Investec rewards backers

Johannesburg - Financial services group Investec [JSE:INL] has announced a 23% hike in its annual dividend, after reporting a 9% increase in operating profits.

The dividend for the group rose to 16 pence per share while operating profit before tax was up to R432m.

"This was a much easier environment in which to operate," said group CEO Stephen Koseff, commenting on the company's performance for the year to end-March.

Market analysts at the best of times are wary to challenge Koseff at a results presentation, lest they end up on the wrong end of his razor-sharp tongue.

Only one shareholder piped up with criticism that Investec's Asset Management unit had, despite record inflows, not seen any benefits from its increased scale.

Koseff responded that remuneration in the asset management unit had risen in line with profits, and that shareholders would only see the benefits from gains in the following financial year.

Louis Venter, a portfolio manager from Anglorand Securities, congratulated Koseff on the increased dividend. "You are simply the best, Mr Koseff," Venter said.

One area which did not receive a lot of attention from analysts was the operating environment in Europe and proposed changes to the laws that govern banks.

David van der Walt, global head of capital markets for Investec, cautioned shareholders that the regulatory environment for banks operating in Europe and the United Kingdom was going to be a challenge in the coming year.

"The political environment presents real threats to the global banking industry," he said, pointing out that Ireland had been the only loss-making geography  for the group.

Patrice Rassou, a senior portfolio manager at Sanlam Investment Management, told Fin24.com that much of the focus in the UK will be on political moves to cap banker remuneration. "The Liberal Democrats are keen to show that they are pro the man in the street; the question is whether shareholders will carry the tab," he said.

With the threat of regulatory changes hanging over banking groups, it is clear that Koseff has worked hard to diversify Investec.

He pointed out to shareholders and analysts that the mission statement for the group had changed from being Investec Specialist Bank to Investec Specialist Bank & Asset Manager, reflecting the wider focus of the company.

By midday on Thursday, shares in Investec Plc were up 50c (1%) to trade at 5 521c.