Investec First-Half Profit Falls as South African Rand Drops
Net income fell to 164.3 million pounds ($264 million) in the six months ended Sept. 30 from 166.9 million pounds a year earlier, the London- and Johannesburg-based lender said in a statement today. Earnings per share excluding one-time items dropped 1.3 percent to 15.6 pence.
South Africa’s rand has depreciated 16 percent against the pound and 17 percent versus the dollar this year, making it the worst performer of 16 major currencies tracked by Bloomberg. Without that decline, earnings would have increased 13 percent, Investec said. The company cut 80 jobs in Australia after shutting its securities and structured finance units.
“The trading update from Investec was a little disappointing with a combination of a weak rand, Australian restructuring and continued subdued customer activity impacting the first half,” Numis Securities analyst James Hamilton said in a note to clients today. “Most of the problems appear to be short term but we have been having short-term problems for quite a while now.”
Investec shares fell 0.8 percent to 423.3 pence at the close of trading in London. The company left its dividend unchanged at 8 pence a share.
Since the end of September the rand has depreciated 1.4 percent against the dollar and its continued weakness will affect Investec’s second-half results, Chief Executive Officer Stephen Koseff said in a conference call with reporters.
“The challenge for the group remains to ensure its specialist banking businesses are in the best possible shape to take advantage of the upturn in markets and generate the appropriate shareholder returns,” said Investec, which started in South Africa in 1974. “While economic conditions remain mixed, the overall group is improving.”
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