despite South Africa’s being subjected to stage 6 load shedding this week, it can be easy to forget that South Africa has recently seen the Covid-19 pandemic, the July 2021 unrest and the floods in Kwa-Zulu Natal, which caused immense harm to the economy.

Sanlam said that its results are starting to return to pre-pandemic levels following a debilitating start to the decade.

“The group delivered a strong financial performance for the first six months of 2023, with the earnings pattern back on track after the series of what the group classifies as one-in-25/100-year events during the period from 2020 to 2022,” Sanlam said.

“The group has shown compound annual growth in NRFFS(4) (7%), life new business volumes (7%), total new business volumes (14%) and the value of new covered business (8%) since the first six months of 2019, on a comparable basis.”

“This growth from the pre-pandemic basis indicates that the underlying growth engine of the group remains intact.”

The group added that the net result from financial services for the first six months of 2023 was comprehensive, with life insurance (28%), general insurance (38%) and credit and structuring (36%) all seeing growth.

The group’s headline earnings per share grew to 339 cents, a 118% increase from the comparable period.

It added that the increase in profits was due to “non-economic and accounting mismatch profits and losses recognised in terms of IFRS, lower amortisation of value of business acquired as well as the reversal of the specific shareholders’ fund adjustments made to net result from financial services”. 

Below are some of the group’s key performance indicators:

Outlook

The group said that the outlook for dividend growth for the full year is positive, with second-half earnings expected to match the first-half, even if the growth rate declines.

“The first half performance in 2022 was negatively impacted by weak investment markets and weak performance from the group’s general insurance operations, while the second half of 2022 saw a significant turnaround in earnings,” it said.

“As a result, the growth in the second half of 2023 is unlikely to be as strong as the first half growth rate.”

The group has also welcomed the partnership between the government and the private sector to improve South Africa’s three major problem areas – electricity, logistics and crime.

“It remains important that there is a continued turnaround in these areas to support a recovery in South Africa’s economic growth rate,” the group said.

Research from the group and PwC showed that fixing these three problem areas could grow South Africa’s GDP by 3%, which is essential to improving the nation’s employment figures.

“This collaboration is built on the recognition that we need to take bold and urgent action to confront these challenges and place South Africa on a trajectory of growth and job creation,” President Cyril Ramaphosa previously said.

“We welcome the emphasis on strategic partnerships and focused interventions, which has enabled us to make significant progress in a short space of time.”

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