Investec Expands Asset Management

Investec expects to report a “marginally higher” adjusted annual operating profit, but the investment bank warned that demand for credit remains subdued and operating conditions difficult. Its various divisions put in mixed performances, with strong results in capital markets and asset management, but weakness in the advisory business and high levels of non-performing loans dragging on the group’s overall figures.

The bank, which has a dual listing in Johannesburg and London, has focused on expanding its asset management business to diversify its activities and increase the level of recurring revenues. The efforts appear to have paid off with record net inflows of more than £6.5bn ($10.5bn) during the year, taking the total assets under management to some £56.6bn.

Since last March, assets under management have grown about 22 per cent. Stephen Koseff, Investec chief executive, was reported last year to have been considering acquiring an Australia-based asset manager to bulk up it operations. However, the bank said trading conditions remained difficult at its institutional stockbroking business, while corporate finance activity had “started to improve” although this has yet to feed through to the bottom line There was also a “significant increase” in impairments at its private banking arm, with losses reported in the UK and Australia and South Africa performing “significantly behind” last year.

At the group level Investec expects modest profit growth from its UK business, while South African activities will remain flat.