Investec Plc · LSE:INVP
Investec — Non-Deal Roadshow (February 2020)
38 slides from Investec's roadshow presentation, February 2020
Slide 1: Investec plc Non-Deal Roadshow Debt Investor Presentation
Investec plc Non-Deal Roadshow Debt Investor Presentation February 2020 The information in this presentation is as at 30 September 2019, unless otherwise indicated.
Slide 2: Contents
Contents Page Introduction 3 Demerger of Investec Asset Management (IAM) 5 Overview of Investec plc 7 Operating fundamentals 22 Sustainability & ESG 35
Slide 3: Investec plc: simplified structure and main operating subsidiaries
Investec plc: simplified structure and main operating subsidiaries Moody’s: Baa1 Stable Features of Investec plc’s structure Investec plc DLC Sharing Investec Limited • Investec plc is the holding company of the 10.5% CET13 Listed on LSE Agreement Listed on JSE Investec group’s UK operations1 Non-SA
Slide 4: Investec plc excluding IAM: specialist bank and wealth manager
Investec plc Investec plc excluding IAM (“Investec plc”) will comprise a specialist bank and private client wealth manager with primary business in the UK Total Net core Customer Third Party Employees Assets loans deposits FUM (approx.) £23.1bn £10.8bn £13.4bn £41.6bn c.3,900 • Balanced business mod
Slide 5: Rationale for the demerger of Investec Asset Management
Rationale for the demerger of Investec Asset Management Proposed demerger of Investec Asset Management (becoming Ninety One) from Investec Bank and Wealth Conclusions of strategic review Demerger benefits for Investec Bank and Wealth • Investec Group comprises a number of successful Simplification a
Slide 6: Summary of the demerger
Summary of the demerger • c.55% – Shareholders of Investec plc and Investec Limited (c.69% of shares held by Investec Group distributed to shareholders) Ninety One’s • Shareholders will receive one Ninety One plc / Limited Share for every two Investec plc / Limited Ordinary post demerger Shares held
Slide 7: An overview of Investec plc
An overview of Investec plc The information that follows in this presentation is as at 30 September 2019 and reflects the Investec plc business excluding Investec Asset Management (“Investec plc”), unless otherwise indicated by “Investec plc as reported”. Page 7
Slide 8: Overview of Investec plc post demerger
Overview of Investec plc post demerger A domestically relevant, internationally connected specialist banking and wealth management group Corporate / Institutional / Government / Private client (HNW / high income) / charities / trusts Intermediary Specialist Banking Wealth & Investment Lending Discre
Slide 9: Investec plc: balanced business model
Investec plc: balanced business model • Realigned the business model since the global financial crisis and focused on growing capital light businesses • At 30 Sept 2019, total capital light activities accounted for 50% of Investec plc’s revenue • Significantly increased third party funds under manag
Slide 10: Specialist Banking – uniquely positioned in the UK market
Specialist Banking – uniquely positioned in the UK market We are uniquely positioned in a segment of the market where we have strong competitive advantage with our full service offering UK Specialist Bank Investment Banking Corporate Banking Private Banking Retail Banking For UK listed corporates an
Slide 11: Established, full service Corporate and Investment Banking (CIB) offering
Established, full service Corporate and Investment Banking (CIB) offering Consistently contributed c.35-40% of Global Specialist Bank revenues • Specialist sector clients • Private companies • 300 customers • 70,000 customers International Corporate • 35-40% of CIB revenues specialist Banking • 25%
Slide 12: Established, full-service CIB offering
Established, full-service CIB offering CIB focused on deepening well-established franchises and balancing fees and lending CIB sustainable earnings CIB loan book growth CIB revenue mix £bn 100% 2% 7 100% 3% 4% 9% 9% 9% 8% 10% 9% 6.3 12% 13% 13% 90% 20% 20% 90% 5.9 6 21% 80% 38% 80% 23% 45% 5.1 31% 2
Slide 13: UK Corporate Banking
UK Corporate Banking A leading, client-centric UK mid-market SME proposition Delivering a ‘private banking’ experience with investment banking quality of advice and service Our Corporate Banking market positioning Our focus: High-growth UK private companies Specialists Our differentiation: Agile, pe
Slide 14: UK Investment Banking
UK Investment Banking Tailored offering to meet the needs of UK mid-market Boutique service with ‘bulge bracket’ capability and award-winning franchises FTSE 250 brokerships • Tailored offering to meet the needs of UK mid-market corporates and financial sponsors Top 3 in market • We offer the capabi
