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JSE INLP
INLP
INLP - Investec Bank Limited - Reviewed interim condensed consolidated financial
results for the six months to 30 September 2010
Investec Bank Limited
(Registration number 1969/004763/06)
Share Code: INLP ISIN: ZAE000048393
Consolidated income statement
Reviewed Reviewed Restated
Six months to Six months to Year to
30 Sept. 30 Sept. 31 March
R` million 2010 2009 2010*
Interest income 7 878 7 581 15 530
Interest expense (5 953) (5 796) (11 599)
Net interest income 1 925 1 785 3 931
Fee and commission income 374 413 921
Fee and commission expense (47) (21) (49)
Principal transactions 729 974 1 629
Operating loss from (17) (41) (47)
associates
Other income 1 039 1 325 2 454
Total operating income before
impairment
losses on loans and advances 2 964 3 110 6 385
Impairment losses on loans (373) (415) (858)
and advances
Operating income 2 591 2 695 5 527
Administrative expenses (1 455) (1 432) (2 879)
Depreciation, amortisation
and impairment of property,
equipment and intangibles (49) (53) (122)
Profit before taxation 1 087 1 210 2 526
Taxation (192) (209) (520)
Profit after taxation 895 1 001 2 006
Losses attributable to - 2 1
minority interests
Earnings attributable to 895 1 003 2 007
shareholders
Headline earnings
Earnings attributable to 895 1 003 2 007
shareholders
Preference dividends paid (61) (83) (149)
Earnings attributable to 834 920 1 858
ordinary shareholders
Headline adjustments, net of 25 (12) (13)
taxation
Gain on realisation of - (12) (13)
available for sale financial
assets
Impairment of associate 25 - -
Headline earnings 859 908 1 845
attributable to ordinary
shareholders
- As restated for reclassifications detailed in the commentary section of
this report.
Condensed consolidated statement of comprehensive income
Reviewed Reviewed Audited
Six months to Six months to Year to
30 Sept. 30 Sept. 31 March
R` million 2010 2009 2010
Profit after taxation 895 1 001 2 006
Fair value movements on cash (4) (7) 18
flow hedges*
Fair value movements on - 14 29
available for sale assets*
Gain on realisation of
available for sale assets
recycled through
the income statement* - - (13)
Foreign currency adjustments (85) (326) (359)
on translating foreign
operations
Total comprehensive income 806 682 1 681
- Net of taxation of (R1 million) (Six months to 30 Sept.: R2 million, Year
to 31 March 2010: R10 million).
Consolidated balance sheet
Reviewed Audited Reviewed
30 Sept. 31 March 30 Sept.
R` million 2010 2010 2009
Assets
Cash and balances at central banks 3 770 3 660 3 493
Loans and advances to banks 9 514 13 245 6 595
Cash equivalent advances to customers 5 805 6 455 5 830
Reverse repurchase agreements and cash 3 761 3 776 2 478
collateral on securities borrowed
Trading securities 47 948 36 375 32 026
Derivative financial instruments 11 279 7 829 8 818
Investment securities 7 339 3 605 1 372
Loans and advances to customers 113 719 111 919 112 597
Securitised assets 3 287 3 531 3 783
Interest in associated undertakings 128 180 145
Deferred taxation assets 21 22 315
Other assets 808 924 1 005
Property and equipment 170 164 159
Investment properties 5 5 5
Intangible assets 100 96 78
Loans to group companies 5 500 6 093 10 899
213 154 197 879 189 598
Liabilities
Deposits by banks 11 845 9 554 10 177
Derivative financial instruments 10 383 7 144 8 294
Other trading liabilities 303 454 442
Repurchase agreements and cash collateral 6 202 6 281 3 856
on securities lent
Customer accounts (deposits) 151 222 143 390 136 766
Debt securities in issue 1 574 1 559 1 122
Liabilities arising on securitisation 2 336 2 707 3 216
Current taxation liabilities 787 857 920
Deferred taxation liabilities 654 444 580
Other liabilities 3 247 3 694 3 730
188 553 176 084 169 103
Subordinated liabilities 6 866 5 341 5 091
195 419 181 425 174 194
Equity
Ordinary share capital 26 25 24
Share premium 11 645 10 530 10 054
Other reserves (152) (156) (218)
Retained income 6 212 6 051 5 541
Shareholders` equity excluding minority 17 731 16 450 15 401
interests
Minority interests 4 4 3
Total equity 17 735 16 454 15 404
Total liabilities and equity 213 154 197 879 189 598
Condensed consolidated statement of changes in equity
Reviewed Reviewed Audited
Six months to Six months to Year to
30 Sept. 30 Sept. 31 March
R` million 2010 2009 2010
Balance at the beginning of 16 454 14 195 14 195
the period
Total comprehensive income 806 682 1 681
for the period
Issue of ordinary shares 1 099 1 000 1 450
Issue of perpetual preference 17 - 27
shares
Dividends paid to ordinary (580) (390) (750)
shareholders
Dividends paid to perpetual (61) (83) (149)
preference shareholders
Balance at the end of the 17 735 15 404 16 454
period
Condensed consolidated cash flow statement
Reviewed Audited Reviewed
Six months Year Six months
to to to
30 Sept. 31 March 30 Sept.
R` million 2010 2010 2009
Net cash inflow from operating 553 1 368 757
activities
Net cash outflow from investing (59) (127) (54)
activities
Net cash inflow from financing 2 000 828 527
activities
Effects of exchange rates on cash (32) (47) -
and cash equivalents
Net increase in cash and cash 2 462 2 022 1 230
equivalents
Cash and cash equivalents at the 10 574 8 552 8 552
beginning of the period
Cash and cash equivalents at the 13 036 10 574 9 782
end of the period
Cash and cash equivalents is defined as including: cash and balances at central
banks, on demand loans and advances to banks and cash equivalent advances to
customers (all of which have a maturity profile of less than three months).
