Investec Limited · JSE:INL
Investec — Debt Investor Presentation (November 2022)
42 slides from Investec's debt investor presentation, November 2022
Slide 1: Investec Limited
Investec Limited November 2022 The information in this presentation relates to the six months ended 30 September 2022, unless otherwise indicated. Investec 2022
Slide 2: Agenda
Agenda Contents 1. 2. 3. 4. 5. Investec Group at a Investec Limited Investec Limited Investec Limited Appendices glance overview operating peer analysis fundamentals 2 Investec 2022
Slide 3: Investec Group at a glance
Investec Group at a glance 3 Investec 2022
Slide 4: Investec Dual Listed Company structure
Investec Dual Listed Company structure § Investec plc and Investec Limited are Non-Southern African operations Southern African operations separate legal entities and listings, but are Investec plc Investec Ltd bound together by contractual agreements and mechanisms Sharing § Investec operates as if
Slide 5: Investec Group at a glance
Investec Group at a glance A domestically relevant, internationally connected banking and wealth & investment Group • Established in 1974 Since 1992 • Today, an efficient integrated Assets international business platform £29.1bn employing approximately 8 500+* FUM people £38.8bn • Listed on the JSE
Slide 6: One Investec
One Investec Our values Our purpose is expressed in four key values that shape the way that we work and live within society. 45+ years of 1 2 3 4 heritage. Cast-iron Integrity Distinctive Performance Client focus Dedicated partnership We demand cast-iron integrity We employ talented people We break
Slide 7: Well positioned to pursue long-term growth
Investment proposition Well positioned to pursue long-term growth 1 Well capitalised and highly liquid balance sheet 2 Strong capital generation - returning excess capital to shareholders Diversified mix of earnings by geography and business, with significant annuity income underpin from leading 3 w
Slide 8: Fuelling a robust growth agenda
Fuelling a robust growth agenda Growth Objectives Continued execution with discipline, Further develop connected client AccelerateGrowth and scale new growth objectives to drive optimisation of returns eco-systems across business units initiatives & geographies With a focus on Deepening our entrepre
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 1.6mn tCO2e Participated in the W&I signed up as a Group Board 5th Transformation Scope 3
Slide 10: Focused on doing well and doing good
Focused on doing well and doing good Other highlights Specialist Banking Wealth & Investment • Continued inflows into the Investec Global Sustainable Equity Fund • Investec Group joined the African Natural Capital Alliance - $44.5mn (since launch in Mar-21 to end Sept-22) • Investec Group contribute
Slide 11: Overview of Investec Limited
Overview of Investec Limited 11 Investec 2022
Slide 12: Overview of Investec Limited
Overview of Investec Limited Investec Limited is a distinctive specialist bank and investment manager with primary business in Southern Africa. We focus on delivering distinct profitable solutions for our clients in two core areas of activity, namely: Specialist Banking and Wealth & Investment Total
Slide 13: Specialist Banking
Specialist Banking We have a specialised niche offering to a select target market • Invested in our • Strong technology and • Deepening our • Our growth initiatives • Maintaining cost • Maintaining sound business, digital platforms existing client and strong franchise efficiency with low capital rat
Slide 14: 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 young
Slide 15: 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 16: 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 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: Wealth & Investment
Wealth & Investment Uniquely positioned for SA HNW private clients seeking a holistic, international wealth management service Key facts* Future growth drivers Total FUM R362.7bn % discretionary and annuity 55.3% Fiduciary • Enhance our fiduciary and tax % of disc. and annuity offshore 66.5% plannin
Slide 19: Group Investments overview
Group Investments overview IEP Group (Pty) Ltd • IEP is an investment holding company that was born out of the Investec The Group Investments segment consists of equity investments held Private Equity portfolio. It holds a controlling stake in the Bud Group, an outside the Group’s banking activities
Slide 20: Investec Limited operating fundamentals
Investec Limited operating fundamentals 20 Investec 2022
Slide 21: Revenue supported by resilient franchises
Revenue supported by resilient franchises Annuity income* Revenue versus expenses 20,000 100% 24,000 70.0% 15,000 75% 60.0% 16,000 10,000 50% 50.0% 5,000 8,000 25% 40.0% — —% 0 30.0% 2018 2019 2020 2021 2022 Sept-22 2018 2019 2020 2021 2022 Sept-22 Annuity Income as a % of total income Other operati
Slide 22: Revenue supported by resilient franchises (cont.)
Revenue supported by resilient franchises (cont.) Impact of impairments on adjusted operating profit Contribution to adjusted operating profit At 30 September 2022 9,000 7.2% 6.8% 8,000 7,000 6,000 5,000 4,000 Wealth & Investment Specialist Banking 3,000 Group Investment 2,000 1,000 0 2018 2019 2020
Slide 23: 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 500 80% • Customer deposits have grown by 35.1% (c.6.9% CAGR) 400 75% since 2018 to R434.6bn at 30 September 2022 300 • Loans and advances as a percentage of customer 7
Slide 24: Sound capital base and capital ratios
Sound capital base and capital ratios Total capital Total risk-weighted assets: lower RWA density 80,000 700,000 80% 70,000 600,000 70% 60,000 60% 500,000 50,000 50% 400,000 40,000 40% 300,000 30,000 30% 200,000 20% 20,000 100,000 10% 10,000 0 —% 0 2018 2019 2020 2021 2022 Sept-22 2018 2019 2020 202
Slide 25: Sound capital ratios and capital ratios (cont.)
