Investec sees H1 revenue ahead of last year, but operating profit down

FTSE 250 banking and asset management group Investec said on Friday that it expects revenue for the first half to be ahead of the previous year, but operating profit will be down.

In a pre-close briefing statement, the company said that against a backdrop of high levels of macroeconomic uncertainty in its key operating geographies, its Asset Management and Wealth & Investment divisions are expected to report results comfortably ahead of the prior year for the first half.

Investec said both divisions benefitted from higher levels of average funds under management supported by a recovery in equity markets and net inflows.

However, the Specialist Banking businesses are expected to report results below the previous year, albeit that both geographies continued to experience reasonable activity levels.

Investec said the UK Specialist Banking business is expected to see weaker results largely on the back of increased investment spend, whilst the South African Specialist Banking business has taken a hit from the formation of Investec Equity Partners which resulted in a change in accounting policy from fair value to equity accounting.

The company said that overall group results have been marginally impacted by the depreciation of the average rand against sterling exchange rate of about 3% over the period.

As a result, operating profit is expected to be slightly behind the prior year.