Investec interims impress in face of economic uncertainty

Investec's banking businesses continued to be “resilient” in the first half, delivering a solid underlying performance despite high levels of macro uncertainty.

The asset management and wealth businesses benefited from higher funds under management supported by a recovery in equity markets and net inflows of £1.8bn, for the six months ended 30 September.

The FTSE 250 company said that operations in the specialist banking business were supported by “sound levels of corporate and private client activity”, but results were behind the last year due to a change in accounting treatment from fair value to equity accounting for the assets transferred to Investec Equity Partners.

It also reported a writedown on an investment in the Hong Kong portfolio, while increased costs reflected planned investment in growing client franchise businesses.

Statutory operating profit before goodwill, acquired intangibles, non-operating items and taxation and after other non-controlling interests nudged up 0.7% to £281.4m, or up 1.6% on a currency neutral basis.

Statutory adjusted earnings per share before goodwill, acquired intangibles and non-operating items rose 1.8% to 22.7p, or 2.2% on a currency neutral basis.

Ongoing operating profit slipped 0.2% to £314.5m, 0.6% on a currency neutral basis.

Ongoing adjusted earnings per share before goodwill, acquired intangibles and non-operating items increased 0.8% from 25.5p to 25.7p - an increase of 1.2% on a currency neutral basis.

Recurring income as a percentage of total operating income amounted to 72.4%, up slightly from 71.6%, last year.

Third party assets under management climbed 16.5% to £141.8bn, or 10.3% on a currency neutral basis.

Customer accounts rose 17.7% to £28.3bn, 7.3% on a currency neutral basis, and core loans and advances increased 16.1% to £20.4bn, or 4% on a currency neutral basis.

Chief executive Stephen Koseff said: "These results show the long term strength and diversity of our business, delivering sustainable recurring client-driven income streams amidst high levels of macro uncertainty.

“We are pleased with the growth in net interest income and fees and commissions, as well as good fund management inflows. We continue to invest with confidence in our business to build even stronger franchises."

The company declared a dividend of 10p per share, up from 9.5p last year, resulting in a dividend cover based on its adjusted earnings per share before goodwill and non-operating items of 2.3 times.

Shares in Investec were up 4.5% to 523p at 0827 GMT.