Investec plc · LSE:INVP
Investec — Investor Presentation (May 2023)
35 slides from Investec's investor presentation, May 2023
Slide 1: Investec Group Investor generic presentation May 2023
Investec Group Investor generic presentation May 2023 The information in this presentation relates to the year ended 31 March 2023, unless otherwise indicated.
Slide 2: 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 8 700+ people Assets • Listed on the JSE and LSE (a FTSE £28.4
Slide 3: 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 4: One Investec
One Investec Our purpose is to create enduring worth. Our values* 45+ years of Deep client partnerships, built on trust and out-of-the-ordinary service, are the bedrock of our business heritage. We are dedicated to building meaningful relationships with all our stakeholders Two core We uphold cast-i
Slide 5: Investment proposition
Investment proposition Well positioned to pursue long-term growth 1 Well capitalised and highly liquid balance sheet 2 Improved capital generation - returning excess capital to shareholders Diversified mix of earnings by geography and business, with significant annuity income underpin from leading 3
Slide 6: 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 7: Market-leading specialist client franchises
Market-leading specialist client franchises We are not all things to all people: we serve select niches where we can compete effectively Specialist client franchises span infrastructure, fund finance, aviation… Specialist Banking Specialist Banking Wealth & Investment th st 5 1 Top tier Top tier Top
Slide 8: A distinctive banking and wealth management business
A distinctive banking and wealth management business creating sustainable, long-term value for our stakeholders 2 c.8 700+ £30.2bn £39.6bn £61.0bn Principal geographies Total Employees Core loans Customer deposits Funds under management Key client groups and our offering Corporate / Institutional /
Slide 9: Group sustainability highlights
Group 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 Zero thermal coal by 2030 Group Board Cost of living crisis Transformation Participate
Slide 10: 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 Publically listed companies Specialist sectors backed companies For UK mid-market founder For high net worth clients that For UK mid-m
Slide 11: Specialist Banking SA
Specialist Banking SA High-quality specialist banking solutions with leading positions in selected areas Corporate and Institutional Investment Banking and Private Banking Investec for Business banking Principal Investments For high net worth clients, For corporates (mid to large size), professional
Slide 12: Wealth & Investment UK
Wealth & Investment UK A leading UK private client wealth manager targeting mass affluent and increasingly HNW client base Key facts Future growth drivers Total FUM £40.7bn %UK Discretionary 87% 13% % UK Direct c.82% UK Operating Margin 25.3% • Focus on collaborating further with the UK private bank
Slide 13: Wealth & Investment
Wealth & Investment Uniquely positioned for SA HNW private clients seeking a holistic, international wealth management service Key facts* Future growth drivers Total FUM R398.4bn % discretionary and annuity 55.9% Fiduciary % of disc. and annuity offshore 64.0% • Enhance our fiduciary and tax plannin
Slide 14: Diversified mix of earnings
Diversified mix of earnings Diversified geographic business with diverse income streams Geography Business Income stream Investment and Associate Income 1% 1% Operating Operating Income Income Net interest income 21% 2% 14% 34% 43% Adjusted Adjusted 47% Operating Operating 53% Profit* Profit^ 57% 57
Slide 15: Appendix
Appendix • 2023 results • Capital and liquidity • Loan book and asset quality • Sustainability highlights 15
Slide 16: Key takeaways
Key takeaways Capital generation and Returns to support Strong financial Deep client franchises, management investment and performance diversified earnings dividends +103% £'bn 510 68.9 61.0 414 Target range: 12 - 16% 45.0 39.6 33.9 32.2 30.2 24.9 13.7% 8.3% Mar-20 Mar-21 Mar-22 Mar-23 Mar-20 Mar-23
Slide 17: Results highlights
Results highlights Adjusted earnings per share Adjusted operating profit Cost to income 68.9p £835.9mn 59.6% (MAR-22: 55.1P) (MAR-22: £687.4MN) (MAR-22: 63.3%) 25.0% AHEAD of prior period 21.6% AHEAD of prior period Credit loss ratio Return on equity Net asset value per share 23bps 13.7% 510.0p (MAR
Slide 18: Solid underlying performance
Solid underlying performance Adjusted operating profit* largely driven by strong performance from our specialist banking operations £’mn SA^▲ 15% (15% in ZAR) UK^ ▲ 30% ▲ 22% 900 110 1 -15 -3 800 74 0.3 -19 700 600 835.9 500 687.4 400 ▲ 21% ▲ 1% ▼ >100% ▲ 57% ▲ 1% ▼ 46% 300 Mar-22 Specialist Banking
