Investec increased adjusted operating profit 7.6% to £475 million (R10.85 billion) in the first half of its 2025 financial year following a solid performance in both SA and the UK, and a record interim dividend of 16.5 pence per share was 6.5% higher.
Pre-provision adjusted operating profit increased 11.1% to £541.6m, as revenue grew by 5.6% against operating cost growth of 0.8%. The dividend translated to a 41.7% payout ratio, which is within the 35% to 50% payout policy.
Group chief executive Fani Titi said they had delivered “a solid performance…in an evolving environment.”
Titi said revenue had benefited from balance sheet growth, the depth of the client franchises, as well as the elevated interest rate environment.
Net interest income (NII) was supported by higher average lending books and higher average interest rates, partly offset by deposit repricing in the UK.
Non-interest revenue (NIR) growth reflected increased capital-light income from the banking businesses, as well as strong growth in fees from the SA Wealth & Investment business. Investment income also contributed positively to NIR growth as global markets improved.
Trading income was lower due to the non-repeat of prior-year risk management gains from hedging the remaining financial products run-down book in the UK, as well as due to hedge accounting in the South African credit investments portfolio from the first quarter.
The cost to income ratio improved to 50.8% (53.3%) as revenue grew ahead of costs. Total operating costs remained flat. Fixed operating expenditure increased 6.7% reflecting investment in people and technology for growth and inflationary pressures.
“We are pleased to report a ROE (return on equity) of 13.9%, putting us on track to achieve the full year ROE guidance. The group has maintained strong capital and liquidity levels, positioning us well to support our clients and pursue disciplined growth in an improving operating environment,” said Titi.
Looking to the full year, he said revenue momentum was expected to be underpinned by average book growth, stronger client activity levels given expected improvement in GDP growth, and continued success in client acquisition strategies, partly offset by the effects of reducing global interest rates.
Group ROE was expected to be 14% for the year. The cost to income ratio was expected to be between 51% and 53%.
The credit loss ratio was expected to be within the through-the-cycle range of 25bps to 45bps. Southern Africa was expected to be close to the lower end of the range of 15bps to 35bps. The UK & Other ratio was expected to be between 50bps and 60bps.
Overall credit quality remained strong in the first half. Net asset value per share came to 575.7p (March 31, 2024: 563.9p), driven by strong capital generation and foreign exchange translation gains, partly offset by shareholder distributions.
Some £109.2m was invested in technology. The group’s cloud modernisation journey was progressing with 48% of the group’s estate completed. Client digital experiences across web and mobile channels continued to be personalised.
Core platforms were being modernised for scale and growth. Engineering capability was being enhanced, reducing time to market for new products and services.