TOP NEWS: Investec annual profit soars on huge client flows, recovery

(Alliance News) - Investec PLC and Ltd reported on Thursday annual profit more than doubled, ...

Alliance News 19 May, 2022 | 7:52AM
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(Alliance News) - Investec PLC and Ltd reported on Thursday annual profit more than doubled, owing largely to robust net inflows, solid top-line growth and a strong economic recovery.

The Sandton-headquartered financial services company multiplied its pretax profit to GBP697.3 million for the financial year ended March 31 from GBP331.6 million in the prior year.

Funds under management expanded by 9.2% to GBP63.8 billion as at March 31 from GBP58.4 billion a year previously, underpinned by net inflows of GBP1.9 billion and improved market levels.

But market volatility in the last quarter tempered growth in funds under management at year-end.

Over the 12 months, revenue rose by 21% to GBP1.99 billion from GBP1.64 billion, bolstered partly by a post-pandemic economic recovery.

Net interest income was also 21% higher at GBP945.3 million from GBP778.1 million, benefitting from higher average interest earning assets and lower funding costs.

Cost-to-income ratio improved to 63.3% from 70.9%, with the increase in fixed operating expenditure well contained at 1.1%.

Fee and commission income was up 9.3% to GBP846.6 million, compared to GBP791.2 million, driven by improved client activity across the board and higher average funds under management in Wealth & Investment.

This increase was partially offset by the prior year wind down of Australia and lower equity capital markets activity in the UK off a higher base.

Investec declared a final dividend of 14.0 pence, bringing the total payout for the year to 25.0p, up sharply from 13.0p last year.

With the pending distribution of 15% of Ninety One PLC and Ltd to shareholders, Investec would have returned an aggregate value of about GBP1.6 billion, or ZAR32 billion, to its shareholders through the demerger and distribution on successful completion.

Headline earnings per share more doubled to 53.3p from 26.6p, while basic earnings per share also soared to 52.0p from 25.2p.

Investec Chief Executive Fani Titi said the group continues to navigate the uncertain outlook emanating from ongoing inflationary pressures and the economic effects of the invasion of Ukraine.

Based on the 2022 financial performance, current business momentum and a macro-economic outlook with elevated forecast risk in the short term, the Anglo-South African company expects revenue outlook to be underpinned by higher average interest rates supporting margins, higher average lending books and increased activity levels given expected GDP growth.

The cost to income ratio is likely to be within the group target of 63%, notwithstanding inflationary pressures and continued investment in technology.

The distribution of Ninety One is expected to result in a 65-basis-point reduction in Investec Ltd's common equity tier 1, or CET1, ratio and to have an "immaterial impact" on Investec Plc.

Investec also said it has appointed Vanessa Olver as a non-executive director.

In Johannesburg, Investec Ltd shares shed 3.1% at ZAR89.87 on Thursday morning, while PLC shares lost 4.2% to 441.70 pence in London.

By Artwell Dlamini; artwelldlamini@alliancenews.com

Copyright 2022 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Investec PLC 411.80 GBX -6.00 -
Ninety One PLC Ordinary Shares 190.10 GBX -2.76 -
Ninety One Ltd Ordinary Shares 3,684.00 ZAC -2.85 -

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