Banking and wealth management group Investec’s profit climbed in the six months to 30 September, boosted by its UK business reaping the benefits of high interest rates.
The firm reported a pretax profit of £453m, up 12 per cent from the same period last year.
The group hiked its interim dividend to 15.5p per share, an increase of 14.8 per cent, and a record interim payout for the group.
Investec’s earnings were boosted by a 41 per cent surge in adjusted operating profit to £235.4m for its UK business, which the firm said was driven by high interest rates.
High rates pushed the group’s net interest income up by 12 per cent to £682.6m.
Its UK specialist banking division’s profit surged by 61 per cent to £207.2m, which the company said was “driven by strong revenue growth across our key client franchises as we continued to successfully execute our client acquisition strategies to build scale and relevance in the UK market”.
However, the group reported that its expected credit loss impairment charges leapt 58 per cent to £46m, resulting in a credit loss ratio of 32 basis points “towards the upper end of the group’s through-the-cycle”.
Investec’s 2024 guidance expected the overall loss ratio to stay between 25 and 35 basis points, with the UK forecast to reach as high as 60 basis points due to the high interest rate environment.
The South African London-listed firm has benefited from interest rate hikes and growth in its loan book this year.
“The group has delivered strong results against a difficult macroeconomic backdrop which was characterised by high inflation, elevated global interest rates and persistent market volatility,” said Investec chief executive Fani Titi.
“Our balance sheet remains strong and highly liquid, positioning us well to support our clients in navigating the uncertain macroeconomic backdrop and achieve our financial targets.”
Investec announced in April that its wealth and management division would combine with Rathbones to create a £100bn money manager trading under the Rathbones brand. The deal was completed in September.
The deal will see Rathbones shares issued in exchange for 100 per cent of Investec W&I UK’s share capital.