| Thu 20 Mar 2025, 9:00 | | INVESTEC PLC - Group pre-close trading update and trading statement |
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Group pre-close trading update and trading statement
Investec Limited Investec plc
Incorporated in the Republic of South Africa Incorporated in England and Wales
Registration number 1925/002833/06 Registration number 3633621
JSE share code: INL LSE share code: INVP
JSE hybrid code: INPR JSE share code: INP
JSE debt code: INLV ISIN: GB00B17BBQ50
NSX share code: IVD LEI: 2138007Z3U5GWDN3MY22
BSE share code: INVESTEC
ISIN: ZAE000081949
LEI: 213800CU7SM6O4UWOZ70
Group pre-close trading update and trading statement
20 March 2025
Investec Group today announces its scheduled pre-close trading update for the year ending 31
March 2025 (FY2025). An investor conference call will be held today at 09:00 UK time / 11:00
South African time. Please register for the call at www.investec.com/investorrelations.
Commentary on the Group's financial performance in this pre-close trading update represents the
11 months ended 28 February 2025 and compares forecast FY2025 to FY2024 (31 March 2024).
The prior year results are presented on a continuing and discontinuing basis in line with the relevant
accounting standards as a result of previously announced strategic actions.
The following commentary is based on the Group's total performance.
FY2025 earnings update and guidance
Our client franchises continued to make progress against our strategic priorities, supporting revenue
growth in a challenging operating environment. Our diversified business model and strong balance
sheet allowed us to continue supporting our clients and achieve results within our financial target
ranges.
For the year ending 31 March 2025, the Group expects:
- Pre-provision adjusted operating profit to be between £1 013 million and £1 076 million
(FY2024: £963.6 million) or c.5.0% to c.12.0% ahead of prior year
- Adjusted earnings per share between 75.0p and 81.2p (FY2024: 78.1p) or c.4.0% behind to
c.4.0% ahead of prior year
- Headline earnings per share between 67.2p and 73.5p (FY2024: 72.9p) or c.8.0% behind to
c.1.0% ahead of prior year
- Basic earnings per share between 67.2p and 73.5p (FY2024: 105.3p) or c.30.0% to c.36.0%
behind prior year. The prior year was positively impacted by the significant net gain from the
implementation of the UK Wealth & Investment combination with Rathbones which was
partially offset by the effects of Burstone's deconsolidation; and the amortisation of intangible
assets associated with the Rathbones combination in the current period
- Credit loss ratio to be within the through-the-cycle (TTC) range of 25bps to 45bps. The
overall credit quality remained strong
- Cost to income ratio to be below the 53.8% reported in the prior year, benefitting from
revenue growing ahead of costs
- Group adjusted operating profit before tax between £888 million and £956 million
(FY2024: £884.5 million)
- Southern African business adjusted operating profit to be at least 5.0% ahead of
prior year in Rands (FY2024: R10 097 million, £429.0 million). Specialist Bank
adjusted operating profit expected to be between 2.0% and 7.0% ahead of prior
year in Rands (FY2024: R9 516 million, £404.3 million). Credit loss ratio is expected
to remain around the lower end of the TTC range of 15bps to 35bps. The expected
credit losses (ECLs) reflect lower recoveries from previously written off exposures
relative to prior year. The Southern African business ROE is expected to be
between 17.7% and 18.7%, within the 16.0% to 20.0% medium-term target range.
The Investec Limited CET1 ratio at 31 December 2024 was 14.8%(1) (31 Mar 2024:
13.6%)
- UK business, including Rathbones Group, adjusted operating profit to be 4.0%
behind to 4.0% ahead of the prior year (FY2024: £455.5 million). Specialist Bank
adjusted operating profit is expected to be c.4.0% behind to c.4.0% ahead of prior
year, following a significant increase of 33.9% in the prior year (FY2024: £406.2
million). We expect to report a credit loss ratio around the upper end of the
previously guided range of 50bps to 60bps, driven by certain specific impairments.
The UK business ROTE is expected to be between 13.5% to 14.5%, within the
medium-term target range of 13.0% to 17.0%. The Investec plc CET1 ratio at 31
December 2024 was 12.3%(2) (31 Mar 2024: 12.4%(3))
- Group ROE to be between 13.0% and 14.0%, within the Group's medium-term target range of
13.0% to 17.0%. Group ROTE is expected to be between 15.5% and 16.5%, within the 14.0% to
18.0% medium-term range.
