SOUTH African bank Investec has seen profits rise 11.3 per cent over the past year despite the challenging environment, with a flood of impairments at its private banking arm offset by a drive to improve its less risky asset management business.
Investec posted a pre-tax profit of £409.9m for the year to end of March, up from £368.3m last year.
All of its business divisions managed to post growth in earnings over the year, with the exception of private banking, where operating pre-tax profit plunged by well over half to £37m due to the impact of bad loans.
The private bank posted £131m of impairments, up from £88m in the previous financial year – equivalent to 45.7 per cent of the total group bad loan charges of £286.6m. But managing director Bernard Kantor was upbeat about the trend in impairments, which he said had already peaked. “We could see them coming down quite significantly over the rest of the financial year,” he added.
Third party assets under management rose by 50.7 per cent to £73.6bn, split roughly two thirds to a third between Investec Asset Management and the private wealth arm.
“With the volatility in capital and liquidity that will hit banks, we want to move more towards a non-capital intensive business model,” said Kantor.