Slide 1: Year-end results
Out of the Ordinary® & Investec Year-end results WW A j 17 May 2018 ur Tm) LS . “ey Specialist Banking | Asset Management | Wealth & Investment
Slide 2: Mixed operating environment
Mixed operating environment Persistent economic uncertainty in key regions 115 Brexit and political uncertainty 110 has continued to impact Rebased to 100 105 corporate and consumer Exchange 100 confidence in the UK rates 95 The SA economy has been 90 Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov-
Slide 3: Highlights for the year
Highlights for the year Satisfactory overall Reasonable growth in key earnings drivers and a solid recurring income performance base Solid client activity Sound levels of corporate and private client activity driving strong loan levels book growth over the year Substantial net Asset Management
Slide 4: Resilient statutory performance
Resilient statutory performance % change on neutral Mar-18 Mar-17 % change currency basis^^ Operating profit* (£’mn) 607.5 599.1 1.4% (3.5%) Statutory results Effective tax rate (%) 9.6% 18.5% Adjusted earning per share^ (pence) 53.2 48.3 10.1% 4.1% Total dividend per share (pence) 24.0 23.0 4.3%
Slide 5: Diversified business model
Unless otherwise stated, all information on this slide relates to the ongoing business Diversified business model Operating profit* % contribution to group by geography Flat performance from 100% combined UK and Other 80% UK and business up 1.2% in Pounds Geographic Other 60% diversity Southern
Slide 6: Solid growth in key earnings drivers
Unless otherwise stated, all information on this slide relates to the ongoing business Solid growth in key earnings drivers £’bn Third party assets under 175 161 management up 6.5% to 150 Asset Management £160.6bn - (up 6.2% on a currency 125 Third party neutral basis) 100 Wealth & assets under In
Slide 7: Supporting growth in operating income
Unless otherwise stated, all information on this slide relates to the ongoing business Supporting growth in operating income Total operating income up 6.9% to £2,443mn (from £2,286mn) £'mn 2700 Total operating income on a currency neutral basis^ Trading income 2400 – Down 19.4% to £134mn (from £166m
Slide 8: Maintained a balanced business model
Unless otherwise stated, all information on this slide relates to the ongoing business Maintained a balanced business model Balanced between capital light and capital intensive activities Capital light activities Capital intensive activities Third party assets and Net interest, investment, advisory
Slide 9: Costs up due to planned strategic investment
Unless otherwise stated, all information on this slide relates to the ongoing business Costs up due to planned strategic investment £’mn 3 000 Cost to income increased 2 500 2,443 Operating slightly to 66.5% from 65.8% income 2 000 1,623 Operating costs up 8.0% to Jaws ratio for 1 500 £1,623mn r
Slide 10: Increase in impairments
Unless otherwise stated, all information on this slide relates to the ongoing business Increase in impairments £’mn Impairments on loans and 300 advances increased to £148.6mn (Mar-17: £111.5mn) 250 Statutory credit loss ratio 200 of 0.61% (Mar-17: 0.54%) Total impairment Ongoing credit loss r
Slide 11: Resulting in a satisfactory ongoing performance
Unless otherwise stated, all information on this slide relates to the ongoing business Resulting in a satisfactory ongoing performance Mar-18 Mar-17 % change Operating profit* before tax (£’mn) 701.0 663.7 5.6% Attributable earnings**^ (£’mn) 566.2 487.1 16.2% Adjusted EPS**^ (pence) 61.3 54.1 13.3%
Slide 12: Progress on financial targets
Progress on financial targets Ongoing Statutory Target Mar-18 Mar-17 Mar-18 Mar-17 12%-16% over a rolling 5- ROE (post tax) 14.1% 14.2% 12.1% 12.5% Summary year period of financial Adjusted* EPS growth Target: 10% > UKPRI 13.3% 11.3% 10.1% 16.9% targets Cost to income Target: < 65% 66.5% 65.8% 66.9%
Slide 13: Ongoing ROE within range
Ongoing ROE within range Statutory ROE in lower end of range £’mn % 4 500 16 Going forward the levers for Target range: 12-16% 14.1% ROE include: 4 000 14 — Activity levels Ordinary — Growing our client base and 3 500 shareholders' 12 core drivers 12.1% equity 3 000 — Leveraging off of our 10 inve
Slide 14: Sound balance sheet
Sound balance sheet Capital Liquidity Healthy capital ratios in excess of regulatory High level of readily available, highly liquid requirements assets We are above the common equity tier 1 ratio Advances as a percentage of customer deposits Capital and target of >10% and total capital ratio
Slide 15: IFRS 9 – impact on Investec plc
IFRS 9 – impact on Investec plc DECREASE INCREASE £70mn £57mn Balance (£21mn) £264mn sheet £158mn impairments IAS 39 impairment Reduction in impairment Increase in Legacy Increase in Ongoing IFRS 9 ECL impairment provision at 31 March 2018 provision from changes in impairments impairments provision
