Investec flags stable first-half performance

20th Sep 2024 07:16

(Sharecast News) - Investec Group projected a stable financial performance for the first half in an update on Friday, despite economic uncertainties earlier in the year.

The company said it expected pre-provision adjusted operating profit for the half-year to range between £520m and £550m - a 6.7% to 12.9% increase compared to the same period last year.

Adjusted earnings per share were projected to be between 37.2p and 40.2p, reflecting a variation from 4.0% below to 4.0% above the prior period's figure of 38.7p.

Headline earnings per share were set to range between 35.3p and 38.2p, representing a potential decline of 1.4% to a growth of 3.5%, impacted by costs related to strategic actions and the amortisation of intangible assets linked to the Rathbones combination.

Basic earnings per share were anticipated to fall sharply, however, between 45% and 50% lower than the previous year's figure, due to one-off gains from the UK Wealth and Investment combination with Rathbones in the prior period and the deconsolidation of Burstone.

The group said its credit loss ratio was expected to be at the higher end of its through-the-cycle range of 25 to 45 basis points, although it said overall credit quality remained strong.

Investec's aouthern Africa operations were set to perform robustly, with adjusted operating profit forecasted to be at least 15% higher than the previous year.

Conversely, the UK business, which includes the Rathbones Group, could see a decline of 5% to 11% in operating profit due to increased impairments and slower growth.

Group return on equity (ROE) was projected to be between 13.0% and 14.0%, aligning with its medium-term target range.

The group's revenue growth was supported by balance sheet expansion and increased contributions from growth initiatives, aided by a favourable interest rate environment.

Non-interest revenue benefited from strong client acquisition and positive inflows in its southern Africa wealth and investment division.

However, trading income lagged due to reduced client flows and lower risk management gains.

Funds under management in southern Africa grew 10.7% to £23.2bn, driven by strong net inflows.

Investec also highlighted the completion of the disposal of Assupol by Bud Group Holdings to Sanlam, a significant move in facilitating its exit from the Bud Group.

Investec said it was on track to meet its full-year 2025 guidance, and was scheduled to release its interim results on 21 November.

At 0821 BST, shares in Investec Group were down 2.2% at 578.5p.

Reporting by Josh White for Sharecast.com.