Investec plc and Investec Limited (LON:INVP), today announced Unaudited combined consolidated financial results for the year ended 31 March 2019.
Group operational performance supported by our client franchises
· The group has delivered a sound operational performance supported by substantial net inflows, good loan book growth in home currency, and a significantly improved performance from the UK Specialist Banking business.
· This is against a challenging operating environment with weak economic growth in both South Africa and the UK, the group’s two core banking markets, as well as mixed equity market performance over the year.
· The Asset Management business generated substantial net inflows supporting higher average funds under management and annuity fees.
· The Bank and Wealth business benefitted from client acquisition and growth in key earnings drivers.
· The Specialist Banking business performance was supported by loan book growth. A reduction in impairments was partly offset by a weak performance from the investment portfolio.
· The Wealth & Investment business generated positive discretionary net inflows. Reported results were affected by certain non-recurring items.
· Operating costs grew faster than revenue. Revenue growth and cost containment remain priorities as outlined over the past year.
· ROE improved from 12.1% to 12.9%.
Overview of results
Group adjusted operating profit increased 9.4% year-on-year to GBP664.5 million. The combined South African businesses reported adjusted operating profit 1.8% ahead of the prior period in Rands, whilst the combined UK and Other businesses posted a 36.1% increase in adjusted operating profit in Pounds Sterling. Overall group results have been negatively impacted by the depreciation of the average Rand: Pound Sterling exchange rate of 4.8% over the year. Key earnings drivers have been negatively impacted by the depreciation of the closing Rand: Pound Sterling exchange rate of 13.1% over the year.
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Salient features1 |
31 March 2019 |
31 March 2018 |
% change |
Neutral Currency % change |
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Adjusted operating profit (GBP’m) |
664.5 |
607.5 |
9.4% |
12.6% |
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Adjusted earnings attributable to shareholders (GBP’m) |
519.3 |
491.1 |
5.8% |
9.2% |
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Adjusted basic earnings per share (pence) |
55.1 |
53.2 |
3.6% |
7.0% |
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Basic earnings per share (pence) |
52.0 |
51.2 |
1.6% |
4.9% |
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Dividend per share (pence) |
24.5 |
24.0 |
2.1% |
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Dividend cover (times) |
2.2 |
2.2 |
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Dividend payout ratio |
44.5% |
45.1% |
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Annuity income as a % of total operating income |
76.9% |
76.2% |
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Credit loss ratio |
0.31% |
0.61% |
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Cost to income ratio (net of non-controlling interests)2 |
69.9% |
68.3% |
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Return on adjusted average shareholders’ equity |
12.9% |
12.1% |
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Third party assets under management (GBP’bn) |
167.2 |
160.6 |
4.1% |
8.3% |
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Customer accounts (deposits) (GBP’bn) |
31.3 |
31.0 |
1.0% |
8.7% |
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Core loans and advances (GBP’bn) |
24.9 |
25.1 |
(0.8%) |
6.8% |
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Cash and near cash (GBP’bn) |
13.3 |
12.8 |
3.6% |
10.0% |
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1Refer to definitions in the Notes.
2The group has changed its cost to income ratio definition to exclude operating profits or losses attributable to other non-controlling interests. Refer to definitions in the Notes for further detail.
· The group maintained a sound capital position with common equity tier one (CET1) ratios of 10.8% for Investec plc and 10.5% for Investec Limited. Investec Limited has received regulatory permission to adopt the Foundation Internal Ratings Based (FIRB) approach, effective 1 April 2019, resulting in a pro-forma CET1 ratio of 11.6% had the FIRB approach been applied as of 31 March 2019. Leverage ratios are robust and remain comfortably ahead of the group’s target of 6%.
· The proposed demerger and separate listing of Investec Asset Management (still subject to regulatory and shareholder approvals) is progressing well.
Fani Titi and Hendrik du Toit, Joint Chief Executive Officers of Investec said:
“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 and Wealth business for long-term growth. In spite of a challenging operating environment, these results speak to strong support from our clients.”
