Bumper UK growth pushes Investec upwards despite volatile global markets
Investec’s profit climbed in 2023 thanks to rising interest rates but the bank also saw its funds under management slip amid a volatile environment.
Investec’s adjusted operating profit rose 21.6 per cent to £835.9m reflecting growth in both of Investec’s main markets. In the UK, profit rose by over 30 per cent while in South Africa it rose by 15 per cent.
The boost in profit came from higher interest rates and a slight growth in loans. Interest income at the banking and wealth management group increased 37.1 per cent across the year.
Non-interest income fell, driven primarily by a decrease in fees. This was a result of market volatility and uncertainty in the UK equity markets.
However, funds under management slipped by 4.5 per cent to £61bn. Investec pinned this decrease on “unfavourable market movements”.
In a potential sign of deteriorating economy, Investec boosted its provision for bad loans to £81.1m from £28.8m. This reflected a more pessimistic macroeconomic outlook compared to March 2022.
Post-year end Investec announced that its wealth and management business would combine with Rathbones to create one of the UK’s top money managers. Today Investec said the combination would “enhance the client proposition across banking and wealth management services for both groups”.
Investec will own 41.25 per cent of the enlarged group. The deal is expected to be completed in the fourth quarter of this year.
Looking forward, Investec said its outlook for revenue was underpinned by “moderate book growth, continued elevated interest rates and client activity levels”.
Fani Titi, chief executive commented: “The group reported strong results in a challenging macro backdrop, with all our client franchises reporting growth in pre-provision adjusted operating profit. Our focused approach to support our clients and the diversified nature of our revenue streams underpinned the financial performance.”