Wrap Text
Preliminary condensed consolidated financial results for the year ended 31 March 2021
Investec Bank Limited
Incorporated in the Republic of South Africa
Registration number: 1969/004763/06
Share code: INLP
ISIN: ZAE000048393
LEI No.: 549300RH5FFHO48FXT69
Preliminary condensed consolidated financial results for the year ended 31 March 2021
Salient features
31 March 2021 31 March 2020 % change
Total operating income before expected credit loss impairment charges (R'million) 12 049 12 603 (4.4%)
Operating costs (R'million) 6 469 6 632 2.5%
Operating profit before goodwill and acquired intangibles (R'million) 5 013 4 883 2.7%
Headline earnings attributable to ordinary shareholders (R'million) 4 133 3 844 7.5%
Cost to income ratio 53.7% 52.6%
Total capital resources (including subordinated liabilities) (R'million) 59 890 53 785 11.4%
Total equity (R'million) 46 954 41 748 12.5%
Total assets (R'million) 509 901 535 970 (4.9%)
Net core loans and advances (R'million) 283 240 283 946 (0.2%)
Customer accounts (deposits) (R'million) 374 369 375 948 (0.4%)
Loans and advances to customers as a % of customer accounts (deposits) 73.5% 73.6%
Cash and near cash balances (R'million) 129 759 147 169 (11.8%)
Total gearing ratio (i.e. total assets excluding intergroup loans to equity) 10.5x 12.4x
Total capital adequacy ratio 17.8% 16.4%
Tier 1 ratio 13.7% 12.3%
Common equity tier 1 ratio 13.3% 12.1%
Leverage ratio 8.1% 6.9%
Leverage ratio - fully loaded 8.1% 6.8%
Stage 3 as a % of gross core loans subject to ECL 2.5% 1.5%
Stage 3 net of ECL as a % of net core loans subject to ECL 2.1% 0.9%
Credit loss ratio 0.18% 0.37%
Commentary
These reviewed year end condensed consolidated financial results are published to provide information to holders of Investec Bank Limited's listed
non-redeemable, non-cumulative, non-participating preference shares.
Overview of results
Business performance was resilient despite an operating environment characterised by stop-start economies as countries grappled with the impact
of COVID-19. We have seen good momentum since December 2020 with stronger activity levels and growth in lending books across the bank, good
client acquisition and point-of-sale activity from private clients as well as increased corporate trading activity. Our clients have a track record of
resilience in difficult operating environments as reflected in our low impairments and credit loss ratio. Despite a greater sense of optimism spurred
on by declining COVID-19 infections and the vaccine roll out programme in South Africa, a third wave remains a key risk to the business and the
economy.
Against this backdrop, Investec Bank Limited, a subsidiary of Investec Limited, posted an increase in headline earnings attributable to ordinary
shareholders of 7.5% to R4 133 million (FY2020: R3 844 million).
The balance sheet remains sound with robust capital and liquidity ratios. At 31 March 2021, Investec Bank Limited had a total capital adequacy ratio
of 17.8% (31 March 2020: 16.4%), a common equity tier one (CET1) ratio of 13.3% (31 March 2020: 12.1%) and a leverage ratio of 8.1% (31 March 2020:
6.9%).
Approval was received from the Prudential Authority to adopt the Advanced Internal Ratings Based (AIRB) approach for the bank's SME and
Corporate models effective 1 April 2021. As a result, the proforma AIRB CET1 ratio was 14.0% at 31 March 2021, an approximate 70bps uplift on the
Foundation Internal Ratings Based (FIRB) approach. We are working towards further adoption of AIRB on certain remaining portfolios and expect a
further 100bps to 150bps uplift to the CET1 ratio.
The Liquidity coverage ratio was 150.2% for Investec Bank Limited (solo) and 164.0% for Investec Bank Limited (consolidated) while the Net stable
funding ratio was 112.8% and 113.2%, respectively.
For full information on the Investec Group results, refer to the combined results of Investec plc and Investec Limited on the group's
website http://www.investec.com.
Financial review
Unless the context indicates otherwise, all comparatives referred to in the financial review relate to the year ended 31 March 2020 (FY2020).
Salient operational features for the year under review include:
Total operating income before expected credit loss (ECL) impairment charges decreased by 4.4% to R12 049 million (FY2020: R12 603 million). The
components of operating income are analysed further below:
- Net interest income increased by 1.3% to R8 786 million (FY2020: R8 673 million) supported by higher average lending book size and lower funding
costs. Net core loans were broadly flat year-on-year at R283.2 billion (31 March 2020: R283.9 billion). Growth in the private clients loan book was
offset by the corporate lending book which experienced higher repayments and lower net new originations as corporate clients remained cautious,
particularly in the first half of the financial year
- Net fee and commission income reduced by 10.7% to R2 337 million (FY2020: R2 616 million) reflecting lower lending and transactional activity
across the business primarily in the first half of the year
- Investment income decreased by 21.5% to R472 million (FY2020: R601 million) driven by lower realisations, dividend flows and negative fair value
adjustments on certain investments given the prevailing economic backdrop
- Share of post taxation profit of associates reflects earnings in relation to the group's investment in the IEP Group (IEP). The 74.6% reduction year on
year reflects the negative impact of COVID-19 as some IEP subsidiaries were unable to trade during the hard lockdown
- Total trading income declined 5.9% to R370 million (FY2020: R393 million). The 41.5% increase in client flow trading income due to increased
commodity and interest rate derivatives trading activity was offset by negative MTM on interest rate swaps hedging fixed deposits and foreign
exchange swaps.
