Investec Group announced on Friday that it is projecting a flat financial performance for the six months ending September 30, compared with the same period last year.
Executive leaders labelled this outcome as "solid," crediting strong cash generation and strategic investments placed on growth initiatives, despite the prevailing challenging macroeconomic conditions and heightened market volatility throughout the year.
The group share price on the JSE experienced a modest decrease of 1.83%, settling at R135.00—only a slight increase from R132.40 at the same time last year.
"We are on track with our strategy to build scale, leverage client franchises and execute plans to enhance our proposition," said Philip Hourqubie, Chairman, and Fani Titi, CEO, in a pre-close statement. They affirmed the group's commitment to maximise returns towards the upper end of their target range by FY2030.
Investec expects adjusted earnings per share to be between 38.7 pence and 41.5 pence, reflecting a potential 2% decline to a 5% increase compared to 39.5 pence from the previous year. Meanwhile, headline earnings per share are anticipated to range from 35.2 pence to 38 pence, representing a decline of 4% and an increase of nearly 4% against last year’s 36.6 pence.
Despite these fluctuations in earnings, the overall credit quality of the business remains strong. The cost to income ratio is also projected to fall between 52% and 54%, adhering to full-year guidance.
In Southern Africa, the Specialist Bank's adjusted operating profit is predicted to show a slight increase of up to 7% in rands, rising from R5.25bn last year. However, Group Investments is expected to decline, leading to an overall adjusted operating profit for the Southern African business likely being flat or 5% lower compared to the previous R5.89bn.
The return on equity (ROE) for the Southern African business is forecasted at 18.5%, within the medium-term target range of 16% to 20%. Across the UK operations, including the investment in Rathbones, an adjusted operating profit is expected to be 1% behind to 6% ahead of last year’s £222.7m. Specifically, the UK Specialist Bank's adjusted operating profit is estimated to be down 0.4% to 4% compared to £202.3m in the prior period.
Group ROE is expected to lie between 13% and 14%, conforming to the medium-term target range of 13% to 17%. Revenue growth benefitted from increased activity, higher average advances, and positive net inflows in discretionary and annuity funds under management. However, this has been tempered by lower interest rates and diminished income from the group investments portfolio.
Particularly noteworthy is the performance in the Specialist Banking sector, where core loans increased by 4.7% annualised to £33bn, with a 5.5% increase in neutral currency, largely driven by growth across corporate lending books and private client lending in both regions. On the flip side, customer deposits fell 1.9% annualised to £40.8bn, reflective of the strategic focus to optimise the liability mix in Southern Africa.
The group indicated that the interim results are set to be released on November 20.
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