Investec Plc · LSE:INVP
Investec — FY2017 Earnings Presentation
37 slides from Investec's earnings presentation, May 18, 2017
Slide 1: Year-end results
Year-end results 18 May ot © Investec Out of the Ordinary” Specialist Banking Asset Management ‘estment
Slide 2: Highlights for the year
Highlights for the year Strong operational performance Good performance across all areas of activity Deepened our core Sound levels of corporate client and private client activity franchise Asset Management and Wealth & Investment benefitted from Solid growth in FUM strong growth in average fu
Slide 3: Mixed operating environment
Mixed operating environment With continued macro uncertainty and volatility 110 Closing rate Average rate % change % change 100 Since Since Since Since Mar-16 Sep-16 Mar-16 Sep-16 Rebased to 100 Exchange 90 £ / Euro -7.3% 1.1% -12.8% -13.7% rates 80 £ / A$ -12.9% -3.9% -15.2% -19.5% 70 £ / ZAR -20.6
Slide 4: Steady growth in statutory operating profit
Steady growth in statutory operating profit Statutory results showed steady growth Creation of IEP and change in accounting from fair value to equity accounting impacted the SA results % change on neutral Mar-17 Mar-16 % change currency basis^^ Snapshot of Operating profit* (£’mn) 599.1 505.6 18
Slide 5: Diversified business model
Unless otherwise stated, all information on this slide relates to the ongoing business Diversified business model Operating profit* % contribution to group by geography Consistent contribution from 100% UK and Other businesses 80% UK and Other — Combined UK and Other Geographic 60% Southern busine
Slide 6: Solid growth in key earnings drivers
Unless otherwise stated, all information on this slide relates to the ongoing business Solid growth in key earnings drivers £’bn Third party assets under 175 management increased 150 Asset Management 23.9% to £150.7bn 125 Third party Wealth & (from £121.7bn) 100 assets under Investment — Up 14.8%
Slide 7: Supporting growth in operating income
Unless otherwise stated, all information on this slide relates to the ongoing business Supporting growth in operating income Total operating income up 18.1% to £2,286mn (from £1,935mn) £'mn 2600 2400 Trading income – Up 35.6% to £166mn (from £122mn) 2200 2000 Investment and associate income 1800 Tot
Slide 8: Maintained a balanced business model
Unless otherwise stated, all information on this slide relates to the ongoing business Maintained a balanced business model Balanced between capital light and capital intensive activities £’mn Net interest, Third party assets and 1 500 investment and trading advisory income £1,284mn £1,002mn 1 000 N
Slide 9: Costs up due to planned strategic growth
Unless otherwise stated, all information on this slide relates to the ongoing business Costs up due to planned strategic growth Cost to income remained at 65.8% £’mn Operating income increased 2 500 18.1% to £2,286mn 2 000 Operating (from £1,935mn) Jaws ratio for income the group* 1 500 Operatin
Slide 10: Total impairments slightly up
Total impairments slightly up £’mn Total impairments on 350 loans and advances increased marginally to 300 £111.5mn (2016: £109.5mn) Total 250 impairment Credit loss ratio of 0.54% charge 200 (2016: 0.62%) (including Legacy and legacy) by 150 Sales* geography 100 South Africa 50 UK and Other 0 M
Slide 11: Resulting in a solid group performance
Unless otherwise stated, all information on this slide relates to the ongoing business Resulting in a solid group performance Mar-17 Mar-16 % change Operating profit* before tax (£’mn) 663.7 583.9 13.7% Attributable earnings**^ (£’mn) 487.1 423.1 15.1% Adjusted EPS**^ (pence) 54.1 48.6 11.3% Custome
Slide 12: Progress on financial targets
Progress on financial targets Ongoing Statutory Target Mar-17 Mar-16 Mar-17 Mar-16 ROE (post tax) 12%-16% over a rolling 5- 14.2% 13.9% 12.5% 11.5% Summary yr period of financial Adjusted* EPS growth Target: 10% > UKPRI 11.3% 2.3% 16.9% 4.8% targets Cost to income Target: < 65% 65.8% 65.8% 66.3% 66.
