| Thu 5 Feb 2009, 13:55 | | INL / INP - Investec Limited - Investec Plc - Inte |
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INL INP
INL INP
INL / INP - Investec Limited - Investec Plc - Interim Management Statement
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
As part of the dual listed company structure, Investec plc and Investec Limited
notify both the London Stock Exchange and the JSE Limited of matters which are
required to be disclosed under the Disclosure and Transparency Rules and Listing
Rules of the United Kingdom Listing Authority (the "UKLA") and/or the JSE
Listing Requirements.
Accordingly, we advise of the following:
Investec plc - Interim Management Statement
Balanced business model and recurring revenue base support profitability in
challenging market environment
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 nine months
ended 31 December 2008 and the corresponding period in the previous year.
Overview of operating fundamentals
Operating fundamentals and activity levels across the group`s core geographies
continue to be negatively impacted by the global financial market crisis and
volatile equity markets. The group`s strategy of maintaining a recurring revenue
base; geographical and operational diversity; and strict management of liquidity
and risk has however, enabled it to navigate through the present challenging
operating environment.
Salient features of the period under review are:
* Higher average advances have resulted in strong growth in net interest
income. The group has recorded marginal growth in net fees and
commissions receivable and revenue from principal transaction income.
* Expenses continued to be tightly managed with moderate growth of 4.5%.
* Net operating income (after expenses and minorities but before
impairments on loans and advances) increased by 9.2%.
* As a result of the weaker credit cycle the group has seen a decline in
the performance of its core loan portfolio with the credit loss ratio
(excluding Kensington which continues to be profitable) increasing
from 0.71% at 30 September 2008 to 0.92%.
* The above mentioned factors have resulted in a decline in normalised
operating profit* of approximately 16.6%.
* The group`s three core geographies remain profitable with recurring
income as a percentage of total operating income amounting to
approximately 70%.
Since 30 September 2008 (the end of the group`s interim reporting period) core
loans and advances grew by 12.9% to GBP16.4 billion, customer deposits increased
by 6.2% to GBP13.7 billion and third party assets under management increased by
1.1% to GBP52.6 billion. The increase reflected in these key indicators is
largely attributable to a weakening in the Pound Sterling against the group`s
other major reporting currencies.
The group continues to focus on the strict management of liquidity and capital.
As at 31 December 2008 the capital adequacy ratio of Investec plc (applying UK
Financial Services Authority rules to its capital base) was 15.6% and the
capital adequacy ratio of Investec Limited (applying South African Reserve Bank
rules to its capital base) was 13.5%. Furthermore, the group currently has
approximately GBP4.7 billion of cash and near cash available to support its
activities. The group continues to diversify its funding sources and has been
successful in increasing its funding from private client and related deposits,
notably towards the end of the quarter.
Outlook
The global environment remains extremely challenging and uncertain. A further
deterioration in operating fundamentals and activity levels could impact on the
group`s results for the last quarter of the financial year. A high level of
recurring income will however, continue to support operating profits, albeit at
a lower level.
As in prior years the group will be holding a pre-close briefing on 19 March
2009 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 *Normalised operating profit refers to net profit before tax, goodwill and
non-operating items but after adjusting for earnings attributable to
minorities.
3 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 5 February 2009.
4 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 and Euros. 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:
31 Dec 2008 31 Mar 2008 31 Dec 2007
Currency Period Average Period Average Period Average
per GBP1.00 end end end
South 13.59 15.04 16.17 14.31 13.61 14.06
African Rand
Australian 2.09 2.18 2.18 2.32 2.28 2.36
Dollar
Euro 1.03 1.24 1.25 1.42 1.36 1.45
US Dollar 1.45 1.82 1.99 2.01 2.01 2.02
5 The following disclosures are made with respect to Basel II quarterly
disclosure requirements:
Investec has always held capital well in excess of regulatory requirements
and the group intends to perpetuate this philosophy and ensure that it
remains well capitalised in a vastly changed banking world. The group
targets a minimum tier one capital ratio of 11% and a total capital
adequacy ratio of 14% to 17% on a consolidated basis for Investec Limited
and Investec plc.
Investec IBP* IBAL* Investec IBL*
plc Limited
As at 31 Dec 2008 GBP `mn GBP `mn A$`mn ZAR `mn ZAR `mn
Primary capital 1,083 896 622
(Tier 1) 14,961 13,639
Other capital 804 614 126
(Tier 2 and 3) 5,290 5,103
1,887 1,510 748 20,251 18,742
Less: impairments -191 -142
-231 -783 -544
Net qualifying
capital 1,696 1,368 517 19,468 18,198
Risk-weighted 10,856 3,084
assets (banking 9,086 144,187 132,067
and trading)
Capital
requirements 869 727 411 13,698 12,546
Credit risk
736 626 355 11,707 11,037
Equity risk
17 17 11 491 476
Market risk
19 19 2 156 91
Operational risk
97 65 43 1,344 941
Capital adequacy 15.6% 15.1% 16.7% 13.5% 13.8%
ratio
Tier 1 ratio 9.5% 9.7% 13.4% 10.0% 10.1%
Capital adequacy 17.6% 16.5% 18.7% 15.0% 15.0%
ratio - pre
operational risk
Tier 1 ratio - 10.6% 10.7% 15.0% 11.1% 10.9%
pre operational
risk
*IBP is Investec Bank plc; IBAL is Investec Bank (Australia) Limited and IBL is
Investec Bank Limited.
Timetable:
Pre-close briefing: 19 March 2009
Year end: 31 March 2009
Release of year end results: 21 May 2009
For further information please contact:
Investec Investor Relations
UK: +44 (0) 207 597 5546
South Africa: +27 (0) 11 286 7070
investorrelations@investec.com
About Investec
Investec is an international specialist banking group 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 5 600 permanent employees.
Investec focuses on delivering distinctive profitable solutions for its clients
in five core areas of activity namely, Private Client Activities, Capital
Markets, Investment Banking, Asset Management and Property Activities.
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 GBP1.7 billion.
5 February 2009
Sponsor: Investec Bank Limited
Date: 05/02/2009 13:30:02 Produced by the JSE SENS Department.
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