UK and South African bank Investec returned about £780 million (R18.8 billion) to shareholders in its year to March 31, comprising ordinary dividends, a share purchase programme to optimise the SA balance sheet and the distribution of a 15% stake in Ninety One.
“The strong capital generation across the group allows us to maintain robust capital and liquidity levels, deliver improved returns to our shareholders, and support our clients, colleagues, and societies through an uncertain economic environment,” CEO Fani Titi said in a statement at the release of annual results for the year to March 31.
The group yesterday proposed a final dividend of 17.5 pence per share, resulting in a full year dividend of 31p, up from 25p in 2022..
As part of its continuing capital optimisation strategy, it acquired 52 million Investec Limited and Investec Plc shares, equivalent to.5.2% of the shares outstanding before the November 2022 announcement of the share buy-back programme; and in this way returned R5.5bn or £245m to shareholders.
The group anticipated also to conclude the balance of the disposal of the shareholding in IEP over 18 months, subject to market conditions – R810m cash proceeds were received by Investec Limited in the 2023 financial year and an additional R183m was received post year-end. The carrying value of the stake in IEP was R4.7bn at March 31.
IEP is an investment holding company that was born out of the Investec Private Equity portfolio. It holds a controlling stake in the Bud Group, an operational services, manufacturing and distribution group.
Titi said Investec remained well positioned to continue to support clients and strong capital and robust liquidity levels would also allow the group to pursue its growth initiatives.
Based on the macroeconomic outlook for its two core geographies, revenue in the 2024 financial year was expected by the group to be underpinned by moderate book growth and continued elevated interest rates and client activity levels.
Overall costs were expected to be contained with a cost to income ratio of approximately 60%, despite inflationary pressures and continued investment in the business. The credit loss ratio cycle was expected to normalise.
The return on equity was anticipated to be about in the mid-point of the group’s target range of 12% to 16%.
In the past year, adjusted earnings per share increased 25% to 68.9p, at the upper end of previous guidance and a performance that represented good progress from strategic goals announced in 2019, Titi said.
Funds under management (FUM) decreased 4.5% to £61bn largely reflecting the unfavourable market movements. Net inflows were £377m, with £810m inflows in discretionary FUM partly offset by £433m net outflows in non-discretionary FUM.
Net core loans increased 7.7% to £30.2bn; largely driven by corporate lending and residential mortgage lending in both geographies.
The cost to income ratio improved to 59.6% from 63.3%.
Expected credit loss impairment charges increased to £81.1m from: £28.8m, resulting in a credit loss ratio of 23bps (2022: 8bps), and approaching the lower end of the group’s through-the-cycle range of 25bps to 35bps..
After year-end, Investec announced the all-share combination of Investec Wealth & Investment UK with Rathbones plc to create the UK’s leading discretionary wealth manager with approximately £100bn in funds under management and administration.
Titi said the results were strong considering the challenging macro backdrop, with all client franchises reporting growth in pre-provision adjusted operating profit.
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