Investec increases its 2016 interim dividend by 11.8%

DividendMax Ltd.

Investec increases its 2016 interim dividend by 11.8%

Overview of results

Positive business momentum contributes to improved results

Sustained improvement in the operating environment in the UK has supported good levels of activity in the banking businesses.

In South Africa the corporate and private banking businesses have seen strong growth in loan portfolios and client activity, notwithstanding an overall weakness in macro-economic conditions.

The Specialist Banking investment and fixed income portfolios have posted a solid result during the period.

The Specialist Banking business has reported results substantially ahead of the prior period.

The Asset Management and Wealth & Investment businesses have reported solid net inflows of GBP4.0 billion.

Continued investment in infrastructure, digital platforms and increased headcount are supporting growth initiatives in the overall business.

The group has further grown and enhanced its international offering, increasing its client base and deepening its core franchise.

A diversified portfolio and a sound balance of earnings generated between capital light and capital intensive businesses continues to support a high level of recurring income.

Statutory operating profit salient features

Statutory operating profit before goodwill, acquired intangibles, non-operating items and taxation and after other non-controlling interests ("operating profit") increased 16.1% to GBP279.4 million (2014: GBP240.8 million) - an increase of 22.5% on a currency neutral basis.

Statutory adjusted earnings per share (EPS) before goodwill, acquired intangibles and non-operating items increased 13.2% from 19.7 pence to 22.3 pence - an increase of 19.8% on a currency neutral basis.

Solid performance from the ongoing business

Ongoing operating profit increased 16.5% to GBP315.0million (2014: GBP270.4 million) - an increase of 22.2% on a currency neutral basis.

Ongoing adjusted EPS before goodwill, acquired intangibles and non-operating items increased 13.3% from 22.5 pence to 25.5 pence - an increase of 19.1% on a currency neutral basis.

Third party assets under management decreased 8.2% to GBP113.9 billion (31 March 2015: GBP124.1billion) - a decrease of 3.1% on a currency neutral basis.

Customer accounts (deposits) decreased 4.2% to GBP21.7 billion (31 March 2015: GBP22.6 billion) - an increase of 4.5% on a currency neutral basis.

Core loans and advances decreased 2.5% to GBP16.1 billion (31 March 2015: GBP16.5 billion) - an increase of 7.1% on a currency neutral basis.

The UK legacy portfolio continues to be actively managed down

The legacy portfolio reduced from GBP696 million at 31 March 2015 to GBP645 million through redemptions and write-offs.

The legacy business reported a loss before taxation of GBP35.5 million (2014:GBP41.7 million) with impairments on the legacy portfolio reducing 24.5% from GBP37.6 million to GBP28.4 million.

Maintained a sound balance sheet

Capital remained well in excess of current regulatory requirements. The group is comfortable with its common equity tier 1 ratio target at a 10% level, as its current leverage ratios for both Investec Limited and Investec plc are above 7%.

Liquidity remained strong with cash and near cash balances amounting to GBP9.2 billion.

Dividend increase of 11.8%

The board declared a dividend of 9.5 pence per ordinary share (2014: 8.5 pence) resulting in a dividend cover based on the group's adjusted EPS before goodwill and non-operating items of 2.3 times (2014: 2.3 times), consistent with the group's dividend policy.

Companies mentioned