21st Nov 2019 08:14
(Alliance News) - Banking group Investec PLC on Thursday reported a fall in income and profit fall but held its payout, as it progresses with the demerger of its asset management business.
In the financial year ended September 30, total operating income, from both its South African and UK firms, declined 1.8% to GBP1.24 billion from GBP1.29 billion last year.
Pretax profit fell 10% to GBP349.2 million from GBP388.3 million. Weighing on profit were costs related to the closure and rundown of its Hong Kong direct investments business. These surged 84% to GBP49.5 million from GBP26.9 million last year.
Investec which, is listed in both London and Johannesburg, will pay a dividend of 11.0 pence per share, flat year-on-year.
In FTSE 250 constituent Investec PLC, the common equity tier 1 ratio narrowed to 10.7% from 10.8% six months earlier.
In Investec Ltd, the Johannesburg-listed entity, it widened to 11.6% from 10.5% in March.
Joint Chief Executives Fani Titi and Hendrik du Toit said: "In spite of the challenging economic environment in which we operate, we are pleased to report further growth in assets under management, customer deposits and the loan book."
In Specialist Banking, operating income was down 8.8% year-on-year to GBP347.1 million from GBP380.6 million. The South African unit had an adjusted operating profit growth of 8.5% in rand terms, while the UK & Other business reported a 19% reduction, Investec explained.
Wealth & Investment rallied despite "tough" market conditions to post operating income to GBP162.3 million, edging 1.4% higher from GBP160.0 million last year.
Investec added: "The South African business performed well against a tough backdrop, with adjusted operating profit up 6.6% in rands.
"The UK & Other business achieved positive net organic growth in assets under management, particularly in our core discretionary managed services, supporting an increase in operating income of 1.4%."
In the soon to be demerged Asset Management unit, operating income climbed 5.9% year-on-year to GBP308.6 million from GBP291.3 million. Total assets under management rose 8.4% to GBP120.8 billion from GBP111.4 billion.
In September 2018, Investec proposed to demerge and list its asset management arm. This was due to limited synergies with its specialist bank and wealth & investment businesses. The firm added on Thursday that the process was "progressing well".
The new entity, which will be called Ninety One, will list on the London and Johannesburg stock exchanges in the first quarter of 2020.
Investec Ltd was down 1.8% at ZAR82.76 in Johannesburg on Thursday morning. Investec PLC was 2.9% lower at 420.50 pence in early trade in London.
By Eric Cunha; [email protected]
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