- South African, U.K. based lender cuts impairments by 20%
- Currency, market volatility may cause `headwinds,' CEO says
Investec Plc, owner of a bank and money manager in South Africa and the U.K., said first-half operating profit will probably be “comfortably ahead” of the 240.8 million pounds ($374 million) it posted a year earlier, even after the rand slumped.
Revenue is expected to be “moderately ahead” of a year earlier, with expenses marginally higher, Investec said in a trading update for the fiscal first half ending Sept. 30 on Thursday. Impairments are likely to be down 20 percent, it said.
Investec makes most of its profit in South Africa, where the continent’s most developed economy shrank by 1.3 percent in the second quarter. Group results have been negatively impacted by an 8 percent depreciation in the rand-pound exchange rate during the six months, Investec said.
“Recent currency and equity market volatility, if sustained, is likely to create headwinds in the wealth and investment and asset management business,” Stephen Koseff, chief executive officer, said in a briefing in Johannesburg.
Investec advanced 2 percent to 547 pence at 9:16 a.m. in London trading. The FTSE 350 Banking Index was 1 percent lower.
Assets under management dropped 8 percent to 71.1 billion pounds in the five months ended Aug. 31, with earnings in this business affected by market volatility and lower performance fees in South Africa.
Earnings at the U.K. specialist banking business are expected to be significantly higher, while in South Africa results will be “well-ahead” of a year earlier.