Investec plc · LSE:INVP
Investec — Investor Presentation (May 2023)
42 slides from Investec's investor presentation, May 2023
Slide 1: Investec Limited Investor generic presentation May 2023
Investec 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 Limited Investec Limited Investec Limited Appendices at a glance overview operating peer analysis 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 Investec plc Investec Ltd are separate legal entities and listings, 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 • Established in 1974 Since • Today, an efficient integrated 1992 international business platform employing approximately 8 700+* Assets people £28.4bn • Listed on the JSE and LSE (a F
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 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 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: Overview of Investec Limited
Overview of Investec Limited
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 • 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: 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 Clear
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 R398.4bn % discretionary and annuity 55.9% Fiduciary % of disc. and annuity offshore 64.0% FUM • Enhance our fiduciary and tax pla
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 Private Equity portfolio, which was sold to IEP in January 2016. IEP has a wholly-owned subsidiary, The Group Investments segment consists of equity being the Bud Group, an operati
Slide 20: Investec Limited operating fundamentals
Investec Limited operating fundamentals
Slide 21: Revenue supported by resilient franchises
Revenue supported by resilient franchises Revenue mix Revenue versus expenses R’mn R’mn 25 000 100% 20 000 100% 20 000 75% 15 000 75% 15 000 50% 10 000 50% 10 000 25% 5 000 25% 5 000 — 0% 0 0% 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 Net Interest Income Net fees and commission income Invest
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 R’mn 10 000 At 31 March 2023 9 000 7.3% 8 000 7 000 6 000 5 000 4 000 Wealth & Investment Specialist Banking 3 000 Group Investment 2 000 1 000 0 2019 2020 2
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% 400 75% 300 • Customer deposits have grown by 6.8% (c.7.0% CAGR) since 70% 2019 to R448.5bn at 31 March 2023 200 • Loans and advances as a percentage of custome
Slide 24: Sound capital base and capital ratios
Sound capital base and capital ratios Total capital (R'bn) Total risk-weighted assets: lower RWA density (R'bn) 60 700 80% 600 70% 50 60% 500 40 50% 400 30 40% 300 30% 20 200 20% 10 100 10% 0 0 —% 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 CET1 capital Total regulatory capital Total assets (L
Slide 25: Sound capital ratios and capital ratios (cont.)
Sound capital ratios and capital ratios (cont.) Capital ratios^ Capital ratios# 20% IRB Scope* 18% 18% 31 March 2023^ 31 March 2022^ 16% 15% Common Equity Tier 1 14.7% 14.0% 14% 12% Tier 1 ratio 15.9% 15.0% 10% 8% Total capital ratio 18.3% 17.5% 6% 6% Leverage ratio ** 6.5% 7.4% 4% ^ Investec Limite
Slide 26: Consistent asset growth, gearing ratios remain low
Consistent asset growth, gearing ratios remain low Total assets composition (R'bn) Gearing remains low* 800 12 10 600 8 400 6 4 200 2 0 0 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 Net core loans Cash and near cash balances Other assets Total gearing ratio Core loans to equity ratio • We have
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 31 March 2013 (9% CAGR) to R171.4bn at 31 M
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 R'mn 400 3% 300 2% 200 1% 100 0 0% 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 qual
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% 4.9% as % of 1.4% 1.6% 2.6% 1.9% 2.7% 4000 gross 20 000 core 3000 17 589 loans 1883 2000 1328 1206 15 289 14 969 15 953 416 620 1000 618 985 869 742 10 768 0 2021 2022 2023 10 000 8 856 7 438 5 625 Stage 1
Slide 32: Credit ratings
Credit ratings Current credit ratings of Investec Limited • Investec Limited’s ratings have remained stable over many Fitch Rating years reflecting the financial soundness of the bank over a long period of time Foreign currency long-term rating BB- • Past ratings adjustments have largely been associ
Slide 33: Appendices
Appendices
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 31 March 2023 31 March 2022 % change Total operating income before expected credit loss impairment charges (R’million) 19 621 17 907 9.6 % Operating costs (R’million) 10 212 9 282 10.0 % Operating profit before goodwill and acquir
Slide 36: Investec Limited: income statement
Investec Limited: income statement R’million 31 March 2023 31 March 2022 Interest income 37 431 26 087 Interest expense (25 999) (16 709) Net interest income 11 432 9 378 Fee and commission income 7 714 7 166 Fee and commission expense (800) (624) Investment (loss)/income (808) 590 Share of post-tax
Slide 37: Investec Limited: balance sheet
Investec Limited: 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 12 323 21 014 25 723 Non-sovereign and non-bank cash placements 14 133 13 176 8 956 Reverse repurchase agreements and cash c
Slide 38: Investec Limited: balance sheet (cont.)
Investec Limited: balance sheet (cont.) R’million 31 March 2023 31 March 2022^ 31 March 2021^ Liabilities Deposits by banks 31 789 22 236 22 052 Derivative financial instruments 37 802 33 112 26 980 Other trading liabilities 3 820 4 475 5 643 Repurchase agreements and cash collateral on securities l
Slide 39: Investec Limited: asset quality
Investec Limited: asset quality R’million 31 March 2023 31 March 2022 Gross core loans 323 954 301 106 Of which subject to ECL* 322 313 299 576 Of which FVPL (excluding fixed rate loans) 1 641 1 530 Gross core loans to customers subject to ECL 322 313 299 576 Stage 1 297 504 276 362 Stage 2 15 953 1
Slide 40: Investec Limited: capital structure and capital adequacy
Investec Limited: capital structure and capital adequacy IRB Scope* 31 March 2023^ 31 March 2022^ Common Equity Tier 1 14.7% 14.0% Tier 1 ratio 15.9% 15.0% Total capital ratio 18.3% 17.5% Leverage ratio** 6.5% 7.4% * Investec Limited uses the Internal Ratings Based (IRB) Approach to quantify credit
Slide 41: Investec Limited: capital structure and capital adequacy (cont.)
Investec Limited: capital structure and capital adequacy (cont.) IRB Scope* R’million 31 March 2023^ 31 March 2022^ Shareholders’ equity 45 929 46 232 Shareholders’ equity per balance sheet 48 374 49 118 Perpetual preference share capital and share premium (2 445) (2 886) Non-controlling interests –
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 2% in the financial services sector in TOP 14% of diversified banks and in the TOP 2% of global diversified financials the MSCI Global Sustainabili