Investec plc · LSE:INVP
Investec — Investec Bank — Investor Presentation (November 2024)
45 slides from Investec's investor presentation, November 2024
Slide 1: Investec Bank plc Investor generic presentation
Investec Bank plc Investor generic presentation November 2024 The information in this presentation relates to the six months ended 30 September 2024 and has been prepared on a pro-forma basis, unless otherwise indicated.
Slide 2: Contents
Contents 01 Investec Group 02 03 04 05 Overview Investec Bank plc Further Appendix at a glance of Investec operating information and Bank plc fundamentals peer analysis 22
Slide 3: Overview of Investec Group
a Overview of Investec , Group
Slide 4: 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 5: Our international footprint
Our international footprint Wealth & Investment Activities Since inception, we have Private Client Banking Activities expanded through a combination of substantial organic growth and Corporate and Investment Banking Activities a series of strategic acquisitions. Corporate Advisory and Investment Act
Slide 6: One Investec
One Investec Our purpose is to create enduring worth. Our values 50 years of Deep client partnerships, built on trust and Out of the Ordinary service, are the bedrock of our business heritage. We uphold cast-iron integrity in all our dealings, consistently displaying moral strength Two core We seek
Slide 7: Investment proposition
Investment proposition Well positioned to pursue long-term growth 1 Well capitalised and highly liquid balance sheet 2 Improved capital allocation - including ongoing strategies to optimise the capital base 3 Diversified mix of earnings by geography and business, with significant annuity income unde
Slide 8: Fuelling a robust growth agenda
Fuelling a robust growth agenda Growth Objectives Continued execution with Accelerate and scale Further develop connected discipline to drive growth initiatives client eco-systems across optimisation of returns business units & geographies Underpinned by Deepening our entrepreneurial culture (Out of
Slide 9: Sustainability highlights
Sustainability highlights Operate responsibly, finance and invest in a sustainable future, and maintain our competitive sustainability position OUR IMPACT SDGs SUSTAINABLE FINANCE Net-zero commitments • Raised $56.5mn through our Global Sustainable Equity Fund at 31 March 2024 (since launch in Mar-2
Slide 10: Overview of Investec Bank plc
Overview of Investec Bank plc 10
Slide 11: Investec Bank plc
Investec Bank plc A Specialist Bank with access to a diversified wealth management offering to deliver an extensive range of products and services. Total assets Net core loans Customer deposits FUMA Employees £29.9bn £16.7bn £21.8bn Rathbones Group Plc* £108.8bn at 30 September 2024 2 200+ Key highl
Slide 12: Strategic positioning
Strategic positioning Building scale & relevance with the client at the centre – creating enduring worth DELIVERING A UNIQUE BREADTH OF CAPABILITIES IN THE UK MID-MARKET “Hi-tech & Hi-touch” Accelerated drive to increase clients and share of wallet Private Private Private Client Companies Equity Enh
Slide 13: Wealth & Investment UK: £32.3 million adjusted operating profit
Adjusted operating profit* Wealth & Investment UK Combination with Rathbones successfully completed on 21 Sept 2023 £32.3 million • In the prior period (pre-combination): IW&I UK reported adjusted operating profit (post-tax) of £35.9mn and an operating margin of 25.2% • The current period (post-comb
Slide 14: 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 Publicly listed companies Specialist sectors backed companies For UK mid-market founder and For high net worth clients that need a For
Slide 15: IBP ranks 7th for UK banks by revenue and 7th by profits
IBP ranks 7th for UK banks by revenue and 7th by profits IBP is a substantial business generating strong and consistent revenues over many years. IBP revenue during the six months to 30 September 2024 totalled £586mn (£1,172mn annualised). The chart below shows the relative revenue generation compar
Slide 16: Investec Bank plc operating fundamentals
Investec Bank plc operating fundamentals 16
Slide 17: Profitability supported by diversified revenue streams
Profitability supported by diversified revenue streams Revenue mix (£'mn) 611 586 600 481 400 Other operating income Trading income 200 Investment income Share of post taxation profit of associates and joint venture holdings Net fee and commisssion income 0 Sept 22 Sept 23 Sept 24 Net interest incom
