Investec to Pay Highest-Ever Dividend Despite Marginal Earnings Drop
TLDR
- Investec reports a 7.6% rise in adjusted operating profit to £475 million for the six months ending September 30.
- Despite the profit increase, headline earnings per share slipped to 36.6 pence due to a higher equity base from a deal with Rathbones.
- Deposits grew to £40.4 billion, improving liquidity and lowering funding costs for the bank.
Investec will pay its highest-ever interim dividend of 16.5 pence per share after reporting a 7.6% rise in adjusted operating profit to £475 million ($600 million) for the six months ending September 30. Despite the profit increase, headline earnings per share (EPS) slipped to 36.6 pence, impacted by a higher equity base following a deal between its UK wealth unit and Rathbones.
Return on equity fell to 13.9%, remaining within the target range of 13%-17%. Deposits grew to £40.4 billion, improving liquidity and lowering funding costs. Net interest income rose 2% to £684.4 million, while non-interest revenue benefited from growth in customer numbers and higher activity.
The bank’s cost-to-income ratio improved to 50.8%, with a credit loss ratio of 42 basis points, at the upper end of its expected range. CEO Fani Titi highlighted strong capital and liquidity levels, positioning the group for disciplined growth in an improving environment.
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Key Takeaways
Investec’s performance reflects its ability to navigate higher interest rates and deposit repricing challenges. Record dividends underscore robust liquidity and profitability, driven by deposit growth and increased customer activity. The modest decline in EPS, linked to capital adjustments, highlights structural shifts following strategic deals. Improved cost efficiency and manageable credit losses position Investec for sustainable growth amid evolving market conditions. Balancing disciplined expansion with capital strength will remain critical as the bank leverages its UK and South African operations.
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