Interim Management Statement

RNS Number : 7285W

Investec PLC

31 January 2013

 



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

Investec (comprising Investec plc and Investec Limited) - Interim Management Statement released on 31 January 2013

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 2012 and the corresponding period in the previous year.

Performance overview

The Asset Management business has continued to see net inflows, recording results ahead of the prior year. The Wealth & Investment division reported net inflows and profits ahead of the prior year, and has continued to make good progress with the integration of Williams de Broë. The South African Specialist Banking business reported a solid increase in operating profit in Rand terms benefiting from growth in revenue and cost containment. The Australian Specialist Banking business is performing significantly ahead of the prior period mainly as a result of a substantial decrease in impairments. The UK Specialist Banking business reported results behind the prior period largely due to lower investment income earned. Overall results have been impacted by the depreciation of the average Rand: Pounds Sterling exchange rate of approximately 13%.

Salient features of the nine month period to 31 December 2012 compared to the nine month period to         31 December 2011:

·      Total operating income (net of depreciation on operating leased assets) is 1% ahead of the prior year.

·      Impairment losses on loans and advances decreased by 20% and the credit loss charge as a percentage of average gross loans and advances annualised for the period amounted to 0.83% (31 March 2012: 1.12%).

·      Operating costs increased by 4% compared to the prior year, but are flat excluding the impact of acquisitions.

·      Operating profit before goodwill, acquired intangibles, non-operating items and taxation and after non-controlling interests is 5% ahead of the prior year.

·      Recurring income as a percentage of total operating income amounted to approximately 71% (2011: 69%), supported by higher average funds under management.

·      As at 31 December 2012 the capital adequacy ratio of Investec plc (applying UK Financial Services Authority rules to its capital base) was 17.0% and the capital adequacy ratio of Investec Limited (applying South African Reserve Bank rules to its capital base) was 16.8%.

·      Thegroup had approximately GBP8.9 billion of cash and near cash available to support its activities. 

·      Since 31 March 2012 (the end of the group's financial year):

o  Third party assets under management increased by 7% to GBP103.3 billion - an increase of 12% on a currency neutral basis. The group recorded net inflows of GBP2.8 billion.

o  Customer accounts (deposits) decreased by 4% to GBP24.4 billion - an increase of 3% on a currency neutral basis.

o  Core loans and advances remained flat at GBP18.1 billion - an increase of 7% on a currency neutral basis.

·      Loans and advances as a percentage of customer deposits were 70.9% (31 March 2012:67.8%).

The group will be holding a pre-close briefing on 14 March 2013.

On behalf of the board

Fani Titi (Joint Chairman), Sir David Prosser (Joint 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.   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 30 January 2012.

3.   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, Euros and Dollars. 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		Year to		Nine months to
	31-Dec-12		31-Mar-12		31-Dec-11
Currency	Period end	Average	Period end	Average	Period end	Average
per GBP1.00
South African Rand	13.77	13.29	12.27	11.85	12.49	11.74
Australian Dollar	1.56	1.54	1.54	1.52	1.52	1.53
Euro	1.23	1.24	1.2	1.16	1.19	1.14
US Dollar	1.62	1.59	1.60	1.60	1.55	1.61

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

The group holds capital in excess of regulatory requirements targeting a minimum tier one capital ratio range of 11% to 12% and a total capital adequacy ratio range of 15% to 18% on a consolidated basis for each of Investec plc and Investec Limited. As per the table below, all regulated entities met these targets at the reporting date.

Basel 2.5	Investec plc^	IBP*^	IBAL*	Investec Limited^	IBL*
As at 31 Dec 2012	GBP 'mn	GBP 'mn	A$'mn	ZAR 'mn	ZAR 'mn
Primary capital (Tier 1) net of  deductions	1,459	1,347	430	23,393	22,654
Other capital (Tier 2) net of deductions	824	670	150	11,292	11,363
	2,283	2,017	580	34,685	34,017
Less: other deductions	(23)	(18)	-	-	-
Net qualifying capital	2,260	1,999	580	34,685	34,017
Risk-weighted assets (banking and trading)	13,312	12,104	3,299	206,981	204,826
Capital requirements	1,065	968	428	19,663	19,458
Credit risk	815	759	370	14,635	14,361
Securitisation exposures	14	14		426	426
Equity risk	41	41	5	2,414	3,033
Market risk	57	57	3	421	403
Operational risk	138	97	50	1,767	1,235
Capital adequacy ratio	17.0%	16.5%	17.6%	16.8%	16.6%
Tier 1 ratio	11.0%	11.1%	13.0%	11.3%	11.1%

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

Timetable:

Pre-close briefing: 14 March 2013

Year-end: 31 March 2013

Release of year-end results: 23 May 2013

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 8 000 employees.

Investec focuses on delivering distinctive profitable solutions for its clients in three core areas of activity namely, Asset Management, Wealth & Investment and Specialist Banking.

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 GBP4.1 billion.

31 January 2013

 

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