Investec bad debts peak over first half

SOUTH African bank Investec yesterday said profits dipped by a tenth in the first half, though it added confidence is starting to return and that impairments appear to have peaked.

Operating pre-tax profit at the group fell 10.7 per cent to £216m over the six months to September, mainly due to a 62 per cent slump in profits at its private client division.

But managing director Bernard Kantor said he believed bad debt charges to have “topped out” and that recent strength in investment banking had given the group a boost.

“There has been a definite uptick in investment banking activity in the last few months,” he said. “It started with the bulge brackets and is now filtering down to the mid-market.”

Assets under management rose by 28.7 per cent over the period to £62.8bn, while core loans and advances to customers climbed 6.9 per cent to £17.3bn and deposits increased 23.6 per cent to £18bn.

Investec escaped with little exposure to toxic US sub-prime loans in the financial crisis, though its operations in South Africa have been battered by falling demand as the country battles its first recession in 17 years.

Kantor said the South African business was “taking its time” to come out of recession, but added that its UK operations – where is it also listed – had experienced a resilient first half, during which its share of the group’s earnings rose from 43 per cent to 48 per cent.


Pre-tax profit down by 10.7% to £216m

Private client division profits down by 62.4%

Investment banking profits down by 6.2%

Assets under management up by 28.7%

Capital markets profits up by 2.1%