Slide 1: Investor pre-close briefing
Investor pre-close briefing 16 September 2016
Slide 2: Proviso
Proviso • Please note that matters discussed in today’s presentation may contain forward looking statements which are subject to various risks and uncertainties and other factors, including, but not limited to: ‒ the further development of standards and interpretations under IFRS applicable to past,
Slide 3: Operational review
Operational review Out of the Ordinary® & Investec
Slide 4: Proviso: basis of figures and trends in the operational review
• Proviso: unless otherwise stated, figures and trends discussed in the operational review relate to the five month period to 31 Aug 2016 and compare 1H2017 vs 1H2016 • References to operating profit relate to adjusted* operating profit. Trends within the divisional sections relate to adjusted opera
Slide 5: Overview of the six months ending Sep 2016
Overview of the six months ending 30 Sep 2016 • The first half of the group’s financial year continued to see high levels of macro uncertainty in our key operating geographies • The Asset Management and Wealth & Investment divisions are expected to report results comfortably ahead of the prior year.
Slide 6: Overview of the six months ending Sep 2016
Overview of the six months ending 30 Sep 2016 • Overall group results have been marginally impacted by the depreciation of the average Rand against Sterling exchange rate of approximately 3% over the period • Adjusted operating profit* is expected to be slightly behind the prior year; albeit well ah
Slide 7: Overview of the six months ending Sep 2016
Overview of the six months ending 30 Sep 2016 • For the period 31 Mar 2016 to 31 Aug 2016: − Third party assets under management increased 13.3% to £137.9bn o An increase of 10.0% on a currency neutral^ basis − Customer accounts (deposits) increased 12.7% to £27.1bn o An increase of 7.2% on a curren
Slide 8: Balance sheet soundness
Balance sheet soundness Liquidity and Funding Cash and near cash • The group remains very liquid • We defensively increased cash Average balances in anticipation of the EU referendum • Net interest margins have remained broadly stable • Advances as a percentage of customer deposits at 31 Aug 2016 wa
Slide 9: Impairment trends
Impairment trends • The total income statement Impairment analysis impairment charge is expected to be in line with the prior year £’mn 160 140 • Impairments on the UK legacy 120 portfolio continue to decline 100 80 60 • Impairments in South Africa are 40 expected to be ahead of the prior year altho
Slide 10: Divisional review
Divisional review Out of the Ordinary® & Investec
Slide 11: Asset Management
Asset Management • Positive net inflows of £1.1bn to Assets under management: end of Aug 2016 Since 31 Mar 2016: up 14.8% to £86.9bn • Assets under management and £’bn 100 earnings positively impacted by 90 market and currency movements 80 and higher performance fees 70 60 • Stable, experienced staf
Slide 12: Wealth & Investment
Wealth & Investment • Performing ahead of the prior Funds under management: year Since 31 Mar 2016: up 11.0% to £50.4bn − Higher average funds under £’bn management 60 50 − Net inflows of £0.5bn to end of Aug 2016 40 30 • Investment expenditure on digital offering continues 20 10 0 2008 2009 2010 20
Slide 13: Specialist Banking
Specialist Banking • Ongoing Specialist Bank results expected to be behind the prior year Net interest income Investment, trading and other operating income • Net interest increase in the South African business • Investment income behind the prior year: driven by strong book growth in FY2016 o Weake
Slide 14: Specialist Banking – UK legacy business
Specialist Banking – UK legacy business • The Legacy business is expected to report a smaller loss than the prior year as a result of an overall reduction in both impairments and costs Legacy portfolio total net loans: Investec and Kensington £’mn 8,000 6 892 Kensington - Ireland 7,000 6,000 Kensing
Slide 15: Impacts arising from Brexit
Impacts arising from Brexit • While the referendum result is clear, there remains uncertainty as to how and when this might be implemented • While we cannot predict the impact of Brexit on levels of economic activity, our diversified business model with multiple income streams should provide resilie
Slide 16: Impacts arising from Brexit
Impacts arising from Brexit • Taking into account comments provided in previous slides the current impact arising from Brexit on our UK businesses can be summarised as follows: Asset Management and Wealth & Investment − Equity market indices have been favourable, positively impacting funds under man
