Investec Plc · LSE:INVP
Investec — UBS Conference October 2011
32 slides from Investec's conference presentation, October 2011
Slide 1: Investec: The Investment Case
Investec The Investment Case UBS Conference October 2011 Stephen Koseff 1
Slide 2: Strategic positioning
Strategic positioning 2
Slide 3: Mission statement
Mission statement We strive to be a distinctive specialist bank and asset manager driven by commitment to our core philosophies and values 3
Slide 4: Specialist bank and asset manager
Specialist bank and asset manager … with three distinct business activities Broad range of services: To: Government Advisory Structuring Institutional Lending Corporates Securities Trading High Net Worth Clients Market Making Principal Transactions High Income Clients Provides Provides investment in
Slide 5: Focused on well defined target clients
Focused on well defined target clients Not “all things to all people” Corporate / Institutional / Government Private Client Specialist Banking Asset Investment Capital Private Wealth & Management Banking Markets Banking Investment Activities Activities Activities 5
Slide 6: With a solid international platform
With a solid international platform Distribution channels Origination channels Core infrastructure Since 1992 Assets: £19bln Since 1997 Assets: £3bln Since 1974 Assets: £29bln 6
Slide 7: And a diversified revenue stream
And a diversified revenue stream Contribution to group earnings 31 Mar-11 Contribution to group earnings 31 Mar-10 Asset Asset Management Management 19.3% 29.3% Wealth & Investment Specialist 6.0% Banking Specialist 61.4% Banking Wealth & 74.7% Investment 9.3% 7
Slide 8: Specialist Banking: The Investment Case
Specialist Banking The Investment Case 8
Slide 9: Operating as a Single Specialist Bank
Operating as a Single Specialist Bank Focusing the Mindset around Client demand Creating the appropriate business structure to maximise the product offering to the client Sharing competencies to achieve greater operational efficiency Ensuring synergies and connectivity across the group Leveraging of
Slide 10: Investment Banking: Investment case
Investment Banking: Investment case Integrated business with local client delivery and international access UK and Europe Hong Kong • Brand well established • Benefiting from a well • With Evolution would position diversified portfolio us as a leading mid-market • Acquired Access Capital investment
Slide 11: Capital Markets: Investment case
Capital Markets: Investment case Primarily focused on traditional bank customer flow/related activities Client focused business concentrating on three areas of customer related activities: Lending and leasing activities Treasury and trading activities Structured credit • Structured and asset finance
Slide 12: Capital Markets: Investment case
Capital Markets: Investment case Strong international platform Value proposition • Successfully built sustainable businesses on the back of client driven transactional flow • Balanced business model with good business depth and breadth • Well positioned in the primary and secondary markets • Ready t
Slide 13: Private Banking: Investment case
Private Banking: Investment case Strong client relationships Value proposition • Provide HIGH TOUCH transactional banking, credit, deposit and investment services to two distinct client bases: • High Income – c.135,000 clients • HNW– c.6, 000 clients Number of clients • Also offer trust and fiduciar
Slide 14: Wealth & Investment
Wealth & Investment The investment case 14
Slide 15: Wealth & Investment: Investment case
Wealth & Investment: Investment case Building an international platform Value proposition • Business has been built via consolidation of smaller businesses over a long period of time • Well established platforms in the UK and SA which could cope with significant additional ‘bolt-ons’ Funds under man
Slide 16: Asset Management
Asset Management The investment case 16
Slide 17: Asset Management: Investment case
Asset Management: Investment case Global specialist investment manager • An independently managed subsidiary of Investec Group • Investec Asset Management’s origins are African but we are global in our approach • Worldwide, top 100 asset manager* • Third party assets under management grown from £41.
