Investec Plc · LSE:INVP
Investec — Investec Bank — Debt Investor Presentation (May 2013)
29 slides from Investec's debt investor presentation, May 2013
Slide 1: Investec Bank Limited Investor Presentation
Investec Bank Limited Investor Presentation May 2013
Slide 2: Contents
Contents 1. Introduction 2. South Africa – Macroeconomic environment and banking sector overview 3. Investec overview 4. Investec financial overview 2
Slide 3: Key investment highlights
Key investment highlights Operates within a 5th largest South resilient South African bank – African banking ZAR279bln in sector - no bank assets t bail outs Sound balance sheet with low Started in 1974 - leverage – 11.4x 11 4x founders include Strong capital CEO, MD, FD adequacy – Tier 1 ratio of 1
Slide 4: The Investec Group - a distinctive specialist bank and asset manager
The Investec Group - a distinctive specialist bank and asset manager …facilitating the creation of wealth and the management of wealth History Strategy and what we do • Established in 1974 • Client focused approach • Today, efficient integrated international business platform • Not “all things to al
Slide 5: Contents
Contents 1. Introduction 2. South Africa – Macroeconomic environment and banking sector overview 3. Investec overview 4. Investec financial overview 5
Slide 6: Economic landscape
Economic landscape • Republic of South Africa issuer / long-term rating - Baa1(M) neg / BBB(F) stable / BBB(S&P) neg • The economy will continue to expand at a moderate pace in 2013 – CoConsumer su e spe spending d g hasas bee been a key ey d driver e oof g growth o t but a high g level e e oof u un
Slide 7: South Africa macroeconomic dynamics
South Africa macroeconomic dynamics Macro Economic Forecasts GDP g growth (%) ( ) 6 % change 2011 2012 2013F 2014F Growth (real, annual % change) 5 GDP 3.5 2.5 2.6 3.4 4 Household consumption expenditure 4.8 3.5 3.0 3.6 3 Gross fixed capital formation 4.5 5.7 5.2 6.0 2 Balance of payments Current ac
Slide 8: South Africa macroeconomic dynamics
South Africa macroeconomic dynamics Current account balance (% of GDP) ZAR vs PPP 0 13 -1 12 11 -2 10 -3 9 -4 8 -5 7 -6 6 6 5 -7 -8 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 PPP USDZAR Source: SARB, ICIB Source: Bloomberg, ICIB Net government debt (foreign and domestic) as % of GDP Governmen
Slide 9: South African Banking sector
South African Banking sector Total assets and gross loans and advances Bank funding composition (% of total) 3,500 Rbn 5.7 11.9 3,000 37 3.7 2,500 Institutional funds 24.5 2,000 Retail deposits Interbank funding 1,500 Commercial deposits 1,000 Foreign deposits 3.0 Other 500 0 51.2 008 008 008 008 00
Slide 10: Investec Bank Limited – South African peer group comparisons
Investec Bank Limited – South African peer group comparisons Funding: Loans: customer deposits ratio (smaller number is better) Asset quality: (smaller number is better) 1.2 7.0% 1 6.0% 5.0% 08 0.8 4.0% 0.6 3.0% 0.4 2.0% 1.0% 0.2 0.0% Investec Bank ABSA Firstrand Nedbank Standard Bank 0 Limited Inve
Slide 11: Contents
Contents 1. Introduction 2. South Africa – Macroeconomic environment and banking sector overview 3. Investec overview 4. Investec financial overview 11
Slide 12: Investec Group - organizational structure as at 31 March 2013
Investec Group - organizational structure as at 31 March 2013 SA and non-SA resident shareholders % of Total Group: p % of Total Group: p Profit: 66% Investec Limited DLC Investec plc Profit: 34% Tangible NAV: 52% Listed on JSE arrangements Listed on LSE Tangible NAV: 48% Assets: 54% SA operations N
Slide 13: Investec Bank Limited overview
Investec Bank Limited overview Investec Bank Limited key facts Shareholding structure for Investec Limited – 31 Mar 2013 • Started in 1974 Shareholder analysis by manager group* Number of • Banking licence obtained in 1980 shares % holding • Southern African banking operations 1 Public Investment Co
Slide 14: Investec Bank Limited overview – a specialist bank
Investec Bank Limited overview – a specialist bank • The bank operates as a specialist bank within Southern Africa, focusing on three key areas of activity: Corporate / Institutional / Government clients High net worth and high income private clients Corporate Advisory and Corporate and Private Bank
Slide 15: Investec Bank Limited – strategic objectives
Investec Bank Limited – strategic objectives Robust liquidity management philosophy Maintain healthy capital ratios • Maintain a high level of readily available, high • Always held capital in excess of regulatory quality liquid assets – 25 to 35% of our liability requirements base • Current C t rati
