Investec expectations hit by challenging market backdrop
Investec has said it remains on track despite battling a “challenging macroeconomic backdrop and market volatility” during the first half of its financial year.
The FTSE 250 bank said it expects its adjusted operating profit before tax for the six months to be between £451m and £481.8m, in line with £474.7m it recorded during the same period last year.
Adjusted earnings per share have also been forecasted to come between 38.7p and 41.5p, two percent behind to five per cent ahead of last year.
Basic earnings per shares are expected to fall by six per cent or increase by two per cent, falling between 36p to 38.8p.
Group chief executive Fani Titi said: “[We] continued to make progress on our strategic objectives, notwithstanding the challenging macroeconomic backdrop and market volatility.”
“We are on track to with our strategy to build scale, leverage existing client franchises and execute plans to enhance our proposition.”
Investec remains committed to completing its £100m share buyback programme announced in May, purchasing £46m shares to date.
The group’s share price fell 0.5 per cent in early morning trading to 582p.
Investec boosted by specialist arm
Meanwhile, funds under management in its Southern African wealth arm, increased by 7.8 per cent to £25.2bn from £23.4bn.
Rathbone’s, the UK wealth manager the bank has a 41 per cent stake in, reported funds under management and administration of £109bn.
Investec also said customer deposits decreased by 1.9 per cent to £40.8bn, driven by the continuation of its strategy to optimise the liability mix in Southern Africa.
Specialist banking core loans increased 4.7 per cent to £33bn, due to growth in both corporate lending books and private clients across both countries.
Revenue 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.
Titi said: “The group has robust capital and liquidity levels to manage the impact of external challenges and deliver on our clear and executable strategy to enhance long-term shareholder returns.”
Motor finance ruling
The group also welcomed the Supreme Court’s motor finance ruling, with the bank reserving £30m in provisions prior to the decision last month.
Titi said: “We welcomed the ruling of the Supreme Court, we think there was a great degree of balanace.”
Titi added the bank is looking forward to “more clarity” from the FCA on the redress scheme, which the financial regulator estimated to cost between £9bn and £18bn.