Investec plc · LSE:INVP
Investec — Investec Bank — Debt Investor Presentation (May 2023)
44 slides from Investec's debt investor presentation, May 2023
Slide 1: Investec Bank Limited Investor generic presentation May 2023
Investec Bank Limited Investor generic presentation May 2023 The information in this presentation relates to the year ended 31 March 2023, unless otherwise indicated.
Slide 2: Agenda
Agenda Contents 1. 2. 3. 4. 5. Investec Group Investec Bank IBL IBL peer analysis IBL Appendices at a glance Limited (IBL) operating overview fundamentals 2
Slide 3: Investec Group at a glance
Investec Group at a glance
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 separate legal entities and listings, Investec Ltd but are bound together by contractual agreements and Sharing mechanisms Agreement • Investec oper
Slide 5: Investec Group at a glance
Investec Group at a glance A domestically relevant, internationally connected banking and wealth & investment Group Since • Established in 1974 1992 • Today, an efficient integrated international business platform Assets employing approximately £28.4bn 8 705*people FUM • Listed on the JSE and LSE (a
Slide 6: One Investec
One Investec Our purpose is to create enduring worth. Our values* 45+ years of Deep client partnerships, built on trust and out-of-the-ordinary service, are the bedrock of our business heritage. We are dedicated to building meaningful relationships with all our stakeholders Two core We uphold cast-i
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 – operating with excess capital in South Africa 33 Diversified mix of earnings by geography and business, with significant annuity income underpin from l
Slide 8: Fuelling a robust growth agenda
Fuelling a robust growth agenda Growth Objectives Continued execution with Accelerate and scale new Further develop connected discipline to drive growth initiatives client eco-systems across optimisation of returns business units & geographies Underpinned by Deepening our entrepreneurial culture (Ou
Slide 9: SA sustainability highlights
SA sustainability highlights Operate responsibly, finance and invest for a sustainable future and maintain our competitive ESG position PROGRESS MADE ON OUR IMPACT SDGs Net-zero commitments Equality commitments Zero thermal coal by Completed a pro- Group Board 4th Transformation 31 March 2030 climat
Slide 10: Focused on doing well and doing good – SA
Focused on doing well and doing good – SA Other highlights Specialist banking Wealth & Investment • Partnered with Proparco to implement the Transforming Financial Systems • Continued inflows into the Investec Global Sustainable Equity Fund of for Climate (TFSC) programme in South Africa. The packag
Slide 11: Investec Bank Limited (IBL) overview
Investec Bank Limited (IBL) overview
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 Net core Total Customer Employees assets loans equity deposits 4 000+ R597.2bn R318.2bn R46.7bn R448.7bn Well established franchise Key strategic
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: 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 17: 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 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
Slide 20: Revenue supported by resilient franchises
Revenue supported by resilient franchises R’mn Revenue mix Revenue versus expenses R’bn R’bn 20 100% 20 100% 15 75% 15 75% 10 50% 10 50% 5 25% 5 25% 0 0% 0 0% 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 Annuity Income* as a % of total income Trading Income Investment and associate income Other
Slide 21: Operating Profit
Operating Profit • IBL reported an increase in profit before tax of 20%. 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 net interest income driven by hig
Slide 22: Sound capital base
Sound capital base Total capital resources (R'bn) Total risk-weighted assets: lower RWA intensity (R'bn) 80 800 100% 60 600 75% 40 400 50% 20 200 25% 0 0 —% 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 Shareholders equity Perpetual preference shares Subordinated liabilities Total assets (LHS) T
Slide 23: Strong capital ratios
Strong capital ratios Capital development Basel capital ratios# AIRB Scope * 24% 21.2% 31 March 2023^ 31 March 2022^ 20% 17.1% Common equity Tier 1 17.1% 15.8% 16% 12% Tier 1 ratio 18.2% 16.6% 8% 7.2% Total capital ratio 21.2% 20.0% 4% Leverage ratio ** 7.2% 7.9% —% * Investec Limited adopts the Int
