COVID-19 mutes Momentum Metropolitan’s upward curve

As the COVID-19 pandemic continues to disrupt economies worldwide, financial services group Momentum Metropolitan has revealed that it has abandoned its target to achieve normalized headline earnings of up to four billion rand for the 2021 financial year. The group cites the uncertainties surrounding the health and economic implications of the pandemic as the primary reason for this decision. In an interview with CNBC Africa, Hillie Meyer, CEO of Momentum Metropolitan Holdings, discussed the challenges they are facing due to the ongoing crisis. While Meyer could not provide a definitive earnings forecast for the upcoming financial year, he did shed some light on the current financial situation. He mentioned that for the first nine months of the 2020 financial year, the group's earnings stood at approximately 1.5 billion rand, which would have been 2.7 billion rand if not for the impact of the market downturn. The final quarter of the year ending on June 30 remains uncertain, with Meyer highlighting the difficulty in predicting future earnings amidst the evolving lockdown measures. However, he expressed cautious optimism, suggesting that the impact on earnings might be less than what was experienced in the third quarter. Looking ahead to the next financial year, Meyer acknowledged that while there are uncertainties, the group anticipates an improvement, despite the ongoing challenges posed by the pandemic. One key area of concern for the company is the impact of COVID-19 on insurance claims. Despite the relatively low number of COVID-19-related claims compared to the national infection and death rates, Meyer pointed out that the majority of death claims are yet to be processed. With claims expected to increase as the pandemic progresses, the company remains prepared for a potential surge in claims and is closely monitoring the situation. In terms of investment strategy and portfolio management, Meyer discussed the impact of the pandemic on market volatility and the company's approach to mitigating risks. He noted that the company's portfolios are predominantly invested in low-risk assets such as government and corporate bonds, reducing the potential impact of market fluctuations. While the pandemic has disrupted global markets and eroded returns, Meyer emphasized that the company is focused on managing the impact of the economic downturn on employment rates and disposable income. As a significant player in the financial services sector, Momentum Metropolitan is cognizant of the challenges posed by the shrinking economy and its implications for client financial health. Meyer highlighted that the company's main concern lies in sustaining its services to clients amid economic uncertainties and ensuring their continued ability to invest and purchase insurance products. Despite the current challenges, Meyer remains hopeful that the company's resilience and strategic planning will help navigate the turbulent financial landscape brought about by the ongoing pandemic. The company's ability to adapt and respond to evolving market conditions will be crucial in safeguarding its financial stability and continuing to serve its clients effectively.