Investec plc · LSE:INVP
Investec — Investec Bank — Investor Presentation (November 2024)
43 slides from Investec's investor presentation, November 2024
Slide 1: Investec Bank Limited Investor generic presentation
Investec Bank Limited Investor generic presentation November 2024 The information in this presentation relates to the six months ended 30 September 2024, unless otherwise indicated.
Slide 2: Contents
Contents 01 Investec 02 03 04 05 Investec Bank IBL IBL peer IBL Group at a Limited (IBL) operating analysis Appendices glance overview fundamentals 22
Slide 3: Investec Group at a glance
Investec Group at a glance 3
Slide 4: Investec Dual Listed Company structure
Investec Dual Listed Company structure Non-Southern African operations Southern African operations • Investec plc and Investec Limited are Investec plc Investec Ltd separate legal entities and listings, but are bound together by contractual agreements Sharing and mechanisms Agreement • Investec oper
Slide 5: Our international footprint
Our international footprint Wealth & Investment Activities Since inception, we have Private Client Banking Activities expanded through a combination of substantial organic growth and Corporate and Investment Banking Activities a series of strategic acquisitions. Corporate Advisory and Investment Act
Slide 6: One Investec
One Investec Our purpose is to create enduring worth. Our values 50 years of Deep client partnerships, built on trust and Out of the Ordinary service, are the bedrock of our business heritage. We uphold cast-iron integrity in all our dealings, consistently displaying moral strength Two core We seek
Slide 7: Investment proposition
Investment proposition Well positioned to pursue long-term growth 1 Well capitalised and highly liquid balance sheet 2 Improved capital allocation – including ongoing strategies to optimise the capital base 3 Diversified mix of earnings by geography and business, with significant annuity income unde
Slide 8: Fuelling a robust growth agenda
Fuelling a robust growth agenda Growth Objectives Continued execution with Accelerate and scale Further develop connected discipline to drive growth initiatives client eco-systems across optimisation of returns business units & geographies Underpinned by Deepening our entrepreneurial culture (Out of
Slide 9: Sustainability highlights (Investec Bank Limited)
Sustainability highlights (Investec Bank Limited) Operate responsibly, finance and invest for a sustainable future and maintain our competitive sustainability position PROGRESS MADE ON OUR IMPACT SDGs Net-zero commitments Equality commitments Awarded best FTSE 250 56% ethnic diversity 3 671 YES inte
Slide 10: Focused on doing well and doing good (Investec Bank Limited)
Focused on doing well and doing good (Investec Bank Limited) Other highlights Specialist banking Wealth & Investment • Following our recently enhanced Sustainable and Transition Finance • The Wealth & Investment International ESG and Responsible Investing Classification Framework, a primary area of
Slide 11: Investec Bank Limited (IBL) overview
Investec Bank Limited (IBL) overview 11
Slide 12: Overview of Investec Bank Limited
Overview of Investec Bank Limited IBL is a specialist bank with a strong franchise in niche market segments operating primarily in Southern Africa. Total assets Net core loans Total equity Customer deposits Employees R610.2bn R344.4bn R49.9bn R434.7bn 4 500+ Key highlights Well established franchise
Slide 13: Specialist Banking
Specialist Banking We have a specialised niche offering to a select target market • Invested in our • Strong technology • Deepening our • Our growth initiatives • Maintaining cost • Maintaining sound business, and digital platforms existing client and strong franchise efficiency with capital ratios
Slide 14: Specialist Banking
Specialist Banking High-quality specialist banking solutions with leading positions in selected areas Corporate and Investment Banking and Private Banking Investec for Business Institutional banking Principal Investments For high net worth clients, For corporates (mid to large professionals and emer
Slide 15: Specialist Banking: Private Banking
Specialist Banking: Private Banking A full-service Private Banking offering integrated into One Place™ Ambition • To be a leading domestic and international Private Bank • High net worth individuals, high-income professionals, sophisticated investors, emerging and established entrepreneurs, and Clea
Slide 16: Specialist Banking: Corporate and Institutional Banking
Specialist Banking: Corporate and Institutional Banking Strong franchise value and leading market position in our niche markets Ambition • To be a top tier corporate and institutional bank • Mid to large size corporates (listed and unlisted), financial advisers and intermediaries, government and pub
Slide 17: Specialist Banking: Investec for Business
Specialist Banking: Investec for Business Bespoke lending offerings for working capital optimisation and business growth Ambition • Develop an integrated niche offering to our target clients Clear target market • Smaller and mid-tier corporates • Combining bespoke lending with Investec’s other trans
