In This Article:
Release Date: May 22, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Investec PLC (IVTJF) reported a significant increase in pre-provision operating profit by 8%, surpassing 1 billion pounds for the first time.
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The company achieved a record adjusted EPS growth from 55.1% to 79.1%, indicating strong business fundamentals.
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Investec PLC (IVTJF) declared a final dividend of 20%, bringing the full-year dividend to 36.5%, and announced a buyback of approximately 100 million pounds.
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The company has made substantial progress in its sustainability efforts, meeting commitments to reduce fossil fuel exposure and setting a 2030 target for sustainable finance at 18 billion pounds.
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Investec PLC (IVTJF) has a strong balance sheet with robust capital and liquidity, positioning it well for future growth and investment opportunities.
Negative Points
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The macroeconomic environment in both South Africa and the UK has been lackluster, with growth expectations ranging between 1 to 1.5% in South Africa.
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Interest rate reductions in both South Africa and the UK have impacted net interest income, with a decrease in margins observed.
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The credit loss ratio increased to 38 basis points, reflecting a normalization from prior year recoveries.
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Operating costs increased by 2.8%, with significant spending on IT and IT investments, impacting overall profitability.
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The UK Specialist Bank's net interest income reduced by 4.4%, affected by lower interest rates and deposit repricing.
Q & A Highlights
Q: Could you provide an update on the move to IRB for the UK business and any capital benefits assumed in your 200 basis point increase target by 2030? A: The journey to IRB is expected to take 3 to 4 years. We are currently developing second-generation models and will soon interact with regulators. The 200 basis point uplift target is independent of any capital management opportunities from IRB that may arise later. - Unidentified_2
Q: Has the removal of non-dom status in the UK impacted your high net worth business, and can you capitalize on this through serving customers in different geographies? A: We've seen very little impact on our high net worth clients. A small number have relocated but often retain properties and business interests in the UK. Anecdotally, many high net worth individuals have relocated due to inheritance tax changes. - Unidentified_6
Q: How do you view net interest margins for the 2026 financial year, and what are your currency expectations? A: In South Africa, margins improved from 2.25% to 2.45% due to better cost of money in a decreasing interest rate environment. In the UK, margins decreased from 3.1% to 2.8%. We actively manage the cost of money and book mix to counter interest rate reductions. - Unidentified_2