Slide 15: UK Private Banking overview
UK Private Banking overview HNW offering Retail offering Our value • Client led (not product) • Product led proposition • High touch, relationship based • High tech, digital, self service • Expertise and speed • Innovative products Ambition • To build an aspirational HNW private bank which facilitat
Slide 16: UK Private Banking: clearly defined UK HNW target market
UK Private Banking: clearly defined UK HNW target market Our proposition is aligned with a clearly defined target client base Size of opportunity in the UK1… £3mn NAV Quantitative + criteria 296,000 meet NAV £300k earnings Allows us to deal criteria directly with clients, avoiding restrictive regula
Slide 17: UK Private Banking: clear HNW opportunity in UK market
UK Private Banking: clear HNW opportunity in UK market Traditional Retail Banks A different kind of private bank Traditional Private Banks For customers that need For clients that need a risk-partner For clients that need a homogenous product to grow their wealth wealth preservation • High volume an
Slide 18: UK Private Banking: traction in client acquisition
UK Private Banking: traction in client acquisition Strong growth across all three client groups, which is a reflection that our proposition is resonating in the market High Net Worth client growth SA client growth Savings client growth clients earning £300k+ and with £3m NAV who are actively creatin
Slide 19: UK Private Banking: fully invested – now in leverage and growth phase
UK Private Banking: fully invested – now in leverage and growth phase c. £67mn invested, now scaling and driving further client acquisition, loan book growth and funding £mn Repositioning the portfolio to current target market We are here Rev. Costs Mar 16 Mar 17 Mar 18 Mar 19 Mar 20 Mar 21 Mar 22 2
Slide 20: Wealth & Investment overview
Wealth & Investment overview • Wealth management Our offering Total FUM £41.0bn2 • Discretionary investment management % UK Discretionary 84% • Private clients Our clients • Charities % UK Direct c.84% • Trusts Operating margin3 18.8% • Direct Average yield 0.8% Our • Intermediaries Key facts1 distr
Slide 21: Investec plc: key developments over the past six months
Investec plc: key developments over the past six months Financial Strategic and operational Operational performance against challenging • Demerger on track – expected to conclude 16 March 2020 backdrop • Decisive action taken in Bank and Wealth business • Adjusted operating profit1 of £94.1mn – Clos
Slide 22: Investec plc operating fundamentals
Investec plc operating fundamentals Page 22
Slide 23: Investec plc as reported: positive credit rating trajectory
Investec plc as reported: positive credit rating1 trajectory IBP long-term ratings Investec plc LT issuer and senior unsecured rating A1 (stable) Moody’s Baa1 Baa1 (positive) Baa1 (stable) Moody’s A2 A2 (positive) Baa2 A3 BBB+ As described in Moody’s latest credit opinion, published on 16 August 201
Slide 24: Investec plc as reported: sound capital base and capital ratios
Investec plc as reported: sound capital base and capital ratios • Investec has always held capital in excess of regulatory requirements and intends to perpetuate this philosophy and ensure that it remains well capitalised • The bank has never required shareholder or government support and we have ne
Slide 25: Continued prudent management of capacity for distributions
Investec plc as reported: continued prudent management of capacity for distributions Current MDA threshold • The MDA threshold for Investec plc at 30 Sept 2019 of 8.43% RWAs is composed of: 12% Pro forma uplift in CET1 ratio of 1.3% as a result of the demerger – 4.50% Pillar 1 10% 10.46% – 0.84% Pil
Slide 26: Investec plc: diversified funding strategy
Investec plc: diversified funding strategy • Investec’s funding consists primarily of customer deposits • Investec 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 t
Slide 27: Investec plc as reported: maintaining robust surplus liquidity
Investec plc as reported: maintaining robust surplus liquidity • We maintain a high level of readily available, high quality Cash and near cash composition liquid assets – maintaining a minimum cash to customer deposit ratio of 25%. These balances have increased significantly since 2008 to £6.6bn at
Slide 28: Primarily customer deposit funded with low loan-deposit ratio
Investec plc as reported: primarily customer deposit funded with low loan-deposit ratio Fully self funded: conservative loan to deposit ratio £’bn FY15 impacted by the sale of group assets, largely in Australia 16 140% • Loans as a percentage of customer deposits remains conservative at 80.8% 14 13.