Slide 18: Cost to income ratio decreasing overtime
Cost to income ratio decreasing overtime Costs and cost to income ratio (£'mn) 416 400 311 54.0% 291 300 54.2% 49.7% 200 100 Operating costs (LHS) Cost to income ratio (RHS) 0 Sept 22 Sept 23 Sept 24 • Focused on managing costs while building for the future – Continue to leverage technology and exis
Slide 19: Profitability supported by diversified revenue streams
Profitability supported by diversified revenue streams Adjusted operating profit1 (£'mn) Business mix percentage contribution to adjusted £'mn operating profit1 400 14% 14.2% 14.7% 300 200 Sept 2024 Sept 2023 Mar 2023 100 86% 85.3% 0 85.8% Sept 20 Sept 21 Sept 22 Sept 23 Sept 24 Specialist Banking W
Slide 20: Consistent asset growth, gearing ratios remain low
Consistent asset growth, gearing ratios remain low Total assets composition Gearing1 remains low £'bn 40 12 10.8 10.3 10.1 10 30 8.3 3.4 8.1 3.7 4.1 8 4.3 5.2 9.7 9.8 20 6 5.7 5.6 8.6 5.2 8.9 4.6 4.6 6.9 4 10 15.6 16.6 16.7 14.4 2 12.3 0 0 2021 2022 2023 2024 Sept 24 2021 2022 2023 2024 Sept 24 Net
Slide 21: Exposures in a select target market
Exposures in a select target market • Credit and counterparty exposures are to a select target market: – High net worth clients – Mid to large sized corporates – Public sector bodies and institutions • The majority of exposures reside within the UK • Our portfolios have performed well to date with l
Slide 22: UK & Other net core loans up 2.3% annualised to £16.7bn
Mar-24 Sept-24 £’mn HNW & Other private 5 500 client lending Property Corporate & Other Lending 5 067 5 000 4 500 4 000 UK & Other net core 3 500 loans up 2.3% 3 000 2 746 annualised to £16.7bn 2 500 2 324 2 175 • Strong growth in our Fund Solutions loan 2 000 book as well as moderate growth across
Slide 23: Unpacking the credit loss ratio
Unpacking the credit loss ratio Credit loss ratio (core loans) bps 80 67 60 59 60 55 CLR 52 increased to 41 40 28 24 32 67bps (1H2024: 55bps) in line with the September pre-close guidance 20 9 0 1H2020 2H2020 1H2021 2H2021 1H2022 2H2022 1H2023 2H2023 1H2024 2H2024 1H2025 ECL impairment charges ECL c
Slide 24: Asset quality metrics
Asset quality metrics Asset quality metrics reflect the solid performance of core loans to date Balance sheet ECL provisions (£’mn) Gross core loans by Stage (£’mn) 200 1500 111 101 102 100 75 67 1000 Stage 1 32 33 30 Stage 2 42 35 43 1321 1391 2021 Stage 3 32 39 38 1242 0 1135 2022 500 992 2021 202
Slide 25: Diversified funding strategy
Diversified funding strategy • Investec Bank plc's funding consists primarily of customer deposits • The bank adopts a conservative and prudent funding strategy • Investec Bank plc is not subject to the Banking Reform Act ring-fencing requirements which are applicable to all large UK deposit takers,
Slide 26: Primarily customer deposit funded with low loan to deposit ratio
Primarily customer deposit funded with low loan to deposit ratio • Loans as a percentage of customer deposits Fully self funded: conservative loan to deposit ratio remains conservative at 77.0% £'bn • Customer deposits have grown by 40.4% (7.8% 21.8 CAGR) since 2020 to £21.8bn at 30 September 20.9 1
Slide 27: Maintaining robust surplus liquidity
Maintaining robust surplus liquidity • We maintain a high level of readily available high quality liquid assets – Cash and near cash composition targeting a minimum cash to customer deposit ratio of 25%. These balances amounted to £9.8bn at 30 September 2024 (representing 44.9% of customer 4.6% depo
Slide 28: Sound capital ratios in excess of internal and regulatory minimums
Sound capital ratios in excess of internal and regulatory minimums Robust headroom of 3.5% above the MDA threshold (Investec plc) Capital ratios: Investec Bank plc Minimum CET 1 requirement % ^ 30 September 15% Investec plc: lowest min 31 Mar 2024* Target 2024* CET 1 requirement 12.3% 12.1% 12.0% 11
Slide 29: We inherently hold more capital per unit of risk
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 (%) 4.0 Total capital (£'bn) 75.0% 10% 3.0 8% 50.0% 2.0 6% 25.0% 4% 1.0 —% 2% 0
Slide 30: Further information and peer analysis
Further information and peer analysis 30
Slide 31: UK high net worth banking: journey to scale
Private Clients UK high net worth (HNW) banking: journey to scale Journey to profitability Growth 6 £’mn Sept 24 Sept 23 Mar 24 5 Loan book (£’bn) 5.0 5.2 Revenue 51.7 60.3 139.0 4 3 ECL impairments (1.6) (1.0) (13.6) 2 Costs (24.4) (25.4) (57.1) 1 Profit 25.8 (34.0) 68.4 0 2021 2022 2023 2024 Sept
Slide 32: Investec Bank plc: peer group comparisons
