Investec has issued an optimistic trading update for the first half of the financial year, projecting a rise in profits despite facing various challenges in the UK market.
Investec anticipates an adjusted operating pre-tax profit ranging from £450 million to £482 million for the six months ending in September. This forecast marks a potential improvement from the £441 million registered during the corresponding period last year. Headline earnings per share are expected to vary between a decline of 1.4% below last year’s 36.9p and an increase of up to 3.5%. This estimation incorporates the costs associated with executing strategic actions.
The bank attributes its revenue growth to an increase in lending and the favourable effects of rising interest rates. However, this growth has been partially offset by higher savings rates paid to UK depositors. Additionally, Investec has enjoyed a boost in non-interest revenue, which the company credits to the diversified nature of its business model. ‘Continued client acquisition and higher activity levels underpinned non-interest revenue growth,’ stated Investec.
When analysing performance by region, Investec’s operations in South Africa have contributed significantly to overall growth. Adjusted profit in the South African segment is expected to surpass the prior period by at least 15%. Conversely, the UK division is projected to see an adjusted profit decline of at least five per cent compared to the same period the previous year.
In terms of credit losses, Investec forecasts a higher ratio within the UK, which it attributes to specific impairments. Across the broader business, the credit loss ratio is anticipated to be at the upper end of the through-the-cycle range. Nevertheless, Investec emphasised that ‘overall credit quality remained strong.’
The financial institution also highlighted its robust capital and liquidity levels. ‘The Group maintained strong capital and liquidity levels and is well positioned to continue supporting our clients and build to scale our identified growth opportunities, in an improving economic environment,’ the bank stated. Notably, Investec confirmed that it is trading in line with expectations for its 2025 financial results.
In summary, despite various challenges in the UK market, Investec is poised to register a growth in profits for the first half of the financial year, driven largely by its diversified business model and robust performance in South Africa.