The year-to-date performance which formed the basis for the above expectations is summarised
below:
- Revenue growth was supported by continued client acquisition, strong net inflows in
discretionary and annuity funds under management (FUM) in the current and prior periods
and higher average advances
- Net interest income benefitted from the growth in average lending books and lower cost
of funds in Southern Africa in line with our strategy to optimise the funding pool, this was
partly offset by the effects of deposit repricing in the UK
- Non-interest revenue (NIR) benefitted from year-to-date improvement in fee-generating
activities within our Banking businesses, as well as strong fees from our SA Wealth &
Investment business. Investment income also positively contributed to NIR growth
reflecting net fair value gains, and dividends received. Increased market liquidity and the
upward trending market resulted in higher trading income from client flow; this was
partially offset by lower risk management gains in hedging the remaining and significantly
reduced financial products run down book in the UK.
- The cost to income ratio improved relative to the prior year (FY2024: 53.8%) as revenue grew
ahead of costs. Fixed operating expenditure reflected continued investment in people and
technology for growth and inflationary pressures. Variable remuneration in each geography
was in line with respective underlying performance
- Investec's share of Rathbones reported post-tax underlying profit attributable to shareholders
for their year ended 31 December 2024 of £167.6 million is £69.1 million (FY2024: £66.9
million)
(1) Investec Limited is predominately on the advanced approach for credit and market risk. Investec Limited's capital information
includes unappropriated profits. If unappropriated profits are excluded from capital information, Investec Limited's CET1 ratio
would be 57bps (111bps) lower.
(2) Investec plc reports capital ratios measured on a Standardised capital measurement approach. Investec plc's December 2024
CET1 ratio excludes quarterly profits and associated foreseeable charges and dividends for the period 1 October 2024 to 31 December
2024. In accordance with the Prudential Regulation Authority rules, quarterly profits may only be included in a firm's capital position once
the profits have been independently verified by an external audit firm.
(3) Investec plc's March 2024 capital disclosures follow Investec's normal basis of presentation and do not include the deduction of
foreseeable charges and dividends when calculating the CET1 ratio as required under the Capital Requirements Regulation.
For the 11 month period ended 28 February 2025:
- Within Specialist Banking, core loans increased by 4.7% annualised to £32.2 billion
(31 March 2024: £30.9 billion) and increased by 3.2% annualised in neutral currency, driven
by growth in private client lending in both geographies as well as corporate lending in South
Africa. Growth in corporate lending turnover in the UK was offset by elevated repayments
given the higher interest rate environment
- Customer deposits increased by 4.8% annualised to £41.2 billion on reported basis and
increased by 3.3% annualised in neutral currency
- Funds under management (FUM) in Southern Africa increased by 14.5% to £24.0 billion (31
March 2024: £20.9 billion). Net discretionary and annuity inflows of R14.7 billion were partly
offset by outflows of R9.6 billion in non-discretionary FUM
- Rathbones Group, a 41.25% held Investec associate, reported funds under management
and administration of £109.2 billion as at 31 December 2024.
The Group maintained strong capital and liquidity levels and is well positioned to continue supporting
our clients navigate the current environment and execute on our strategic priorities.
Other information
The financial information on which this trading update and trading statement is based, has not been
reviewed and reported on by the external auditors.
An investor conference call will be held today at 09:00 UK time / 11:00 South African time. Please
REGISTER HERE: https://services.choruscall.za.com/DiamondPassRegistration/register?confirmationNumber=2171710&linkSecurityString=98c4a863a
for the call.
Year end results
The year end results for the year ending 31 March 2025 are scheduled for release on Thursday, 22 May 2025.
On behalf of the board
Philip Hourquebie (Chair), Fani Titi (Group Chief Executive)
For further information please contact:
Investec Investor Relations
General enquiries: investorrelations@investec.co.za
Results:
Qaqambile Dwayi
SA Tel: +27 (0)83 457 2134
Brunswick (SA PR advisers)
Tim Schultz Tel: +27 (0)82 309 2496
Lansons (UK PR advisers)
Tom Baldock Tel: +44 (0)78 6010 1715
Key income drivers
Core loans
Neutral currency
£'m 28-Feb-25 31- Mar-24 % change
% change
UK and Other 16,607 16,557 0.3% 0.3%
South Africa 15,633 14,344 9.0% 6.0%
Total 32,240 30,901 4.3% 3.0%
Customer deposits
Neutral currency
£'m 28-Feb-25 31- Mar-24 % change
% change
UK and Other 21,246 20,784 2.2% 2.2%
South Africa 19,984 18,721 6.7% 3.8%
Total 41,230 39,505 4.4% 3.0%
Funds under Management (FUM)
Neutral
£'m 28-Feb-25 31-Mar-24 % change currency
% change
Wealth & Investment - Southern Africa 23,959 20,922 14.5% 11.8%
Discretionary 14,181 12,517 13.3% 10.4%
Non-discretionary 9,778 8,405 16.3% 13.8%
Rathbones Group plc(*) 109,200 107,600
(*) The balance of £109.2bn reflects total funds under management and administration (FUMA) as reported at 31 December
2024 by Rathbones Group plc.
