Investec Sees Economic Challenges Ahead After Profit Climbs 28%

Investec Plc (INVP), owner of a bank and a money manager in South Africa and the U.K., said economic challenges in its main markets will partly offset a rally in global equities after full-year profit rose 28 percent.

Net income climbed to 317.5 million pounds ($479 million) in the 12 months to March 31, from 247.5 million pounds the previous year, the Johannesburg- and London-based company said today in a statement. Investec shares fell the most in 21 months in London trading amid a decline in global stocks markets.

Investec is made up of asset management operations, a wealth business and a specialist banking unit, operating across the U.K., Australia and South Africa. Its fund management business, which recorded net inflows, is being bought in part by senior staff. Investec has focused on boosting return on equity and taking on more clients as it seeks to boost earnings.

“There were no surprises,” said Patrice Rassou, head of equities at Sanlam Investment Management in Cape Town. “Investec is being hammered like everything else.”

Investec fell as much as 7.3 percent and was down 3.3 percent to 488.6 pence as of 12:42 p.m. London time. The stock fell 2.8 percent in Johannesburg, paring this year’s gain to 20 percent. South Africa’s big four banks, including Absa Group Ltd. and Standard Bank Group Ltd., have declined this year.

“The broader economic environment continues to be volatile with a strong rally in global equity markets partially negated by weak conditions on the ground in Europe and the U.K.,” Investec said today. “The South African economy also has its challenges as labor unrest and weak global demand impact on the currency and growth.”

Adjusted earnings a share increased 16 percent to 37 pence, while Investec boosted its dividend almost 6 percent to 18 pence a share.

“We expect strong earnings growth this year despite a mixed outlook for the group’s markets and businesses,” Numis Securities analysts James Hamilton and David McCann said in a note e-mailed to clients today.

To contact the reporter on this story: Renee Bonorchis in Johannesburg at rbonorchis@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net

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