Sound capital ratios and capital ratios (cont.) Basel capital ratios# Capital ratios^ 20% Increased AIRB Scope* 18% 30 Sept 2022^ 31 March 2022^ 16% Common Equity Tier 1 14.1% 14.0% 14% 12% Tier 1 ratio 15.0% 15.0% 10% Total capital ratio 18.0% 17.5% 8% 6% Leverage ratio ** 7.1% 7.4% 4% 2% —% 2018 2
Slide 26: Consistent asset growth, gearing ratios remain low
Consistent asset growth, gearing ratios remain low Total assets composition Gearing remains low* 800,000 12 10 600,000 8 400,000 6 4 200,000 2 0 0 2018 2019 2020 2021 2021 Sept-22 2018 2019 2020 2021 2022 Sept-22 Net core loans Cash and near cash balances Other assets Total gearing ratio Core loans
Slide 27: Substantial surplus liquidity
Substantial surplus liquidity • We maintain a high level of readily available, high quality liquid assets, targeting a Cash and near cash balances minimum cash to customer deposit ratio of 25%. Cash and near cash balances have increased significantly since 2013 (CAGR: 8%) to R149.2bn at 30 September
Slide 28: 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 29: 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 30: Asset quality
Asset quality Core loans and asset quality 400 3% 300 2% 200 1% 100 0 0% 2018 2019 2020 2021 2022 Sept-22 Net core loans and advances (LHS) Credit loss ratio 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 Credit quality metri
Slide 31: Asset quality metrics
Asset quality metrics Provision build Gross core loans by stage R’mn R’mn 4.0% 5.3% 5.2% 5.8% 4.6% as % of 1.4% 1.6% 2.6% 1.9% 2.3% 4000 gross core 20,000 loans 17,589 2000 1328 1206 1552 15,289 14,969 14,713 416 620 555 985 869 768 10,768 0 2021 2022 Sept-22 10,000 7,438 7,166 5,625 Stage 1 Stage 2
Slide 32: Credit ratings
Credit ratings Current credit ratings of Investec Limited Fitch Rating • Investec Limited’s ratings have remained stable over many years reflecting the financial soundness of the bank over a Foreign currency long-term rating BB- long period of time Foreign currency short-term rating B • Past ratings
Slide 33: Appendices
Appendices 33 Investec 2022
Slide 34: Forward-looking macro-economic scenarios
Forward-looking macro-economic scenarios The measurement of ECL requires the use of multiple economic scenarios to calculate a probability weighted forward- looking estimate. These scenarios are updated at least twice a year, or more frequently if there is a macro-economic shock or significant shift
Slide 35: Investec Limited: salient financial features
Investec Limited: salient financial features Key financial statistics 30 Sept 2022 30 Sept 2021 % change 31 March 2022 Total operating income before expected credit loss impairment charges (R’million) 9,996 8,528 17.2 % 17,907 Operating costs (R’million) 4,868 4,349 11.9 % 9,282 Operating profit bef
Slide 36: Investec Limited: income statement
Investec Limited: income statement Six months to Six months to R’million 31 March 2022 30 Sept 2022 30 Sept 2021 Interest income 16,057 12,768 26,087 Interest expense -10,649 -8,167 -16,709 Net interest income 5,409 4,601 9,378 Fee and commission income 3,756 3,508 7,166 Fee and commission expense -
Slide 37: Investec Limited: balance sheet
Investec Limited: balance sheet R’million 30 Sept 2022 30 Sept 2021 31 March 2022 Assets Cash and balances at central banks 13,564 12,685 11,893 Loans and advances to banks 18,522 18,793 21,014 Non-sovereign and non-bank cash placements 13,237 9,656 13,176 Reverse repurchase agreements and cash coll
Slide 38: Investec Limited: balance sheet (cont.)
Investec Limited: balance sheet (cont.) R’million 30 Sept 2022 30 Sept 2021 31 March 2022 Liabilities Deposits by banks 19,681 17,798 22,236 Derivative financial instruments 32,176 26,407 33,626 Other trading liabilities 4,181 3,716 4,475 Repurchase agreements and cash collateral on securities lent
Slide 39: Investec Limited: asset quality
Investec Limited: asset quality R’million 30 Sept 2022 31 March 2022 Gross core loans 316,624 301,106 Of which subject to ECL* 315,138 299,576 Of which FVPL (excluding fixed rate loans) 1,486 1,530 Gross core loans to customers subject to ECL 315,727 299,904 Stage 1 293,259 276,362 Stage 2 14,713 17
Slide 40: Investec Limited: capital structure and capital adequacy
Investec Limited: capital structure and capital adequacy Increased AIRB Scope* 30 Sept 2022 31 March 2022^ Common Equity Tier 1 14.1 % 14.0 % Tier 1 ratio 15.0 % 15.0 % Total capital ratio 18.0 % 17.5 % Leverage ratio** 7.1 % 7.4 % 40 Investec 2022 *Investec Limited adopts the Internal Rating Based
Slide 41: Investec Limited: capital structure and capital adequacy (cont.)
Investec Limited: capital structure and capital adequacy (cont.) Increased AIRB Scope* R’million 30 Sept 2022^ 31 March 2022^ Shareholders’ equity 45,079 46,232 Shareholders’ equity per balance sheet 47,660 49,118 Perpetual preference share capital and share premium (2,581) (2,886) Non-controlling i
Slide 42: 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 1% in the financial services sector in the TOP 14% of globally assessed companies in TOP 2% of diversified financials in the S&P MSCI Global Sustai
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