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2014
Investec Bank Limited
Q and A fact sheet
20 November 2014
Specialist Banking
Asset Management
Wealth & Investment
Overview of Investec and
Investec Bank Limited
Investec is an international specialist
bank and asset manager that provides a
diverse range of financial products and
services to a select client base in two
principal markets, the United Kingdom
and South Africa, as well as certain other
countries.
In July 2002, the Investec group
implemented a dual listed companies (DLC)
structure with linked companies listed in
London and Johannesburg. Investec plc
(housing the non-South African operations)
and Investec Limited (housing the Southern
African operations) form a single economic
enterprise where shareholders have
common economic and voting interests.
Creditors, however, are ring-fenced to
either Investec plc or Investec Limited as
there are no cross guarantees between
the companies.
Investec Bank Limited (IBL) is a specialist
bank and is the main banking subsidiary of
Investec Limited. Investec Bank (Mauritius)
Limited and Reichmans Limited are
the main operating subsidiaries of IBL.
IBL is regulated by the South African
Reserve Bank.
Performance
IBL posted an increase in headline
earnings attributable to ordinary
shareholders of 29.6% to R1 644 million
(2013: R1 269 million). The balance sheet
remains strong with an increase in capital
and liquidity over the period.
Further detail on IBL’s results can
be found on Investec’s website
at www.investec.com
Investec Bank Limited Q and A fact sheet | 2
Liquidity and funding
IBL has a liquidity management
philosophy that has been in place for
many years. The bank continues to
focus on maintaining a stock of readily
available, high quality liquid assets
targeting a minimum cash to customer
deposit ratio of 25%. As at 30 September
2014 the bank had R82.3 billion of cash
and near cash to support its activities,
representing approximately 30.6%
of its liability base. Furthermore, the
bank maintains an appropriate mix of
term funding, placing a low reliance on
interbank wholesale funding to fund
core lending asset growth. IBL targets
a diversified funding base, avoiding
undue concentrations by investor types,
maturity and market source, instrument
and currency. Customer deposits have
increased by 6.2% since 31 March 2014
to R217.6 billion at 30 September 2014.
The bank’s loan to deposit ratio was 74.6%
as at 30 September 2014 (31 March
2014: 72.5%).
Capital adequacy
IBL holds capital in excess of regulatory
requirements and intends to perpetuate
this philosophy and ensure that it remains
well capitalised. As at 30 September 2014,
the capital adequacy ratio of IBL was
15.6% and the tier 1 ratio was 11.2%.
Deposit guarantees
There are no deposit guarantees in
South Africa.
Asset quality and
exposures
The bulk of IBL’s credit and counterparty
risk arises through its private client and
corporate client activities in South Africa
and Mauritius. The bank lends to high net
worth and high income individuals, mid to
large sized corporates, public sector bodies
and institutions. IBL has no exposure to
peripheral European sovereign debt.
IBL impairments
Impairments on loans and advances
decreased from R299 million to
R219 million. The credit loss charge as a
percentage of average gross core loans
and advances has improved from 0.44% at
31 March 2014 to 0.30%. The percentage
of default loans (net of impairments but
before taking collateral into account) to
core loans and advances amounted to
1.30% (31 March 2014: 1.50%). The ratio
of collateral to default loans (net of
impairments) remains satisfactory at
1.48 times (31 March 2014: 1.55 times).
Gearing
IBL is not a highly geared bank. A number
of banks that have come into difficulty over
the past few years have been in excess of
40 times geared. IBL’s comparative ratio
would be 11.3 times.
Credit ratings
As at 20 November 2014 IBL’s national long- and short-term credit ratings from Fitch, Moody’s and Standard & Poors are in line with the
Big 4 banks in South Africa and are listed below:
Fitch
Moody’s
Long-term rating
A+ (zaf)
A1 (za)
Standard & Poors
AA (za)
Short-term rating
F1 (zaf)
P1 (za)
A – 1 (za)
Key financial statistics for the six months ended 30 September 2014
Six months
to 30 Sept
2014
Six months
to 30 Sept
2013
% change
Year to
31 March
2014
Total operating income before impairment losses on loans and
advances (R’million)
4 350
3 696
17.7%
7 216
Operating costs (R’million)
2 195
1 929
13.8%
4 113
Profit before taxation (R’million)
1 936
1 468
31.9%
2 465
Headline earnings attributable to ordinary shareholders (R’million)
1 644
1 269
29.6%
2 086
36 099
Salient features
Cost to income ratio
50.5%
52.2%
Total capital resources (including subordinated liabilities) (R’million)
38 231
34 931
9.4%
57.0%
Total equity (R’million)
27 586
24 527
12.5%
25 601
Total assets (R’million)
313 675
284 803
10.1%
303 218
Net core loans and advances (R’million)
165 362
146 623
12.8%
151 384
Customer accounts (deposits) (R’million)
217 550
200 512
8.5%
204 903
Cash and near cash balances (R’million)
82 252
74 479
10.4%
84 476
Capital adequacy ratio (current)
15.6%
15.2%
15.3%
Tier 1 ratio (current)
11.2%
10.7%
10.8%
Common equity tier 1 ratio (current)
10.7%
10.1%
10.3%
8.4%
n/a
7.9%
1.30%
2.12%
1.50%
Net defaults (after collateral and impairments) as a % of net core loans
and advances
–
–
–
Annualised credit loss ratio (income statement impairment charge as a
% of average core loans and advances)
0.30%
0.42%
0.44%
Leverage ratio (current)
Defaults (net of impairments) as a % of net core loans and advances
Total gearing ratio (total assets excluding intergroup loans to
total equity)
Loans and advances to customers: customer deposits
11.3x
11.4x
11.8x
74.6%
72.0%
72.5%
For queries regarding information in this document:
Investor Relations
Tel:(2711) 286 7070 / (44) 20 7597 5546
e-mail: [email protected]
Internet address: www.investec.com
Investec Bank Limited Q and A fact sheet | 3

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