Investec plc · LSE:INVP
Investec — Investor Presentation (November 2024)
44 slides from Investec's investor presentation, November 2024
Slide 1: Investec plc Investor generic presentation
Investec plc 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 Group 02 03 04 05 Overview Investec plc Further Appendix at a glance of Investec plc operating information and fundamentals peer analysis 2 2
Slide 3: Investec Group at a glance
Investec Group at a glance 3
Slide 4: Dual Listed Company structure
Investec Dual Listed Company structure Non-Southern African operations Southern African operations • Investec plc and Investec Limited are separate legal entities and listings, but are Investec plc Investec Ltd bound together by contractual agreements and mechanisms Sharing 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: Overview of Investec plc
Overview of Investec plc 9 9
Slide 10: Investec plc key highlights
Investec plc The Investec Group was established in 1974 and has been operating in the UK for more than 30 years since 1992. Total assets Net core loans Customer deposits FUMA Employees £30.1bn £16.7bn £21.6bn Rathbones Group Plc* £108.8bn at 30 September 2 200+ 2024 Key highlights Diversified revenu
Slide 11: Strategic positioning
Strategic positioning Building scale & relevance with the client at the centre – creating enduring worth DELIVERING A UNIQUE BREADTH OF CAPABILITIES IN THE UK MID-MARKET “Hi-tech & Hi-touch” Private Private Private Client Companies Equity Enhanced by the strategic partnership with Rathbones Group Li
Slide 12: Specialist Banking
Specialist Banking Winning in under-serviced parts of the market through dynamic, full service offering Private equity and sponsor- Private clients Private companies Publicly listed companies Specialist sectors backed companies For UK mid-market founder For high net worth clients that For UK mid-mar
Slide 13: Wealth & Investment UK
Adjusted operating profit* Wealth & Investment UK Combination with Rathbones successfully completed on 21 Sept 2023 £32.3 million • In the prior period (pre-combination): IW&I UK reported adjusted operating profit (post-tax) of £35.9mn and an operating margin of 25.2% • The current period (post-comb
Slide 14: Investec plc ranks 7th for UK banks by revenue and 8th by profits
Investec plc ranks 7th for UK banks by revenue and 8th by profits • Investec plc is a substantial business generating strong and consistent revenues over many years • Investec plc revenue during the 6 months to 30 September 2024 totaled £587mn (£1,174mn annualised). The chart below shows the relativ
Slide 15: Investec plc's operating fundamentals
Investec plc’s operating fundamentals 15
Slide 16: Profitability supported by diversified revenue streams
Profitability supported by diversified revenue streams Revenue mix (£'mn) 587 600 568 481 400 Other operating income Trading income 200 Share of post taxation profit of associates and joint venture holding Investment income Net fee and commisssion income 0 Net interest income Sept 2022 Sept 2023 Sep
Slide 17: Cost to income ratio decreasing overtime
Cost to income ratio decreasing overtime Costs and cost to income ratio^ (£'mn) 400 325 309 292 300 57.2% 60.7% 52.7% 200 100 Operating costs (LHS) 0 Cost to income ratio (RHS) Sept 22 Sept 23 Sept 24 • Focused on managing costs while building for the future ◦ Continue to leverage technology and exi
Slide 18: Profitability supported by diversified revenue streams
Profitability supported by diversified revenue streams Adjusted operating profit1 (£'mn) Business mix percentage contribution to adjusted operating profit1 300 278.3 2% 2% 2% 243.4 225.4 14% 15% 204.1 14% 200 Sept 24 Sept 23 Mar 24 100 — 83% 83% 83% Sept 20 Sept 21 Sept 22 Sept 23 Sept 24 Adjusted o
Slide 19: Specialist capabilities with exposures in select target markets
Specialist capabilities with exposures in select target markets • Focus remains on deployment of capital into core business activities and ensuring that concentration risk to certain asset types, industries and geographies is prudently managed, mitigated and controlled • Our portfolios have performe
