SOUTH African bank Investec said yesterday that first-half operating profit is expected to inch up marginally, as a strong performance from the asset management and private wealth businesses offset sluggish investment banking activity.
Investec admitted that defaults on bad loans have continued to increase due to the slow pace of economic recovery. Impairments remain elevated but are beginning to show signs of improvement, the bank said, forecasting an annualised credit loss charge of between 0.85 and 0.9 per cent of average gross loans and advances.
In the investment bank, a robust performance in capital markets was dragged down by diffcult conditions for the stockbroking business and muted corporate finance activity.
However, Investec – which earlier this year bought out the remaining half of Rensburg Sheppards – said the performance of its asset management and private wealth businesses had jumped compared to the prior year, with average numbers 38 per cent and 22 per cent respectively above the six months to end of September 2009.
The asset management arm raked in £1.5bn of net inflows over the first-half period.