Slide 18: Specialist Banking: Investment Banking and Principal Investments
Specialist Banking: Investment Banking and Principal Investments Delivering holistic investment solutions to clients Investment banking Principal investment activities • Using our collective skill set to optimise capital allocation in principal Ambition • To be the leading investment bank with an in
Slide 19: IBL operating fundamentals
IBL operating fundamentals 19
Slide 20: Revenue supported by resilient franchises
Revenue supported by resilient franchises R’mn Revenue mix Revenue versus expenses R’bn R’bn 100% 10.2 100% 12 10 9.4 10.2 10 9.3 8 75% 75% 8 6 4.7 50% 6 4.3 4 50% 4 25% 2 2 0 25% 0 0% Sept 20 Sept 21 Sept 22 Sept 23 Sept 24 Sept 20 Sept 21 Sept 22 Sept 23 Sept 24 Net interest income Annuity fees an
Slide 21: Operating Profit
Operating Profit • IBL reported an increase in profit before goodwill and acquired intangibles of 6.5%. Our client engagement has been proactive, resulting in good client acquisition across both private and corporate clients in the period under review. Profits increased primarily due to: – Higher ne
Slide 22: Sound capital base
Sound capital base Total capital resources (R'bn) Total risk-weighted assets: lower RWA intensity (R'bn) 80 700 80% 611.7 610.2 600 60 60% 53.3 53.2 500 400 40 40% 300 273.2 261.5 200 20 20% 100 0 0 —% 2020 2021 2022 2023 2024 Sept 24 2020 2021 2022 2023 2024 Sept 24 Shareholders equity Perpetual pr
Slide 23: Strong capital ratios
Strong capital ratios Capital development Basel capital ratios# AIRB Scope * 24% 21.5% 30 Sept 2024 31 March 2023 20% 17.2% Common equity Tier 1 ^ 17.2% 16.5% 16% 12% Tier 1 ratio 18.7% 17.8% 8% 7.1% Total capital ratio 21.5% 20.5% 4% Leverage ratio 7.1% 7.1% 0% * Investec Limited adopts the Interna
Slide 24: Consistent asset growth, gearing ratios remain low
Consistent asset growth, gearing ratios remain low Total assets composition Gearing remains low1 R’bn 14 800 12 11.5 614 610 600 10 112 95 8 7.5 161 171 400 6 4 200 342 344 2 0 0 2020 2021 2022 2023 2024 Sept 2024 2020 2021 2022 2023 2024 Sept 24 Net core loans Cash and Near Cash Balances Other Asse
Slide 25: Substantial surplus liquidity
Substantial surplus liquidity • We maintain a high level of readily available, high quality liquid assets, targeting a minimum cash to customer deposit ratio of 25%. Cash and near cash balances Cash and near cash balances have increased significantly since 30 September 2014 (8% CAGR) to R170.9bn at
Slide 26: Healthy loan to deposit ratio, stable customer deposit base
Healthy loan to deposit ratio, stable customer deposit base Fully self funded from customer deposits: healthy loan to deposit ratio R’mn 500 100% 400 80% • Customer deposits have grown by 112.1% (c.7.8% CAGR p.a.) since 2014 to R434.7bn at 30 September 2024 300 60% • Loans and advances as a percenta
Slide 27: Diversified funding strategy
Diversified funding strategy • Investec’s funding consists primarily of customer deposits • Investec adopts a conservative and prudent funding strategy Conservative and prudent funding strategy 1 Maintaining a high base of high-quality liquid assets 5 Low reliance on wholesale funding 2 Diversifying
Slide 28: Exposures in a select target market
Exposures in a select target market • Credit and counterparty exposures are to a select target market: – high net worth and high-income clients – mid to large sized corporates – government, public sector bodies and institutions • We typically originate loans with the intent of holding these assets t
Slide 29: Asset quality
Asset quality Core loans and asset quality 400 4% 300 3% 200 2% 100 1% 0 0% 2020 2021 2022 2023 2024 Sept 24 Net core loans (LHS) Credit loss ratio (RHS) Stage 3 as a % of gross core loans subject to ECL (RHS) • Credit quality metrics on core loans and advances for the year ending 30 September 2024
Slide 30: Asset quality metrics
Asset quality metrics Provision build Gross core loans subject to ECL by stage R’mn R’mn 4 000 as % of 5.3% 5.2% 5.9% 2.4% 2.4% gross core 1.5% 2.5% 1.8% 3.6% 2.7% 20 000 loans 3 000 17 589 1 893 16 328 2 000 1 206 1 879 14 969 1 827 15 000 620 623 1 000 250 215 12 203 868 760 644 525 9 458 0 10 000
Slide 31: Credit ratings
Credit ratings Current credit ratings Historical credit ratings Moody’s Rating Outlook Long-Term Foreign Currency Current Nov 20* May 20* Apr 20* National scale long-term deposit rating Aaa.za Stable Deposit Rating National scale short-term deposit rating P-1.za Moody’s Baa3 Ba2 Ba1 Ba1 Global long-
Slide 32: Peer analysis
Peer analysis 32
Slide 33: Peer group companies
Peer group companies Long-Term Deposit Rating S&P Fitch Moody's Global Credit Ratings Foreign National Foreign National Viability National Baseline credit Global International National currency* scale currency* scale ratings scale assessment Absa Bank Limited n/a za.AA BB- AA+(zaf) bb- Baa3 Aaa.za b
Slide 34: Peer group companies (cont.)
