Investec’s Swiss strategy for wealthy South Africans pays off as funds hit R60bn
Group says its interim performance demonstrates continued momentum from its differentiated client franchises
21 November 2024 - 10:27
UPDATED 21 November 2024 - 21:08
by Kabelo Khumalo and Jacqueline Mackenzie
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Switzerland's national flag flies outside a building in Zurich. Picture: REUTERS/ARND WIEGMANN
Niche private banking and wealth management business Investec’s international strategy is paying off.
Targeting high net worth South Africans, the group’s Switzerland platform is reporting double-digit growth in funds under management for the six months ended September, with the group expecting further growth.
Funds under management (FUM) by the Swiss platform grew 11.9% to £2.67bn (R60bn) in the six months under review. The growth is even bigger when looked at through a 12 months lens, with FUM in the platform up 25%, having added £713m in the period.
Investec has identified Switzerland as a key opportunity for its wealthy clients in SA and other jurisdictions to grow their wealth, as part of its international strategy.
“The Swiss investment business is a key part of our strategy for high net worth SA clients looking to diversify their asset base and looking for a jurisdiction that offers a high level of neutrality as well as clarity of tax legislation,” said Investec Bank CEO Cumesh Moodliar.
“Switzerland has premised itself on levels of tax legislation that have neutrality. SA clients, who live in an emerging market, seek to create diversity in their asset allocation.”
Switzerland has long been one of the most glamorous places for affluent families and offers the privacy they yearn for.
The target market for Investec for the Swiss operations is individuals with $3m (R54m) or more of investable assets.
The group said it was leveraging its Swiss platform and value proposition to enhance its offerings across private banking and wealth management.
Investec has also identified the UAE as a key growth area, following thousands of rich SA expats who have set up base in the region. The company in September opened an office at the Dubai International Financial Centre (DIFC), which connects high net worth clients, family offices and financial institutions in the Gulf Co-operation Council.
The group has also established a partnership in Latin America with access to more than 400 independent financial advisers to distribute Investec-managed and branded mutual funds.
The group on Thursday reported 7.6% growth in adjusted operating profit.
Revenue at £1.1bn was up 5.6% in sterling and 5.2% in rand in the six months to end-September, benefiting from balance sheet growth, the breadth and depth of the group’s client franchises, and the elevated interest rate environment. Adjusted operating profit grew 7.6% to £474.7m.
Net interest income increased 2% to £684.4m, driven by higher average interest-earning assets and higher average interest rates, which was partly offset by the effects of deposit repricing in the UK.
Noninterest revenue increased 12.2% to £418.2m, reflecting increased capital-light income from the group’s banking businesses, as well as strong growth in fees from the SA Wealth & Investment business.
Investment income also contributed positively to the growth of noninterest revenue, given the backdrop of improving global markets.
Trading income was lower due to the nonrepeat of prior year risk management gains from hedging the remaining financial products rundown book in the UK, as well as due to the implementation of hedge accounting in the SA credit investments portfolio from the first quarter of the current period.
Adjusted earnings per share (EPS) were up 2.1% to 39.5p, while headline earnings per share (HEPS) at 36.6c, were down 0.8%.
“We are pleased to report an ROE [return on equity] of 13.9%, putting us on track to achieve the group’s full-year ROE guidance,” said group CEO Fani Titi.
Investec expects group ROE to be about 14%, with Southern Africa reporting ROE of 19%, and UK and other 13.5%, in line with the first half.
The credit-loss ratio is expected to be within the through-the-cycle range of 25-45 basis points.
Update: November 21 2024 This story has been updated with new information.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Investec’s Swiss strategy for wealthy South Africans pays off as funds hit R60bn
Group says its interim performance demonstrates continued momentum from its differentiated client franchises
Niche private banking and wealth management business Investec’s international strategy is paying off.
Targeting high net worth South Africans, the group’s Switzerland platform is reporting double-digit growth in funds under management for the six months ended September, with the group expecting further growth.
Funds under management (FUM) by the Swiss platform grew 11.9% to £2.67bn (R60bn) in the six months under review. The growth is even bigger when looked at through a 12 months lens, with FUM in the platform up 25%, having added £713m in the period.
Investec has identified Switzerland as a key opportunity for its wealthy clients in SA and other jurisdictions to grow their wealth, as part of its international strategy.
“The Swiss investment business is a key part of our strategy for high net worth SA clients looking to diversify their asset base and looking for a jurisdiction that offers a high level of neutrality as well as clarity of tax legislation,” said Investec Bank CEO Cumesh Moodliar.
“Switzerland has premised itself on levels of tax legislation that have neutrality. SA clients, who live in an emerging market, seek to create diversity in their asset allocation.”
Switzerland has long been one of the most glamorous places for affluent families and offers the privacy they yearn for.
The target market for Investec for the Swiss operations is individuals with $3m (R54m) or more of investable assets.
The group said it was leveraging its Swiss platform and value proposition to enhance its offerings across private banking and wealth management.
Investec has also identified the UAE as a key growth area, following thousands of rich SA expats who have set up base in the region. The company in September opened an office at the Dubai International Financial Centre (DIFC), which connects high net worth clients, family offices and financial institutions in the Gulf Co-operation Council.
The group has also established a partnership in Latin America with access to more than 400 independent financial advisers to distribute Investec-managed and branded mutual funds.
The group on Thursday reported 7.6% growth in adjusted operating profit.
Revenue at £1.1bn was up 5.6% in sterling and 5.2% in rand in the six months to end-September, benefiting from balance sheet growth, the breadth and depth of the group’s client franchises, and the elevated interest rate environment. Adjusted operating profit grew 7.6% to £474.7m.
Net interest income increased 2% to £684.4m, driven by higher average interest-earning assets and higher average interest rates, which was partly offset by the effects of deposit repricing in the UK.
Noninterest revenue increased 12.2% to £418.2m, reflecting increased capital-light income from the group’s banking businesses, as well as strong growth in fees from the SA Wealth & Investment business.
Investment income also contributed positively to the growth of noninterest revenue, given the backdrop of improving global markets.
Trading income was lower due to the nonrepeat of prior year risk management gains from hedging the remaining financial products rundown book in the UK, as well as due to the implementation of hedge accounting in the SA credit investments portfolio from the first quarter of the current period.
Adjusted earnings per share (EPS) were up 2.1% to 39.5p, while headline earnings per share (HEPS) at 36.6c, were down 0.8%.
“We are pleased to report an ROE [return on equity] of 13.9%, putting us on track to achieve the group’s full-year ROE guidance,” said group CEO Fani Titi.
Investec expects group ROE to be about 14%, with Southern Africa reporting ROE of 19%, and UK and other 13.5%, in line with the first half.
The credit-loss ratio is expected to be within the through-the-cycle range of 25-45 basis points.
Update: November 21 2024
This story has been updated with new information.
khumalok@businesslive.co.za
mackenziej@arena.africa
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