Investec Plc · LSE:INVP
Investec — Investec Bank — Debt Investor Presentation (June 2024)
45 slides from Investec's debt investor presentation, June 2024
Slide 1: Investec Bank plc Investor generic presentation
Investec Bank plc Investor generic presentation June 2024 The information in this presentation relates to the year ended 31 March 2024 and has been prepared on a pro-forma basis, unless otherwise indicated.
Slide 2: Contents
Contents 01 Investec Group 02 03 04 05 Overview Investec Bank plc Further Appendix at a glance of Investec operating information and Bank plc fundamentals peer analysis 22
Slide 3: Overview of Investec Group
a Overview of Investec , Group
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 Investec Ltd separate legal entities and listings, but are bound together by contractual agreements Sharing and mechanisms 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: Sustainability highlights
Sustainability highlights Operate responsibly, finance and invest in a sustainable future, and maintain our competitive sustainability position OUR IMPACT SDGs SUSTAINABLE FINANCE Net-zero commitments • Raised $56.5mn through our Global Sustainable Equity Fund at 31 March 2024 (since launch in Mar-2
Slide 10: Overview of Investec Bank plc
Overview of Investec Bank plc 10
Slide 11: Investec Bank plc
Investec Bank plc A Specialist Bank with access to a diversified wealth management offering to deliver an extensive range of products and services. Total assets Net core loans Customer deposits FUMA Employees £29.9bn £16.6bn £20.8bn Rathbones Group Plc* £107.6bn at 31 March 2024 2 200+ Key highlight
Slide 12: 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 13: Wealth & Investment UK: Rathbones combination
Adjusted UK operating profit* Wealth & Investment UK Combination with Rathbones successfully completed end of 1H2024 £66.9 million • 1H2024 / pre combination : IW&I UK reported adjusted operating profit (post-tax) of £35.9mn (10.8% above 1H2023) • 2H2024 / post combination: £31.0 million post-taxati
Slide 14: 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 and For high net worth clients that need a For
Slide 15: IBP ranks 7th for UK banks by revenue and profits
IBP ranks 7th for UK banks by revenue and 7th by profits IBP is a substantial business generating strong and consistent revenues over many years. IBP revenue during the year to 31 March 2024 totalled £1 194mn on a pro- forma basis. The chart below shows the relative revenue generation compared to th
Slide 16: Investec Bank plc operating fundamentals
Investec Bank plc operating fundamentals 16
Slide 17: Profitability supported by diversified revenue streams
Profitability supported by diversified revenue streams Revenue mix (£'mn) 1 194 1 250 1 035 1 000 750 500 Other operating income Trading income Investment income 250 Share of post taxation profit of associates and joint venture holdings Net fee and commisssion income 0 Mar 20 Mar 21 Mar 22 Mar 23 Ma
Slide 18: Cost to income ratio decreasing overtime
Cost to income ratio decreasing overtime Costs and cost to income ratio (£'mn) 700 627 600 577 500 400 55.7% 52.5% 300 200 100 Operating costs (LHS) Cost to income ratio (RHS) 0 2020 2021 2022 2023 2024 • Focused on managing costs while building for the future – Continue to leverage technology and e
Slide 19: Profitability supported by diversified revenue streams
Profitability supported by diversified revenue streams Adjusted operating profit1 (£'mn) Business mix percentage contribution to adjusted £'mn operating profit1 600 15% 19% 500 400 300 Mar 2024 Mar 2023 200 100 81% 0 85% 2020 2021 2022 2023 2024 Specialist Banking Wealth & Investment Adjusted operat
Slide 20: Consistent asset growth, gearing ratios remain low
Consistent asset growth, gearing ratios remain low Total assets composition Gearing1 remains low £'bn 40 12 10.8 10.3 10.1 10 10 30 8.3 3.7 4.1 8 4.3 6.8 5.2 9.7 20 6 5.7 5.6 8.6 5.2 8.9 5.1 4.6 6.9 6.0 4 10 15.6 16.6 14.4 2 11.8 12.3 0 0 2020 2021 2022 2023 2024 2020 2021 2022 2023 2024 Net core lo
Slide 21: 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 clients – Mid to large sized corporates – Public sector bodies and institutions • The majority of exposures reside within the UK • Our portfolios have performed well to date with l
Slide 22: Strong growth in UK loan book
Strong growth in UK loan book Mar-23 Mar-24 £'mn HNW & Other private 5 500 client lending Property Corporate & Other Lending 5 000 4 889 4 500 Strong UK & Other 4 000 loan growth 3 500 3 000 Net core loans up 6.4% 2 655 2 473 2 500 2 268 2 000 to £16.6bn 1 500 1 394 • Good activity in corporate clie
Slide 23: Unpacking the credit loss ratio
Unpacking the credit loss ratio Credit loss ratio (core loans) bps 80 69 56 58 60 CLR increased to 40 37 58bps (Mar-23: 37bps) in line with guidance provided in November 2023 20 17 0 Mar-20 Mar-21 Mar-22 Mar-23 Mar-24 ECL impairment charges ECL charges £'mn increased to 100 80 76 86 £86.1mn 71 (Mar-
Slide 24: 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 111 107 101 100 67 75 1000 Stage 1 31 32 33 42 35 43 1321 1391 2020 Stage 2 37 27 32 39 1242 0 2021 Stage 3 500 992 2020 2021
Slide 25: Diversified funding strategy
Diversified funding strategy • Investec Bank plc's funding consists primarily of customer deposits • The bank adopts a conservative and prudent funding strategy • Investec Bank plc is not subject to the Banking Reform Act ring-fencing requirements which are applicable to all large UK deposit takers,
