Interim Management Statement

RNS Number : 2855G

Investec PLC

29 January 2010

 



Investec Limited Incorporated in the Republic of South Africa Registration number 1925/002833/06   JSE share code: INL   ISIN: ZAE000081949

Investec plc  Incorporated in England and Wales Registration number 3633621 JSE share code: INP ISIN: GB00B17BBQ50

(jointly "Investec")

As part of the dual listed company structure, Investec plc and Investec Limited notify both the London Stock Exchange and the JSE Limited of matters which are required to be disclosed under the Disclosure, Transparency and Listing Rules of the United Kingdom Listing Authority (the "UKLA") and/or the JSE Listing Requirements.

Accordingly we advise of the following:

Investec (comprising Investec plc and Investec Limited) - Interim Management Statement

29 January 2010

Investec continues to consolidate its position as a well capitalised, diversified, specialist bank and asset manager, with a strong recurring revenue base underpinning profitability  

This Interim Management Statement is issued by Investec in accordance with the UK Listing Authority's Disclosure and Transparency Rules. Unless stated otherwise, key trends and figures highlighted below refer to the nine months ended 31 December 2009 and the corresponding period in the previous year.

Overview of operating fundamentals 

The group has remained focused on managing risk, building capital and preserving liquidity. Investec's recurring revenue base and operational diversity have continued to support profitability across its core geographies. Although there has been a sustained period of stability in financial markets, operating fundamentals remain mixed with activity levels below historic trends.

Salient features of the nine month period to 31 December 2009 compared to the nine month period to 31 December 2008 are:

• Net operating income (after expenses and minorities but before impairments on loans and advances) increased by 1%. 

• Defaults and impairments have continued to increase in line with previous guidance provided. The credit loss charge as a percentage of average gross core loans and advances annualised for the period amounted to 1.1% (31 March 2009: 1.1%).  

• The above mentioned factors have resulted in attributable earnings (see note 2) remaining in line with the prior year.

• The group's three core geographies remain profitable with recurring income as a percentage of total operating income amounting to approximately 63%. 

• As at 31 December 2009 the capital adequacy ratio of Investec plc (applying UK Financial Services Authority rules to its capital base) was 15.2% and the capital adequacy ratio of Investec Limited (applying South African Reserve Bank rules to its capital base) was 14.8%.

• The group has a strong liquidity position and currently has approximately GBP7.4 billion of cash and near cash available to support its activities. 

• Since 31 March 2009 (the end of the group's financial year) core loans and advances grew by 7% to GBP17.4 billion, customer deposits increased by 33% to GBP19.3 billion and third party assets under management increased by 38% to GBP67.2 billion. 

• Core advances (excluding own originated assets) as a percentage of customer deposits were 84.0% (31 March 2009:103.6%)  

• The group's gearing ratio remains low at approximately 12 times.

Outlook 

Investec has successfully focused on maintaining a sound balance sheet, increasing both capital and liquidity. The group will continue to leverage off its existing platforms, seeking to create additional operational efficiencies and organic growth opportunities across all the geographies in which it operates. While the pace of economic recovery remains uncertain the group believes that it is well placed to capitalise on opportunities presented in a much changed operating environment.

The group will be holding a pre-close briefing on 18 March 2010 at which it will provide further detail on the performance of its businesses. 

On behalf of the board

Hugh Herman (Chairman), Stephen Koseff (Chief Executive Officer) and Bernard Kantor (Managing Director)

Notes:

1. The financial information on which this statement is based has not been reviewed and reported on by the group's auditors.

2. Attributable earnings refer to net profit before goodwill and non-operating items but after taxation and adjusting for earnings attributable to minorities and preference shareholders.

3. Please note that matters highlighted above may contain forward looking statements which are subject to various risks and uncertainties and other factors, including, but not limited to:

• -   the further development of standards and interpretations under International Financial Reporting Standards (IFRS)
      applicable to past, current and future periods, evolving practices with regard to the interpretation and application of 
       standards under IFRS. 

  -   domestic and global economic and business conditions

  -   market related risks. 

