Investec’s Koseff warns on ANC
• Banking outlook ‘tricky’ in run-up to election of new party president
The South African banking outlook would be “quite tricky”, depending on the outcome of the ANC’s internal election in December, Investec CEO Stephen Koseff said on Friday. Markets would be supportive of change, but not if it was the wrong kind of change.
The South African banking outlook would be “quite tricky”, depending on the outcome of the ANC’s internal election in December, Investec CEO Stephen Koseff said on Friday. Markets would support change but not if it was the wrong kind of change, Koseff said.
SA was lucky because global markets remained favourable, and though some of SA’s other banking groups had sounded warnings about the outlook, Koseff said Investec’s client base in SA was a more narrowly defined demographic, which was more affected by where the stock market was now.
Despite a big drop in confidence in SA, there was still activity, unlike in the 2008-09 recession, because people were “still hopeful”, Koseff said.
Investec, based in London and dual-listed in London and Johannesburg, expected to be “reasonably well ahead in pounds” for the six months to end-September, Koseff said.
The group said in a pre-close trading statement that its client base had “demonstrated resilience in the face of mixed economic backdrops”.
The statement came after ratings agency Moody’s on Thursday upgraded the outlook on Investec’s ratings from stable to positive.
Had it not been for Brexit, the group’s ratings would have been upgraded, Koseff said.
Investec Bank was upgraded to an A2 rating in February 2016, while Investec has a Baa1 rating from Moody’s, both of which are better than SA’s Baa3 rating.
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The group’s third-party funds under management have increased 6.1%, to £160bn, while customer deposits are up 1.3% to £29.5bn and core loans and advances 4.5%, to £23.7bn.
Koseff said Investec was still experiencing good growth and making strategic progress, with very good growth and inflows in its investment and wealth management businesses.
Asset management was flat, but the specialist banking business is expected to be ahead of the same period a year ago.
The group was making good progress in running down its legacy business — a precrisis loan portfolio with high bad debts, which originally was £7bn but is now down to £430m and by the end of this financial year will be down to about 5% of the original amount. This will enable the group to stop reporting separately on recurring and nonrecurring operations as it has been doing until now.
The group was working to rebalance its portfolio towards “capital-light” businesses, from capital-heavy ones. Capital-light businesses had risen to 58% of the total from 40% in 2008.
The group could get to twothirds capital-light, but it would always provide credit, which was the more capital-intensive part of its business.
Analysts expect double-digit growth in Investec’s full-year adjusted earnings per share.