Slide 1: Investor pre-close briefing
Investor pre pre-close close briefing 20 March 2014 1
Slide 2: Proviso
Proviso • Please note that matters discussed in today’s presentation may contain forward lookingg statements which are subject j to various risks and uncertainties and other factors, including, but not limited to: ‒ the further development of standards and interpretations under IFRS applicable to pa
Slide 3: Operational review
Out of the Ordinary® & Investec Operational review
Slide 4: Proviso: basis of figures in the operational review
• Proviso: unless otherwise stated, figures and trends discussed in the operational review relate to the eleven month period to 28 Feb 2014 and compare 1H2014 vs 2H2014 p • References to operating gp profit relate to normalised* operating p gpprofit. Trends within the divisional sections relate to n
Slide 5: Overview of the year ending 31 March 2014
Overview of the year ending 31 March 2014 • Over the past year we have focused on reshaping our business with a view to improving returns and have successfully restructured and/or sold certain businesses • The Th process to t identify id tif alternatives lt ti for f the th Australian A t li Professi
Slide 6: Overview of the year ending 31 March 2014
Overview of the year ending 31 March 2014 • Wealth & Investment’s results are expected to increase substantially and Asset Management is expected to report results moderately ahead of the prior year. Both divisions have benefited from higher levels of average funds under management supported by net
Slide 7: Overview of the year ending 31 March 2014
Overview of the year ending 31 March 2014 • Overall group results have been negatively impacted by the depreciation of the Rand: Pounds Sterling exchange rate of approximately 20% over the period 20 Rand/£ 18 16 14 12 4/1/2013 6/1/2013 8/1/2013 10/1/2013 12/1/2013 2/1/2014 7
Slide 8: Overview of the year ending 31 March 2014
Overview of the year ending 31 March 2014 • Against this backdrop, operating profit* is expected to be marginally ahead of the prior year - an increase of approximately 28% in Rands • Revenue (net of depreciation on operating leased assets) is expected to be marginally behind the prior year - an inc
Slide 9: Overview of the year ending 31 March 2014
Overview of the year ending 31 March 2014 • For the period 31 Mar 2013 to 28 Feb 2014: – Third party assets under management decreased 3% to £107.7bn – an increase of 8% on a currency neutral^ basis – Customer accounts (deposits) decreased 10% to £22.2bn - an increase of 6% on a currency neutral^ ba
Slide 10: Balance sheet soundness
Balance sheet soundness Liquidity and funding Cash and near cash • We have continued to diversify and £'mn lengthen our funding sources 10,000 Average 8,000 • The cost of funds has reduced in our UK and Australian businesses 6,000 4,000 • Advances as a percentage of customer 2,000 deposits p at 28 F
Slide 11: Impairment trends
Impairment trends • The total income statement Impairment analysis impairment charge is expected to be approximately 35% lower 350 £’mn than the prior year 300 250 • We expect the credit loss ratio 200 on total average core loans and advances to be 150 approximately pp y 0.70% ((Mar 100 2013: 0.84%;
Slide 12: Divisional review
Out of the Ordinary® & Investec Divisional review 12
Slide 13: Asset Management
Asset Management • Competitive long-term Assets under management: investment performance Since 31 Mar 2013: down 4% to £66.8bn; currency neutral^ up 6% • The business has been £’bn impacted by tapering and 80 repricing of emerging market 70 60 assets 50 40 • Positive net inflows to end of 30 Feb of
Slide 14: Wealth & Investment
Wealth & Investment • Performing well ahead of the Funds under management: prior year Since 31 Mar 2013: up 1% to £40.6bn; currency y neutral^ up p 10% ‒ Higher average funds under management 45 £’bn ‒ Net inflows of £1.1bn to 40 35 end of Feb 30 25 • Improving operating margins 20 • Selectively rec
Slide 15: Specialist Banking
Specialist Banking • The Specialist Bank is performing marginally ahead of the prior year Net interest margin Investment and trading income • Loan growth of 7% in neutral currencies • Strong performance from the South African • Stable lending margins unlisted investment portfolio • Cost of funds has
