LONDON (Alliance News) – South African financial services firm Investec PLC said Thursday its asset management demerger is progressing well, but the company saw its loan book reduced in financial 2019 in a “challenging operating environment” in its two core markets.
Investec is a specialist banking company with dual-listed companies in London and Johannesburg. Investec PLC is listed in London, with a secondary listing in Johannesburg, whereas Investec Ltd is listed only in Johannesburg.
Investec PLC holds the company’s non-South African operations and soon-to-be demerged Asset Management business.
The results announced Thursday cover both Investec PLC and Investec Ltd.
Investec said financial 2019 saw “sound operational performance”, boosted by “substantial net inflows”, “good” loan book growth in rand, and a “significantly” improved UK Specialist Banking business.
In the twelve months to March 31, Investec’s pretax profit increased 7.8% to GBP687.2 million from GBP637.5 million the year prior.
The financial services company’s net interest income increased 7.2% to GBP815.4 million from GBP760.4 million the year before.
Investec’s combined South African businesses reported an adjusted operating profit increase of 1.8%, with Investec’s UK and international businesses seeing a 36% increase in adjusted operating profit.
Investec’s core loans & advances at the end of the financial year slipped slightly to GBP24.9 billion from GBP25.1 billion at the same time last year.
“We are implementing our strategy to simplify, focus and grow with discipline. We are committed to the demerger and listing of the Asset Management business and the positioning of the Bank & Wealth business for long-term growth. In spite of a challenging operating environment, these results speak to strong support from our clients,” said joint chief executives Fani Titi and Hendrik du Toit.
Investec PLC’s CET1 ratio at March 31 stood at 10.8%, slightly ahead of 10.5% at April 1 but behind 11.0% twelve months ago.
Investec Ltd, the company’s South African operations, said its CET1 ratio ended the year at 10.5%, higher than the 10.0% at April 1 and 10.2% the year prior.
The group’s cost-to-income ratio increased in the period to 69.9% from 68.3% the year before.
Investec’s Asset Management business, which is 84% owned by Investec PLC, saw its assets under management increase 7.3% in the period to GBP111.4 billion. The business reported “substantial” net inflows of GBP6.1 billion, attributed to “favourable” market and currency movements. The business’ adjusted operating profit increased slightly to GBP179.4 million.
Investec’s Bank & Wealth business – which holds its Specialist Banking and Wealth & Investment units – saw a 13% increase in adjusted operating profit to GBP485.2 million.
The Specialist Banking unit reported an 18% jump in adjusted operating profit to GBP448.9 million, driven by an 8.5% jump in its UK operations loan book. In the UK, Specialist Bank saw a rise in both corporate lending and private bank mortgage originations.
The Wealth & Investment unit saw a 16% decrease in adjusted operating profit to GBP82.6 million, attributed to a non-recurring investment gain the prior year and write-offs in financial 2019. Investec said the unit’s performance was in line with the prior year.
Investec declared a 24.5 pence total dividend for financial 2019, 2.1% higher than the 24.0p distributed the year before.
Shares in Investec PLC were up 0.3% Thursday morning in London at 482.70 pence each. In Johannesburg, Investec PLC shares were down 0.8% at ZAR87.98. Investec Ltd was trading 0.9% lower at ZAR88.27.
By Paul McGowan; firstname.lastname@example.org
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