• A number of these factors are beyond the group's control.
• These factors may cause the group's actual future results, performance or achievements in the markets in which it operates to differ from those expressed or implied.
• Any forward looking statements made are based on the knowledge of the group at 29 January 2010.

4. The group's reporting currency is Pounds Sterling. Certain of the group's operations are conducted by entities outside the UK. The results of operations and the financial condition of the group's individual companies are reported in the local currencies in which they are domiciled, including Rands, Australian Dollars and Euros. These results are then translated into Pounds Sterling at the applicable foreign currency exchange rates for inclusion in our combined consolidated financial statements. In the case of the income statement, the weighted average rate for the relevant period is applied and, in the case of the balance sheet, the relevant closing rate is used. The following table sets out the movements in certain relevant exchange rates against Pounds Sterling over the period:

	Nine months to  31 Dec 2009		Year to 31 Mar 2009		Nine months to 31 Dec 2008
Currency  per GBP1.00	Period end	Average	Period end	Average	Period end	Average
South African Rand	11.89	12.60	13.58	14.83	13.59	15.04
Australian Dollar	1.80	1.93	2.07	2.19	2.09	2.18
Euro	1.12	1.13	1.08	1.21	1.03	1.24
US Dollar	1.62	1.61	1.43	1.73	1.45	1.82

5. The following disclosures are made with respect to Basel II quarterly disclosure requirements:

The group holds capital in excess of regulatory requirements and intends to perpetuate this philosophy and ensure that it remains well capitalised in a vastly changing banking world. Accordingly, as announced in November 2008, the group has adjusted its capital adequacy targets and is focusing on increasing its capital base, targeting a minimum tier one capital ratio of 11% and a total capital adequacy ratio of 14% to 17% on a consolidated basis for Investec plc and Investec Limited, respectively. As per the table below, all regulated entities met these targets at the reporting date.  

	Investec plc	IBP*^	IBAL*	Investec Limited	IBL*
As at 31 December 2009	GBP 'mn	GBP 'mn	A$'mn	ZAR 'mn	ZAR 'mn
Primary capital (Tier 1)	1,272	1,102	539	17,064	15,418
Other capital (Tier 2)	601	502	76	5,599	5,599
	1,873	1,604	615	22,663	21,017
Less: deductions	-228	-167	-92	-630	-730
Net qualifying capital	1,645	1,437	523	22,033	20,287
Risk-weighted assets (banking and trading)	10,815	8,765	2,984	149,174	135,973
Capital requirements	864	701	388	14,172	12,918
Credit risk	694	572	335	11,502	10,871
Securitisation exposures	21	20	0	170	170
Equity risk	18	18	9	657	639
Market risk	21	21	2	197	104
Operational risk	110	70	42	1,646	1134
Capital adequacy ratio	15.2%	16.4%	17.5%	14.8%	14.9%
Tier 1 ratio	11.0%	12.2%	15.5%	11.2%	11.0%
Capital adequacy ratio - pre operational risk	17.4%	18.2%	19.6%	16.7%	16.4%
Tier 1 ratio - pre operational risk	12.7%	13.5%	17.3%	12.7%	12.1%

*IBP is Investec Bank plc; IBAL is Investec Bank (Australia) Limited and IBL is Investec Bank Limited. ^IBP includes IBAL. 

Timetable:

Pre-close briefing: 18 March 2010

Year-end: 31 March 2010

Release of year-end results: 20 May 2010

For further information please contact:

Investec Investor Relations                        

UK: [phone]                    

South Africa: [phone]

[e-mail]

About Investec

Investec is an international specialist bank and asset manager that provides a diverse range of financial products and services to a niche client base in three principal markets, the United Kingdom, South Africa and Australia as well as certain other countries. The group was established in 1974 and currently has approximately 5 900 permanent employees.

Investec focuses on delivering distinctive profitable solutions for its clients in five core areas of activity namely, Private Client Activities, Capital Markets, Investment Banking, Asset Management and Property Activities.

In July 2002 the Investec group implemented a dual listed company structure with listings on the London and Johannesburg Stock Exchanges. The combined group's current market capitalisation is approximately GBP3.2 billion.

 

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