Slide 16: Contents
Contents 1. Introduction 2. South Africa – Macroeconomic environment and banking sector overview 3. Investec overview 4. Investec financial overview 16
Slide 17: Investec Bank Limited – well diversified balance sheet
Investec Bank Limited – well diversified balance sheet Composition of assets: total of ZAR267,701mln* Total assets and risk-weighted assets (RWA) Cash and balances at central ZAR’mln Basel Standardised Approach: RWA 6.3% 2.1% banks comprise 78% of total assets 3.4% 8.7% Loans and advances to banks 3
Slide 18: Investec Bank Limited – strong capital position with low leverage
Investec Bank Limited – strong capital position with low leverage • Investec has been successful in maintaining a strong capital base – FY2013: total capital adequacy ratio of 16.2% and tier 1 ratio of 10.9% – Basel III: now reporting in terms of Basel III – has had minimal impact on our capital rat
Slide 19: Investec Bank Limited – robust liquidity and funding philosophy
Investec Bank Limited – robust liquidity and funding philosophy • Continue to increase deposits p and cash and near cash Cash and near cash balances: comprise 28% of total assets balances • IBL is a net provider of funds to the interbank market in South Africa R'mn 90,000 • We have implemented a num
Slide 20: Investec Bank Limited – credit and counterparty exposures to a select target market
Investec Bank Limited – credit and counterparty exposures to a select target market • Target market includes: • high net worth and high income clients • mid to large sized corporates, public sector bodies and institutions • We typically originate loans with the intent of holding these assets to matu
Slide 21: Investec Bank Limited – asset quality of loans
Investec Bank Limited – asset quality of loans Defaults and core loans • Impairments on loans and advances ZAR’bln increased from ZAR833mln to ZAR868mln 160 4.5% for the year ended 31 Mar 2013 140 4.0% 120 3.5% 3.0% 100 • Default loans decreased significantly, 80 2.5% 2.0% with an improvement report
Slide 22: Investec Bank Limited - sustainable earnings supported by a high level of recurring income
Investec Bank Limited - sustainable earnings supported by a high level of recurring income Composition of total operating income (pre costs) ZAR’mln • For the year ended 31 Mar 2013: 7,000 100% 6,000 • Total operating income before impairment 80% losses on loans and advances increased 5,000 by 4.1%
Slide 23: Appendices
Appendices SS Xn Oo Investec
Slide 24: IBL: salient financial features
IBL: salient financial features % 31 March 2013 31 March 2012 change Total operating income before impairment losses on loans and advances (ZAR'mln) 6,620 6,357 4.1% Operating costs (ZAR'mln) 3,629 3,351 8.3% Operating profit before taxation (ZAR'mln) 2,123 2,173 (2.3%) Headline earnings attributabl
Slide 25: IBL: income statement
IBL: income statement Year to Year to ZAR'mln 31 March 2013 31 March 2012 Interest income 15,809 15,850 I Interest expense (10 926) (10,926) (11 581) (11,581) Net interest income 4,883 4,269 Fee and commission income 1,051 1,146 Fee and commission expense (109) (91) Investment income 459 589 Trading
Slide 26: IBL: balance sheet
IBL: balance sheet ZAR'mln 31 March 2013 31 March 2012 Assets Cash and balances at central banks 5,677 9,303 Loans and advances to banks 23,278 19,191 Non-sovereign and non-bank cash placements 5,875 7,885 Reverse repurchase agreements and cash collateral on securities borrowed 7,668 5,098 Sovereign
Slide 27: IBL: asset quality
IBL: asset quality ZAR'mln 31 March 2013 31 March 2012 Gross core loans and advances to customers 139,454 126,225 Total impairments (1,349) (1,308) Portfolio impairments (121) (206) Specific impairments (1,228) (1,102) Net core loans and advances to customers 138,105 124,917 Average gross core loans
Slide 28: IBL: capital adequacy
IBL: capital adequacy ZAR'mln 31 March 2013 31 March 2012 Tier 1 capital Core tier 1 / common equity tier 1 capital 22,331 19,492 Additional tier 1 capital 1,381 1,534 Total tier 1 capital 23,712 21,026 Total tier 2 capital 11,493 8,667 Total regulatory capital 35,205 29,693 Risk-weighted assets 217
Slide 29: Disclaimer
Disclaimer These materials may not be copied, published, distributed or transmitted and may not be reproduced in any manner whatsoever. These materials do not constitute or form part of any offer to sell or any solicitation of an offer to buy any securities in any jurisdiction. Investec Bank Limited
Investec Bank — Debt Investor Presentation (May 2013) on 6ix