Slide 17: Impacts arising from Brexit cont…
Impacts arising from Brexit cont… • Property exposures (excluding legacy book) are well collateralised and servicing from consistent cash flows • We do not expect imminent defaults in this portfolio but are monitoring underlying exposures regularly • The main property portfolios can be assessed as f
Slide 18: Additional aspects
Additional aspects Out of the Ordinary® & Investec
Slide 19: Other information
Other information • Effective tax rate: expected to be approximately 18% - 19% • Net non-controlling interests of approximately £27mn (profits attributable) relating to the Asset Management business and the consolidation of the Property Fund • Weighted number of shares in issue for the six months to
Slide 20: Conclusion
Conclusion Ordinary® Out of the & Investec
Slide 21: Conclusion
Conclusion • Markets and economic conditions in our key geographies have been volatile and difficult to predict • The impact of Brexit will be dependent on the outcome of negotiations which are likely to commence next year • While we had peaceful municipal elections in South Africa this has been fol
Slide 22: Investor pre-close briefing
Investor pre-close briefing 16 September 2016
Slide 23: Contact details
Contact details For further information please refer to the Investor Relations section of www.investec.com Or contact the Investor Relations team: • Telephone: − UK: +44 (0) 207 597 5546 − UK: +44 (0) 207 597 4493 − SA: +27 (0) 11 286 7070 • E-mail: investorrelations@investec.com 23
Slide 24: Appendices
Appendices Ordinary® Out of the & Investec
Slide 25: Operating environment
Operating environment 31 Aug 31 Mar 30 Sep % move since 2016 2016 2015 Mar 2016 JSE ALSI 52,733 52,250 50,089 0.92% FTSE ALSI 3,697 3,395 3,336 8.90% SA Prime 10.50% 10.50% 9.50% - UK Clearing Banks 0.25% 0.50% 0.50% (0.25%) Year to date 31 Aug 2016 31 Mar 2016 30 Sep 2015 Currency per £1.00 Close A
Slide 26: Adjusted operating profit: for the year ended Mar 2016
Adjusted* operating profit: For the year ended 31 Mar 2016 £’000 UK & Other Southern Total group Africa Asset Management 76,853 57,930 134,783 Wealth & Investment 63,127 22,608 85,735 Specialist Banking 78,043 252,837 330,880 Specialist Banking - Ongoing 156,378 Specialist Banking - Legacy business
Slide 27: Adjusted operating profit: for the six months ended Sep 2015
Adjusted* operating profit: For the six months ended 30 Sep 2015 £’000 UK & Other Southern Total group Africa Asset Management 40,127 30,427 70,554 Wealth & Investment 25,896 11,954 37,850 Specialist Banking 63,263 130,389 193,652 Specialist Banking - Ongoing 98,786 Specialist Banking - Legacy busin
Slide 28: Investec Asset Management: Assets under management
Investec Asset Management: Assets under management* £’million 31 Aug 31 Mar 30 Sep 31 Mar % change 2016 2016 2015 2015 YTD vs Mar 2016 UK and international 58,113 51,076 47,327 50,622 13.8% - Mutual funds 20,258 18,289 18,102 19,398 10.8% - Segregated mandates 37,855 32,787 29,225 31,224 15.5% South
Slide 29: Investec Wealth & Investment: Funds under management
Investec Wealth & Investment: Funds under management £’million 31 Aug 31 Mar 30 Sep 31 Mar % change 2016 2016 2015 2015 YTD vs Mar 2016 UK and Other 32,953 29,769 28,451 29,562 10.7% Southern Africa 17,484 15,690 14,899 16,514 11.4% Total 50,437 45,459 43,350 46,076 11.0% Investec Wealth & Investmen
Slide 30: Investec Wealth & Investment SA: Funds under management
Investec Wealth & Investment SA: Funds under management R’million 31 Aug 31 Mar 30 Sep 31 Mar % change YTD 2016 2016 2015 2015 vs Mar 2016 Discretionary 109,084 104.480 94,883 89,382 4.4% Non-discretionary 228,185 227,033 217,243 207,379 0.5% Total 337,269 331,513 312,126 296,761 1.7% £’million 31 A
Slide 31: Total group core loans
Total group core loans £’million 31 Aug 31 Mar 30 Sep 31 Mar % change YTD 2016 2016 2015 2015 vs Mar 2016 UK and Europe 8,375 7,804 7,210 7,061 7.3% Southern Africa 11,649 10,315 9,521 10,128 12.9% Total core loans 20,024 18,119 16,731 17,189 10.5% Home currency 31 Aug 31 Mar 30 Sep 31 Mar % change
Slide 32: Total group customer deposits
Total group customer deposits £’million 31 Aug 31 Mar 30 Sep 31 Mar % change YTD 2016 2016 2015 2015 vs Mar 2016 UK and Europe 11,990 10,801 9,719 10,298 11.0% Southern Africa 15,109 13,243 11,940 12,317 14.1% Total deposits 27,099 24,044 21,659 22,615 12.7% Home currency 31 Aug 31 Mar 30 Sep 31 Mar