Investec Plc · LSE:INVP
Investec — Investor Presentation (June 2024)
45 slides from Investec's investor presentation, June 2024
Slide 1: Investec plc Investor generic presentation June 2024
Investec plc Investor generic presentation June 2024 The information in this presentation relates to the year ended 31 March 2024 and has been prepard on a pro-forma basis, unless otherwise indicated.
Slide 2: Contents
Contents 01 Investec Group 02 03 04 05 Overview Investec plc Further Appendix at a glance of Investec plc operating information and fundamentals peer analysis 2 2
Slide 3: Investec Group at a glance
Investec Group at a glance 3
Slide 4: Dual Listed Company structure
Investec Dual Listed Company structure Non-Southern African operations Southern African operations • Investec plc and Investec Limited are separate legal entities and listings, but are Investec plc Investec Ltd bound together by contractual agreements and mechanisms Sharing 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 for a sustainable future, and maintain our competitive ESG position PROGRESS MADE ON OUR IMPACT SDGs SUSTAINABLE FINANCE Net-zero commitments • Raised $56.5mn through our Global Sustainable Equity Fund at 31 March 2024 (since launch i
Slide 10: Overview of Investec plc
Overview of Investec plc 10 10
Slide 11: Investec plc key highlights
Investec plc A Specialist Banking Group 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 £30.1bn £16.6bn £20.8bn Rathbones Group Plc* £107.6bn at 31 March 2024 2 200+ Key highl
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 combination with Rathbones
Adjusted UK operating profit* Wealth & Investment UK £66.9 million Combination with Rathbones • 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-taxation profit from associates was recogni
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 For high net worth clients that For UK mid-mar
Slide 15: Investec plc ranks 7th for UK banks by revenue and 6th by profits
Investec plc ranks 7th for UK banks by revenue and 6th by profits • Investec plc is a substantial business generating revenues of £1,206mn (on a pro-forma basis) during the year to March 2024. • The chart below shows the relative revenue generation compared to the rest of the UK banking market as we
Slide 16: Investec plc's operating fundamentals
Investec plc’s operating fundamentals 16
Slide 17: Profitability supported by diversified revenue streams
Profitability supported by diversified revenue streams Revenue mix (£'mn) 1 400 1 206 1 200 1 036 1 000 800 600 Other operating income Trading income 400 Share of post taxation profit of associates and joint venture holding 200 Investment income Net fee and commisssion income 0 Net interest income 2
Slide 18: Cost to income ratio decreasing overtime
Cost to income ratio decreasing overtime Costs and cost to income ratio (£'mn) 1000 900 77.5% 800 74.2% 700 657 65.1% 599 600 500 54.5% 400 57.8% 300 200 Operating costs (LHS) 100 Cost to income ratio (RHS) 0 2020 2021 2022 2023 2024 • Focused on managing costs while building for the future – Contin
Slide 19: Profitability supported by diversified revenue streams
Profitability supported by diversified revenue streams Business mix percentage contribution to adjusted Adjusted operating profit1 (£'mn) operating profit1 1500 2% 3% 15% 19% 1000 Mar 24 Mar 23 500 78% 0 83% 2020 2021 2022 2023 2024 Adjusted operating profit Specialist Banking Wealth & Investment Gr
Slide 20: 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 21: Strong UK & Other loan growth
Mar-23 Mar-24 £'mn HNW & Other private 5 500 client lending Property Corporate & Other Lending 5 000 4 889 4 500 4 000 Strong UK & Other 3 500 loan growth 3 000 2 655 2 473 Net core loans up 2 500 6.4% 2 268 2 000 to £16.6bn 1 500 1 394 • Good activity in corporate client 1 000 lending portfolio acr
Slide 22: 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 23: 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 107 111 101 100 75 67 1000 Stage 1 31 42 32 33 Stage 2 35 39 43 1242 1321 1391 2020 Stage 3 37 27 32 0 500 992 2021 2020 2021
Slide 24: Consistent asset growth, gearing ratios remain low
Consistent asset growth, gearing ratios remain low Total assets composition Gearing1 remains low £'bn 50.0 12 10.4 10.4 10.4 9.9 10 40.0 8.7 20.4 19.8 8 30.0 4.7 6 5.7 5.4 5.6 5 4.9 6.9 9.7 4.8 20.0 8.6 8.9 4 6.0 6.9 10.0 15.6 16.6 2 14.4 11.9 12.3 0.0 0 2020 2021 2022 2023 2024 2020 2021 2022 2023
