Strong equity markets boost Investec

The asset management side also managed a robust performance, pushing operating profit up 26 per cent to £83.4m. There was a significant £4.7bn net inflow of funds, which contributed towards a 60.9 per cent increase in the value of assets under management to £46.4bn. This helped boost net fee and commission income by 2.6 per cent to £545.1m. But net interest income generated from the group's cash holdings fell 11.7 per cent to £613.1m, which reflects today's low interest rate environment.

Profits from the private wealth unit - previously known as private client portfolio management and stockbroking - grew 7.4 per cent to £25.9m. And, while the South African side of the business saw lower volumes, the division was helped by profits from Investec's 47.1 per cent share in Rensburg Sheppards. Since the financial year-end, the group has reached an agreement to acquire all of the shares that it doesn't already own in Rensburg.

However, Investec's overall performance was marred by another disappointing performance from the private banking division, which mainly lends to wealthy clients. Operating profits there collapsed by 54 per cent to £37m, despite a 16.8 per cent rise in the core lending book. Once again there was a considerable increase in the group's impairment losses on loans, which rose from £163m to £205.4m.

Subject to revision, Numis Securities expects pre-tax profits for 2011 of £428m and EPS of 40.1p.

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