Investec flags 'resilient' full-year performance

(Sharecast News) - Investec said in an update on Thursday that it expected to deliver a "resilient" performance for the year to 31 March, supported by diversified revenue streams, higher client activity and continued balance sheet growth, despite the impact of lower interest rates. The Johannesburg and London dual-listed bank and wealth manager guided adjusted earnings per share of 81.6p to 84p, representing growth of 3% to 6% on the prior year, while headline EPS was expected to be broadly flat to 2% higher at 72.6p to 74.1p.

Basic EPS was forecast to rise between 6% and 9% to 76.9p to 79.2p.

Pre-provision adjusted operating profit is expected to increase by 3% to 5% to between £1.07bn and £1.09bn, while adjusted operating profit before tax was projected at £940.3m to £965.9m, compared with £920.0m in 2025.

The group said performance for the 11 months ended 28 February was driven by higher lending volumes, increased client activity and positive inflows into funds under management, partly offset by margin compression linked to declining global interest rates.

Within specialist banking, core loans rose to £36.3bn, representing growth of 7.4% on a currency-neutral basis, while customer deposits increased to £45.5bn.

Funds under management in the Southern African wealth business climbed 26.7% to £29.6bn, supported by strong discretionary inflows and a strategic acquisition in Switzerland.

The Southern African division was expected to deliver at least 4% growth in adjusted operating profit in rand terms, with the specialist bank growing at least 5% and maintaining a credit loss ratio at the lower end of its through-the-cycle range.

Return on equity for the region was projected at around 18%, within its medium-term target range.

In the UK, adjusted operating profit was expected to be broadly in line with the prior year, although the UK specialist bank is forecast to see a decline of between 1% and 5%.

Credit losses in the UK were expected to be at the upper end of guidance, while return on tangible equity is projected at between 13.3% and 13.7%.

Group return on equity was expected to be between 13.3% and 13.7%, with return on tangible equity of 15% to 16%, both within medium-term targets.

The group reiterated its ambition to move returns towards the upper end of those ranges by 2030.

Investec also confirmed completion of its £110m share buyback programme announced in May, supported by strong capital generation.

Revenue growth during the period was underpinned by higher average lending balances, increased fee income from banking activities and stronger annuity revenues in wealth management.

Elevated client hedging activity amid market volatility also supported trading income, while the group's share of earnings from associate Rathbones increased year-on-year.

The group said it continued to invest in its corporate mid-market and private client franchises, as well as in technology and digital platforms, contributing to fixed cost growth alongside regulatory and strategic initiatives.

Investec said it maintained robust capital and liquidity positions, with CET1 ratios of 14.2% for Investec Limited and 12.3% for Investec plc at the end of December, supporting its strategy to grow market share, deepen client relationships and enhance long-term shareholder returns.

Full-year results for the year ending 31 March were scheduled to be released on 21 May.

At 1220 GMT, shares in Investec were down 3.67% in London at 565p.

Reporting by Josh White for Sharecast.com.

See latest RNS on Investegate