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 12 597 600 555 10 536 509 108 476 101 105 96 8 88 400 171 147 159 130 6 118 200 4 284 283 295 318 269 2 0 2019 2020 2021 2022 2023 0 2019 2020 2021 2022 2023 Net Core Loans Cash and Near Cash
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 31 March 2013 (9% CAGR) to R171.4bn at 31 M
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 142.1% (c.9.2% CAGR p.a.) 300 60% since 2013 to R448.7bn at 31 March 2023 200 40% • Loans and advances as a perc
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 3% 300 2% 200 1% 100 0 0% 2018 2019 2020 2021 2022 2023 Net core loans and advances (LHS) Credit loss ratio (RHS) Net default loans before collateral as a % of net core loans / Stage 3 net of ECL as a % of net core loans subject to ECL (RHS) • Credit qu
Slide 30: Asset quality metrics
Asset quality metrics Provision build Gross core loans by stage R’mn R’mn 4 000 as % of 4.0% 5.3% 5.2% 5.9% 5.0% gross core 1.3% 1.5% 2.5% 1.8% 2.7% 20 000 loans 3 000 17 589 1 880 2 000 1 328 1 206 1 552 15 953 15 111 14 969 423 416 620 1 000 618 1 057 984 868 741 10 768 0 2020 2021 2022 2023 10 00
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 Aa1.za Stable Deposit Rating National scale short-term deposit rating P-1.za Moody’s Ba2 Ba2 Ba1 Ba1 Global long-t
Slide 32: IBL peer analysis
IBL peer analysis
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- Ba2 Aa1.za ba
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 180.0 6.00% 5.53% 153.6 154.8 5.50% 5.10% 4.92% 160.0 5.00% 1
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: Investec Bank Limited Appendices
Investec Bank Limited Appendices
Slide 37: Macroeconomic scenarios – 31 March 2023
Macroeconomic scenarios – 31 March 2023 Key judgements at 31 March 2023 • After careful review of portfolio performance, the current design of the ECL models and updated published market data, management reduced the ECL overlay of R219 million at 31 March 2022 to R113 million at 31 March 2023 in the
Slide 38: IBL: salient financial features
IBL: salient financial features Key financial statistics 31 March 2023 31 March 2022 % change Total operating income before expected credit loss impairment charges (R’million) 17 054 14 304 19.2% Operating costs (R’million) 8 126 7 048 15.3% Operating profit before goodwill and acquired intangibles
Slide 39: IBL: income statement
IBL: income statement Year to Year to R’million 31 March 2023 31 March 2022 % change Interest income 38 112 26 230 45.3% Interest expense (25 347) (16 020) 58.2% Net interest income 12 765 10 210 25.0% Fee and commission income 4 106 3 609 13.8% Fee and commission expense (728) (539) 35.0% Investmen
Slide 40: IBL: balance sheet
IBL: balance sheet R’million 31 March 2023 31 March 2022 31 March 2021 Assets Cash and balances at central banks 22 761 11 893 9 653 Loans and advances to banks 10 502 19 609 24 666 Non-sovereign and non-bank cash placements 14 133 13 176 8 956 Reverse repurchase agreements and cash collateral on se
Slide 41: IBL: balance sheet (cont.)
IBL: balance sheet (cont.) R’million 31 March 2023 31 March 2022 31 March 2021 Liabilities Deposits by banks 26 420 18 721 17 144 Derivative financial instruments 33 242 28 398 23 837 Other trading liabilities 1 542 3 309 3 388 Repurchase agreements and cash collateral on securities lent 17 933 12 0
Slide 42: IBL: asset quality
IBL: asset quality R’million 31 March 2023 31 March 2022 Gross core loans 321 394 297 451 of which subject to ECL* 320 098 296 094 of which FVPL (excluding fixed rate loans above) 1 296 1 357 Gross core loans subject to ECL 320 098 296 094 Stage 1 295 546 273 138 Stage 2 15 953 17 589 of which past
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 At 31 March 2023 Gross Gross Gross Gross ECL ECL ECL ECL R’million Exposure Exposure Exposure Exposur
Slide 44: Top of SA peers across the most credible international ratings
Top of SA peers across the most credible international ratings 1 MSCI ESG Ratings 2 Sustainalytics Ratings 3 S&P Corporate Sustainability Assessment TOP 2% in the financial services sector TOP 14% of globally assessed TOP 2% of diversified financials in the S&P in the MSCI Global Sustainability Inde
Investec Bank — Debt Investor Presentation (May 2023) on 6ix