Peer group companies* (cont.) Investec is one of the more proportionately liquid of the Big 5 banks and is a net provider of funds to the interbank market in South Africa Liquidity: regulatory liquidity coverage ratio Asset quality ratios 176.3 7.00% 6.5% 180 6.00% 5.7% 160 140 127.4 126.2 122.70 12
Slide 35: Peer group companies (cont.)
Peer group companies (cont.) Definitions and/or explanations of certain ratios: • A capital ratio is a measure of a bank's available capital expressed as a percentage of a bank's risk-weighted assets. It is based on regulatory qualifying capital (including common equity tier 1, additional tier 1 and
Slide 36: IBL Appendices
IBL Appendices 36
Slide 37: Macroeconomic scenarios – 30 September 2024
Macroeconomic scenarios – 30 September 2024 Key judgements at 30 September 2024 R'bn South Africa GDP forecast The measurement of ECL requires the use of multiple economic scenarios to calculate a 6 000 probability weighted forward-looking estimate. These scenarios are updated at least twice a year,
Slide 38: IBL: salient financial features
IBL: salient financial features Key financial statistics 30 Sept 2024 30 Sept 2023 % change 31 March 2024 Total operating income before expected credit loss impairment charges (R’million) 10 177 9 365 8.7% 18 347 Operating costs (R’million) 4 686 4 301 9.0% 8 783 Operating profit before goodwill and
Slide 39: IBL: income statement
IBL: income statement R’million 30 Sept 2024 30 Sept 2023 % change Interest income 27 135 25 647 5.8% Interest expense (19 311) (18 264) 5.7% Net interest income 7 824 7 383 6.0% Fee and commission income 2 270 2 192 3.5% Fee and commission expense (527) (464) 13.6% Investment income 396 324 22.0% S
Slide 40: IBL: balance sheet
IBL: balance sheet R’million 30 Sept 2024 31 March 2024 30 Sept 2023 Assets Cash and balances at central banks 20 064 14 795 13 450 Loans and advances to banks 8 471 7 751 7 789 Non-sovereign and non-bank cash placements 9 820 10 818 9 113 Reverse repurchase agreements and cash collateral on securit
Slide 41: IBL: balance sheet (cont.)
IBL: balance sheet (cont.) R’million 30 Sept 2024 31 March 2024 30 Sept 2023 Liabilities Deposits by banks 32 375 31 065 34 973 Derivative financial instruments 18 117 14 172 35 362 Other trading liabilities 22 753 20 410 3 875 Repurchase agreements and cash collateral on securities lent 28 198 19 7
Slide 42: IBL: asset quality
IBL: asset quality R’million 30 Sept 2024 31 March 2024 Gross core loans 346 983 344 339 of which FVPL (excluding fixed rate loans) 1 122 1 137 Gross core loans subject to ECL* 345 861 343 202 Stage 1 327 999 322 779 Stage 2 8 404 8 220 of which past due greater than 30 days 930 671 Stage 3 9 458 12
Slide 43: IBL: analysis of core loans by risk category
IBL: analysis of core loans by risk category Gross core loans at Gross core loans at amortised cost and FVPL (subject to ECL) FVPL (not subject to Gross core loans ECL) Stage 1 Stage 2 Stage 3 Total Gross Gross Gross Gross ECL ECL ECL ECL At September 30, 2024 Exposure Exposure Exposure Exposure Len
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