An easier credit environment and asset inflows boosted specialist bank and asset manager Investec (INVP) in the year to March. Operating profit from its ongoing business increased by 15 per cent to £580.7m, and that increase would have been 23 per cent but for the depreciation of the rand against sterling.
The reported results were nonetheless dragged down by various legacy businesses. The company has slashed its legacy portfolio from £3.4bn to £0.7bn through the disposal of operations in Australia, the UK and Ireland. Impairments incurred in the process hit reported profits by £93m.
The company's largest division, specialist banking, was boosted in both the UK and South Africa by a growing loan book and a lower level of impairments. Operating profit here was up 18 per cent to £392m. Buoyant markets and net inflows of £3.1bn also helped Investec's fund management business grow its assets by 14 per cent to £77.5bn.
The most notable cloud over these results was news that Investec is among the banks under investigation by South African regulators over the rigging of foreign exchange markets. "We have no idea what they are talking about," says managing director Bernard Kantor, arguing its forex operations are tiny compared to other banks in the country.
Pending upgrades, analysts at Numis are forecasting pre-tax profits of £610m for the current financial year, giving adjusted EPS of 48.1p - compared with £392m and 39.4p in 2014-15.
| INVESTEC (INVP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 635p | MARKET VALUE: | £5.7bn** | |
| TOUCH: | 634.5-635p | 12-MONTH HIGH: | 636.5p | LOW: 477.2p |
| DIVIDEND YIELD: | 3.2% | PE RATIO: | 26 | |
| NET ASSET VALUE: | 389p* | |||
| Year to 31 Mar | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|
| 2011 | 466 | 49.7 | 17.0 |
| 2012 | 291 | 25.7 | 17.0 |
| 2013 | 394 | 32.5 | 18.0 |
| 2014 | 424 | 34.3 | 19.0 |
| 2015 | 392 | 24.4 | 20.0 |
| % change | -8 | -29 | +5 |
*Includes intangible assets of £509m, or 57p a share **Includes UK-listed and South Africa-listed shares Ex-div: 30 Jul Payment: 14 Aug Last IC view: 591p, 21 Nov 2014 | |||
