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Investec to reduce surplus capital through share buyback program

Investec to reduce surplus capital through share buyback program

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JSE – and London-listed bank and financial services group Investec has announced a R7 billion share buyback to address its surplus capital position in South Africa.

Investec directors said at the release of results for the six months to September 30 that they were making progress on their capital optimisation strategy, and the board had approved a proposed share repurchase programme of up to R7 billion to be executives over the next 18 months, subject to market conditions.

This is the second recent share buyback. .

On October 3, 2022, the group announced a R1.2bn share buyback, where about 6.9 million shares in Investec plc were purchased.

Shares acquired by Investec Limited under the Investec Purchase and Buyback Programme would be additional to the 10 million Investec Limited shares that were repurchased and cancelled by Investec Limited in the last twelve months, the group said.

Also benefiting shareholders, the group declared an interim dividend of 13.5 pence per share, 22.7% higher than the 11 pence declared in the first half of 2021, reflecting a payout ratio of 41%.

Adjusted earnings 25.1% to 32.9 pence a share in the six months to September 30, at the top end of previous guidance.

“Rising global interest rates, client acquisition and strong asset quality supported these results,” Fani Titi, the CEOsaid in a statement.

He said their earnings growth momentum had continued to be, underpinned by strong revenues from diversified client franchises and a focused approach to support clients.

Funds under management (FUM) fell 7.6% to £59 billion (R1.2 trillion) , reflecting the year-to-date decline in global markets. Net inflows were £202m, with £464m in discretionary FUM inflows partly offset by £261m net outflows in non-discretionary FUM.

Net core loans grew 7.1% annualised to £31bn, largely driven by corporate lending in both core geographies and UK residential mortgage lending.

Revenue grew 18.9% as momentum continued in client franchises and after benefiting from rising global interest rates. The cost to income ratio improved to 60.5% from 64% at the same time last year. Pre-provision adjusted operating profit increased 29.5% to £435.2m.

Impairment charges increased to £30.2 million, resulting in a credit loss ratio of 15bp versus 7bp at the same time last year.

Tangible net asset value (TNAV) per share remained flat at 475.3p (R97.80). Investec Limited’s share price fell 0.42% yesterday to R92.85, but the price was 20.6% higher over a 12-month period.

“We have strong liquidity and capital levels and are well positioned to support all our stakeholders, including our clients, our people, and communities around us,” said Titi.

BUSINESS REPORT

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