Slide 16: Additional aspects
Out of the Ordinary® & Investec Additional aspects 16
Slide 17: Other information
Other information • Effective tax rate: expected to be approximately 17% - 18% • Net non-operational costs of approximately £6mn (restructuring and other costs relating to Australia and the sale of the trust business, partially offset by profit on sale of Lease Direct Finance in the UK) • Net non-co
Slide 18: Conclusion
Out of the Ordinary® & Investec Conclusion 18
Slide 19: Conclusion
Conclusion • We have clarity on our strategic direction and our focus over the next period will be to execute our key strategic initiatives, including the sale of part of our business in Australia and our Kensington business • We aim to p perpetuate p and build a high g qquality y client driven orga
Slide 20: Investec pre-close briefing
Investec pre pre-close close briefing 20 March 2014 20
Slide 21: Contact details
Contact details For further information please refer to the Investor Relations section of www.investec.com Or contact the Investor Relations team: • Telephone: – UK: UK +44 (0) 207 597 5546 – SA: +27 (0) 11 286 7070 • E-mail: investorrelations@investec.com 21
Slide 22: Appendices
Out of the Ordinary® & Investec Appendices 22
Slide 23: Operating environment
Operating environment 28 Feb 30 Sep 31 Mar % move since 2014 2013 2013 Mar 2013 JSE ALSI 47,329 , 44,032 , 39,861 , 18.7% FTSE ALSI 3,667 3,444 3,381 8.5% Australian All Ord 5,415 5,218 4,980 8.7% SA Prime 9.00% 8.50% 8.50% 0.5% UK Clearing Banks 0.50% 0.50% 0.50% - RBA cash rate target 2.50% 2.50%
Slide 24: Normalised operating profit: six months ended Sep 2013
Normalised* operating profit: For the six months ended 30 Sep 2013 £’000 UK & Southern Australia Total Europe p Africa group g p Asset Management 33,446 38,494 - 71,940 Wealth & Investment 20,690 10,151 - 30,841 Specialist Banking 26,881 107,081 (13,925) 120,037 Total group 81,017 155,726 (13,925) 2
Slide 25: Normalised operating profit: year ended Mar 2013
Normalised* operating profit: For the year ended 31 Mar 2013 as restated £’000 UK & Southern Australia Total Europe Africa group Asset Management 59,341 81,066 - 140,407 Wealth & Investment 33,910 16,757 - 50,667 Specialist Banking 42,049 189,754 3,401 235,204 Total group 135,300 287,577 3,401 426,2
Slide 26: Investec Asset Management: Assets under management
Investec Asset Management: Assets under management* £’million 28 Feb 30 Sep 31 Mar 30 Sep 31 Mar % change 2014 2013 2013 2012 2012 YTD vs Mar 2013 UK and international 41,727 40,266 41,569 36,034 36,154 0.4% - Mutual funds 15,269 15,541 17,004 16,150 17,490 (10.2%) - Segregated mandates 26,458 24,72
Slide 27: Investec Wealth & Investment SA: Funds under management
Investec Wealth & Investment SA: Funds under management R’million 28 Feb 30 Sep 31 Mar 30 Sep 31 Mar % change 2014 2013 2013 2012 2012 YTD vs Mar 2013 Discretionary 47,831 44,979 36,352 30,947 26,809 31.6% Non-discretionary 197,421 195,250 181,668 159,514 142,546 8.7% Total 245,252 , 240,229 , 218,0
Slide 28: Investec Wealth & Investment Non-SA: Funds under management
Investec Wealth & Investment Non-SA: Funds under management £’million 28 Feb 30 Sep 31 Mar 30 Sep 31 Mar % change 2014 2013 2013 2012 2012 YTD vs Mar 2013 Total IWI and Europe - Discretionary 18,530 17,149 16,381 14,786 14,187 13.1% - Non-discretionary and other 8,419 8,179 8,352 7,706 6,782 0.8% To
Slide 29: Total group core loans
Total group core loans £’million 28 Feb 30 Sep 31 Mar 30 Sep 31 Mar % change 2014 2013 2013 2012 2012 YTD vs Mar 2013 UK and Europe 6,303 6,235 6,045 5,778 5,788 4.3% Southern Africa 8,635 9,227 10,165 9,983 10,490 (15.1%) Australia 1,696 1,929 2,205 1,991 1,948 (23.1%) Total core loans 16,634 17,39
Slide 30: Total group customer deposits
Total group customer deposits £’million 28 Feb 30 Sep 31 Mar 30 Sep 31 Mar % change 2014 2013 2013 2012 2012 YTD vs Mar 2013 UK and Europe 9,288 9,309 9,561 9,673 9,459 (2.9%) Southern Africa 11,440 12,312 13,278 13,371 14,348 (13.8%) Australia 1,483 1,610 1,693 1,644 1,537 (12.4%) Total deposits 22