Investec plc and Investec Limited (LON: INVP) has today provided a half year report for the six months ended 30th September 2019. The financial impact of strategic actions undertaken to simplify and focus the group has been separately disclosed from adjusted operating profit. These actions include the closure, sale and restructure of certain businesses. The prior period has been restated to reflect a like-for-like basis. Unless stated otherwise, comparatives relate to the restated six month period ended 30 September 2018 (1H19). Further information is contained in the Notes to this announcement.
Solid performance against challenging market conditions
· The Group has delivered a solid operational performance with results in line with the pre-close trading update.
· Group adjusted operating profit of GBP373.6 million was broadly consistent with the prior period (1.7% behind prior period and in line on a neutral currency basis).
· Asset Management generated strong net inflows of GBP3.2 billion, which, together with supportive markets, boosted average assets under management (AUM) and increased adjusted operating profit by 6.3%.
· The Specialist Banking business had a sound performance from its lending franchises. The South African Specialist Bank’s adjusted operating profit increased by 6.7% (8.5% in Rands). The UK Specialist Bank demonstrated cost discipline, achieving a reduction of 9.1% (GBP25 million) in operating costs. The decrease in the UK Specialist Bank’s adjusted operating profit of 18.9% reflects lower investment banking fees in weak market conditions and base effects of a liability management exercise to restructure subordinated debt in the prior period, which boosted prior year adjusted operating profit.
· Wealth & Investment generated positive net inflows with growth in AUM supporting higher revenue. An increase in technology spend to support growth over the longer term, as well as higher than expected regulatory levies in the UK, resulted in a decrease in adjusted operating profit of 10.8%.
· Group return on equity (ROE) is 13.1% (2018: 14.2%). The group contained costs in a challenging environment and maintained the cost to income ratio at 67.3%. We are committed to improving these ratios.
· The Bank and Wealth business remains fully committed to delivering its 2022 financial year targets.
· The Group declared an interim dividend of 11.0p per share, in line with the prior period.