Investec’s Swiss strategy for wealthy South Africans is paying off as funds reach R60 billion

Investec’s target market for its Swiss operations is individuals with $3 million (R54 million) or more in investable assets.

The group said it was leveraging its Swiss platform and value proposition to enhance its private banking and wealth management offering.

Investec has also identified the UAE as a key growth area, following thousands of wealthy South African expats who have settled in the region. The company opened an office in the Dubai International Financial Center (DIFC) in September, connecting high net worth clients, family offices and financial institutions in the Gulf Co-operation Council.

The group has also established a partnership in Latin America with access to more than 400 independent financial advisors for the distribution of Investec-managed branded investment funds.

The group reported 7.6% growth in adjusted operating profit on Thursday.

Turnover was £1.1 billion, up 5.6% in sterling and 5.2% in rand in the six months to the end of September, driven by balance sheet growth, the breadth and depth of the group’s client business, and the higher interest rate environment. Adjusted operating profit rose 7.6% to £474.7 million.

Net interest income increased 2% to £684.4 million, driven by higher average interest-bearing assets and higher average interest rates, partly offset by the effects of deposit repricing in the UK.

Non-interest income rose 12.2% to £418.2 million, driven by higher capital income from the group’s banking operations, as well as strong fee growth from the SA Wealth & Investment business.

The investment returns also contributed positively to the growth of non-interest incomegiven the backdrop of improving global markets.

Trading income was lower due to the non-recurrence of the previous year’s risk management gains from hedging the remaining write-down portfolio of financial products in the UK, as well as due to the implementation of hedge accounting in the SA credit investment portfolio from the first quarter of the current period. .

Adjusted earnings per share (EPS) rose 2.1% to 39.5p, while headline earnings per share (HEPS) fell 0.8% to 36.6c.

“We are pleased to report an ROE (return on equity) of 13.9%, which puts us on track to achieve the group’s full-year ROE guidance,” said group CEO Fani Titi.

Investec expects the group’s ROE to be around 14%, with South Africa reporting an ROE of 19%, and the UK and others 13.5%, in line with the first half.

The credit loss ratio is expected to be in the range of 25-45 basis points throughout the cycle.

Update: November 21, 2024
This story has been updated with new information.

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