Condensed consolidated segmental information
For the six months to 30 September 2010
Reviewed Group
Services
Private Investment Capital and Other
R` million Banking Banking Markets Activities Total
Operating 854 519 944 274 2 591
income
Operating (688) (98) (508) (210) (1 504)
expenses
Operating 166 421 436 64 1 087
profit
Cost to income 59.0 19.0 53.5 63.3 50.7
ratio (%)
Condensed consolidated segmental information
For the six months to 30 September 2009
Reviewed Group
Services
Private Investment Capital and Other
R` million Banking Banking Markets Activities Total
Operating 709 481 795 710 2 695
income
Operating (615) (152) (472) (246) (1 485)
expenses
Operating 94 329 323 464 1 210
profit
Cost to income 65.8 31.6 53.8 30.1 47.7
ratio (%)
These interim condensed consolidated financial results are published to provide
information to holders of Investec Bank Limited`s listed non-redeemable, non-
cumulative, non-participating preference shares.
Commentary
Overview of results
Investec Bank Limited, a subsidiary of Investec Limited, posted a decrease in
headline earnings attributable to ordinary shareholders of 5.4% to R859 million
(2009: R908 million). For full information on the Investec group results, refer
to the combined results of Investec plc and Investec Limited.
Business unit review
Unless the context indicates otherwise, all comparatives referred to in the
business unit review relate to the six months ended 30 September 2009. Operating
profit is before taxation and headline adjustments.
Salient operational features of the period under review include:
The Private Banking division posted an increase in operating profit of
76.6% to R166 million (2009: R94 million) largely as a result of margins
normalising. Since 31 March 2010 the private client core lending book grew by
2.3% from R79.6 billion to R81.4 billion and the deposit book grew by 5.3% from
R51.2 billion to R53.9 billion.
Operating profit of the Investment Banking division increased by 28.0% to
R421 million (2009: R329 million). The investments held within the Principal
Investment portfolio generated a solid performance. The Corporate Finance
division has benefitted from a steady deal pipeline with fees and commissions
earned in line with the prior year.
The Capital Markets division posted an increase in operating profit of
35.0% to R436 million (2009: R323 million) benefitting from lower impairments.
Corporate activity levels, however, remain depressed and the division`s lending
book decreased marginally to R28.6 billion (31 March 2010: R28.8 billion).The
bank continued to hold significant surplus liquidity and remains a net provider
of liquidity to the South African interbank market.
Operating profit from the Group Services and Other Activities division
decreased by 86.2% from R464 million to R64 million largely as a result of a
lower return generated on cash balances held within the Central Funding
portfolio and lower foreign currency gains.
Accounting policies and disclosures
These reviewed interim condensed consolidated financial results have been
prepared in terms of the recognition and measurement criteria of International
Financial Reporting Standards, and the presentation and disclosure requirements
of IAS34, Interim Financial Reporting.
The accounting policies applied in the preparation of the results for the period
ended 30 September 2010 are consistent with those adopted in the financial
results for the year ended 31 March 2010.
Restatements
On review, it was detected that the gross interest income and expense, as
reported at 31 March 2010, had not appropriately netted certain intergroup
interest income and expense between the two line items. Whilst net interest
income was correctly reported, the restatement to interest income and expense is
noted below:
R`million 31 March 2010
Restated
Interest income 15 530
Interest expense (11 599)
Net interest income 3 931
As previously reported
Interest income 23 494
Interest expense (19 563)
Net interest income 3 931
Changes to previously reported
Interest income (7 964)
Interest expense 7 964
Net interest income -
The above change has no impact to the income statement (other than as noted
above), balance sheet or cash flow statement.
On behalf of the Board of Investec Bank Limited
Fani Titi Stephen Koseff Bernard Kantor
Chairman Chief Executive Officer Managing Director
18 November 2010
Review conclusion
KPMG Inc. and Ernst & Young Inc., the Group`s independent auditors, have
reviewed the interim condensed consolidated financial results and have expressed
an unmodified review conclusion on the interim condensed consolidated financial
results, which is available for inspection at the company`s registered office.
Non-redeemable non-cumulative non-participating preference shares
Declaration of dividend number 15
Notice is hereby given that preference dividend number 15 has been declared for
the period 01 April 2010 to 30 September 2010 amounting to 373.87 cents per
share payable to holders of the non-redeemable non-cumulative non-participating
preference shares as recorded in the books of the company at the close of
business on Friday, 03 December 2010.
The relevant dates for the payment of dividend number 15 are as follows:
Last day to trade cum-dividend Friday, 26 November 2010
Shares commence trading
ex-dividend Monday, 29 November 2010
Record date Friday, 03 December 2010
Payment date Tuesday, 14 December 2010
Share certificates may not be dematerialised or rematerialised between Monday,
29 November 2010 and Friday, 03 December 2010, both dates inclusive.
By order of the board
B Coetsee
Company Secretary 18 November 2010
Registered office
100 Grayston Drive
Sandown
Sandton 2196
Transfer secretaries
Computershare Investor Services (Pty) Ltd
70 Marshall Street
Johannesburg 2001
Directors: F Titi (Chairman), D M Lawrence* (Deputy Chairman),
S Koseff* (Chief Executive), B Kantor* (Managing Director),
S E Abrahams, G R Burger*, M P Malungani, K X T Socikwa,
B Tapnack*, P R S Thomas, C B Tshili.
*Executive
Company Secretary: B Coetsee
Date: 18/11/2010 09:01:01 Produced by the JSE SENS Department.
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