Investec sees higher profit even as rand weakens

Johannesburg - Investec [JSE:INL], owner of a bank and money manager in South Africa and the UK, said first-half operating profit will probably be “comfortably ahead” of the £240.8m it posted a year earlier, even after the rand slumped.

Revenue is expected to be “moderately ahead” of a year earlier, with expenses marginally higher, Investec said in a trading update for the fiscal first half ending September 30 on Thursday. Impairments are likely to be down 20%, it said.

Investec makes most of its profit in South Africa, where the continent’s most developed economy shrank by 1.3% in the second quarter. Group results have been negatively impacted by an 8% depreciation in the rand-pound exchange rate during the six months, Investec said.

“Recent currency and equity market volatility, if sustained, is likely to create headwinds in the wealth and investment and asset management business,” Stephen Koseff, chief executive officer, said in a briefing in Johannesburg.

Investec advanced 2% to 547 pence at 10:16. The FTSE 350 Banking Index was 1% lower.

Assets under management dropped 8% to £71.1bn in the five months ended August 31, with earnings in this business affected by market volatility and lower performance fees in South Africa.

Earnings at the UK specialist banking business are expected to be significantly higher, while in South Africa results will be “well-ahead” of a year earlier.