Investec's half-year headline earnings surge almost 30%


Wealth, investment and financial services giant Investec delivered a healthy set of half-year results on Thursday, with headline earnings per share (Heps) surging 29.6%, to 32 (UK) pence per share or 663 cents per share in South African currency terms.

Heps is a key profit measure for most corporates in SA. The surge in profit for Investec came as the group dished out more loans and benefitted from higher interest rates. 

The group, which is dually listed on the Johannesburg and London stock exchanges, said total operating profit was up 18.9% to £1.13 billion (R23.4 billion) for the six months ending 30 September 2022, while earnings attributable to shareholders soared more than 91% to £478 million (R9.5 billion).

Speaking about the performance, Investec CEO Fani Titi, said the group’s earnings benefited from rising interest rates around the world and other factors.

The other positive factors he cited include the continued momentum in its client franchises and higher loan advances from client acquisitions, despite operating in a highly volatile market.

Market volatility did however contribute to Investec’s funds under management falling 7.6% during the half-year, to £59 billion (R1.2 trillion).

“The income in our wealth and investment businesses, however, was negatively impacted by the effects of the market sell-off on average funds under management,” noted Titi.

For its South African wealth and investment unit, Investec expanded global investment offerings during the reporting period, recording discretionary and annuity net inflows of R2.1 billion.

Adjusted operating profit was up 7.6% to R300.7 million.

UK business

Meanwhile, in the UK wealth and investment business, funds under management amounted to £38.8 billion (R804 billion), with operating profit falling 7.9% to £40.3 million (R835 million).

Its core loans grew 7.1% to an annualised £31 billion (R642 billion), largely driven by corporate lending in its South African and UK core geographies as well as residential mortgages, particularly in the UK.

Although growth in lending to corporate clients has been advanced to various sectors, the company is experiencing demand in lending such as the energy sector, said Nishlan Samujh, Investec’s group finance director.

“The energy sector here in South Africa, as we move into a just transition environment, [together with] the opportunities for financing clients doing private sector development of new sources of energy, is very good for the market,” said Samujh.

Investec’s board has proposed an interim dividend of 13.5 pence per share (1H2022: 11 pence), at a payout ratio of 41%. This is 22.7% up on its dividend for the comparative half-year.

The group’s share price closed 0.66% firmed on the JSE on Thursday, at R93.86 a piece.