Slide 29: Investec plc: exposures in a select target market
Investec plc: exposures in a select target market • Credit and counterparty exposures are to a select target market: Gross core loans by country of exposure1 • High net worth and high income clients • Mid to large sized corporates 3% 2% 4% • Public sector bodies and institutions 6% UK • The majority
Slide 30: Investec plc: sound and improving asset quality
Investec plc: sound and improving asset quality Core loans and asset quality £’bn Credit quality on core loans and advances for the six 12 9% months ended 30 Sept 2019: 10.8 8% 10 • Total income statement ECL impairment charges 7% amounted to £16.1mn. The credit loss ratio1 is running 8 6% at 0.28%
Slide 31: Investec plc: profitability supported by diversified revenue streams
Investec plc: profitability supported by diversified revenue streams Annuity income1,3 Costs and cost to income ratio3 Annuity income 2019: 61% £’mn 900 3.2% annualised decrease in costs in 1H20 100% £’mn Total operating 1,200 income: £1,076mn 800 700 79% 78% 80% 78% 80% 1,000 9% 76% 76% Annuity inc
Slide 32: UK Specialist Bank: clear path to achieving ROE targets
UK Specialist Bank: clear path to achieving ROE targets ROE track record of ongoing business excluding Banking proposition is within target range UK Specialist Bank ROE trend1 A clear path for achieving our targets: – Delivering scale while 13.8% 13.5% maintaining cost discipline Accelerated legacy
Slide 33: Summary – credit highlights
Summary – credit highlights A well-established profitable business • Holding company of the Investec Group’s UK operations1 – operating in the UK since 1992 • UK FTSE 250 listed entity since 2002 • PRA and FCA regulated • Long-term senior unsecured and issuer rating of Baa1 (stable outlook); IBP: Mo
Slide 34: Contact details
Contact details CEO of Investec Bank plc Ruth Leas • Phone: +44 (0) 20 7597 4379 • Email: ruth.leas@investec.co.uk Investor Relations Carly Newton • Phone: +44 (0) 20 7597 4493 • Email: carly.newton@investec.co.uk Treasurer Paul Myers • Phone: +44 (0) 20 7597 4313 • Email: paul.myers@investec.co.uk
Slide 35: Sustainability & ESG
Sustainability & ESG Page 35
Slide 36: Investec plc: Sustainability and ESG
Investec plc: Sustainability and ESG Key Messages ESG Rankings and Ratings • Investec plays a critical role in funding a sustainable economy that is cognisant of We participate and have maintained inclusion in several globally-recognised sustainability the world’s limited natural resources and promo
Slide 37: Investec plc's impact through the SDGs
Investec plc’s impact through the SDGs We believe that the United Nations Sustainable Development Goals (SDGs) provide a solid framework for us to assess, align and prioritise our activities. We recognise the pivotal role that the private sector, and in particular, the financial sector, will have in
Slide 38: Legal disclaimer
Legal disclaimer This presentation and any attachments (including any e-mail that accompanies it) (together “this presentation”) is for general information only and is the property of Investec Bank plc (“Investec”). It is of a confidential nature and all information disclosed herein should be treate