Slide 26: Primarily customer deposit funded with low loan to deposit ratio
Primarily customer deposit funded with low loan to deposit ratio • Loans as a percentage of customer deposits Fully self funded: conservative loan to deposit ratio remains conservative at 79.5% £'bn • Customer deposits have grown by 35% (8% 20.9 100% CAGR) since 2020 to £20.9bn at 31 March 19.3 2024
Slide 27: 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 amounted to £9.7bn at31 March 2024 (representing 46.3% of customer 5.8% deposits)
Slide 28: Sound capital ratios in excess of internal and regulatory minimums
Sound capital ratios in excess of internal and regulatory minimums Robust headroom of 3.5% above the MDA threshold (Investec plc) Capital ratios: Investec Bank plc Minimum CET 1 requirement % ^ 15% Investec plc: lowest min 31 Mar 2024* 31 Mar 2023* Target CET 1 requirement 12.3% 12.0% 12.0% 11.7% Co
Slide 29: 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 (%) 4.0 Total capital (£'bn) 75.0% 10% 3.0 8% 50.0% 2.0 6% 25.0% 4% 1.0 —% 2% 0
Slide 30: Further information and peer analysis
Further information and peer analysis 30
Slide 31: UK high net worth banking: journey to scale
Private Clients UK high net worth (HNW) banking: journey to scale Journey to profitability Growth 6 0.3 0.3 £’mn Mar 24 Mar 23 Mar-22 5 Loan book (£’bn) 4.9 5.0 Revenue 139.0 135.5 75.3 4 3 ECL impairments (13.6) (6.3) (2.4) 2 1 Costs (57.1) (59.0) (42.0) 0 2019 2020 2021 2022 2023 2024 Profit 68.4
Slide 32: Investec Bank plc: peer group comparisons
Investec Bank plc: peer group comparisons Funding: Loans and advances to customers as a % Credit loss ratio: ECL impairment charges as a % of average core loans of customer deposits (smaller number is better) and advances (smaller number is better) 200% 1.00 0.80 116% 109% 107% 0.58 95% 84% 100% 80%
Slide 33: Appendix
Appendix 05 33
Slide 34: 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 35: IBP: salient financial features (statutory)
IBP: salient financial features (statutory) Key financial statistics 31 Mar 2024 31 Mar 2023 % Change Operating income (£’000) 1 158 450 960 901 20.6% Operating costs (£’000) 626 732 577 152 8.6% Adjusted operating profit (£’000) 444 517 317 009 40.2% Earnings attributable to ordinary shareholder (£
Slide 36: IBP: Statutory Income Statement
IBP: Statutory Income Statement £'000 31 Mar 2024 31 Mar 2023^ % Change Interest income 1 933 984 1 225 353 57.8 % Interest expense (1 105 027) (499 096) >100% Net interest income 828 957 726 257 14.1 % Fee and commission income 178 770 131 307 36.1 % Fee and commission expense (16 381) (15 372) 6.6
Slide 37: IBP: Pro-forma Income Statement
IBP: 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 presentation o
Slide 38: IBP: Balance Sheet
IBP: Balance Sheet £'000 31 Mar 2024 31 Mar 2023 Assets Cash and balances at central banks 5 661 623 5 400 401 Loans and advances to banks 676 001 892 791 Reverse repurchase agreements and cash collateral on securities borrowed 1 140 115 1 338 699 Sovereign debt securities 1 928 134 1 221 744 Bank d
Slide 39: IBP: Balance Sheet (continued)
IBP: Balance Sheet (continued) £'000 31 Mar 2024 31 Mar 2023 Liabilities Deposits by banks 2 174 305 2 172 170 Derivative financial instruments 472 662 704 816 Other trading liabilities 18 449 28 184 Repurchase agreements and cash collateral on securities lent 85 091 139 529 Customer accounts (depos
Slide 40: IBP: Statutory segmental analysis of operating profit
IBP: Statutory segmental analysis of operating profit Specialist Banking For the financial year ended 31 March 2024 Wealth & Private Corporate, Investment Total £'000 Investment Banking Banking & Other Group Continuing operations Net interest income 8 340 132 302 688 315 828 957 Fee and commission i
Slide 41: IBP: Statutory segmental analysis of operating profit
IBP: Statutory segmental analysis of operating profit Specialist Banking For the financial year ended 31 March 2023^ Wealth & Private Corporate, Investment Total £'000 Investment Banking Banking & Other Group Net interest income 5 382 128 945 591 930 726 257 Fee and commission income 8 284 2 120 120
Slide 42: IBP: asset quality under IFRS 9
IBP: asset quality under IFRS 9 £‘mn 31 Mar 2024 31 Mar 2023 Gross core loans 16 744 15 709 Gross core loans at FVPL 641 551 Gross core loans subject to ECL1 16 103 15 158 Stage 1 14 181 13 494 Stage 2 1 391 1 321 of which past due greater than 30 days 150 35 Stage 3# 531 343 ECL (187) (146) Stage 1
Slide 43: IBP: capital adequacy
IBP: capital adequacy £‘mn 31 Mar 2024 31 Mar 2023 Tier 1 capital Shareholders’ equity 3 070 2 486 Non-controlling interests – – Regulatory adjustments to the accounting basis (3) 15 Deductions (658) (306) Common equity tier 1 capital 2 409 2 195 Additional Tier 1 instruments 458 250 Tier 1 capital2
Slide 44: Group sustainability highlights
Group sustainability highlights Other highlights Consistently strong ESG ratings and rankings • Investec Group included as one of the top 100 most sustainable companies in the world (Corporate Knights) • Investec Bank Limited and Proparco have partnered to implement the Transforming Financial System
Slide 45: UK sustainability highlights
UK 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 Awarded best FTSE 250 strategy award at the INSEAD Alumni Coal as a % of loans Fossil fue
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