Interim Management Statement

RNS Number : 2481L

Investec PLC

28 July 2011

 



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 28 July 2011

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 three months ended 30 June 2011 and the corresponding period in the previous year.

Performance overview

Against a backdrop of poor economic fundamentals and weak debt and equity markets, operating conditions have been more difficult than anticipated in the first quarter of the group's 2012 financial year. The Asset Management and Wealth Management businesses have continued to perform well as a result of increased average funds under management and net inflows. The Specialist Banking businesses have benefited from growth in margin and fee income but earnings from principal activities have been under pressure. The group's geographical and operational diversity has, however, supported a stable operational performance.

Salient features of the three month period to 30 June 2011 compared to the three month period to 30 June 2010:

·      The group has recorded strong growth in net interest income and net fees and commissions, whilst principal 
transaction income has decreased.

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

·      The credit loss charge as a percentage of average gross loans and advances annualised for the period amounted 
to 0.82% (31 March 2011: 1.27%).

·      Recurring income as a percentage of total operating income amounted to approximately 71%.

·      As at 30 June 2011 the capital adequacy ratio of Investec plc (applying UK Financial Services Authority rules to 
its capital base) was 16.8% and the capital adequacy ratio of Investec Limited (applying South African Reserve Bank rules to its capital base) was 15.8%.

·      The group had approximately GBP9.4 billion of cash and near cash available to support its activities. 

·      Since 31 March 2011 (the end of the group's financial year) core loans and advances increased by 3% to
GBP19.4 billion, customer deposits increased by 2% to GBP24.9 billion and third party assets under management increased by 2% to GBP91 billion.

·      Core advances (excluding own originated securitised assets) as a percentage of customer deposits were 73.7% 
(31 March 2011:72.4%).

The group will be holding a pre-close briefing on 15 September 2011 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.   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 28 July 2011.

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:

	Three months to		Year to		Three months to
	30-Jun-11		31-Mar-11		30-Jun-10
Currency	Period end	Average	Period end	Average	Period end	Average
per GBP1.00
South African Rand	10.85	11.02	10.88	11.16	11.48	11.24
Australian Dollar	1.50	1.53	1.55	1.65	1.77	1.69
Euro	1.11	1.13	1.13	1.17	1.22	1.17
US Dollar	1.61	1.64	1.60	1.55	1.50	1.50

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

The group holds capital in excess of regulatory requirements targeting a minimum tier one capital ratio of 11% and a total capital adequacy ratio range of 14% to 17% 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.  

	Investec plc^	IBP*^	IBAL*	Investec Limited^	IBL*
As at 30 Jun 2011	GBP 'mn	GBP 'mn	A$'mn	ZAR 'mn	ZAR 'mn
Primary capital (Tier 1)	1,488	1,308	559	21,532	19,774
Other capital (Tier 2)	752	613	108	7,019	7,019
	2,240	1,921	667	28,551	26,793
Less: deductions	-81	-74	-67	-532	-532
Net qualifying capital	2,159	1,847	600	28,019	26,261
Risk-weighted assets (banking and trading)	12,823	11,389	3,481	177,056	167,242
Capital requirements	1,026	911	452	16,820	15,888
Credit risk	801	738	392	12,280	12,016
Securitisation exposures	20	20	-	423	423
Equity risk	20	20	7	2,224	2,142
Market risk	55	50	6	124	81
Operational risk	130	83	47	1,769	1,226
Capital adequacy ratio	16.8%	16.2%	17.2%	15.8%	15.7%
Tier 1 ratio	11.4%	11.3%	14.3%	12.0%	11.7%

*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: 15 September 2011

Interim results: 30 September 2011

Release of interim results: 17 November 2011

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 7 300 employees.

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

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.

Johannesburg and London

28 July 2011

 

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