Investec Limited · JSE:INL
Investec — Investor Presentation (November 2023)
41 slides from Investec's investor presentation, November 2023
Slide 1: Investec Limited Investor generic presentation
Investec Limited Investor generic presentation November 2023 The information in this presentation relates to the year ended 30 September 2023, unless otherwise indicated.
Slide 2: Contents
Contents 01 Investec 02 03 04 05 Investec Investec Limited Investec Appendices Group at a Limited operating Limited peer glance overview fundamentals analysis 22
Slide 3: Investec Group at a glance
Investec Group at a glance 3
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: 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 7 400+ Assets people £29.5bn • Listed on the JSE and LSE (a FT
Slide 6: One Investec
One Investec Our purpose is to create enduring worth. Our values* 45+ years of Deep client relationships, 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 se
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 - returning excess capital to shareholders 3 Diversified mix of earnings by geography and business, with significant annuity income underpin from leading
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 Commitment to Completed a pro- 4th in the 2022 Thermal coal as a Fossil fuels (as a 50% e
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 • Continued advancement in ESG integration work with added emphasis on Systems for Climate (TFSC) programme in South Africa. The program
Slide 11: Overview of Investec Limited
Overview of Investec Limited 11
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 Clea
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 SA
Wealth & Investment SA Uniquely positioned for SA HNW private clients seeking a holistic, international wealth management service Key facts* Future growth drivers Total FUM R420.0bn % discretionary and annuity 60.0% Fiduciary • Enhance our fiduciary and tax planning services % of disc. and annuity o
Slide 19: Group Investments overview
Group Investments overview Bud Group Holdings (Pty) Ltd • The Bud Group Holdings (previously Investec Equity Partners (IEP)) is an investment holding company that was born out of the Investec Private Equity portfolio, which was The Group Investments segment consists of equity sold to IEP in January
Slide 20: Investec Limited operating fundamentals
Investec Limited operating fundamentals 20
Slide 21: Revenue supported by resilient franchises
Revenue supported by resilient franchises Revenue mix Revenue versus expenses R’bn R’bn 10.3 100% 100% 10 10 75% 8 8 75% 5.4 5 5 50% 50% 3 3 25% 0 25% 0 0% Sept 19 Sept 20 Sept 21 Sept 22 Sept 23 Sept 19 Sept 20 Sept 21 Sept 22 Sept 23 Net Interest Income Net fees and commission income Operating inc
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 5 000 At 30 September 2023 7.4% 4 000 3 000 Wealth & Investment Specialist Banking 2 000 Group Investment 1 000 0 93.2% Sept 19 Sept 20 Sept 21 Sept 22
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 R'bn 500 80% 400 75% 300 • Customer deposits have grown by 23% (c.6.9% CAGR) since 70% March 2019 to R460.4bn at 30 September 2023 200 • Loans and advances as a percent
Slide 24: Sound capital base and capital ratios
Sound capital base and capital ratios Total capital (R'mn) Total risk-weighted assets: lower RWA density 60 000 700 000 80% 50 000 600 000 70% 60% 500 000 40 000 50% 400 000 30 000 40% 300 000 30% 20 000 200 000 20% 10 000 100 000 10% 0 0 —% 2020 2021 2022 2023 Sept 2023 2020 2021 2022 2023 Sept 202
Slide 25: Sound capital ratios and capital ratios (cont.)
Sound capital ratios and capital ratios (cont.) Capital ratios^ Capital ratios# 20% IRB Scope* 18% 17.0% 30 Sept 2023^ 31 March 2023^ 16% Common Equity Tier 1 13.2% 14.7% 14% 13.2% 12% Tier 1 ratio 14.3% 15.9% 10% Total capital ratio 17.0% 18.3% 8% 5.9% 6% Leverage ratio ** 5.9% 6.5% 4% ^ Investec L
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 14.0 12.3 12.0 10.3 600 139 125 10.0 8.0 171 178 400 6.5 6.0 5.3 4.0 200 325 338 2.0 0 0.0 2020 2021 2022 2023 Sept 23 2020 2021 2022 2023 Sept 23 Net core loans Cash and near cash balances Ot
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 30 September 2013 (9% CAGR) to R177.7bn at
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 4% 300 3% 200 2% 100 1% 0 0% 2020 2021 2022 2023 Sept 23 Net core loans and advances (LHS) Credit loss ratio (RHS) Stage 3 net of ECL as a % of net core loans subject to ECL (RHS) Credit quality metrics on core loans for the year ended 30 September
Slide 31: Asset quality metrics
Asset quality metrics Provision build Gross core loans by stage R’mn R’mn 4 000 as % of 5.3% 5.2% 5.9% 5.0% 2.9% gross core 1.5% 2.5% 1.8% 2.7% 3.8% 20 000 loans 3 000 17 589 1 893 2 413 16 328 2 000 1 328 1 206 15 111 14 969 15 000 416 620 13 019 1 000 623 397 984 868 761 772 9 802 0 10 000 8 874 2
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 33
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 2023 30 Sept 2022^ % change Total operating income before expected credit loss impairment charges (R’million) 10 250 9 212 11.3 % Operating costs (R’million) 5 360 4 800 11.7 % Operating profit before goodwill and acquired
Slide 36: Investec Limited: income statement
Investec Limited: income statement R’million 30 Sept 2023 30 Sept 2022^ Interest income 24 782 16 022 Interest expense (18 304) (10 395) Net interest income 6 478 5 627 Fee and commission income 3 499 3 180 Fee and commission expense (519) (374) Investment income 288 209 Share of post-taxation profi
Slide 37: Investec Limited: balance sheet
Investec Limited: balance sheet 30 September 30 September R’million 31 March 2023^ 2023 2022^ Assets Cash and balances at central banks 13 450 22 761 13 564 Loans and advances to banks 10 095 12 323 18 522 Non-sovereign and non-bank cash placements 9 113 9 705 8 566 Reverse repurchase agreements and
Slide 38: Investec Limited: balance sheet (cont.)
Investec Limited: balance sheet (cont.) 30 September 30 September R’million 31 March 2023^ 2023 2022^ Liabilities Deposits by banks 34 973 31 789 19 681 Derivative financial instruments 39 813 37 802 31 352 Other trading liabilities 6 080 3 820 4 181 Repurchase agreements and cash collateral on secu
Slide 39: Investec Limited: asset quality
Investec Limited: asset quality R’million 30 Sept 2023 31 March 2023** Gross core loans 342 015 328 416 Of which FVPL (excluding fixed rate loans) 1 547 1 641 Gross core loans to customers subject to ECL* 340 468 326 775 Stage 1 317 647 301 573 Stage 2 9 802 16 328 of which past due greater than 30
Slide 40: Investec Limited: capital structure and capital adequacy
Investec Limited: capital structure and capital adequacy IRB Scope* 30 Sept 2023^ 31 March 2023^ Common Equity Tier 1 13.2% 14.7% Tier 1 ratio 14.3% 15.9% Total capital ratio 17.0% 18.3% Risk-weighted assets (R'million) 289 148 283 600 Leverage exposure measure (R'million) 701 096 696 319 Leverage r
Slide 41: Investec Limited: capital structure and capital adequacy (cont.)
Investec Limited: capital structure and capital adequacy (cont.) IRB Scope* R’million 30 Sept 2023^ 31 March 2023^ Shareholders’ equity 46 524 45 929 Shareholders’ equity per balance sheet 48 975 48 374 Perpetual preference share capital and share premium (2 451) (2 445) Non-controlling interests –