REG - Investec PLC - Pre-Close Trading Statement

InvestecAnnouncement

19/09/2025 07:00

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RNS Number : 9535Z  Investec PLC  19 September 2025

 Investec Limited                               Investec plc
 Incorporated in the Republic of South Africa   Incorporated in England and Wales

Registration number 1925/002833/06
Registration number 3633621

JSE share code: INL
LSE share code: INVP

 JSE hybrid code: INPR                          JSE share code: INP

ISIN: GB00B17BBQ50
 JSE debt code: INLV

                                              LEI: 2138007Z3U5GWDN3MY22
 NSX share code: IVD

 BSE share code: INVESTEC

 ISIN: ZAE000081949

 LEI: 213800CU7SM6O4UWOZ70

 

Group pre-close trading update and trading statement
 

19 September 2025

Investec Group today announces its scheduled pre-close trading update for the
interim period ending 30 September 2025 (1H2026). An investor conference call
will be held today at 09:00 UK time / 10:00 South African time. Please
register for the call at www.investec.com/investorrelations.

Commentary on the Group's financial performance in this pre-close trading
update represents the five months ended 31 August 2025 and compares forecast
1H2026 to 1H2025 (30 September 2024).

 

 1H2026 earnings update and guidance

 

The Group's results for 1H2026 are expected to be in line with the prior
period. Our solid performance and strong capital generation has enabled us to
continue supporting our clients while accelerating investment in identified
growth initiatives.

 

The Group continued to make progress on our strategic objectives,
notwithstanding the challenging macroeconomic backdrop and market volatility
that prevailed year to date. We are on track with our strategy to build scale,
leverage existing client franchises and execute plans to enhance our
proposition. As part of ongoing capital management, the Group has repurchased
c.R1.1 billion / c.£46 million of the c.R2.5 billion / c.£100 million share
buy-back programme announced in May 2025. We remain committed to advancing
returns towards the upper end of our target range by FY2030.

 

For the six months ended 30 September 2025, the Group expects:

·      Adjusted earnings per share of 38.7p to 41.5p (1H2025: 39.5p) or
c.2% behind to c.5% ahead of prior period

·      Headline earnings per share of 35.2p to 38.0p (1H2025: 36.6p) or
c.4% behind to c.4% ahead of prior period

·      Basic earnings per share of 36.0p to 38.8p (1H2025: 36.6p) or
c.2% behind to c.6% ahead of prior period

·      Pre-provision adjusted operating profit to be between £509.4
million and £540.3 million (1H2025: £541.6 million) or c.6% behind to flat
relative to prior period

·      Credit loss ratio to be within the through-the-cycle (TTC) range
of 25bps to 45bps. The overall credit quality remained strong

·      Cost to income ratio to be between 52% and 54%, in line with full
year guidance

·      Adjusted operating profit before tax between £451.0 million and
£481.8 million

(1H2025: £474.7 million)

o  In Southern Africa, the Specialist Bank adjusted operating profit is
expected to be ahead of prior period by up to c.7% in Rands (1H2025: R5 251
million, £224.6 million). Group Investments is expected to be behind the
strong prior period, resulting in the overall Southern African business
adjusted operating profit of c.5% behind to flat versus prior period in Rands
(1H2025: R5 890 million, £252.0 million). The credit loss ratio is expected
to be around the lower end of the TTC range of 15bps to 35bps. The Southern
African business ROE is expected to be c.18.5%, well within the 16% to 20%
medium-term target range. The Investec Limited CET1 ratio at 30 June 2025 was
15.3%(1) (30 September 2024: 14.8%)

o  The UK business, including our interest in Rathbones, adjusted operating
profit is expected to be c.1% behind to c.6% ahead of the prior period
(1H2025: £222.7 million). The UK Specialist Bank adjusted operating profit is
expected to be c.4% behind to c.4% ahead of the prior period (1H2025: £202.3
million). We expect to report a credit loss ratio around the upper end of the
previously guided range of 50bps to 60bps. The UK business ROTE is expected to
be c.13%, within the medium-term target range of 13% to 17%. The Investec plc
CET1 ratio at 30 June 2025 was 12.2%(2) (30 September 2024: 12.6%(3))

·      Group ROE to be between 13% and 14%, within our medium-term
target range of 13% to 17%. Group ROTE is expected to be between 15% and 16%,
within the 14% to 18% medium-term range.