Notes
1. Definitions
- Adjusted operating profit refers to profit before tax of continuing operations, adjusted
to remove goodwill, acquired intangibles and strategic actions, including such items
within equity accounted earnings, and non-controlling interests. Non-IFRS measures
such as adjusted operating profit are considered as pro-forma financial information as
per the JSE Listings Requirements. The pro-forma financial information is the
responsibility of the Group's Board of Directors. Pro-forma financial information was
prepared for illustrative purposes and because of its nature may not fairly present the
issuer's financial position, changes in equity or results of operations. This pro-forma
financial information has not been reported on by the Group's external auditors
- Adjusted earnings attributable to ordinary shareholders is calculated as earnings
attributable to shareholders adjusted to remove goodwill, acquired intangible assets,
strategic actions, including such items within equity accounted earnings, and earnings
attributable to perpetual preference shareholders and Other additional tier 1 security
holders
- Adjusted earnings per share is calculated as adjusted earnings attributable to ordinary
shareholders divided by the weighted average number of ordinary shares in issue
during the year
- Headline earnings is an earnings measure required to be calculated and disclosed by
the JSE and is calculated in accordance with the guidance provided by The South
African Institute of Chartered Accountants in Circular 1/2023
- Headline earnings per share (HEPS) is calculated as headline earnings divided by the
weighted average number of ordinary shares in issue during the year.
- Basic earnings is earnings attributable to ordinary shareholders as defined by IAS33
Earnings Per Share
- Core loans is defined as net loans to customers plus net own originated securitised
assets
- The credit loss ratio is calculated as expected credit loss (ECL) impairment charges on
gross core loans as a percentage of average gross core loans subject to ECL.
2. Exchange rates
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 these individual
companies are reported in the local currencies in which they are domiciled, including Rands,
Australian Dollars, Euros and US Dollars. These results are then translated into Pounds Sterling at
the applicable foreign currency exchange rates for inclusion in the Group's 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 the Pound
Sterling over the period:
11 months to Year ended
28 February 2025 31 March 2024
Currency
Period end Average Period end Average
per GBP1.00
South African Rand 23.31 23.22 23.96 23.54
Euro 1.21 1.19 1.17 1.16
US Dollar 1.26 1.27 1.26 1.26
3. Profit forecasts
- The following matters highlighted in this announcement contain forward-looking
statements:
- Adjusted EPS is expected to be between 75.0p and 81.2p which is below and
ahead of FY2024 respectively
- HEPS is expected to be between 67.2p and 73.5p which is below and ahead
of FY2024 respectively
- Basic EPS is expected to be between 67.2p and 73.5p which is below FY2024
- Pre-provision adjusted operating profit is expected to be between £1 013
million and £1 076 million which is ahead of FY2024
- Adjusted operating profit is expected to be between £888 million and £956
million which is ahead of FY2024
- The UK business' including Rathbones Group adjusted operating profit to be
4.0% behind to 4.0% ahead of prior year. Specialist Bank adjusted operating
profit is expected to be 4.0% behind to 4.0% ahead of prior year. The UK
business ROTE is expected to be between 13.5% to 14.5%, within the medium-
term target range of 13.0% to 17.0%
- The Southern African business' adjusted operating profit to increase by at
least 5.0% ahead of prior year in Rands. Specialist Bank adjusted operating
profit expected to be between 2.0% and 7.0% ahead of prior year in Rands. SA
business ROE is expected to be between 17.5% and 18.5% within the 16.0% to
20.0% medium-term target range
- ROE is expected to be between 13.0% and 14.0%, within the Group's medium-
term target range of 13% to 17%.
(collectively the Profit Forecasts)
- The basis of preparation of each of these statements and the assumptions upon which
they are based are set out below. These statements are subject to various risks and
uncertainties and other factors – which may cause the Group's actual future results,
performance or achievements in the markets in which it operates to differ from those
expressed in the Profit Forecasts
- Any forward-looking statements made are based on the knowledge of the Group at 19
March 2025
- These forward-looking statements represent a profit forecast under the Listing Rules.
