Investec (INVP) managing director Bernard Kantor tells a tale of two cities - or at least sectors - in the financial service group's home market of South Africa. Economic growth in sub-saharan Africa as a whole is slowing, but the corporate and high-net-worth sector is thriving. This helped Investec's key specialist banking division, which incorporates private, corporate and investment banking, deliver operating profit of £229m, up 29 per cent.
In wealth management, meanwhile, operating profit was flat. A bump in income from more funds under management was offset by increased investment as Investec looked to catch up with other managers' online trading platforms. This investment will continue in the next financial year, when the majority of the marketing spend will fall.
In asset management, demand from European retail investors helped deliver solid net inflows of £2.9bn. But market and currency weakness dragged overall assets under management down by 10 per cent, and there were also lower performance fees on African equity funds, which have seen recent outflows. On this last point, Mr Kantor says "the bleeding has stopped" and flows have stabilised.
Back in South African, Investec has also created a new investment vehicle, Investec Equity Partners, to house private equity investments. It will hold a 45 per cent stake, with outside investors contributing 55 per cent of funds.
Analysts at broker Numis Securities expect pre-tax profit of £524m and EPS of 41.4p for the year to March 2016, compared with £392m and 37.3p in FY2015.
| INVESTEC (INVP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 544.5p | MARKET VALUE: | £4.95bn* | |
| TOUCH: | 544.5-545.5p | 12-MONTH HIGH: | 650p | LOW: 482p |
| DIVIDEND YIELD: | 3.9% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 366p*† | LEVERAGE RATIO: | 13 | |
| Half-year to 30 Sep | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) | |
|---|---|---|---|---|
| 2014 | 209 | 11.6 | 8.5 | |
| 2015 | 277 | 20.1 | 9.5 | |
| % change | +32 | +73 | +12 | |
Ex-div: 30 Nov Payment: 14 Dec *Includes UK-listed and South Africa-listed shares †Includes intangible assets of £523m, or 58p a share | ||||