 

The year-to-date performance which formed the basis for the above expectations
is summarised below:

·      Revenue was supported by increased activity levels, higher
average advances, and positive net inflows in discretionary and annuity funds
under management (FUM). This was counterbalanced by the negative impact of
lower average interest rates and the reduced income from the Group investments
portfolio

o  Net interest income reflects growth in average lending books, and success
in our strategic execution to optimise the funding mix in Southern Africa.
This was offset by the endowment effect of declining interest rates

o Non-interest Revenue (NIR) growth was underpinned by strong fee generation
from our Banking businesses, as well as higher annuity fees from our SA Wealth
& Investment business. The market volatility that prevailed has resulted
in increased client demand for hedging, supporting customer flow trading
income in the UK. Southern African investment and trading income were behind
the prior period which benefitted from the positive sentiment post the GNU
formation. NIR also benefitted from growth in the Group's share of Rathbones
post-tax underlying profit attributable to shareholders

·    Fixed operating expenditure growth reflected continued and
accelerated investment in people and technology for strategic growth, as well
as inflationary pressures. Variable remuneration was in line with underlying
business performance.

( )

(1) Investec Limited is predominately on the advanced approach for credit and
market risk. Investec Limited's capital information includes unappropriated
profits. If unappropriated profits are excluded from capital information,
Investec Limited's CET1 ratio would be 186bps (165bps) lower.

(2) Investec plc reports capital ratios measured on a Standardised capital
measurement approach. Investec plc's June 2025 CET1 ratio excludes quarterly
profits and associated foreseeable charges and dividends for the period 1
April 2025 to 30 June 2025. In accordance with the Prudential Regulation
Authority rules, quarterly profits may only be included in a firm's capital
position once the profits have been independently verified by an external
audit firm.

(3)Investec plc's September 2024 capital disclosures follow Investec's normal
basis of presentation and do not include the deduction of foreseeable charges
and dividends when calculating the CET1 ratio as required under the Capital
Requirements Regulation.

 

For the five-month period ended 31 August 2025:

·      Within Specialist Banking, core loans increased by 4.7%
annualised to £33.0 billion

(31 March 2025: £32.4 billion) and increased by 5.5% annualised in neutral
currency, driven by growth across the corporate lending books, as well as
private client lending in both geographies

·      Customer deposits decreased by 1.9% annualised to £40.8 billion
and decreased by 1.1% annualised in neutral currency. The decrease is
primarily driven by the continuation of our strategy to optimise the liability
mix in Southern Africa where non-wholesale deposit growth was 8.5% annualised
while wholesale deposits declined by 12.8% annualised

·      FUM in our Southern African Wealth business increased by 7.8% to
£25.2 billion (31 March 2025: £23.4 billion). Net discretionary and annuity
inflows of R9.3 billion were partly offset by outflows of R7.7 billion in
non-discretionary FUM

·      Investec's associate, Rathbones reported funds under management
and administration (FUMA) of £109.0 billion as at 30 June 2025.

 

The Group has robust capital and liquidity levels to manage the impact of
external challenges and deliver on our clear and executable strategy to
enhance long-term shareholder returns.

 

 

Other information

The financial information on which this trading update and trading statement
is based, has not been reviewed and reported on by the external auditors.

 

An investor conference call will be held today at 09:00 UK time / 10:00 South
African time. Please REGISTER HERE
(https://url.za.m.mimecastprotect.com/s/eqDmCBgvNRcDPvoWKiNixs222zH?domain=services.choruscall.eu)
for the call.

