Weaker rand takes its toll on Investec’s SA arm
The company’s Southern African specialist bank suffered a small decline, while its UK asset management division grew
Investec’s UK arm managed to offset stagnant results from Southern Africa, its interim results released on Thursday morning showed.
Investec segments itself into three divisions, which in turn are each broken into two geographic regions.
The group grew its overall operating profit by 3% to £383m, its results statement for the six months to end-September showed.
Its largest operating profit generator, Southern African specialist banking, which contributed 43% of the total, suffered a 0.4% decline to £164.6m.
The South African business reported an increase in operating profit in rands of 4.2%.
“It’s been a smooth transition and [Fani and I] are working together very well. These are a sound set of numbers, and there is good business momentum despite the headwinds faced in our two key geographies,” says Investec co-CEO, Hendrik du Toit.
Its second biggest operating profit generator is its “UK and other” specialist banking division, which contributed 21% of the group’s total. It specialist banking division outside Southern Africa managed to grow operating profit by 8.9% to £80.8m.
Co-CEO, Fani Titi, said that the bank took a big provision against its legacy portfolio in the prior period, effectively rendering the UK specialist bank’s portfolio of poorly performing loans irrelevant.
Investec’s UK asset management division reported the fastest growth of 13.8% in operating profit to £56.8m, contributing 15% of the group’s total. Its Southern African asset management division grew operating profit 4.2% to £34.7m, or 9% of the group’s total.
Du Toit said the group were making good progress on the proposed demerger that will see Investec Asset Management split from the specialist banking group.
Both its Southern African and UK wealth and investment divisions suffered operating profit declines. The UK wealth and investment division’s operating profit fell 7.3% to £32.9m, and its Southern African counterpart suffered a 3.9% decline to £13.5m.
“Earnings have been impacted by growth in headcount for information technology initiatives, compliance requirements, and continued recruitment of experienced portfolio managers and financial planners to support future revenue growth,” Investec said.
Investec’s interim headline earnings per share (HEPS) grew 11.4% to 27.4p, and it raised its interim dividend by 4.8% to 11p.
Regarding the group’s outlook for the second half of its financial year, the joint CEOs said: “Notwithstanding macro challenges, we believe that our current business momentum and our drive to simplify and focus the business, together with our commitment to cost discipline, will support our long-term growth aspirations."