Investec Plc · LSE:INVP
Investec — Investor Presentation (December 2010)
27 slides from Investec's investor presentation, December 2010
Slide 1: Investec
Investec Nov-Dec 2010 1
Slide 2: Review of global environment
Review of global environment 2
Slide 3: Looking back
Looking back 13 SEP 2008 “You are about to experience the most unbelievable week in America ever ever, and we have to prepare for the absolutely worst case …We have to protect the firm. This is about our SURVIVAL SURVIVAL” - JAMIE DIMON, CEO JPMorgan Chase 3
Slide 4: Financial crisis …
Financial crisis … Collapse of LIBOR-OIS spread Lehman’s 3.6 3.2 2.8 Bear Stearns 2.4 2 Closure of money funds / (%) 1.6 Northern Rock 1.2 0.8 04 0.4 0 Oct 05 Oct 06 Oct 07 Oct 08 Oct 09 Oct 10 Apr 06 Apr 07 Apr 08 Apr 09 Apr 10 -0.4 O O O O O O A A A A A UK Eurozone US Source: Bloombergs and Datast
Slide 5: … leading to a potential global debt crisis
… leading to a potential global debt crisis Country % risk of bankruptcy 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Source: Market Oracle, March 2010 5
Slide 6: Resulting in the age of austerity
Resulting in the age of austerity Australia “We have entered the Age of Austerity. It’s already l d arrived i d in i Europe E and d is i destined d ti d forf the th United States. Governments throughout Europe are cutting social spending and raising taxes — or contemplating doing so. Even rich count
Slide 7: Hence, the world is in 'stop-start' mode
Hence, the world is in ‘stop-start’ mode (President Herbert Hoover (August 10, 1874 – October 20, 1964) 7
Slide 8: With global growth slowly recovering
With global growth slowly recovering GDP Growth Forecasts for 2010 2010-2017 2017 Source: Standard and Poors 8
Slide 9: Interest rates at historic lows
Interest rates at historic lows Except for South Africa and Australia 18 16 14 12 10 % 8 6 4 2 0 Nov-99 Nov-00 Nov-01 Nov-02 Nov-03 Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 JIBAR (3M) UKINT (3M) AUINT (3M) USINT (3M) JPN (3M) EURIBOR (3M) Source: Datastream 9
Slide 10: Credit markets have recovered
Credit markets have recovered 100 90 80 00 Rebased to 10 70 60 50 40 30 Sep 08 Dec 08 Mar 09 Jun 09 Sep 09 Dec 09 Mar 10 Jun 10 Sep 10 ABX 06 06-1 1 AAA ABX 06 06-2 2 AAA ABX 07 07-1 1 AAA ABX 07 07-2 2 AAA Source: Datastream 10
Slide 11: Equity markets volatile but moving up
Equity markets volatile but moving up 140 125 110 ased to 100 95 Reba 80 65 50 Dec 08 Feb 09 Apr 09 Jun 09 Aug 09 Oct 09 Dec 09 Feb 10 Apr 10 Jun 10 Aug 10 Oct 10 JSE FTSE ASX Dow Jones Source: Datastream 11
Slide 12: With SA on a much firmer long-term growth path
With SA on a much firmer long-term growth path p • SA never had a banking crisis but rather a traditional recession brought about by high interest rates and the collapse of global demand. • SA’s banking sector was recently ranked 6th in the world in global competitiveness report and first on its str
Slide 13: Investec through the crisis
Investec through the crisis 13
Slide 14: Maintained a strong balance sheet
Maintained a strong balance sheet • Current capital structure and capital ratios exceed the minimum requirements for 2013 Capital adequacy ratios Capital 18 18.5% IBAL 19 2% 19.2% 16.2 16 2 15.8 16 14.8 14.6 16.7% Sep-10 14 Investec plc 15.9% 14 Mar-10 13.1 12.1 11.8 11.7 5 11.5 16.2% 16 2% 12 Inves
Slide 15: Diversified our funding sources
Diversified our funding sources Investec DLC Investec Limited £'mn R'mn 11,000 70,000 10,000 60,000 9,000 Average g 8,000 50,000 7,000 average average 40,000 6,000 5,000 30,000 4,000 3,000 20,000 2,000 10,000 1,000 - - Oct-08 Feb-09 Jun-09 Oct-09 Feb-10 Jun-10 Oct-10 Oct-08 Feb-09 Jun-09 Oct-09 Feb-
Slide 16: Built our core earnings drivers
Built our core earnings drivers Third party assets under management Core loans and advances Investec DLC Investec DLC £'bn £'bn 90 80.0 21 17.3 17.9 18.1 74.2 16.2 62.9 18 75 15 60 48.8 12 45 9 30 6 15 3 0 0 2009 2010 2009 2010 Mar Sep Mar Sep p Investec Limited Investec Limited R'bn R'bn 150 500 40
Slide 17: Results of the group
Results of the group Salient financial features (Investec DLC) % Sep-10 Sep-09 change Mar-10 Operating profit* excluding debt buy-back 228,157 169,979 34.2% 382,258 Operating profit* before tax (£’000) 228,157 215,979 5.6% 432,258 Attributable earnings* (£’000) 163,202 160,422 1.7% 309,710 Adjusted
Slide 18: And for South Africa
And for South Africa Salient financial features (Investec Limited) R'mn Sep-10 Sep-09 % change Mar-10 Operating profit before taxation, headline adjustments 1 947 1,947 2 067 2,067 -5.8% 5 8% 4 450 4,450 and impairments Operating profit before taxation and headline 1,570 1,652 -5.0% 3,587 adjustment
Slide 19: Strong operational performance
Strong operational performance Investec DLC Investec Limited Operating profit* Operating profit* 300 2,000 +49.5% 1,800 +23.8% 250 1,600 1,400 200 1,200 R’mn £’mn 150 1,000 800 100 600 400 50 200 - - Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Capital Markets Investment Ban
Slide 20: Supported by strong recurring income base
Supported by strong recurring income base Investec DLC Investec Limited 900 5,000 800 4,500 700 4,000 3 500 3,500 600 3,000 500 £’mn £’mn 2,500 400 2,000 300 1,500 200 1,000 100 63% 63% 74% 61% 63% 59% 67% 71% 65% 71% 500 - - Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Othe
Slide 21: Strategy and outlook
Strategy and outlook 21
Slide 22: 2008 – 2009: On the defensive
2008 – 2009: On the defensive • F For th the restt off 2008 and d much h off 2009 2009, th ’ ffocus continued the group’s ti d tto b be on the balance sheet and we remained in defensive mode 22
Slide 23: Past year we've moved onto the front foot
Past year we’ve moved onto the front foot 23
Slide 24: Focused on realigning the business model
Focused on realigning the business model 600 Third party Proprietary risk assets and capital advisory £535 mn 400 £346 mn £'mn Net interest Net fees and income of (36% of (40% of commissions of £321 mn total) total)) 200 £341 mn Other Principal (24% of of transactions of total) £5 mn - £214 mn S 04
Slide 25: …and on building our brand
…and on building our brand • Strengthen existing client relationships • Provide distinctive products and an increased breadth of services to clients 25
Slide 26: Ready to capture opportunities
Ready to capture opportunities • The system has stabilised and activity levels are starting to improve • We have a solid and resilient franchise and will continue our efforts to build a strong brand • We are on the front foot and have had a forward-focused approach • With our strong balance sheet an
Slide 27: Thank You
Thank You 27