Investec First-Half Earnings Rise as Investment Inflows Jump

  • Profit at asset management and wealth offsets banking decline
  • Shares climb to highest since June to pare annual drop

Investec, which owns a lender and money manager in South Africa and the U.K., said fiscal first-half profit rose 5.6 percent as inflows into the asset management, wealth and investment businesses increased.

Net income climbed to 208.6 million pounds ($259 million) in the six months ended Sept. 30, from 197.6 million pounds a year earlier, the London- and Johannesburg-based lender said in a statement on Thursday. The dividend increased to 10 pence from 9.5 pence a year ago.

The asset management and wealth and investment units benefited from higher funds under management, which were supported by a recovery in equity markets and net inflows of 1.8 billion pounds, according to Investec. The lender, which started in Johannesburg in 1974 and set up a dual listing in London in 2002, also operates in Australia and Hong Kong with the biggest portion of earnings coming from South Africa, where the economy is expanding at the slowest pace since a 2009 recession.

“Uncertainty persists in the macro environment as the U.K. prepares for Brexit, the U.S. adopts a new presidential administration and South Africa deals with economic, political and social volatility,” Investec said. The bank’s “operational and geographic diversity is supporting a recurring income base, which has proved resilient notwithstanding fluctuating market conditions”

Investec Ltd. rose 3.9 percent to 91.84 rand as of 10:03 a.m. in Johannesburg, the highest on a closing basis since June 24, and paring losses this year to 16 percent. The six-member South African banks index fell 0.4 percent. Investec Plc jumped 3.6 percent to 518.50 pence in London, the highest since April 29 and extending its advance this year to 8.4 percent.

Future Investment

Operating profit at Investec’s asset management business increased 17 percent to 82.3 million pounds and 14 percent at its wealth and investment unit to 43.2 million pounds.

Earnings at the specialist banking division decreased 7 percent to 212.8 million pounds, after the lender had to account for the transfer of private-equity assets at its South African unit, while costs rose as Investec increased headcount and improved computer systems to bolster its private-client banking offering, mainly in the U.K. 

The business was also hurt by a write down in Hong Kong, where regulators suspended trading in one of Investec’s investments to allow for an audit. There were no findings in the audit and the investment will be “listed again in the not-too-distant future,” Chief Executive Officer Stephen Koseff said on a conference call.

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