Strong rand helps Investec crack £2bn operating income barrier
Investec was a beneficiary of the rand strengthening about 24% from R21/£ to R17/£ over the year to end-March, helping its total operating income grow 18% to crack the £2bn barrier for the first time.
Measured in pounds, its South African businesses were the group’s best performers, growing operating profit 16% to £387m, beating its UK and other countries’ operating profit growth of 11% to £326m.
But measured in rand, the performance of Investec’s home businesses was less impressive.
"The combined South African businesses reported operating profit 0.4% ahead of the prior period in rand, while the combined UK and other businesses posted a 10.8% increase in operating profit in pounds," the company said in its results statement released on Thursday morning.
For the first time our revenues have broken the £2bn mark, showing the strength and resilience of our businesses in the face of macro uncertainty in our two key marketsStephen Koseff, CEO
Investec declared a final dividend of 13 pence, taking its dividend for the year to 23p, a 9.5% rise on the previous year’s 21p.
The group segments itself into three divisions: specialist banking, which contributed 72% of its £712m operating profit; asset management, which contributed 23%, and wealth and investment, which contributed 15%.
These divisions in turn are split into SA, and the UK and other countries.
Investec’s South African asset management division was its fastest growing, with operating profit rising 27% to £74m, followed by its South African wealth and investment division, which grew operating profit 24% to £28m.
The group’s biggest operating profit contributor at 45%, its South African specialist bank, grew operating profit 13% to £285m.
Investec transferred assets from its South African specialist bank to a newly created business, Investec Equity Partners. Accounting for this caused this division’s operating profit in rand to decline by 3.3%.
"Excluding the impact of this transaction, operating profit was considerably ahead of the prior period. The division reported solid growth in net interest income and net fee and commission income supported by continued growth in the private banking client base, sound corporate activity and an increase in the scale of the property fund business," Investec said.
"For the first time our revenues have broken the £2bn mark, showing the strength and resilience of our businesses in the face of macro uncertainty in our two key markets," Investec CEO Stephen Koseff said in the results statement.
"Our client focus, multiple income streams and long-term investment strategy give us confidence for the future."