Investec banks on rand to increase earnings
INVESTEC, which owns a bank and money manager in South Africa and the UK, said its fiscal second-half earnings may increase from a year earlier as the rand becomes less volatile.
“The rand will have a much lesser impact if it holds its levels,” Stephen Koseff, chief executive of the London- and Johannesburg-based lender, said in the UK yesterday.
The currency constrained Investec’s fiscal first-half profit, which after conversions rose 3.7 percent from a year earlier to £169 million (R2.9 billion) in the six months to September, the lender said.
Investec makes the bulk of its operating profit in South Africa. The rand’s three-month implied volatility is 11.2 percent against the dollar, compared with 13.2 percent a year ago, data show.
“The results would have been even stronger but for the continued weakness of the rand,” Koseff said.
Investec’s adjusted earnings per share rose 3.7 percent to 19.7 pence and its dividend increased 6.3 percent to 8.5p a share.
Expansion in the asset management, and wealth and investment units is “supporting solid net inflows” that amounted to a combined £4.2bn in the period under review, Investec said.
“On a constant-currency basis Investec had a strong first half across all divisions,” James Hamilton, an analyst at Numis Securities in London who rates the share a hold, said in a note to clients.
Investec was little changed at £5.93 as of 9.22pm in London trading.
The bank has been disposing of assets in Australia and the UK and said on September 9 it was selling its Kensington Group mortgage business for £180m after buying it for £283m in 2007, just before the financial crisis.
Bernard Kantor, the managing director of Investec, said: “Our focus remains on developing our high-income private banking business and improving structural inefficiencies, which we believe is key to unlocking future value in the UK bank.” – Bloomberg