Investec Full-Year Earnings May Climb as Rand Stabilizes

Investec Plc, which owns a bank and money manager in South Africa and the U.K., said its fiscal second-half earnings may increase from a year earlier as the rand becomes less volatile.

“The rand will have a much lesser impact if it holds its levels,” Stephen Koseff, chief executive officer of the London-and Johannesburg-based lender, said on a conference call from the U.K. today.

The South African currency constrained Investec’s fiscal first-half profit, which after currency conversions rose 3.7 percent from a year earlier to 169 million pounds ($265 million) in the six months ended Sept. 30, the lender said in a statement. Investec makes the bulk of its operating profit in South Africa. The rand’s three-month implied volatility is 11.2 percent against the dollar, compared with 13.2 percent a year ago, data compiled by Bloomberg show.

“The results would have been even stronger but for the continued weakness of the rand,” Koseff said in the statement.

Investec’s adjusted earnings per share rose 3.7 percent to 19.7 pence and its dividend increased 6.3 percent to 8.5 pence a share. Expansion in the asset management and wealth and investment units is “supporting solid net inflows” that amounted to a combined 4.2 billion pounds in the period under review, Investec said.

“On a constant-currency basis Investec had a strong first half across all divisions,” James Hamilton, an analyst at Numis Securities in London who rates the share a hold, said in a note to clients. “We do not expect to materially change our forecasts.”

Unlocking Value

Investec was little changed at 593.5 pence as of 9:22 a.m. in London trading.

The bank has been disposing of assets in Australia and the U.K. and said Sept. 9 it’s selling its Kensington Group Plc mortgage business for 180 million pounds after buying it for 283 million pounds in 2007, just before the financial crisis.

“Our focus remains on developing our high-income private banking business and improving structural inefficiencies, which we believe is key to unlocking future value in the U.K. bank,” Bernard Kantor, managing director of Investec, said in the statement.

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