Investec profit declines as demerger costs weigh

The asset management company recorded a profit before tax of £349.2m for the six months ended 30 September, down 10% from the same period last year.

The FTSE 250-listed company, which is also traded in Johannesburg, held its half-year dividend at 11.00p per share.

Investec said the drop in profit was largely due to the 84% leap in costs incurred in relation to strategic actions such as the closure of its operations in Hong Kong and the proposed demerger of the asset management business, which climbed to £45.3m.

Preparations for the breakup are on track, with regulatory approval having been received as shareholders await their chance to vote on the matter.

Third party assets under management increased by 6.0% to £177.9bn as the asset management division generation registered inflows of £3.2bn and the private banking business saw continued client base growth in both the UK and South Africa.

However, the UK specialist banking business saw its adjusted operating profit drop by 19% to £79.4m after earnings were impacted by lower trading income and a drop in investment banking fees due to weak market conditions.

Joint chief executives Fani Titi and Hendrik du Toit said: "In spite of the challenging economic environment in which we operate, we are pleased to report further growth in assets under management, customer deposits and the loan book.

"Profitable and sustainable growth with improved cost control remain priorities. We are committed to our stated objective to simplify, focus and grow for the long term, in the interest of all our stakeholders."

Investec shares were down by 2.17% at 423.60p at 0951 GMT.