 

Interim results and Business update

The interim results for the six months ending 30 September 2025 are scheduled
for release on Thursday, 20 November 2025. Following the interim results
presentation, the Group will provide an update on our Corporate mid-market
growth initiatives.

Webcast details will be provided in due course.

 

On behalf of the board

Philip Hourquebie (Chair), Fani Titi (Group Chief Executive)

 

For further information please contact:

Investec Investor Relations

General enquiries: investorrelations@investec.co.za
(mailto:investorrelations@investec.co.za)

 

Results:

Qaqambile
Dwayi

SA Tel: +27 (0)83 457 2134
 

 

Brunswick (SA PR advisers)

Tim Schultz Tel: +27 (0)82 309 2496

 

Lansons (UK PR advisers)

Tom Baldock Tel: +44 (0)78 6010 1715

Key income drivers

 

    Core loans

 £'m           31-Aug-25  31- Mar-25  Annualised % change  Annualised

                                                           Neutral currency

% change
 UK and Other  17,222     16,791      6.2%                 6.2%
 South Africa  15,783     15,573      3.2%                 4.8%
 Total         33,005     32,364      4.7%                 5.5%

    Customer deposits

 £'m           31-Aug-25  31- Mar-25  Annualised % change  Annualised Neutral currency

% change
 UK and Other  21,405     21,449      (0.5%)               (0.5%)
 South Africa  19,438     19,715      (3.4%)               (1.9%)
 Total         40,843     41,164      (1.9%)               (1.1%)

 

 Funds under Management (FUM)
 £'m                                        31-Aug-25  31-Mar-25   % change   Neutral currency

% change

 Wealth & Investment - Southern Africa      25,215     23,385     7.8%        8.4%
 Discretionary                              15,169     13,944     8.8%        9.4%
 Non-discretionary                          10,046     9,441      6.4%        7.0%
                                            109,000    104,100

 Rathbones Group plc*

Note: Totals and variances are presented in £'millions which may result in
rounding differences

*  The balance of £109.0bn reflects total FUMA as reported at 30 June 2025
by Investec's associate, Rathbones.

 

 

Notes

 

1.     Definitions

·      Adjusted operating profit refers to profit before tax of
continuing operations, adjusted to remove goodwill, acquired intangibles and
strategic actions, including such items within equity accounted earnings, and
non-controlling interests. Non-IFRS measures such as adjusted operating profit
are considered as pro-forma financial information as per the JSE Listings
Requirements. The pro-forma financial information is the responsibility of the
Group's Board of Directors. Pro-forma financial information was prepared for
illustrative purposes and because of its nature may not fairly present the
issuer's financial position, changes in equity or results of operations. This
pro-forma financial information has not been reported on by the Group's
external auditors

·      Adjusted earnings attributable to ordinary shareholders is
calculated as earnings attributable to shareholders adjusted to remove
goodwill, acquired intangible assets, strategic actions, including such items
within equity accounted earnings, and earnings attributable to perpetual
preference shareholders and Other additional tier 1 security holders

·      Adjusted earnings per share is calculated as adjusted earnings
attributable to ordinary shareholders divided by the weighted average number
of ordinary shares in issue during the year

·      Headline earnings is an earnings measure required to be
calculated and disclosed by the JSE and is calculated in accordance with the
guidance provided by The South African Institute of Chartered Accountants in
Circular 1/2023

·      Headline earnings per share (HEPS) is calculated as headline
earnings divided by the weighted average number of ordinary shares in issue
during the year.

·      Basic earnings is earnings attributable to ordinary shareholders
as defined by IAS33 Earnings Per Share

·      Core loans is defined as net loans to customers plus net own
originated securitised assets

·      The credit loss ratio is calculated as expected credit loss (ECL)
impairment charges on gross core loans as a percentage of average gross core
loans subject to ECL.

