Investec shares dip as full-year guidance disappoints

(Sharecast News) - Shares in Investec dropped on Thursday after the international bank and wealth manager underwhelmed with its guidance for the year ending 31 March, with adjusted profits expected to rise by 5-12%. Pre-provision adjusted operating profit should be between £1.01bn and £1.08bn, up from £964m the year before. This was helped by the cost-to-income ratio being below the 53.8% reported in the prior year, benefitting from revenue growing ahead of costs.

Revenue growth was said to be supported by continued client acquisition, strong net inflows in discretionary and annuity funds under management and higher average advances.

However, basic earnings per share guidance was just 67.2p-73.5p, representing a 30-36% drop on last year's results. Invetec said: "The prior year was positively impacted by the significant net gain from the implementation of the UK Wealth & Investment combination with Rathbones which was partially offset by the effects of Burstone's deconsolidation; and the amortisation of intangible assets associated with the Rathbones combination in the current period."

Group adjusted operating profit before tax should be between £888m and £956m, representing mild growth from the previous year (£885m).

The South African business is expected to post 5% adjusted profit growth in rands to £429m, though the guidance range for the UK business points to earnings growth of -4% to +4%.

Shares were down 4.5% at 493.28p by 0842 GMT.