Investec reinstates dividend despite tough first half

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The first half of the financial year has been characterised by difficult and volatile market and economic conditions attributed primarily to Covid-19,” CEO Fani Titi said. “We are encouraged by the resilience of our loan book, the performance of our core franchises against a tough backdrop and progress made on our strategic objectives.”
Operating income before expected credit losses fell 24% to £729 million over the six months, with net interest income dropping 16%, primarily due to lower interest rates. Non-interest revenue declined by 31% impacted by lower lending fees, subdued client transactional activity, and lower investment and associate income. Its credit loss ratio doubled to 0.47% from 0.23% a year earlier. Adjusted operating profit declined by 48% to £143 million. Basic earnings per share (EPS) dropped 50% to 9.6 pence, with headline EPS down by 46% to 9.2p. It’s halved its dividend to 5.5p.

Investec said it expected a better full-year performance due to improving revenue trends as client activity picked up. However, trading income from client flow would continued to be negatively impacted by risk management and risk reduction costs on hedging its structured products book. It also expected to report lower expected credit loss provisions for the remaining six months of the year.

While the impact of Covid-19 has been felt across our business and the outlook is still uncertain, we remain confident in the fundamentals of our business and in our long-established client relationships,” Investec said. “We have continued to make progress against our strategic objectives, positioning the business for growth in the long term, and expect to substantially complete our simplification process by the end of the financial year.”
Investec Limited shares fell 6.1% to R38.12 yesterday while Investec Plc declined by 6.4% to R38.68.

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