 

 

2.     Exchange rates

 

The Group's reporting currency is Pounds Sterling. Certain of the Group's
operations are conducted by entities outside the UK. The results of operations
and the financial condition of these individual companies are reported in the
local currencies in which they are domiciled, including Rands, Australian
Dollars, Euros and US Dollars. These results are then translated into Pounds
Sterling at the applicable foreign currency exchange rates for inclusion in
the Group's combined consolidated financial statements. In the case of the
income statement, the weighted average rate for the relevant period is applied
and, in the case of the balance sheet, the relevant closing rate is used. The
following table sets out the movements in certain relevant exchange rates
against the Pound Sterling over the period:

 

                     Five months to        Year ended            Six months ended 30 September 2024

                     31 August 2025        31 March 2025
 Currency            Period end  Average   Period end  Average   Period end          Average

 per GBP1.00
 South African Rand  23.90       24.22     23.74       23.25     23.11               23.40
 Euro                1.16        1.17      1.20        1.19      1.20                1.18
 US Dollar           1.35        1.34      1.29        1.28      1.34                1.28

 

 

3.     Profit forecasts

·      The following matters highlighted in this announcement contain
forward-looking statements:

§  Adjusted earnings per share (EPS) is expected to be between 38.7p and
41.5p which is below and ahead of 1H2025 respectively

§  Headline earnings per share is expected to be between 35.2p and 38.0p
which is below and ahead of 1H2025 respectively

§  Basic EPS is expected to be between 36.0p and 38.8p which is below and
ahead of 1H2025 respectively

§  Pre-provision adjusted operating profit is expected to be between £509.4
million and £540.3 million

§  Adjusted operating profit is expected to be between £451.0 million and
£481.8 million (1H2025: £474.7 million)

§  The UK business' (including our interest in Rathbones) adjusted operating
profit to be c.1% behind to c.6% ahead of the prior period. The UK Specialist
Bank adjusted operating profit is expected to be 4.0% behind to 4.0% ahead of
the prior period. The UK business ROTE is expected to be c.13%, within the
medium-term target range of 13% to 17%

§  The Southern African Specialist Bank adjusted operating profit expected
to be ahead of prior period by up to c7% in Rands. Group Investments is
expected to be behind the strong prior period, resulting in the overall
Southern African business adjusted operating profit of c.5% behind to flat
versus prior period in Rands (1H2025: R5 890 million, £252.0 million) SA
business ROE is expected to be c.18.5% within the 16% to 20% medium-term
target range

§  Group ROE is expected to be between 13% and 14%, within the Group's
medium-term target range of 13% to 17%.

(collectively the Profit Forecasts)

·      The basis of preparation of each of these statements and the
assumptions upon which they are based are set out below. These statements are
subject to various risks and uncertainties and other factors - which may cause
the Group's actual future results, performance or achievements in the markets
in which it operates to differ from those expressed in the Profit Forecasts

·      Any forward-looking statements made are based on the knowledge of
the Group at 18 September 2025

·      These forward-looking statements represent a profit forecast
under the Listing Rules. The Profit Forecasts relate to the six months ending
30 September 2025

The financial information on which the Profit Forecasts are based is the
responsibility of the Directors of the Group and has not been reviewed and
reported on by the Group's auditors.

Basis of preparation

·      The Profit Forecasts have been compiled using the assumptions
stated below, and on a basis consistent with the accounting policies adopted
in the Group's March 2025 audited financial statements, which are in
accordance with IFRS and are those which the Group anticipates will be
applicable for the year ending 31 March 2026.

·      The Profit Forecasts have been prepared based on (a) audited
financial statements of the Group for the year ended 31 March 2025, and the
results of the Specialist Banking and Wealth & Investment businesses
underlying those audited financial statements; (b) the unaudited management
accounts of the Group and the Specialist Banking and Wealth & Investment
businesses for the five months to 31 August 2025; and (c) the projected
financial performance of the Group and the Specialist Banking and Wealth &
Investment businesses for the remaining one month of the period ending 30
September 2025.

