Investec today announces its scheduled pre-close trading update for the interim period ending 30 September 2021 (1H2022). An investor conference call will be held today at 09:00 UK time /10:00 South African time. Please register for the call at www.investec.com/investorrelations.

Commentary on the group’s financial performance in this pre-close trading update represents the five months ended 31 August 2021 and compares forecast 1H2022 to 1H2021 (30 September 2020).

1H2022 earnings guidance

For the six months ending 30 September 2021, the group expects:

  • Adjusted operating profit before tax between £265 million and £293 million (or 86% to 106% ahead of 1H2021) (1H2021: £142.5 million).
  • The Southern African business’ adjusted operating profit at least 50% ahead in Rands for the period (1H2021: R2 184 million, £99.1 million).
  • The UK business’ adjusted operating profit at least 125% higher than the prior period (1H2021: £43.4 million).
  • Adjusted earnings per share between 21.5p and 24p (or 92% to 114% ahead of 1H2021) (1H2021: 11.2p),
  • Basic earnings per share between 20.2p and 22.7p (or 110% to 136% ahead of 1H2021) (1H2021: 9.6p), and
  • Headline earnings per share between 20.2p and 22.7p (or 120% to 147% ahead of 1H2021) (1H2021: 9.2p).

31 March 2022 (FY2022) earnings range

Based on current business momentum, for FY2022, the group expects to report adjusted earnings per share above the upper end of the 36p to 41p range guided in May 2021.

Group overview

Performance for the five months ended 31 August 2021 was characterised by good growth in revenue and lower impairments.

  • Revenue was positively impacted by increased client activity across the business and lower funding costs. Risk management and risk reduction costs associated with the UK structured products book were immaterial.
  • ECL charges were lower, aided by limited specific impairments and certain recoveries.

The group has retained COVID-19 related overlays to account for the uncertainty that remains in the economic environment.

  • Operating costs have increased in line with activity and revenue levels; however, efficiency ratios have improved as revenue increased ahead of costs.
  • The average Rand/Pounds Sterling exchange rate appreciated by c.9% over the period.

The group’s trading performance was substantially ahead of the comparative period ended 31 August 2020 and in line with the pre-COVID comparative period ended 31 August 2019. This recovery in performance underscores the resilience of our client franchises. The group is well capitalised and has strong liquidity, above Board approved minimums. The business continues to focus on its commitment to clients, offering them an “Out of the Ordinary” service and innovative solutions.

The changes made to simplify and focus the group are bearing fruit, positioning the group well for the future.

Divisional review

The Wealth & Investment business grew funds under management (FUM) by 9.9% to £63.8 billion at 31 August 2021 (31 March 2021: £58 billion) supported by net inflows of £1.4 billion, favourable market movements and investment performance. Operating margin was higher in the UK, while flat in SA.

  • In the Southern African business, FUM increased by 9.5% to R364.5 billion (31 March 2021: R333 billion), with net inflows of R16.7 billion.
    Adjusted operating profit for 1H2022 is expected to be ahead of the prior period in Rands (1H2021: R264 million, £12.0 million).
  • In the UK business, FUM increased by 9.0% to £45.4 billion (31 March 2021: £41.7 billion) with net inflows of £0.6 billion.
    Adjusted operating profit for 1H2022 is expected to be ahead of 1H2021 (1H2021: £28.9 million).
    Within Specialist Banking, core loans grew by 6.5% to £28.2 billion at 31 August 2021 (31 March 2021: £26.4 billion) given increased activity levels and good client acquisition within private banking across both geographies. The UK experienced increased demand for corporate credit across a number of portfolios while SA corporate credit demand remained largely muted.
    Net interest income (NII) benefitted from higher average lending books and lower cost of funding as liabilities repriced. Higher point of sale activity, lending turnover, and client flow trading volumes underpinned the growth in non-interest revenue (NIR) over the period.
    Impairments were lower due to limited specific impairments and continued recoveries over the period. Cost to income ratios improved as revenue grew ahead of costs.
  • In the Southern African business, core loans increased by 1.8% to R292.5 billion (31 March 2021: R287.3 billion).
    Adjusted operating profit for 1H2022 is expected to be higher in Rands for the period (1H2021: R2 049 million, £92.9 million).
  • In the UK business, core loans grew by 9.2% to £13.5 billion (31 March 2021: £12.3 billion).
    Adjusted operating profit for 1H2022 is expected to be ahead of 1H2021 (1H2021: £12.9 million).
    Adjusted operating profit from Group Investments is expected to be ahead of 1H2021 (1H2021: £13.2 million) as investee companies’ profitability recovered given the improving economic environment.
    Group costs are expected to be lower than the prior period (1H2021: £17.3 million).

Interim results

The interim results for the six months ending 30 September 2021 are scheduled for release on Thursday,18 November 2021.
The financial information on which this trading statement is based, has not been reviewed and reported on the by the external auditors.

For further information please contact:

Investec Investor Relations
Qaqambile Dwayi
South Africa: Tel: +27 (0)83 457 2134 [email protected]
Media Queries
Lansons (UK PR advisers) – Tom Baldock. Tel: +44 (0)78 6010 1715
Brunswick (SA PR advisers) – Graeme Coetzee. Tel: +27 (0)63 685 6053
On behalf of the board
Philip Hourquebie (Chair), Fani Titi (Group Chief Executive)


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