Rathbones deal, higher interest rates boost Investec H1

Investec on Friday said it expected to post higher earnings for the first half of the year, boosted by the now-completed merger of its UK wealth and investment business with Rathbones, higher global interest rates and growth in average lending books.

Adjusted pre-tax operating for the six months to August 31 was expected to be in a range of £428.7m- £449.6m, compared with £405m a year ago.

The UK business' adjusted operating profit is expected to be at least 25% higher than the prior period’s £174.4 million.

Rathbones merger with Investec W&I was completed on Thursday, creating one of the largest discretionary wealth managers in the UK, with £100bn in combined assets.

The group said it expected to report a credit loss ratio closer to the upper end of the through-the-cycle (TTC) range of 25 to 35 basis points. South Africa is expected to report a credit loss ratio around the lower end of its TTC range of 20 to 30bps, positively impacted by recoveries from previously written off exposures.

In the UK, the credit loss ratio is expected to be above the upper end of its TTC range of 30 to 40bps, Investec added.

"The expected credit loss experience to date reflects the higher interest rate and inflationary environment. We have seen idiosyncratic client stresses with no evidence of trend deterioration in the overall credit quality of our books."

Reporting by Frank Prenesti for Sharecast.com