The Profit Forecasts relate to the year ended 31 March 2025
The financial information on which the Profit Forecasts are based is the responsibility of the
Directors of the Group and has not been reviewed and reported on by the Group's auditors.
Basis of preparation
- The Profit Forecasts have been compiled using the assumptions stated below, and on
a basis consistent with the accounting policies adopted in the Group's March 2024
audited financial statements, which are in accordance with IFRS and are those which
the Group anticipates will be applicable for the year ending 31 March 2025.
- The Profit Forecasts have been prepared based on (a) audited financial statements of
the Group for the year ended 31 March 2024, and the results of the Specialist Banking
and Wealth & Investment businesses underlying those audited financial statements; (b)
the unaudited management accounts of the Group and the Specialist Banking and
Wealth & Investment businesses for the 11 months to 28 February 2025; and (c) the
projected financial performance of the Group and the Specialist Banking and Wealth &
Investment businesses for the remaining one month of the period ending 31 March
2025.
- Percentage changes shown on a neutral currency basis for balance sheet items
assume that the relevant closing exchange rates at 28 February 2025 remain the same
as those at 31 March 2024. This neutral currency information has not been reported on
by the Group's auditors.
Assumptions
The Profit Forecasts have been prepared on the basis of the following assumptions during the
forecast period:
Factors outside the influence or control of the Investec Board:
- There will be no material change in the political and/or economic environment that
would materially affect the Investec Group
- There will be no material change in legislation or regulation impacting on the Investec
Group's operations or its accounting policies
- There will be no business disruption that will have a significant impact on the Investec
Group's operations
- The Rand/Pound Sterling and US Dollar/Pound Sterling exchange rates remain
materially unchanged from the prevailing rates detailed above
- The tax rates remain materially unchanged
- There will be no material changes in the structure of the markets, client demand or the
competitive environment.
Estimates and judgements
In preparation of the Profit Forecasts, the Group makes estimations and applies judgement that
could affect the reported amount of assets and liabilities within the reporting period. Key areas
in which judgement is applied include:
- Valuation of unlisted investments primarily in the private equity, direct investments
portfolios and embedded derivatives. Key valuation inputs are based on the most
relevant observable market inputs, adjusted where necessary for factors that
specifically apply to the individual investments and recognising market volatility
- The determination of ECL against assets that are carried at amortised cost and ECL
relating to debt instruments at fair value through other comprehensive income (FVOCI)
involves the assessment of future cash flows which is judgmental in nature
- Based on the current available information, the provision for the motor commission
review as reported as at 30 September 2024 is not expected to change materially.
There remains significant uncertainty across the industry as to the extent of any
misconduct and customer loss that may be identified, and/or the nature, extent and
timing of any remediation action that may subsequently be required following the Court
of Appeal decision and FCA motor commission review. The Group notes that the
ultimate financial impact of the Court of Appeal decision and ongoing FCA investigation
into motor commission could materially vary, pending further guidance from the FCA
or the outcome of the intended appeal to the UK Supreme Court
- Valuation of investment properties is performed by capitalising the budgeted net
income of the property at the market related yield applicable at the time
- The Group's income tax charge and balance sheet provision are judgmental in nature.
This arises from certain transactions for which the ultimate tax treatment can only be
determined by final resolution with the relevant local tax authorities. The Group
recognises in its tax provision certain amounts in respect of taxation that involve a
degree of estimation and uncertainty where the tax treatment cannot finally be
determined until a resolution has been reached by the relevant tax authority. The
carrying amount of this provision is often dependent on the timetable and progress of
discussions and negotiations with the relevant tax authorities, arbitration processes
and legal proceedings in the relevant tax jurisdictions in which the Group operates.
Issues can take many years to resolve and assumptions on the likely outcome would
therefore have to be made by the Group
- Where appropriate, the Group has utilised expert external advice as well as experience
of similar situations elsewhere in making any such provisions
- Determination of interest income and interest expense using the effective interest rate
method involves judgement in determining the timing and extent of future cash flows.
About Investec
Investec partners with private, institutional, and corporate clients, offering international banking,
investments, and wealth management services in two principal markets, South Africa and the UK.
The Group was established in 1974 and currently has 7,800+ employees. Investec has a dual listed
company structure with primary listings on the London and Johannesburg Stock Exchanges.
Johannesburg and London
JSE Equity and Debt Sponsor: Investec Bank Limited
Date: 20-03-2025 09:00:00
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