With its share price hovering at multi-year lows, the market was not expecting Investec (INVP) to show much improvement in its interim results. Despite a decent outing from the specialist banking arm, and a rise in assets under management, deposits and loans, the sprawling financial services business again underwhelmed, as lower UK investment bank fees and currency translation effects conspired to hit adjusted earnings per share by 4.1 per cent.
Investec’s geographic footprint lacks lustre. So far this year, UK economic growth has stayed well below the decade average, while labour strikes, rolling city blackouts and declining sovereign credit quality have left South Africa’s economy treading water.
This drag, together with a stubborn cost profile, multiplies the impetus for greater business efficiencies. To this end, the group has taken a loss running down its private equity business in Hong Kong and axing its Click & Invest operations in the UK, although the disposal of its Irish arm to Brewin Dolphin (BRW) netted an £18.2m profit. The signature move in this push – the de-merger of the group’s asset management arm – is set for a shareholder vote in the first three months of 2020, while a circular should land by the end of November.
Consensus forecasts are for earnings of 52.7p per share for the year to March 2020, and 56.1p in FY2021.
| INVESTEC (INVP) | ||||
| ORD PRICE: | 429p | MARKET VALUE: | £4.50bn | |
| TOUCH: | 428.5-429.2p | 12-MONTH HIGH: | 524p | LOW: 392p |
| DIVIDEND YIELD: | 5.7% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 421p | LEVERAGE: | 12 | |
| Half-year to 30 Sep | Operating income (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 1.26 | 388 | 27.6 | 11.0 |
| 2019 | 1.24 | 349 | 24.7 | 11.0 |
| % change | -2 | -10 | -11 | - |
| Ex-div: | 5 Dec | |||
| Payment: | 17 Dec |