Slide 20: UK & Other net core loans up 2.3% to £16.7bn
Mar-24 Sept-24 £'mn HNW & Other private 5 500 client lending Property Corporate & Other Lending 5 067 5 000 4 500 4 000 UK & Other net core 3 500 loans up 2.3% to 3 000 2 746 £16.7bn 2 500 2 324 2 175 2 000 • Strong growth in our Fund Solutions 1 617 loan book as well as moderate 1 500 growth across
Slide 21: Unpacking the credit loss ratio
Unpacking the credit loss ratio CLR Credit loss ratio (core loans) increased to 67bps bps 120 111 (1H2024: 55bps) 100 • The annualised credit loss ratio as at 30 September 2024 is 80 67 67bps, which is above the upper end of the guided range 60 59 for the financial year ended 2025 of 50bps to 60bps,
Slide 22: Asset quality metrics
Asset quality metrics Asset quality metrics reflect the solid performance of core loans to date Balance sheet ECL provisions (£’mn) Gross core loans by Stage (£’mn) 200 1500 111 101 102 100 75 67 1000 Stage 1 42 32 33 30 Stage 2 35 43 1321 1391 2021 Stage 3 27 32 39 38 1242 0 1135 2022 500 992 2021
Slide 23: Consistent asset growth, gearing ratios remain low
Consistent asset growth, gearing ratios remain low Total assets composition Gearing1 remains low £'bn 50.0 12 10.4 10.4 9.9 10 40.0 8.7 8.5 20.4 20.3 8 30.0 4.7 4.3 6 5.7 5.4 5.6 9.8 4.9 4.8 4.7 9.7 20.0 8.6 8.9 4 6.9 10.0 15.6 16.6 16.7 2 14.4 12.3 0.0 0 2021 2022 2023 2024 Sept 24 2021 2022 2023 2
Slide 24: Investec plc – Diversified funding strategy
Investec plc – Diversified funding strategy Credit Ratings Conservative and prudent funding strategy 1 Maintaining a high base of high-quality liquid assets • On 23 August 2024, Moody's affirmed IBP's long-term deposit rating at A1 and Investec plc’s rating at Baa1. The outlook for Investec plc has
Slide 25: Primarily customer deposit funded with low loan to deposit ratio
Primarily customer deposit funded • Loans as a percentage of customer deposits with low loan to deposit ratio remains conservative at 77.5% • Customer deposits have grown by 41% (10% CAGR) since 2021 to £21.6bn at 30 September 2024 • Low usage of central bank funding schemes as a Fully self funded:
Slide 26: Maintaining robust surplus liquidity
Maintaining robust surplus liquidity • We maintain a high level of readily available high quality liquid assets – Cash and near cash composition targeting a minimum cash to customer deposit ratio of 25%. These balances 4.6% amounted to £9.8bn at 30 September 2024 13.3% • At 30 September 2024 the Liq
Slide 27: Sound capital ratios in excess of internal and regulatory minimums
Sound capital ratios in excess of internal and regulatory minimums Robust headroom of 3.7% above the MDA threshold based on the latest regulatory requirements Capital ratios : Investec plc Minimum CET 1 requirement % ^ 30 Sept 31 March Target 2024* 2024* 15% Investec plc: 12.3% 12.1% 12.0% Common eq
Slide 28: We inherently hold more capital per unit of risk
We inherently hold more capital per unit of risk As we use the standardised approach for RWA calculations, our capital ratios are not directly comparable with peers RWA density – Total RWA / Total Assets CET 1 / Total Assets (%) 75% 8% 50% 6% 25% 4% 0% 2% 2020 2021 2022 2023 2024 Sept 24 2020 2021 2
Slide 29: Further information and peer analysis
Further information and peer analysis 29
Slide 30: UK high net worth banking: journey to scale
Private Clients UK high net worth (HNW) banking: journey to scale Journey to profitability Growth £’mn Sept 2024 Sept 2023 Mar 24 6 5 Revenue 139.0 5.2 Loan book (£’bn) 51.7 60.3 5.0 4 ECL impairments (13.6) 3 (1.6) (1.0) 2 Costs (57.1) (24.4) (25.4) 1 Profit 68.4 0 25.8 34.0 2021 2022 2023 2024 Sep
Slide 31: Investec plc: peer group comparisons
Investec plc: peer group comparisons Funding: Loans and advances to customers as a % Credit loss ratio: ECL impairment charges as a % of average core loans and advances of customer deposits (smaller number is better) (smaller number is better) 200% 4.00 3.60 116% 109% 107% 96% 91% 100% 77% 75% 75% 2
Slide 32: Appendix
