BUSINESS DAY TV: Policy makes SA a ‘difficult economic environment’
Investec CEO Stephen Koseff discusses full-year results and attempts to bolster growth in SA in the face of political and economic turmoil
Stephen Koseff is the CEO of Investec.
BUSINESS DAY TV: Investec has managed to lift revenue beyond the £2bn mark for the first time, reporting full-year numbers today, the specialist bank and asset manager commented that this achievement was only possible due to the strength and resilience of its businesses in the face of macro uncertainty. How much of the positive numbers we saw filtering through were actually down to currency effects. Joining us on the line now from London is CEO Stephen Koseff.
Stephen ... so good results and it looks like the market likes them as well, but you were given a bit of a tailwind by the rand’s surprising strength, particularly against the pound last year?
STEPHEN KOSEFF: Yes, it was the first time in five years that we’ve seen the rand help our results and it did a good job last year, so it did help our overall results. But we still had good momentum in the businesses.
BDTV: Of course, let’s take a look at the momentum that these businesses are able to sustain from here on out because rand strength seemingly something of the past and moving forward a lot of the focus is going to be on how businesses are going to sustain themselves in an environment of uncertainty, not only here in SA but, of course, in the UK and Europe as well with Brexit front of mind for many?
SK: Yes, we can still grow our client base and we still have lots of activity taking place. SA is in a difficult economic environment because of policy framework and the events of the last few months but our clients are still active and hopefully they remain active. On the UK front, the Brexit is less of an issue for us, as we are primarily a UK business, it’s more the consequence of what Brexit does to the UK domestic market that could affect us. And at the moment the domestic economy is holding up reasonably well. Obviously, we’ve got an election on the 8th June, and it’s expected Theresa May will win quite convincingly, but let’s see.
BDTV: Stephen, apart from the asset management business, which did very well, helped by those buoyant global markets over the period, specialist banking was also a standout division supported by, you say, sound levels of corporate and private client activity. On the corporate front though, both in the UK and SA, what kind of conversations are you having with your clients? Are they reluctant to make investments in an environment like this that is quite uncertain?
SK: Certainly in the UK, corporates are not being frightened. In SA, the recent events would obviously delay investment decisions but you get two types of corporates, those that get on with doing what they have to do and then others that hold back investment. I think there are always opportunities in this kind of environment.
BDTV: Is the CEO Initiative going on with what it needs to do in the current environment because one assumes that there’s got to be a lot of distrust that’s being cemented right now when it comes to that relationship between business and the South African government?
SK: Obviously business and the whole CEO Initiative have people who are members that were very angry because we had been working well with government and were starting to see the benefits of the hard work over the past 15-16 months. At that time it had calmed down and we have to worry about SA Inc and we know that some of the initiatives that we were proposing and working on are very good for SA as an entity and we’ve decided that we will carry on with it.
BDTV: It was just over a year ago that you announced Investec Equity Partners, which was a joint venture with Investec, how has that taken off, particularly in an environment like this? Are you seeing demand for private equity in this sort of environment?
SK: It’s not a private equity fund, it is an investment holding company and, as we articulate in results, it has a number of investments in very key areas of the economy. So clearly its performance will be linked to the economy to some extent but also the ability of its management to do better than other competitors. We’re quite happy with what we’ve got there and it’s making very good progress. So we would expect very good performance from that unit over the next two to three years.
BDTV: Talk us through some of the other avenues you’re pursuing as you chase growth because multiple income streams and long-term investment strategy is something that you’ve been quite emphatic about in these results?
SK: We launched Investec Life, we will launch it in July in London, and we’re launching our digital initiative in the wealth space called Pick and Invest. We are busy with a private banking project in the UK, the platforms will all be properly in place, probably by early 2018 but we’re already on the road, we just have to get by our systems and processes to the level that our clients would expect. So there are lots of initiatives, Investec Asset Management, we’re going to put more focus on North America in this next period, that’s a very big market and we’ve got some penetration there but we would like to see better penetration there.
So there are multiple initiatives taking place across the organisation.
BDTV: Just quickly with your expansion into the insurance sector, you already have a life licence, in fact you’ve sat with that life licence for quite a while now, but I presume you have a client base that’s just waiting for it so it would provide a nice annuity type stream of income wouldn’t it?
SK: Our attitude is that we have a client base that does invest with us, that borrows from us, where we provide transactional banking services, wealth management services too and like the life area was a segment of that offering that was missing.
So, we are creating a life product that’s very flexible to our client base not being sold through intermediaries. So it’s only to our client base and a value added product and hopefully we’ll have reasonable take-up. If the product is good, we’re sure our clients will want it.