Slide 13: ROE within range
ROE within range £’mn % 4 500 16 The improvement in ROE Target range: 12-16% reflects: 14.2% 4 000 14 — Growth in client franchise businesses 12.5% Ordinary 3 500 shareholders' — Growth in our annuity 12 equity businesses 3 000 10 — Decline in impairments ROE post- ROE statutory 2 500 tax post-tax
Slide 14: Sound balance sheet
Sound balance sheet Leverage ratio 7.3% Healthy capital ratios in excess of regulatory as reported 6.9% requirements Common equity 9.9% Target common equity tier 1 ratio of above 10% Investec tier 1 9.6% and total capital ratios of 14%-17% Limited Capital 14.1% High level of readily available,
Slide 15: Business review
Business review » @ Investec
Slide 16: Asset Management - overview
Asset Management - overview Momentum remains positive £’mn Operating profit increase 200 164.8 160 134.8 Operating profit Record year Operating 120 growth 80 ▲ 22.3% Revenues driven by increase in profit* AUM 40 0 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 % Operating margin slightly up 40 32.0% 33.1% O
Slide 17: Asset Management – outlook
Asset Management – outlook Positioning Outlook AUM Exposure by Net Flows by Region (FY2017 and FY2016) Cautious on the outlook for Asset Exposure* financial asset prices £1 457 mn Europe Including Solid pipeline but net flows Emerging United Kingdom picture unclear Markets £61 mn 59% £639 mn 201
Slide 18: Wealth & Investment - overview
Wealth & Investment - overview Solid overall performance 120 £’mn Total operating profit up 8.8% 93.2 85.7 Southern SA up 10.5% in Rands due to 80 Africa increased FUM and net inflows Operating profit* 40 UK and UK up 3.3%, benefiting from growth Europe in average FUM supported by a 0 higher lev
Slide 19: Wealth & Investment – outlook
Wealth & Investment – outlook Positioning Outlook Consumer and investor confidence in SA impacted by weak GDP growth and continued political uncertainty Investor sentiment in the UK will remain uncertain until we get clarity around the UK’s exit from the EU UK and Other SA & Mauritius • Brand we
Slide 20: Specialist Banking - overview
Unless otherwise stated, all information on this slide relates to the ongoing business Specialist Banking - overview Stable performance £’mn 500 454.4 Operating profit up 11.0% to 409.2 400 Southern £454.4mn (2016: £409.2mn) 300 Africa UK up 8.2% Operating 200 UK and SA down 3.3% in Rands due to
Slide 21: Specialist Banking - outlook
Unless otherwise stated, all information on this slide relates to the ongoing business Specialist Banking - outlook Specialist Bank UK and Other Ongoing £'mn 850 Other operating income Outlook 713.0 700 591.0 Customer flow 550 trading income Current global political Analysis of 400 Investment and
Slide 22: Specialist Banking – UK legacy
Specialist Banking – UK legacy Continued to reduce the UK Legacy Business exposures £'mn Mar-17 Mar-16 The legacy portfolio has continued to be actively managed down to Total income 0.3 4.7 £476mn (2016: £583mn) Total impairments (54.3) (68.1) Largely through assets sales, Total expenses (10.6)
Slide 23: Specialist Banking - outlook
Unless otherwise stated, all information on this slide relates to the ongoing business Specialist Banking - outlook Specialist Bank SA Other operating 15 R’bn income Outlook 12.4 12.9 12 Customer flow trading income Economic slowdown is Analysis of 9 Investment and expected to continue with the in
Slide 24: Investec Equity Partners - overview
Investec Equity Partners - overview Created in January 2016 Summary About Investec Principal Investments transferred IEP is a diversified investment holding company certain portfolio investments to the value of which owns controlling and strategic scalable R7.6bn to IEP interests in a number of
Slide 25: SA investment portfolio - overview
SA investment portfolio - overview High IRR over the long term but dragging short-term ROE Asset Income £'million analysis analysis Investec Equity Partners (IEP) 323 16 Equity investments^ 130 - Property investments* 260 22 Total equity exposures 713 38 Associated loans and other assets 36 2 Total
Slide 26: Strategic review and priorities for FY2018
Strategic review and priorities for FY2018
Slide 27: Asset Management – strategy
Asset Management – strategy Focus on clients, people and long-term growth Strategic priorities Investment performance Grow in the Advisor channel Focus on our large markets, especially North America Continue to scale Multi-asset and Global Equities Continue to nurture a limited number of l
Slide 28: Wealth & Investment – strategic review
Wealth & Investment – strategic review Investing for long-term sustainability Strategic priorities Independent recognition Internationalisation: Create international operating platform in Switzerland Digitalisation as another channel to reach new clients Best Private Bank and Wealth Manager, Sou
Slide 29: Specialist Banking – strategic review
Specialist Banking – strategic review Specialist Bank UK and Other Ongoing Strategic priorities Independent recognition Build a domestically relevant Private Bank — Shifting from product based model to client centric model focusing on HNW and active entrepreneurs — Building the processes, products
Slide 30: Specialist Banking – strategic review
Specialist Banking – strategic review Specialist Bank SA Strategic priorities Independent recognition Client acquisition — Strategy to acquire and penetrate client base through improved coordination and collaboration Best Private Bank and Wealth Manager, South Africa Evolve the digital offering
Slide 31: Launch of Investec Life
Launch of Investec Life Further enhancing our client value proposition About Investec Life is a personalised insurance offering with both the product features and process highly tailored to our clients and crafted around an extraordinary client experience Extension of One Place Through Investec
Slide 32: Closing
Closing » @ Investec
Slide 33: We continue to focus on our revenue drivers
We continue to focus on our revenue drivers Which support our balanced business model Generate high quality income through diversified revenue streams Further grow funds under management Managed growth in loans and customer deposits Increase transactional activity 33
Slide 34: Building our franchises
Building our franchises Through a focus on clients and building the brand 34
Slide 35: Being a responsible corporate
Being a responsible corporate Investing in … …our People …our Communities …our Planet Voted 2nd most attractive employer in SA (Universum survey) Team Green 35
Slide 36: Creating value for our stakeholders
Creating value for our stakeholders We have made good progress in building our core franchises whilst at the same generating reasonable growth and returns for our shareholders We have a strong leadership team who are motivated to build their businesses and improve the quality of earnings through
Slide 37: Closing
Closing Sound levels of activity supported performance as the group continued to strengthen its client franchise businesses Whilst macro uncertainty persists, which could impact activity levels going forward, the group believes that its balanced business model together with its strategic initiat