Slide 19: Divisional highlights
Divisional highlights UK & Other | Wealth & Investment SA | Wealth & Investment • FUM during the period of £40.7bn (Mar-22: £42.9bn) • Expanded global investment offerings providing access to a range • Net inflows of £608mn of investment opportunities • Adjusted operating profit up 1.3% to £91.8mn (
Slide 20: ROE and ROTE
ROE and ROTE ROE ROTE Group 13.7% 14.7% Geographic 14.8% 14.9% 14.5% 12.7% Investec Ltd. Investec plc. Investec Ltd. Investec plc. Average allocated equity Average allocated tangible equity 47.3% 52.7% 50.5% 49.5% £2 119mn £2 362mn £2 109mn £2 069mn
Slide 21: Capital and liquidity
Capital and liquidity Group cash and near cash Group liquidity summary £’bn • Strong liquidity positions to support growth 18 16.4 Min • Loans to customers as % of customer deposits of 75.6% (Mar 22: 73.7%) 16 11.1bn Capital summary 14 Max • CET1^ ratio above 10% target for Investec plc , and 11.5%
Slide 22: Investec plc: 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) 75.0% 8.0% 4 7.0% 3 50.0% 6.0% 2 5.0
Slide 23: Investec Ltd: Sound capital base and capital ratios
Investec Ltd: 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 —% 2019 2020 2021 2022 2023 2019 2020 2021 2022
Slide 24: Lending exposures
Lending exposures Credit and counterparty exposures are to a select target market: HNW and high income clients, mid to large corporates and public sector bodies and institutions Gross core loans by country of exposure 0.8% 1.5% 3.7% 5.6% South Africa United Kingdom • The majority of exposures reside
Slide 25: Group ECL impairment charges & CLR
Group ECL impairment charges & CLR Credit loss ratio (core loans) bps 60 52 40 35 23 • CLR increased to 23 bps (2022: 8 bps), approaching the lower end of the through-the- 20 cycle range (TTC) range of 25-35bps 8 • Total ECL charges of £81.1mn (2022: £28.8mn) mainly driven by: 0 Mar-20 Mar-21 Mar-22
Slide 26: Unpacking the credit loss ratio - UK
Unpacking the credit loss ratio - UK Investec plc credit loss ratio (core loans) bps 80 69 60 56 40 37 CLR increased to 37bps (2022: 17bps), within the through-the-cycle range (TTC) range of 30-40bps: 20 17 • Total ECL charges of £67mn (2022: £25mn) mainly driven by: 0 – Increase in modelled ECLs du
Slide 27: Unpacking the credit loss ratio - SA
Unpacking the credit loss ratio - SA Investec Ltd credit loss ratio (core loans) bps 40 36 30 20 18 ECL impairment charges on loans subject to ECL 10 8 increased resulting in a CLR of 8 bps, driven primarily by: • Stage 3 ECL charges on certain exposures 0 • Reversals and recoveries on previously im
Slide 28: Balance sheet provisions
Balance sheet provisions £'mn R'mn 150 3000 56.1% 11.9% 75 1 883 100 67 2000 1 206 Investec plc Investec Ltd balance sheet balance sheet 620 ECL provision 50 35 8.6% 32 ECL provision 1000 0.3% 618 21.9% 39 869 14.6% 742 32 0 0 Mar-22 Mar-23 Mar-22 Mar-23 Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage
Slide 29: 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 Group joined the African Natural Capital Alliance • Investec Group joined the Partnersh
Slide 30: 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 Zero coal by 31 March Participated in Group Board Cost of living crisis Transformation 20
Slide 31: Focused on doing well and doing good - UK
Focused on doing well and doing good - UK Other highlights Specialist banking Wealth & Investment • Rolled out a sustainability awareness programme aimed at identifying • Continued inflows into the Investec Global Sustainable Equity Fund - sustainability business opportunities $46.2mn (since launch
Slide 32: Top of UK peers across the most credible international ESG ratings
Top of UK peers across the most credible international ESG ratings 1 MSCI ESG Ratings 2 Sustainalytics Ratings 3 S&P Corporate Sustainability Assessment TOP 2% in the financial services sector in the TOP 14% of globally assessed companies in TOP 2% of diversified financials in the S&P MSCI Global Su
Slide 33: 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 Zero thermal coal by Completed a pro- Group Board 4th Transformation 31 March 2030 climat
Slide 34: 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 Systems • Continued inflows into the Investec Global Sustainable Equity Fund of for Climate (TFSC) programme in South Africa. The packag
Slide 35: Top of SA peers across the most credible international ratings
Top of SA peers across the most credible international ratings 1 MSCI ESG Ratings 2 Sustainalytics Ratings 3 S&P Corporate Sustainability Assessment TOP 2% in the financial services sector in TOP 14% of globally assessed companies in TOP 2% of diversified financials in the S&P the MSCI Global Sustai