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Investec set for profit boost after pandemic slowdown

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City Editor

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Brooks Macdonald is to review its international division, which it said was under performing.
Brooks Macdonald is to review its international division, which it said was under performing.

Anglo-South African banking giant Investec is set to report bumper profits this year as it rebounds from a pandemic slowdown in 2020.

In a trading update today bosses said adjusted operating profits at the firm were set to come in between £642m and £683m for the year ending 31st March.

The guidance marks a major uptick on the previous year as the pandemic hit the lender and profits came in at £377.6m.

Bosses said the firm had felt the boost of continued client acquisition, growth in funds under management (FUM) and higher average advances.

Investec boss Fani Titi said the group was set to beat expectations.

“The Group’s trading performance for the eleven months ended on 28 February 2022 has surpassed the pre-COVID comparative period, benefitting from strategic execution over the past three years, and post-pandemic recovery,” he said.

“We have seen good momentum across all our businesses and continued growth in revenue. The recovery in performance underscores the continued resilience of our client franchises and our strong balance sheet leaves us well positioned to pursue identified growth opportunities.”

While the firm said it has “no material direct or indirect exposure to Russia or Ukraine” it said the current market volatility may have an impact on performance in the period ahead.  

Revenue momentum experienced in the first half of the financial year continued into the second half, the FTSE 250-listed firm said, with income lifted by lower funding costs and higher average lending books.

Increased client activity, higher lending turnover and supportive market conditions underpinned the growth in non-interest revenue over the period.

Earnings per share are also set to sail past previous guidance, with the firm now expecting between 51p and 55p, up from the 48p to 53p range guided in November 2021.

Investec’s wealth and investment business grew its FUM by 6.6 per cent to £61.9 billion, driven by net inflows of £2bn and what the firm said were “positive market conditions”.