Investec on Thursday reported half-year profit up 15.3%, led by increased loan volumes, corporate deposits and funds under management.
The bank, which also operates in the UK, reported headline earnings per share of 36.9 pence for the six months to September 30 and an interim dividend of 15.5 pence per share.
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“The Group has delivered strong results against a difficult macroeconomic backdrop which was characterised by high inflation, elevated global interest rates and persistent market volatility,” Group CEO Fani Titi said in a statement.
“This performance was underpinned by continued success in our client acquisition strategies, loan book growth and the rising interest rate environment.”
“Our client franchises reported solid performance while the aggregate Group financial results also reflect the impact of the conclusions of the strategic actions executed over the past 18 months. Our balance sheet remains strong and highly liquid, positioning us well to support our clients in navigating the uncertain macroeconomic backdrop and achieve our financial targets.” Titi added.
The banking and wealth management group reported an 8.6% (28.8% in rand terms) increase in half-year revenue to £1.043 billion, supported by double-digit growth in net interest income as the firm saw strong corporate loan growth and higher global interest rates.
This period also saw Investec’s net core loans increasing by 4%, annualised to £31.0 billion, compared to £30.4 billion at the end of March 2023, this was supported by corporate lending in both the firm’s core geographies as well as private client lending in South Africa, it said.
Customer deposits reportedly increased by 1.9% annualised to £39.9 billion, up from £39.6 billion in March 2023.
Investec says its funds under management (FUM) in Southern Africa have grown by 2.0% to £20.2 billion thanks to “net inflows of R7.3 billion and FX translation gains on dollar-denominated portfolios,” these were however partly offset by non-discretionary net outflows of R2.6 billion during the period it said.
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Looking forward to the rest of the year, the group believes its strong capital and liquidity puts it in a good position to navigate the rest of the financial year, despite the uncertain macroeconomic outlook, as well as continue to pursue growth in some markets.
As such, Investec says it, among other things, expects moderate book growth, elevated interest rates and continued client acquisition and activity to continue to support revenue momentum for the rest of the year.
The cost-to-income ratio is expected to remain below 55%, while the credit loss ratio is expected to stay within the through-the-cycle range of 25bps to 35bps.
Further, the return on equity – which came in at 14.6% in the current period – is forecast to be above the mid-point of the target range of 12% to 16%.