Investec signals modest earnings growth
South African investment and wealth management group Investec has signalled modest earnings growth in its latest update, after diverse revenue streams and ongoing investment offset macroeconomic challenges.
The group expects a three to six per cent increase in earnings per share from the prior year, ranging from 81.6p to 84p.
Headline earnings per share are projected to be flat to two per cent higher, between 72.6p to 74.1p, while basic earnings per share are forecast to jump six per cent to nine per cent, between 76.9p to 79.2p.
Profit before tax is anticipated to be between £940.3m to £965.9m, up from £920m the year before.
Shares slumped 4.6 per cent in early morning trading to 559.6p.
Business arms
The FTSE 250 constituent expects its South Africa business arm to deliver operating profit four per cent ahead of the prior year, reaching £463m, with the company noting “pleasing growth” in its loan book and levels of customer activity.
The group also confirmed it is investing in its private client capabilities within the region.
The UK is expected to deliver flat growth, with operating profit in line with the prior year at £457m, with its specialist bank arm expected to be between one and five per cent behind the prior year’s £410.1m.
The group’s Investec Wealth and Investment (IW&I) arm’s integration into Rathbones continued to progress, as the business exceeded expectations, contributing £76m on an annualised run-rate basis, significantly above Rathbones’ £60m target, and making the group the UK’s largest discretionary wealth manager.
Fani Titi, group chief executive of Investec, said: “We are pleased with our strategic investment in Rathbones which is core to our long-term commitment to the UK wealth market, and pleased with the work that Jonathan Sorrell and his team are doing.”
Funds under management jump
Across its specialist banking arm, core loans increased 7.4 per cent to £36.3bn to £32.4bn, bolstered by growth across both its client lending books and corporate lending books.
Customer deposits jumped 5.7 per cent to £45.5bn.
Funds under management in its South African wealth business increased by 26.7 per cent to £29.6bn, up from £23.4bn eleven months ago, following strong net inflows in its discretionary and annuity funds.
Investec’s associate Rathbones reported funds under management and administration of £1156bn, up from £109.2bn.