ECL impairment charges declined to R567 million (FY2020: R1 088 million) resulting in a credit loss ratio (CLR) of 18bps (FY2020: 37bps). Higher
specific impairments and the inclusion of an additional model overlay were offset by stable portfolio impairments due to broadly flat lending books
and an increased level of recoveries. Despite an increase in Stage 3 specific impairments, the coverage ratio declined to 18.5% (31 March 2020:
43.2%) due to some highly collateralised deals migrating from Stage 2 and the write-off of specific exposures with higher provision coverage.
Operating costs were well contained, declining by 2.5% to R6 469 million (FY2020: R6 632 million) driven by headcount containment and reduced
discretionary expenditure. The decline in revenue resulted in a cost to income ratio of 53.7% (FY2020: 52.6%).
The decrease in impairment of associate to R98 million (FY2020: R937 million) relates to the non-repeat of a prior year goodwill impairment to the
equity accounted value of the group's holding in IEP.
As a result of the foregoing factors, profit before taxation increased by 24.9% to R4 861 million (FY2020: R3 892 million). The higher taxation charge
of R878 million (FY2020: R816 million) resulted in a profit after taxation of R3 997 million (FY2020: R3 090 million).
The preliminary condensed consolidated financial statements for the year ended 31 March 2021 have been reviewed by KPMG Inc. and Ernst & Young
Inc., who expressed an unmodified review conclusion. A copy of the auditors' review report is available for inspection at the company's registered
office together with the financial statements identified in the auditors' report.
The auditors' report does not necessarily report on all of the information contained in these financial results. Shareholders are therefore advised that
in order to obtain a full understanding of the nature of the auditors' engagement, they should obtain a copy of the auditors' report together with the
accompanying financial information from the issuer's registered office.
On behalf of the Board of Investec Bank Limited
Khumo Shuenyane Richard Wainwright
Chair Chief Executive
20 May 2021
This short-form announcement is the responsibility of the directors. It is only a summary of the information contained in the full announcement and
does not contain full or complete details.
Any investment decision should be based on the full viewed announcement which can be accessed from 21 May 2021, using the following JSE link:
https://senspdf.jse.co.za/documents/2021/jse/issh/INLPH/IBLYE21.pdf
Alternatively the full announcement is also available at our registered offices for inspection at no charge, during office hours.
Copies of the full announcement may be requested by contacting Investor Relations on:
Telephone: (+27 11) 286 7000
e-mail: investorrelations@investec.com
Investec Bank Limited
Incorporated in the Republic of South Africa
Registration number: 1969/004763/06
Share code: INLP
ISIN: ZAE000048393
LEI No.: 549300RH5FFHO48FXT69
Preference share dividend announcement
Non-redeemable non-cumulative non-participating preference shares ("preference shares")
Declaration of dividend number 36
Notice is hereby given that preference dividend number 36 has been declared by the Board from income reserves for the period 1 October 2020 to
31 March 2021 amounting to a gross preference dividend of 290.85595 cents per preference share payable to holders of the non-redeemable non-
cumulative non-participating preference shares as recorded in the books of the company at the close of business on Friday, 11 June 2021.
The relevant dates for the payment of dividend number 36 are as follows:
Last day to trade cum-dividend Tuesday, 08 June 2021
Shares commence trading ex-dividend Wednesday, 09 June 2021
Record date Friday, 11 June 2021
Payment date Monday, 14 June 2021
Share certificates may not be dematerialised or rematerialised between Wednesday, 9 June 2021 and Friday, 11 June 2021, both dates inclusive.
Additional information to take note of:
- Investec Bank Limited tax reference number: 9675/053/71/5
- The issued share preference share capital of Investec Bank Limited is 14 917 559 preference shares
- The dividend paid by Investec Bank Limited is subject to South African Dividend Tax (Dividend Tax) of 20% (subject to any available exemptions
as legislated)
- The net dividend amounts to 232.68476 cents per preference share for shareholders liable to pay the Dividend Tax and 290.85595 cents per
preference shareholders exempt from paying the Dividend Tax.
By order of the board
Niki van Wyk
Company Secretary
20 May 2021
For further information
Investec Bank Limited
Incorporated in the Republic of South Africa
Registration number 1969/004763/06
Share code: INLP
ISIN: ZAE000048393
LEI No: 549300RH5FFHO48FXT69
Registered office
100 Grayston Drive
Sandown, Sandton, 2196
Transfer secretaries
Computershare Investor Services (Pty) Ltd
Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196
Company Secretary
Niki van Wyk
Sponsor:
Investec Bank Limited
Directors
Khumo Shuenyane (Chair)
David Lawrence (Deputy Chair)
Richard Wainwright (Chief Executive)^
Marle van der Walt (Finance Director)^*
Zarina Bassa
David Friedland
Philip Hourquebie
Morris Mthombeni
Geoffrey Qhena
Fani Titi^
^ Executive
Stuart Spencer resigned as Finance Director effective 8 April 2021
*Marle van der Walt was appointed as Finance Director effective 8 April 2021
Date: 21-05-2021 07:59:00
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