20th Sep 2024 08:05
(Alliance News) - Investec PLC and Ltd on Friday warned that it expects its interim earnings to plummet at least 45% following the Burstone Group Ltd deal and the Rathbones Group PLC combination.
The Sandton, Johannesburg-based financial services firm projects earnings per share to slump by between 45% and 50% to a range of 35.2 pence and 38.2p for the first six months ending September 30, from 69.6p a year before.
It blamed Burstone's "deconsolidation", and the amortisation of intangible assets associated
with the Rathbones combination.
In July last year, Burstone acquired asset management businesses from Investec Ltd for ZAR850.0 million, as part of an internalisation. In another transaction, Rathbones completed an all-share combination with Investec Wealth & Investment Ltd, which had been a UK division of Investec, in September last year. Investec has a 41% stake in Rathbones.
But headline EPS is guided to be between 35.3p and 38.2p, compared to 36.9p. Headline earnings include the cost of executing strategic actions, and the amortisation of intangible assets associated with the Rathbones combination.
Group adjusted pretax operating profit is seen between GBP450 million and GBP482 million, up from GBP441.4 million.
Investec said it continues to trade in line with its guidance for the financial year ending March 31, 2025.
Core loans within Specialist Banking rose 6.1% annualised to GBP31.7 billion for the first five months that ended August 31, compared to GBP30.9 billion for the period to March 31, 2024, driven by private client lending in both geographies and corporate client lending in the UK.
Funds under management in Southern Africa grew 11% to GBP23.2 billion as at August 31, from GBP20.9 billion at March 31. Net discretionary inflows of R8.5 billion were augmented by net
inflows of R1.3 billion in non-discretionary FUM.
Over five months, revenue momentum from Investec's "diversified" client franchises continued.
Net interest income benefitted from the growth in average lending books and higher average interest rates, which was partly offset by the effects of deposit repricing in the UK.
Non-interest revenue growth, the company said, reflected the diversified nature of its business model.
By Artwell Dlamini, Alliance News reporter
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