By now the tune should be familiar to all bank shareholders. In a predictably downbeat set of full-year results, Investec (INVP) warned of muted client activity, elevated impairments and interest income battered by lower interest rates. Economic recovery is expected to be protracted.
Life was already looking tough before the pandemic. Persistent economic weakness in South Africa and “Brexit-related uncertainties in the UK” (remember them?) were already affecting income generation before Covid-19 shaved £105m off adjusted operating profits. Though the return on equity held up at a respectable 11 per cent, a spike in the credit loss ratio to 0.52 per cent is concerning.
Following steers from regulators in the UK and South Africa, the dividend has also been axed, though long-term investors can at least point to the 54 per cent rise in shares of former asset management arm Ninety One, one of which was awarded for every two Investec shares held. Were it not for the 17.8 per cent depreciation in the rand over the year, the spin-off would have been positive for the bank’s tangible net asset value. As it was, this edged down 2.2 per cent to 378p per share.
Consensus forecasts are for earnings of 42p per share for the year to March 2021, rising to 57p in FY2022.
| INVESTEC (INVP) | ||||
| ORD PRICE: | 155.5p | MARKET VALUE: | £1.60bn | |
| TOUCH: | 155.2-155.5p | 12-MONTH HIGH: | 407p | LOW: 123p |
| DIVIDEND YIELD: | 7.1% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 420p | LEVERAGE: | 10.3 | |
| Year to 31 Mar | Operating income (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 1.89 | 567 | 38.5 | 21.0 |
| 2017 | 2.23 | 637 | 50.8 | 23.0 |
| 2018 | 2.29 | 637 | 51.2 | 24.0 |
| 2019 | 1.95 | 515 | 40.4 | 24.5 |
| 2020 | 1.81 | 310 | 17.5 | 11.0 |
| % change | -8 | -40 | -57 | -55 |
| Ex-div: | n/a | |||
| Payment: | n/a |
