Investec annual profit dips as interest costs take toll

(Alliance News) - Investec PLC and Ltd on Thursday reported a slight drop in annual profit as interest expense mounted, outshining increased client activity and expanding loan book.

The Sandton, Johannesburg-based financial services firm said its pretax profit from continuing operations GBP822.5 million for the financial year that ended March 31, down 7.9% from GBP893.9 million a year before.

Investec Wealth & Investment UK, which merged with Rathbones Group PLC in September last year, it classified as discontinued operation.

Interest expense for the 12-month period soared 45% to GBP2.78 billion from ZAR1.92 billion.

But the company described its financial performance as "strong". Investec said operating income rose 5.0% to GBP2.09 billion, compared to GBP1.99 billion, and was up 12% at constant currency.

Revenue growth was underpinned by the strong performance from the corporate client franchises in the UK and South Africa, and Investec Wealth & Investment in South Africa.

Finds under management for IW&I Southern Africa was GBP20.9 billion as at March 31, slightly up from GBP19.8 billion a year earlier.

Rathbones's funds under management and administration totalled GBP107.6 billion at March 31. Investec owns 41% of Rathbones.

Investec said net core loans increased 1.7% to GBP30.9 billion from GBP30.4 billion, primarily driven by corporate lending in both core geographies and private client lending in South Africa.

Customer deposits remained constant at GBP39.6 billion.

Investec declared a final dividend of 19.0 pence, up 8.6% from 17.5p, lifting the total payout to 34.5p, up 11% from 31.0p.

Earnings per share rose 23% 105.3p from 85.8p, while headline EPS was up 9.1% to 72.9p from 66.8p.

Net asset value per share grew 11% to 563.9p as at March 31 from 507.3p at March 31, 2023.

"The group has delivered strong financial performance notwithstanding the uncertain operating environment that prevailed throughout the financial year," Chief Executive Officer Fani Titi said.

Going forward, Investec expects its revenue momentum to continue, underpinned by loan book growth, stronger client activity levels and success in its client acquisition strategies.

By Artwell Dlamini, Alliance News reporter

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