Investec in good position to push for market growth
Its appetite for business has not dampened
INTERNATIONAL specialist bank and asset manager Investec has said that its balanced business model together with its strategic initiatives placed it in a favourable position to continue with the growth that is has shown in the year to end March despite persistent macroeconomic uncertainty in the market.
The group said the market volatility, caused by the Brexit in the UK and the recent downgrades in South Africa, had not dampened its appetite for business.
Managing director Bernard Kantor said the bank and its businesses had already factored the uncertainties into its balance sheet.
Good results “We have invested in our infrastructure and we are seeing good results because we managed to report good earnings despite the strain in the markets,” Kantor said. “The business has a strong balance sheet and we are positive about the business going forward.”
Investec said its liquidity remained strong with cash and near cash balances amounting to £12 billion (R203.77bn) for the year at the end of the period. It reported an 18.1 percent increase to £2.29bn in total operating income before impairment losses on loans and advances, up from £1.93bn reported in 2016.
The group said its net interest income rose 19 percent to £680.5 million from £571.9m a year ago, supported by sound levels of lending activity across the banking businesses.
Net fee and commission income increased by 20.1 percent to £1.27bn, up from £1.06bn as a result of higher average funds under management in the Asset Management and Wealth Management businesses.
It said the specialist banking unit benefited from an increase in the scale of the property fund business in South Africa and from a good performance in the corporate and advisory businesses in the UK. Adjusted earnings per share increased to 48.3 pence from 41.3p a year earlier. The board declared a dividend of 23p a share, up from 21p in 2016.
Results were driven by strong client activity in the bank and from higher equity markets.
Chief executive Stephen Koseff 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. Our client focus, multiple income streams and long term investment strategy give us confidence for the future.”
The group said asset management operating profit increased by 22.3 percent to £164.8m. Total funds under management now reached £95.3bn, up from £75.7bn in 2016. The wealth and Investment division increased profit 8.8 percent to £93.2m.
Total funds under management amounted to £54.8bn, up from £45.5bn, while the specialist banking operating profit increased by 11 percent to £454.4m. The South African business reported a decrease in operating profit in local currency of 3.3 percent.
Solid growth Kantor added: “We have seen solid growth in all the core earnings drivers for our three business areas, thanks to investment in our people, our infrastructure and our franchises. Strong, sustainable levels of corporate and private client activity are reaping rewards for the Specialist Bank while both Asset Management and Wealth & Investment are benefiting from higher funds under management.”
Investec said results have benefited from an 11.1 percent appreciation of the average rand/£ exchange rate over the period.
Richard Hasson, fund manager at Electus Fund Managers, said Investec released a good set of results with earnings in pounds coming in ahead of market expectations. “The results were driven by strong client activity in the bank and benefiting from higher equity markets in their UK Wealth and Asset Management divisions.”