Slide 16: IFRS 9 – impact on Investec Limited
IFRS 9 – impact on Investec Limited DECREASE INCREASE R811mn (R154mn) Balance R2.2bn sheet R1.5bn impairments IAS 39 impairment provision at Reduction in impairment Increase in stage 1, 2 and 3 IFRS 9 ECL impairment provision 31 March 2018 provision from changes in impairments at 1 April 2018 classi
Slide 17: Business review
Out of the Ordinary® & Investec Business review Specialist Banking | Asset Management | Wealth & Investment
Slide 18: Asset Management - overview
Asset Management - overview Momentum remains positive Third party funds on AUM increased by 9.0% to £103.9bn 120 £’bn 103.9 advisory platform 95.3 Assets 100 Alternatives Strong net inflows of £5.4bn under 80 Positive market and FX movement of management 60 Multi-Asset 40 £3.2bn by asset Fixed I
Slide 19: Asset Management – outlook
Asset Management – outlook Strong platform with positive momentum Positioning Outlook The long-term growth AUM by strategy type* Net flows by geography (£’mn) fundamentals in the asset management industry remain strong 2,670 However, challenges include the 1,444 1,393 risk of a market correction
Slide 20: Wealth & Investment - overview
Wealth & Investment - overview Strong platform for growth £’mn Total operating profit up 5.7% to £98.6mn 120 98.6 UK and from £93.2mn 93.2 90 Europe SA down 2.1% in Rands - increase in annuity Operating 60 fees earned offset by lower brokerage volumes profit* 30 Southern UK up 6.3% - solid net i
Slide 21: Wealth & Investment – outlook
Wealth & Investment – outlook Positioning Outlook Some political and economic uncertainty remains, particularly with regards to Brexit Nevertheless, we are well positioned for the future given: Our global investment strategy and asset allocation processes The strength of our core UK and Othe
Slide 22: Specialist Banking – global overview
Unless otherwise stated, all information on this slide relates to the ongoing business Specialist Banking – global overview Stable performance £’mn 474 Operating profit up 4.3% to 500 454 UK and Other £474.0mn (2017: £454.4mn) 400 UK down 9.3% Operating 300 SA up 6.9% in Rands supported by profi
Slide 23: Specialist Banking UK and Other Ongoing
Unless otherwise stated, all information on this slide relates to the ongoing business Specialist Banking UK and Other Ongoing Overview of performance £'mn Other operating income Net interest income up 16.3% 850 713 713 with good book growth and 700 Customer flow trading lower cost of funding 550
Slide 24: Specialist Banking UK and Other Ongoing
Unless otherwise stated, all information on this slide relates to the ongoing business Specialist Banking UK and Other Ongoing Returns and outlook Net profit (before tax) £'mn ROE (post tax) % Outlook 180 20 We expect the UK Specialist 160 18 Bank to continue generating a sustainable level of recu
Slide 25: Specialist Banking – UK legacy
Specialist Banking – UK legacy £'mn Mar-18 Mar-17 The legacy portfolio has continued to be actively managed down to £313mn (Mar- Total income 0.7 0.3 17: £476mn) Loss on Largely through assets sales, legacy Total impairments (84.7) (54.3) redemptions and write-offs assets Total expenses (9.5) (1
Slide 26: Specialist Banking SA
Unless otherwise stated, all information on this slide relates to the ongoing business Specialist Banking SA Income, returns and outlook Other operating R’bn 13.5 income Outlook 14 12.9 Customer flow 11 trading income Resilient performance with a Analysis of 8 Investment and combined book growth o
Slide 27: Strategic priorities for FY2019
Strategic priorities for FY2019
Slide 28: Asset Management – strategy
Asset Management – strategy Focus on clients, performance, people and long-term growth Strategic priorities Continue to improve our investment performance Maintain strong momentum in the Advisor business globally Grow our presence in large markets, especially North America Continue to scale
Slide 29: Wealth & Investment – strategic review
Wealth & Investment – strategic review Investing for long-term sustainability Strategic priorities Independent recognition Digitalisation Focus on investing in and developing our digital channel including enhancements to our core service Defaqto 2017 – Five-star ratings awarded to both our Mai
Slide 30: Specialist Banking – strategic review
Specialist Banking – strategic review Specialist Bank UK and Other Ongoing Strategic priorities Independent recognition Broaden client base by building franchise while Investec Structured Products Best Distributor UK/Ireland deepening client relationships 2015/2016/2017 Establishing a high-tech
Slide 31: Specialist Banking – strategic review
