Investec Sees Operating Profit Little Changed on Rand Impactby
Forecasts `solid increase' in profit excluding rand effect
Asset management results will be behind last year's figures
Investec Plc, owner of a bank and money manager in South Africa and the U.K., expects to report fiscal full-year operating profit that is little changed after the rand weakened against the British pound, hurting earnings when converted into the U.K. currency.
Excluding the impact of currency translations, the company will report a “solid increase” in operating profit in the 12 months through March, Investec, which is based in Johannesburg and London, said in a statement on Friday. Impairments are expected to be about 20 percent lower than the prior year, it said.
Investec, which also has operations in Australia, makes the bulk of its operating profit in South Africa, where the rand has dropped 19 percent against the pound since the beginning of March 2015. The impact of the currency’s decline on Investec’s earnings comes as other U.K. financial services companies with operations in South Africa, Barclays Plc and Old Mutual Plc, reduce holdings in Africa’s most industrialized economy.
“The U.K. specialist banking business is expected to report results substantially ahead of the prior year, whilst the South African specialist banking business is expected to report results comfortably ahead of the prior year in rands,” the company said in the statement. “Wealth and investment is expected to report results marginally ahead of the prior year, whilst asset management is expected to report results behind the prior year.”
Investec rose 1.5 percent to 509 pence as of 9:17 a.m. in London trading.