Markets pose difficulties for Investec's predictions
Investec, a FTSE 250 bank, has reported a 7.8 percent increase in funds under management in its Southern African wealth arm, taking the total to £25.2bn from £23.4bn. This growth is a testament to the bank's strategy, which includes building scale, leveraging existing client franchises, and executing plans to enhance its proposition.
However, customer deposits at Investec decreased by 1.9% to £40.8bn, a move that was strategic to optimize the liability mix in Southern Africa.
Group chief executive Fani Titi expressed confidence in the bank's ability to manage external challenges and deliver on its strategy to enhance long-term shareholder returns. Titi stated that Investec is making progress on its strategic objectives despite a challenging macroeconomic backdrop and market volatility.
Revenue at Investec was supported by increased activity levels, higher average advances, and positive net inflows in discretionary and annuity funds under management. However, growth was offset by the impact of lower average interest rates and the reduced income from the group's investments portfolio.
Investec is expecting its adjusted operating profit before tax for the first half of its financial year to be between £451m and £481.8m. The bank is also committed to completing its £100m share buyback programme announced in May, having purchased £46m shares to date.
Basic earnings per shares are forecasted to come between 36p to 38.8p, with adjusted earnings per share expected to be between 38.7p and 41.5p.
Titi also welcomed the Supreme Court's motor finance ruling, stating there was a great degree of balance in the decision. The bank has reserved £30m in provisions in relation to the ruling.
Rathbone's, the UK wealth manager that Investec has a 41% stake in, reported funds under management and administration of £109bn. Titi looks forward to more clarity from the FCA on the redress scheme, which the financial regulator estimated to cost between £9bn and £18bn.
Cumesh Moodliar, the CEO of Investec South Africa, led the bank during the first half of its financial year amid a "challenging macroeconomic backdrop and market volatility." Specialist banking core loans increased 4.7% to £33bn, due to growth in both corporate lending books and private clients across both countries.
In early morning trading, Investec's share price fell 0.5 percent to 582p. Despite this, Titi remains optimistic about the bank's future and its ability to navigate through the current market conditions.
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