Slide 18: Asset Management: Value proposition
Asset Management: Value proposition • Developed business from scratch out of a domestic position in an emerging market • Create successful investment capabilities organically • Strong investment performance • Truly global in our approach with broader distribution than ever before • Unique and clearl
Slide 19: Asset Management: Drivers of future performance
Asset Management: Drivers of future performance • The economic power shift from West to East • Continued development of funded savings pools around the globe • The rise of international investing in the markets with large mobilised savings pools • Convergence between traditional and alternative mana
Slide 20: Investment case: demystifying the numbers
Investment case: demystifying the numbers 20
Slide 21: Solid base of recurring income
Solid base of recurring income Average since 2002 of 65% £'mn 2,000 1,800 1,600 1,400 1,200 1,000 800 c 600 400 200 - 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Net interest income Annuity fees and commissions Other fees Client flow trading income Investment income 21
Slide 22: Driven by strong growth in funds under management
Driven by strong growth in funds under management CAGR since 2002 of 15% £'mn 100,000 90,000 80,000 70,000 60,000 50,000 40,000 c 30,000 20,000 10,000 - 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Asset Management Wealth & Investment Other 22
Slide 23: And loans and deposits
And loans and deposits CAGR since 2002 - customer deposits CAGR since 2002 - loans 21% 15% £'mn 30,000 120% 25,000 100% 20,000 80% 15,000 60% 10,000 40% 5,000 20% - 0% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Customer accounts Core loans and advances to customers (including own originated s
Slide 24: Revenue continued to grow faster than costs
Revenue continued to grow faster than costs CAGR since 2002 - Revenue 14% CAGR since 2002 - Expenses 12% £'mn 2,500 2,000 1,500 1,000 500 - 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Total revenue Expenses 24
Slide 25: Good growth in operating profit before tax and impairments
Good growth in operating profit before tax* and impairments CAGR since 2002 - NIBTBI 21% CAGR since 2002 - NIBT15% £'mn 800 700 600 500 400 300 200 100 - 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Operating profit before tax and impairments* (NIBTBI) Operating profit before taxation* (NIBT) *
Slide 26: But Specialist Banking held back by elevated impairments
But Specialist Banking held back by elevated impairments Specialist Banking Wealth & Investment Asset Management £‘mn £‘mn £‘mn 700 45 140 600 40 120 35 500 100 30 400 25 80 300 20 60 200 15 40 10 100 20 5 - - - 2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 201
Slide 27: Strong growth in capital and a reduction in leverage
Strong growth in capital and a reduction in leverage CAGR since 2002 of 20% Average 10-year leverage ratio of 14x £'mn times 6,000 20 18 5,000 16 14 4,000 12 3,000 10 8 2,000 6 4 1,000 2 - 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Total sha
Slide 28: Resulting in a decline in ROE in Specialist Banking
Resulting in a decline in ROE in Specialist Banking Specialist Banking Wealth & Investment Asset Management £’bn £’mn £’mn 3.0 35% 70 120% 45 600% 2.5 30% 60 40 100% 500% 25% 35 2.0 50 80% 30 400% 20% 40 1.5 25 60% 300% 15% 30 20 1.0 40% 15 200% 10% 20 0.5 20% 10 5% 10 100% 5 0.0 0% - 0% - 0% 2006 2
Slide 29: Overall CAGR since 2002
Overall CAGR since 2002: NTAV 24% NTNAV per share 19% Share price 13% (10%)* pence £'mn 700 3,000 600 2,500 500 2,000 400 1,500 300 1,000 200 100 500 0 - 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Net tangible asset value (excluding goodwill) (£'mn) (RHS) Net tangible asset value per share (e
Slide 30: Conclusion
Conclusion 30
Slide 31: We have a distinctive investment offering
We have a distinctive investment offering … … with a balanced business model and an entrepreneurial culture … dedicated employees that are focused on clients and building the business … a well established brand that supports a sustainable long term strategy Resulting in … … a quality scalable global
Slide 32: Thank you
Thank you Out of the Ordinary® @ Investec Specialist Bank and Asset Manager 32