Appendix 05 32
Slide 33: IFRS 9 macro-economic scenario forecasts
IFRS 9 macro-economic scenario forecasts For Investec plc, four macro-economic scenarios are used in the measurement of ECL. These scenarios incorporate a base case, an upside case and two downside cases. The table below shows the key factors that form part of the UK and Other macro-economic scenari
Slide 34: Investec plc: salient financial features (statutory)
Investec plc: salient financial features (statutory) Key financial statistics 30 Sept 2024 30 Sept 2023 % Change 31 Mar 2024 Operating income (£'000) 586 905 568 387 3.3 % 1 170 211 Operating costs (£'000) 308 641 325 033 (5.0)% 656 599 Adjusted operating profit (£'000) 224 641 204 287 10.0% 426 413
Slide 35: Investec plc: Statutory Income Statement
Investec plc: Statutory Income Statement Six months to Six months to £'000 30 Sept 2024 30 Sept 2023 % Change Interest income 1 019 990 1 101 828 (7)% Interest expense (630 680) (695 154) (9)% Net interest income 389 310 406 674 (4)% Fee and commission income 86 777 76 731 13 % Fee and commission ex
Slide 36: Investec plc: Pro-forma Income Statement
Investec plc: Pro-forma Income Statement Given the nature of the IW&I UK all-share combination with Rathbones, the Group essentially retains similar economic interest to this investment before and after the transaction. In order to provide information that will be more comparable to the future prese
Slide 37: Investec plc: Balance Sheet
Investec plc: Balance Sheet £'000 30 Sept 2024 31 Mar 2024 Assets Cash and balances at central banks 3 939 001 5 661 623 Loans and advances to banks 724 129 676 464 Reverse repurchase agreements and cash collateral on securities borrowed 1 568 757 1 140 115 Sovereign debt securities 3 074 220 1 928
Slide 38: Investec plc: Balance Sheet (continued)
Investec plc: Balance Sheet (continued) £'000 30 September 2024 31 Mar 2024 Liabilities Deposits by banks 1 464 124 2 174 305 Derivative financial instruments 402 014 472 662 Other trading liabilities 21 548 18 449 Repurchase agreements and cash collateral on securities lent 84 599 85 091 Customer a
Slide 39: Statutory segmental analysis of operating profit
Investec plc: Statutory segmental analysis of operating profit Specialist Banking For the six months ended 30 September 2024 Wealth & Group £'000 Investment Private Banking CIB & Other Investments Group Costs Total Group Net interest income 4 164 49 697 335 449 — — 389 310 Fee and commission income
Slide 40: Statutory segmental analysis of operating profit (continued)
Investec plc: Statutory segmental analysis of operating profit (continued) Specialist Banking For the six months ended 30 September 2023^ Wealth & Group £'000 Investment Private Banking CIB & Other Investments Group Costs Total Group Net interest income 4 122 57 817 348 256 — — 410 195 Fee and commi
Slide 41: Investec plc: asset quality under IFRS 9
Investec plc: asset quality under IFRS 9 £‘mn 30 Sept 2024 31 Mar 2024 Gross core loans 16 917 16744 Gross core loans at FVPL 567 641 Gross core loans subject to ECL1 16 350 16103 Stage 1 14 687 14181 Stage 2 1 135 1391 of which past due greater than 30 days 61 150 Stage 3 528 531 ECL (170) (187) St
Slide 42: Investec plc: capital adequacy
Investec plc: capital adequacy £‘mn 30 September 2024 31 Mar 2024* Tier 1 Capital Shareholders’ equity 2 984 2 917 Non-controlling interests — — Regulatory adjustments to the accounting basis (15) (3) Deductions (652) (677) Common equity tier 1 capital 2 317 2 237 Additional Tier 1 instruments 458 4
Slide 43: Group sustainability highlights
Group sustainability highlights Highlights Consistently well positioned in international ESG rankings and ratings • Following our recently enhanced Sustainable and Transition Finance Classification Framework, a primary area of focus has been developing and rigorously testing sustainable and transiti
Slide 44: UK sustainability highlights
UK sustainability highlights 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 strategy award at Committed to zero coal exposure in our