Investec plc · LSE:INVP
Investec — H1 2018 Earnings Presentation
34 slides from Investec's earnings presentation, Nov 16, 2017
Slide 1: Results Presentation: six months ended 30 September 2017
RESULTS PRESENTATION For the six months ended 30 September 2017
Slide 2: Proviso
Proviso Please note that matters discussed in today's presentation may contain forward looking statements which are subject to various risks and uncertainties and other factors including, but not limited to: the further development of standards and interpretations under IFRS applicable to past,
Slide 3: Persistent economic uncertainty in key regions
Persistent economic uncertainty in key regions Stock markets reasonably supportive 110 Year end Sep-17 Mar-17 Rebased to 100 Period Period Average Average 100 End End £ / Euro 1.13 1.14 1.17 1.19 Exchange 90 rates £ / A$ 1.71 1.69 1.64 1.75 80 £ / ZAR 18.10 17.06 16.77 18.42 Sep-16 Oct-16 Nov-16 Dec
Slide 4: Snapshot of results
Snapshot of results Asset Management and Wealth & Investment benefited from higher funds under management supported by favourable equity markets and combined net inflows of £3.6bn The Specialist Banking businesses have continued to see good growth in loan portfolios and client activity, notwiths
Slide 5: As a result … Resilient statutory performance
As a result … Resilient statutory performance % change on neutral currency Sep-17 Sep-16 % change basis Operating profit* (£’mn) 314.6 281.4 11.8% 1.1% Adjusted earning per share^ (pence) 26.6 22.7 17.2% 5.7% Total dividend per share (pence) 10.5 10.0 5.0% na Results supported by the Rand apprecia
Slide 6: Diversified business model
Unless otherwise stated, all information on this slide relates to the ongoing business Diversified business model Consistent contribution across geographies and businesses Operating profit* % contribution to group by geography 100% Combined UK and Other business down 5.0% in 80% UK and Other Pound
Slide 7: 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 175 Third party assets under 150 management up 2.4% to Asset Management Third party 125 £154.3bn - (5.1% on a currency assets under 100 Wealth & Investment neutral basis
Slide 8: Supporting growth in operating performance
Unless otherwise stated, all information on this slide relates to the ongoing business Supporting growth in operating performance £'mn Series 1 Total operating income up 1400 Trading income 13.2% to £1,190.9mn 1 190.9 Net interest income up 1200 Investment and 16.0% to £364.4mn associate income
Slide 9: Balanced business model
Unless otherwise stated, all information on this slide relates to the ongoing business Balanced business model Balanced between capital light and capital intensive activities £’mn Net interest, investment, Third party assets and 800 associate and trading advisory 700 income £672mn 600 £519mn 500 Net
Slide 10: Positive jaws notwithstanding planned investment
Unless otherwise stated, all information on this slide relates to the ongoing business Positive jaws notwithstanding planned investment Cost to income flat at 66.5% £’mn 1 400 Operating income increased 1 200 Operating income 13.2% from £1,052.3mn to 1 000 Jaws ratio £1,190.9mn 800 Operating costs
Slide 11: Increase in impairments
Unless otherwise stated, all information on this slide relates to the ongoing business Increase in impairments Credit loss ratios remain low £’mn Impairments on loans and 160 Legacy and sale assets* advances increased to South Africa £31.1mn (Sep-16: £18.0mn) 140 UK and Other Annualised credit l
Slide 12: 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 % change currency POUND RESULTS Sep-17 Sep-16 % change neutral basis^^ Operating profit* before tax (£’mn) 347.5 314.5 10.5% 0.9% Attributable earnings**^ (£’mn) 272
Slide 13: Performance against financial targets
Unless otherwise stated, all information on this slide relates to the ongoing business Performance against financial targets Summary of financial targets Ongoing Statutory Target Sep-17 Sep-16 Sep-17 Sep-16 ROE (post tax) 12%-16% over a rolling 5-yr period 14.1% 13.9% 12.5% 12.1% Adjusted* EPS growt
Slide 14: ROE
Unless otherwise stated, all information on this slide relates to the ongoing business ROE Remains within range £’mn % Target range: 12-16% 4 500 16 ROE in line with Mar-17 14.2% 14.1% reflecting: 4 000 14 — Strong client franchise 12.5% 12.5% businesses 3 500 Ordinary shareholders' 12 equity — So
Slide 15: Sound balance sheet
Unless otherwise stated, all information on this slide relates to the ongoing business Sound balance sheet Healthy capital ratios in excess of regulatory requirements Target common equity tier 1 ratio of above 10% Leverage ratio as 7.6% reported 7.3% and total capital ratios of 14%-17% 10.0% Hig
Slide 16: Divisional review
Divisional review » o Investec
Slide 17: Asset Management - Overview
