The uncertain and volatile macro environment had a negative impact on certain market facing businesses. Picture: Mujahid Safodien.
The Investec Group expects headline earnings a share to increase between 21 percent and 38 percent in the six months to September 30, after higher operating profit was supported by client acquisition, positive effects from rising interest rates and increased advances.
The financial services group listed in South Africa and the UK, said it expected headline earnings per share to be between 30 pence (R5.91) and 34 pence for the year. Investec Limited’s share price had slipped 1.3 percent to R78.96 Friday afternoon.
Adjusted operating profit before tax was expected to be between £372.6 million and £406.2m compared with £325.7m in the first half of the 2022 financial year.
The UK business' adjusted operating profit was expected to be at least 20% higher than the prior period’s £133.8m. The Southern African business' adjusted operating profit was expected to be at least 10% ahead of prior period of R3.83 billion or £191.9m.
In the five months to end-August 2022, the positive revenue trajectory in the last financial year had continued.
The uncertain and volatile macro environment had a negative impact on certain market facing businesses.
Net interest income benefited from higher average lending books and higher interest margin, given the rising interest rates.
Non-interest revenue growth was underpinned by increased client activity, higher lending turnover and a net positive contribution from investment income, partly offset by lower fees from some of the market facing businesses.
Fixed operating expenditure increased, driven by inflationary pressure on salaries, investment in technology, and normalisation of certain business expenses as Covid-19 related restrictions were removed.
The cost to income ratio improved as revenue grew faster than costs.
The credit loss ratio normalised towards the through-the-cycle range, largely driven by the weakening macro-economic outlook and limited specific impairments, partly offset by higher recoveries in South Africa.
The Wealth & Investment business FUM (funds under management) fell 2.7% to £61.7bn, driven by market volatility.
In Specialist Banking, core loans grew 7.8% annualised from higher corporate lending in both geographies, and residential mortgage growth mainly in the UK.
The interim results are scheduled for release on November 17, 2022.
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