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Investec moves ahead

RESULTS: All three divisions delivered increased profits at investment bank, Investec, although a weak rand depressed South African profits
November 15, 2012

Add back amortisation and goodwill costs and operating profits grew 1.5 per cent to £222.4m at investment bank Investec (INVP). That progress would have been better, though, had it not been for a 15 per cent decline in the rand that dampened South African earnings. Indeed, all three of Investec's divisions delivered higher operating profits although the shares - which have performed well in recent months - aren't so cheap.

IC TIP: Hold at 373p

Specialist banking, covering private banking, property and capital markets, increased operating profit by 2.3 per cent to £139.4m - reflecting higher interest income from more South African lending and a solid investment performance. Although fee and commission income from institutional and corporate banking did fall. On the asset management side, meanwhile, total funds under management rose from £61.6bn at the March year-end to £62.4bn. There was also a £1.5bn net inflow of funds, helping to lift operating profits at the division by 2.5 per cent to £67.2m. Investec's wealth and management operation, meanwhile, benefited from the integration of Williams de Broë and operating profits here grew 4.9 per cent to £22.9m.

Numis Securities expects to upgrade its current full-year estimates and currently expects pre-tax profit of £444.9m, giving EPS of 36.8p (2012:£347.6m/32.4p).

INVESTEC (INVP)
ORD PRICE:373pMARKET VALUE:

£3.32bn†

TOUCH:373-374p12-MONTH HIGH:419pLOW: 309p
DIVIDEND YIELD:4.6%PE RATIO:16
NET ASSET VALUE†:418p*

Half-year to 30 SepPre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201121419.28.00
201220016.88.00
% change-7-13-

Ex-div: 12 Dec

Payment: 28 Dec

†Reflects shares in both UK and South African listed entities

*Includes intangible assets of £658m, or 74p† a share