Investec Bank plc: peer group comparisons Funding: Loans and advances to customers as a % Credit loss ratio: ECL impairment charges as a % of average core loans of customer deposits (smaller number is better) and advances (smaller number is better) 135.7% 1 113.1% 1 105.4% 95.3% 89.1% 0.67 100% 76.9
Slide 33: Appendix
Appendix 05 33
Slide 34: IFRS 9 macro-economic scenario forecasts
IFRS 9 macro-economic scenario forecasts For Investec plc, four macro-economic scenarios are used in the measurement of ECL. These scenarios incorporate a base case, an upside case and two downside cases. The table below shows the key factors that form part of the UK and Other macro-economic scenari
Slide 35: IBP: salient financial features (statutory)
IBP: salient financial features (statutory) Key financial statistics 30 Sept 2024 30 Sept 2023 % Change Operating income (£’000) 586 010 574 942 1.9% Operating costs (£’000) 290 910 310 656 (6.4%) Adjusted operating profit (£’000) 241 477 225 215 7.2% Earnings attributable to ordinary shareholder (£
Slide 36: IBP: Statutory Income Statement
IBP: Statutory Income Statement £'000 30 Sept 2024 30 Sept 2023 % Change Interest income 1 029 859 941 883 9.3 % Interest expense (632 599) (522 993) 21.0 % Net interest income 397 260 418 890 (5.2)% Fee and commission income 86 577 82 509 4.9 % Fee and commission expense (6 497) (7 474) (13.1)% Inv
Slide 37: IBP: Pro-forma Income Statement
IBP: Pro-forma Income Statement Given the nature of the IW&I UK all-share combination with Rathbones, the Group essentially retains similar economic interest to this investment before and after the transaction. In order to provide information that will be more comparable to the future presentation o
Slide 38: IBP: Balance Sheet
IBP: Balance Sheet £'000 30 Sept 2024 31 March 2024 Assets Cash and balances at central banks 3 939 001 5 661 623 Loans and advances to banks 723 652 676 001 Reverse repurchase agreements and cash collateral on securities borrowed 1 568 757 1 140 115 Sovereign debt securities 3 074 220 1 928 134 Ban
Slide 39: IBP: Balance Sheet (continued)
IBP: Balance Sheet (continued) £'000 30 Sept 2024 31 March 2024 Liabilities Deposits by banks 1 464 124 2 174 305 Derivative financial instruments 402 014 472 662 Other trading liabilities 21 548 18 449 Repurchase agreements and cash collateral on securities lent 84 599 85 091 Customer accounts (dep
Slide 40: IBP: Statutory segmental analysis of operating profit
IBP: Statutory segmental analysis of operating profit Specialist Banking For the financial year ended 30 September 2024 Wealth & Private Corporate, Investment Total £'000 Investment Banking Banking & Other Group Continuing operations Net interest income 4 164 49 697 343 399 397 260 Fee and commissio
Slide 41: IBP: Statutory segmental analysis of operating profit
IBP: Statutory segmental analysis of operating profit Specialist Banking For the financial year ended 30 September 2023^ Wealth & Private Corporate, Investment Total £'000 Investment Banking Banking & Other Group Net interest income (4 122) (57 817) (356 951) (418 890) Fee and commission income (4 4
Slide 42: IBP: asset quality under IFRS 9
IBP: asset quality under IFRS 9 £‘mn 30 Sept 2024 31 March 2024 Gross core loans 16 917 16 744 Gross core loans at FVPL 567 641 Gross core loans subject to ECL1 16 350 16 103 Stage 1 14 687 14 181 Stage 2 1 135 1 391 of which past due greater than 30 days 61 150 Stage 3# 528 531 ECL (170) (187) Stag
Slide 43: IBP: capital adequacy
IBP: capital adequacy £‘mn 30 Sept 2024 31 March 2024 Tier 1 capital Shareholders’ equity 3 126 3 070 Non-controlling interests – – Regulatory adjustments to the accounting basis (15) (3) Deductions (633) (658) Common equity tier 1 capital 2 478 2 409 Additional Tier 1 instruments 458 458 Tier 1 cap
Slide 44: Group sustainability highlights
Group sustainability highlights Highlights Consistently well positioned in international ESG rankings and ratings • Following our recently enhanced Sustainable and Transition Finance Classification Framework, a primary area of focus has been developing and rigorously testing sustainable and transiti
Slide 45: Sustainability highlights (Investec Bank plc)
Sustainability highlights (Investec Bank plc) Operate responsibly, finance and invest for a sustainable future and maintain our competitive sustainability position PROGRESS MADE ON OUR IMPACT SDGs Net-zero commitments Equality commitments Awarded best FTSE 250 strategy award 44% women and 22% ethnic
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