·      Percentage changes shown on a neutral currency basis for balance
sheet items assume that the relevant closing exchange rates at 31 August 2025
remain the same as those at 31 March 2025. This neutral currency information
has not been reported on by the Group's auditors.

 

Assumptions

The Profit Forecasts have been prepared on the basis of the following
assumptions during the forecast period:

 

Factors outside the influence or control of the Investec Board:

·      There will be no material change in the political and/or economic
environment that would materially affect the Investec Group

·      There will be no material change in legislation or regulation
impacting on the Investec Group's operations or its accounting policies

·      There will be no business disruption that will have a significant
impact on the Investec Group's operations

·      The Rand/Pound Sterling and US Dollar/Pound Sterling exchange
rates remain materially unchanged from the prevailing rates detailed above

·      The tax rates remain materially unchanged

·      There will be no material changes in the structure of the
markets, client demand or the competitive environment.

 

Estimates and judgements

In preparation of the Profit Forecasts, the Group makes estimations and
applies judgement that could affect the reported amount of assets and
liabilities within the reporting period. Key areas in which judgement is
applied include:

·      Valuation of unlisted investments primarily in the private
equity, direct investments portfolios and embedded derivatives. Key valuation
inputs are based on the most relevant observable market inputs, adjusted where
necessary for factors that specifically apply to the individual investments
and recognising market volatility

·      The determination of ECL against assets that are carried at
amortised cost and ECL relating to debt instruments at fair value through
other comprehensive income (FVOCI) involves the assessment of future cash
flows which is judgmental in nature

·      On 1 August 2025, the Supreme Court of England and Wales' (the
"Supreme Court") provided a judgment on the appeal against the Court of
Appeal's decision in Wrench, Hopcraft and Johnson concerning the payment of
finance commission by motor finance lenders to motor dealers acting as credit
brokers. Whilst the judgment announced on 1 August provides additional
clarity, there remain a number of uncertainties. The FCA announced that it
will publish a consultation on an industry wide redress scheme by early
October 2025. Following the initial assessment of the Supreme Court judgment
and pending resolution of the outstanding uncertainties, in particular the FCA
redress scheme. Investec believes that the current provision of £30 million
remains adequate. The provision will continue to be reviewed as and when
further information becomes available.

·      Valuation of investment properties is performed by capitalising
the budgeted net income of the property at the market related yield applicable
at the time

·      The Group's income tax charge and balance sheet provision are
judgmental in nature. This arises from certain transactions for which the
ultimate tax treatment can only be determined by final resolution with the
relevant local tax authorities. The Group recognises in its tax provision
certain amounts in respect of taxation that involve a degree of estimation and
uncertainty where the tax treatment cannot finally be determined until a
resolution has been reached by the relevant tax authority. The carrying amount
of this provision is often dependent on the timetable and progress of
discussions and negotiations with the relevant tax authorities, arbitration
processes and legal proceedings in the relevant tax jurisdictions in which the
Group operates. Issues can take many years to resolve and assumptions on the
likely outcome would therefore have to be made by the Group

·      Where appropriate, the Group has utilised expert external advice
as well as experience of similar situations elsewhere in making any such
provisions

·      Determination of interest income and interest expense using the
effective interest rate method involves judgement in determining the timing
and extent of future cash flows.

 

About Investec

Investec partners with private, institutional, and corporate clients, offering
international banking, investments, and wealth management services in two
principal markets, South Africa and the UK. The Group was established in 1974
and currently has c.8,000 employees. Investec has a dual listed company
structure with primary listings on the London and Johannesburg Stock
Exchanges.

 

Johannesburg and London

 

JSE Equity and Debt Sponsor: Investec Bank Limited

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