Barclays ups Old Mutual to 'overweight'

The bank said recent weakness in the South African rand is priced into expectations. In addition, it noted that the company’s emerging-market operations remain robust and the UK Wealth operations reported strong first-half results that appear to be sustainable.

“We expect that management will reach their £270m pre-tax target for the legacy Wealth operations, and that the majority of earnings are likely to be from new generation business in future,” it said.

Barclays said Old Mutual offers attractive emerging-market growth superior to most European peers, with a competitive progressive dividend policy supported by cash earnings.

“The balance sheet has been de-risked in recent years, and the nature of OML’s business is less capital intensive than most European peers,” it said.

At 1523 BST, Old Mutual shares were up 3.5% at 209.20p.