Slide 25: Diversified funding strategy
Investec plc – Diversified funding strategy Credit Ratings Conservative and prudent funding strategy • On 17 August 2023, Moody's affirmed IBP's long-term deposit rating at A1 1 Maintaining a high base of high-quality liquid assets (stable outlook) • On 20 February 2024, Fitch affirmed IBP’s long-te
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 79.7% • Customer deposits have grown by 36% (12% CAGR) £'bn since 2020 to £20.8bn at 31 March 2024 25 100% 20.8
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 5.8% amounted to £9.7bn at 31 March 2024 (representing 46.4% of customer 10.7% de
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 based on the latest regulatory requirements Capital ratios : Investec plc Minimum CET 1 requirement % 5 31 Mar 20241 31 Mar 20231 Target 15 Investec plc: 12.3% 12.0% 12.0% Common equity
Slide 29: We inherently hold more capital per unit of risk
Investec plc: 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 (%) Total capital (£'bn) 75% 8% 4 3 50% 6% 2 25% 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 £’mn Mar 24 Mar 23 Mar 22 6 0.3 0.3 5 Revenue 139.0 135.5 75.3 Loan book (£’bn) 4.9 5.0 4 ECL impairments (13.6) (6.3) (2.4) 3 2 Costs (57.1) (59.0) (42.0) 1 Profit 68.4 70.2 30.8 0 2019 2020 2021 2022
Slide 32: Investec plc: peer group comparisons
Investec plc: peer group comparisons Funding: Loans and advances to customers as a % Credit loss ratio: ECL impairment charges as a % of average core loans and advances of customer deposits (smaller number is better) (smaller number is better) 200% 1 0.8 116% 109% 107% 0.58 95% 100% 84% 80% 0.46 74%
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: Salient financial features (statutory)
Investec plc: salient financial features (statutory) Key financial statistics 31 Mar 2024 31 Mar 2023 % Change Operating income (£'000) 1 170 211 961 125 21.8 % Operating costs (£'000) 656 599 598 966 9.6 % Adjusted operating profit (£'000) 426 413 295 407 44.3 % Earnings attributable to ordinary sh
Slide 36: Statutory Income Statement
Investec plc: Statutory Income Statement £'000 31 Mar 2024 31 Mar 2023 % Change Interest income 1 914 473 1 215 245 58 % Interest expense (1 103 546) (501 025) 120 % Net interest income 810 927 714 220 14 % Fee and commission income 173 213 131 795 31 % Fee and commission expense (16 451) (15 442) 7
Slide 37: Pro-forma Income Statement
Investec plc: 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 prese
Slide 38: Balance Sheet
Investec plc: 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 676 464 893 297 Reverse repurchase agreements and cash collateral on securities borrowed 1 140 115 1 338 699 Sovereign debt securities 1 928 134 1 221 7
Slide 39: Balance Sheet (continued)
Investec plc: Balance Sheet (continued) £'000 31 Mar 2024 31 Mar 2023 Liabilities Deposits by banks 2 174 305 2 172 171 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 accoun
Slide 40: Statutory segmental analysis of operating profit
Investec plc: Statutory segmental analysis of operating profit Specialist Banking For the financial year ended 31 March 2024 Wealth & Group £'000 Investment Private Banking CIB & Other Investments Group Costs Total Group Net interest income 8 340 132 302 670 285 — — 810 927 Fee and commission income
Slide 41: Statutory segmental analysis of operating profit (continued)
Investec plc: Statutory segmental analysis of operating profit (continued) Specialist Banking For the financial year ended 31 March 2023^ Wealth & Group £'000 Investment Private Banking CIB & Other Investments Group Costs Total Group Net interest income 5 382 128 945 579 893 — — 714 220 Fee and comm
Slide 42: Asset quality under IFRS 9
Investec plc: 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)
Slide 43: Capital adequacy
Investec plc: capital adequacy £‘mn 31 Mar 2024* 31 Mar 2023* Tier 1 Capital Shareholders’ equity 2 917 2 373 Non-controlling interests — — Regulatory adjustments to the accounting basis (3) 16 Deductions (677) (318) Common equity tier 1 capital 2 237 2 071 Additional Tier 1 instruments 458 250 Tier
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