Weak rand and legacy book hit Investec shares

DUAL-LISTED investment firm Investec yesterday said its struggling legacy business lowered six-month operating profits, and added the book could take another five years to run off.

The Gresham Street based company, which is listed in London and South Africa, said operating profits fell 2.3 per cent in the six months ending September, dragged down by the legacy business of its UK Specialist bank, which lost £49.2m.

Managing director Bernard Kantor said: “We see the legacy book dropping quite dramatically – it was about £4.8bn to begin with, now it is £3.4bn and I see it at £800m by 2018.

“So over the next five years, there is quite a decline and if the economy proves more buoyant than our conservative estimates then it could be even quicker.”

The company has also been hit hard by the ongoing depreciation of the rand against sterling. The rand has fallen 16 per cent against the pound over the past six months.

But there was better news for its two other divisions, asset management and wealth and investment.

The fund management side of the business benefited from inflows of £1.4bn, helping deliver higher overall operating profits in the division of £71.9m, up from £67.4m at the same time last year. Its well-heeled client base also added £400m to funds within its wealth and investment unit, driving operating profits up 35 per cent.

Shares in London traded slightly lower losing 0.77 per cent. In Johannesburg shares fell 1.37 per cent.