Specialist Banking – strategic review Specialist Bank SA Strategic priorities Independent recognition Identify new sources of revenue across our existing client base Management of our liquidity ratios with an emphasis on retail funding initiatives Management of our capital to optimise returns
Slide 32: Outlook
Outlook The group has achieved a satisfactory operating performance, supported by sound growth in key earnings drivers, solid levels of client activity and a robust recurring income base Whilst the complexities of Brexit continue to cause uncertainty in the UK economy, the final quarter of the 2
Slide 33: Closing: 38 years of building a quality business
Closing: 38 years of building a quality business
Slide 34: Our aim has always been to build a sustainable business
Our aim has always been to build a sustainable business Building all areas of CAPITAL simultaneously: FINANCIAL CLIENT HUMAN SOCIAL & ENVIRONMENTAL … to ensure we have the resilience to support us through varying cycles 34
Slide 35: Building capital
1,000 2,000 3,000 4,000 5,000 6,000 - £’mn 1981 1982 1981: 1983 £0.97mn 1984 1985 FINANCIAL 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Total shareholders’ equity 2002 2003 2002: £768mn 2004 UK Listing 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 20
Slide 36: Growing funds under management
FINANCIAL Growing funds under management 2018: £’mn £160.6bn 180,000 160,000 140,000 120,000 100,000 UK Listing 80,000 2002: 60,000 £24.7bn 40,000 1981: 20,000 £17.4mn - 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Slide 37: Growing customer deposits
5,000 - 10,000 15,000 20,000 25,000 30,000 35,000 £’mn 1981 1982 1983 1984 1981: £7.0mn 1985 FINANCIAL 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Customer deposits 2002 2003 2002: £7.1bn 2004 UK Listing 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Slide 38: Growing core loans and advances
5,000 - 10,000 15,000 20,000 25,000 30,000 £’mn 1981 1982 1981: 1983 £4.2mn 1984 1985 FINANCIAL 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Core loans and advances 2002 2002: 2003 £3.3bn 2004 UK Listing 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2
Slide 39: Growing earnings through the cycles
FINANCIAL Growing earnings through the cycles 2018: £’mn £491mn 500 400 300 UK Listing 2002: 200 £128mn 100 1981: £0.16mn 0 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2
Slide 40: Share price
FINANCIAL Share price Rands Start of the financial crisis 140 120 100 Investec 80 Limited 60 40 20 0 GBP Start of the financial crisis 1000 800 Investec 600 plc 400 200 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 40
Slide 41: Building wealth FOR our clients…
CLIENT Building wealth FOR our clients… 1984: “Pursuant to the strategic objective of building committed relationships with clients over time, a separate function, Corporate Banking Relations was established.” 1985: “Investec believes it should concentrate on knowing its clients and their requir
Slide 42: … and WITH our clients
CLIENT … and WITH our clients TODAY the focus remains the same … “We have a client focused approach. Our clients are our business. We are not all things to all people: we serve select market niches where we can compete effectively. Our distinction lies in our ability to be nimble, flexible a
Slide 43: Establishing our brand …
CLIENT Establishing our brand … 43
Slide 44: … which is now internationally recognised
CLIENT … which is now internationally recognised 2017 2nd best Banking brand as voted by Businesses 44
Slide 45: Investing in talent and leadership
HUMAN Investing in talent and leadership Archbishop Tutu Fellowship Programme 2018: 10,146 (49% female) 10000 UK Listing 8000 2002: 6000 5,529 4000 1981: 2000 18 (28% female) 0 1981 1982 1983 1985 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 200
Slide 46: We have always cared …
SOCIAL & ENVIRONMENTAL We have always cared … … about unselfishly contributing to the world around us INVESTEC BANK LIMITED: Annual Report 1996 46
Slide 47: Focusing on education and entrepreneurship…
SOCIAL & ENVIRONMENTAL Focusing on education and entrepreneurship… … to create economic participants 47
Slide 48: Transforming our communities …
SOCIAL & ENVIRONMENTAL Transforming our communities … … through skills, youth employment and caring for the environment Bringing water to rural South Africa Promoting skills and youth employment Supporting the economy of wildlife 48
Slide 49: Reflecting back on 38 years…
Reflecting back on 38 years… • We have spent more than 38 years building a quality franchise that has the will to survive and thrive through all conditions • Our people have a depth of wisdom, professional ability and individual brilliance. They operate within a strong cultural context where effecti
Slide 50: Thank you
Thank you “ Success is not final, failure is not final: it is the courage to continue that counts.” Winston Churchill 50