Cost-cutting drive raises Britam's profit to Sh1.6b

Britam Group Chairman Kuria Muchiru Group Managing Director Tom Gitogo at the insurer's half-year briefing. [Wilberforce Okwiri, Standard]

Financial services firm Britam Holdings has reported a massive jump in profit after tax to Sh1.69 billion for the full-year period to December 2022 on the back of extensive cost-cutting measures.

The company's net profit stood at Sh72.12 million in 2021 after emerging from a Sh9.1 billion loss it made in the year to December 2020 following the underperformance of its asset management division.

The drivers for last year's performance included cost-cutting measures that saw its operating costs during the year decline 26 per cent.

The firm also said the profit level rose following a generally good year, especially from returns on investment in equities.

"The improved performance is attributable to a growth in top-line revenue as well as operating efficiency and cost management initiatives," said Britam in a statement yesterday.

"This together with improved dividend and interest income helped cushion the significant fair value losses to register improved profitability."

But despite the rise in profitability, the board does not recommend a dividend payout to shareholders.

Operating costs reduced by 26.1 per cent to Sh8.4 billion from Sh11.3 billion in 2021. The firm said the reduction in costs was due to efficiencies derived from cost containment measures under its new strategy.

Britam's revenue or gross earned premiums and fund management fees grew 2.7 per cent to Sh33.4 billion, up from Sh32.5 billion.

Among the drivers was strong growth in interest and dividend income, which was up 19.6 per cent to Sh13 billion.

"The growth in investment income continues to be driven by business growth and shifting of the Group's investment strategy with an increased focus on stabilizing and growing yields from its investment portfolio," said the firm.

"We are pleased with the growth trajectory of our business in Kenya and in the region following our focus on improving customer experience and strategic partnerships," said Chief Executive Tom Gitogo.

"The strategy places the right emphasis on efficiencies and cost management initiatives, which are bearing fruit as witnessed by the notable drop in operating expenses."