Asset Management - Overview Momentum remains positive £’mn Growth of 1.2% in operating profit to 100 £83.2mn from £82.3mn 80 Earnings benefited from improved Operating 60 markets and net flow growth profit* 40 20 However, growth reduced by lower 0 performance fees in South Africa (SA) Sep-13 Sep
Slide 18: Asset Management – Outlook
Asset Management – Outlook Strong platform for growth Positioning Outlook Asset management remains a AUM by strategy type* Six months net flows by geography (£’ mn) growth industry in spite of a low yield environment, growing 1 278 1 232 regulatory scrutiny, changing 927 investor needs and an evol
Slide 19: Wealth & Investment - overview
Wealth & Investment - overview Good overall performance £’mn 60 Total operating profit up 14.7% to Southern Africa £49.5mn from £43.2mn 40 SA performance impacted by lower Operating brokerage volumes profit* 20 Strong performance from the UK, up UK and Other 21.4%, benefiting from strong net inf
Slide 20: Wealth & Investment – outlook
Wealth & Investment – outlook Investing for long-term sustainability Positioning Outlook Performance for the remainder of the financial year will in part be dependent on market conditions that prevail While investor sentiment in the UK remains uncertain, we continue to focus on increased digitis
Slide 21: Specialist Banking: Global overview
Unless otherwise stated, all information on this slide relates to the ongoing business Specialist Banking Global overview £’mn 250 Operating profit up 12.5% to £239.4mn 200 UK and Other (2016: £212.8mn) UK down 22.1% due to strong Operating 150 investment banking and client flow 100 profit* tradin
Slide 22: 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 450 Other income Net interest income up 18.6% 342.3 335.7 with good book growth Customer flow Analysis 300 trading income Net fees down 9.9%
Slide 23: Specialist Banking UK and Other Ongoing: Returns and outlook
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) ROE (post tax) Outlook £'mn % 120 20 Solid corporate and high net 18.3 worth franchise continues to 18 support performance but
Slide 24: Specialist Banking UK - Legacy
Specialist Banking UK - Legacy Continued to reduce the UK Legacy Business exposures £'mn Sep-17 Sep-16 The legacy portfolio has continued to be actively managed down to £425mn (Mar- Total income 0.1 (0.6) Loss on 17: £476mn) legacy Total impairments (28.5) (28.6) Largely through assets sales, re
Slide 25: Specialist Banking SA
Unless otherwise stated, all information on this slide relates to the ongoing business Specialist Banking SA Overview R’bn 8 Other income Review and outlook 6.8 5.9 6 Customer flow trading income Resilient performance in a Analysis of tough environment with 4 Investment and income associate income
Slide 26: Strategic review
Strategic review , o Investec
Slide 27: Asset Management – strategic review
Asset Management – strategic review Focus on clients, people and long-term growth Strategic priorities Investment performance Scale Multi-Asset and Quality capabilities Grow our Advisor business Focus on our large markets, especially North America Clarify our purpose and ensure we are resp
Slide 28: Wealth & Investment – strategic review
Wealth & Investment – strategic review Investing for long-term sustainability Strategic priorities Independent recognition Digitalisation Click & Invest successfully launched to market in June and ranked joint 1st Robo-Advisor in an independent survey of digital portfolio management We will co
Slide 29: Specialist Banking – strategic review (UK and Other)
Specialist Banking – strategic review Specialist Banking UK and Other Ongoing Strategic priorities Independent recognition A key objective of the next six months is to complete the Investec Structured Products majority of our large strategic and regulatory projects Best Distributor UK/Ireland 2015/2
Slide 30: Specialist Banking – strategic review (SA)
Specialist Banking – strategic review Specialist Banking SA Strategic priorities Independent recognition Client acquisition — Strategy to acquire and penetrate client base through improved coordination and collaboration Evolve the digital offering — Continued enhancement of One Place for private
Slide 31: Digitalisation strategy
Digitalisation strategy Complementing a high touch client centric service model Digital Joint 1st Robo-Advisor for Click & Invest strategy Joint 2nd best for One Place Mobile App Private Wealth & Corporate Key Integrated Banking Investments Businesses clients Growth and creation Management and Chann
Slide 32: Closing
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Slide 33: Outlook
Outlook Whilst the global economy has improved our two key geographies suffer from continued political uncertainty Notwithstanding this, the group has continued to improve in shape and capability Further progress has been made in dealing with the UK legacy book and the development of the priva
Slide 34: End
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