Investec Interim Results Investec Interim Results For the six months ended 30 September 2009 Proviso • Please note that matters discussed in today's presentation may contain forward looking statements which are subject to various risks and uncertainties and other factors including, but not limited to: g, the further development of standards and interpretations under IFRS applicable to o past, current and future periods evolving practices with regard to the interpretation and application of standards evolving practices with regard to the interpretation and application of standards o o under IFRS domestic and global economic and business conditions o market related trends market related trends o o • A number of these factors are beyond the group’s control • These factors may cause the group’s actual future results, performance or achievements in markets in which it operates to differ from those expressed or implied achievements in markets in which it operates to differ from those expressed or implied • Any forward looking statements made are based on knowledge of the group at 19 November 2009 2
Snapshot of the p interim period 3 Improved operating environment Strong recovery in equity markets Credit markets recovering 110 100 90 90 100 80 sed to 100 ed to 100 90 70 Rebase 60 60 Reba 80 50 70 40 30 60 Sep 08 Nov 08 Jan 09 Mar 09 May 09 Jul 09 Sep 09 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 ABX 06-1 ABX 06-2 ABX 07-1 ABX 07-2 JSE FTSE ASX Since Mar-09 Since Sep-08 FTSE All Share 33% 6% JSE All Share 22% 5% Aus All Ords Aus All Ords 34% 34% 2% 2% Source: Datastream 4
Improved operating environment Weak Sterling Low interest rates 130 14 120 12 110 10 based to 100 100 8 % 90 6 6 Reb 80 4 70 2 60 60 0 0 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Rand/£ Euro/£ A$/£ US$/£ JIBAR (3m) UKINT (3m) AUSINT (3m) USINT (3m) Since Mar-09 Since Sep-08 At Sep-09 At Sep-08 Euro/£ 1.4% 13.8% UKINT 0.54% 6.30% Rand/£ 11.1% 17.9% JIBAR 7.02% 12.05% A$/£ $ 12.4% % 19.2% % AUSINT 3.35% % 7.34% % US$/£ 12.0% 10.2% USINT 0.29% 4.05% Source: Datastream 5 A solid base of recurring income supported by strong principal activity … Total operating income 900 900 773 up 6.8% Other income 800 700 600 600 Principal transactions 500 £'mn 400 N Net deal fee and d l f d 300 commission income 200 100 Recurring income Recurring income - Sep- Sep- Sep- Sep- Sep- Sep- 04 05 06 07 08 09 Recurring income as a % of 67% 59% 63% 63% 74% 61% total income 6
… together with a diversified business model … % contribution to operating profit* ( Excluding Group Services and Other Activities) 100% Property Activities 80% Investment Banking 60% Capital Markets p 40% Asset Management g 20% 20% Private Client Activities 0% Mar-00 M 00 Mar-02 M 02 Mar-04 M 04 Mar-06 M 06 M Mar-08 08 Sep-09 S 09 *Before goodwill, non-operating items, taxation and after minorities 7 Prior to 2005 the numbers are reported in terms of UK GAAP and thereafter in terms of IFRS … and operating profits* in all core geographies … Operating profit* % contribution to operating profit* 100% 180 157.6 42% 160 80% 140 125.2 125.2 120 60% 100 £'mn 86.7 74.9 50% 80 40% 58% 58% 60 60 40 20% 20 9.2 4.1 0 0% 0% Southern Africa UK & Europe Australia Sep-01 Sep-03 Sep-05 Sep-07 Sep-09 Sep-08 Sep-09 Southern Africa UK, Europe, Australia & Other *Amounts for 2008 and 2009 are shown before goodwill, non-operating items, taxation and after minorities. Prior to 2008 amounts have not been adjusted for minorities 8 Prior to 2005 the numbers are reported in terms of UK GAAP and thereafter in terms of IFRS
Resulted in a stable performance 30 Sep 30 Sep 31 Mar 2009 2008 % change 2009 Operating profit before tax*(£’000) and pre- Operating profit before tax (£ 000) and pre- 350 275 318 538 10% 652 939 impairments Operating profit before tax* (£’000) 215 979 241 758 (11%) 396 766 Attributable earnings* (£’000) Att ib t bl i * (£’000) 160 422 160 422 165 632 165 632 (3%) (3%) 269 215 269 215 Adjusted EPS* (pence) 24.0 26.3 (9%) 42.4 DPS (pence) (p ) 8.0 8.0 0% % 13.0 30 Sep 31 Mar 2009 2009 % change Customer deposits (£’bn) 18.0 14.6 24% Core loans and advances to customers 17.3 16.2 7% (£’bn) Third party assets under management (£’bn) 62.8 48.8 29% 9 *Before goodwill and non-operating items and after minorities Financial targets … ROE and EPS targets difficult to achieve in this environment � Target: >20% � ROE Dividend cover (times) Target: 1.7 – 3.5 times Sep-09 14.8% 3.0 Sep-09 2.28 Sep-08 19.3% Sep-08 3.3 0% 5% 10% 15% 20% 25% 30% 0 1 2 3 4 Target: 14-17% � � Adjusted* EPS growth Capital adequacy Limited Target: 10%> UK RPI plc Sep-09 (8.7%) 14.7% Sep-09 p 15 5% 15.5% (3.7%) 13.9% Sep-08 Sep-08 16.1% -10% -8% -6% -4% -2% 0% 2% 4% 6% 8% 10% 0% 5% 10% 15% 20% � � Cost to income Target: <65% Sep-09 56.1% Sep-08 58.0% Note: The original targets were disclosed in May 2004 and are medium to long- term targets. We aim to achieve them through varying market conditions. The term targets We aim to achieve them through varying market conditions The 40% 45% 50% 55% 60% 65% 70% 75% capital adequacy and dividend cover targets were revised in November 2008. *As determined in accordance with IFRS. Adjusted EPS is before goodwill, non-operating items and after the accrual of dividends attributable to perpetual preference shareholders 10
Balance sheet strength Strong build up of liquidity • Strong growth in cash and near cash Surplus cash and near cash balances ranging between £4.3bn and £6.8bn over the six month period £6 8bn over the six-month period 7,000 7,000 Max: £6 8 bn Max: £6.8 bn 6,500 • This represents 20% to 30% of the group’s 6,000 liability base 5,500 Ave: £5.4 bn • Continue to focus on: £'mn 5,000 o Diversifying funding sources 4,500 o Maintaining a low reliance on interbank Min: £4.3 bn wholesale funding 4,000 o Limiting concentration risk 3,500 3,000 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Total 30 Sep-09 £6.6bn Investec Limited Investec Limited £3.5bn £3.5bn Investec plc £3.1bn 12
All capital targets have been met • The group remains well capitalised and good Capital adequacy progress was made in increasing the capital base • Tier 1 ratios were achieved in the period Basel I Basel II 30 3500 3000 25 25 2500 20 2000 (£'mn) (%) 15 Capital Basel II Pillar I Basel II Pillar I Tier 1 Tier 1 1500 1500 adequacy 30 Sep-09 ratio 10 ratio 1000 Investec Limited 14.7% 11.3% 5 500 Investec Bank Limited Investec Bank Limited 15.1% 15.1% 11.3% 11.3% 0 0 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Sep-09 Investec plc 15.5% 11.0% Investec Bank plc 15.7% 11.1% Total shareholders’ equity Investec Limited capital adequacy Investec Bank (Australia) Investec Bank (Australia) 19.6% 19 6% 15 0% 15.0% Investec plc capital adequacy Limited Note: The group is on the standardised approach in terms of Basel II and as a result has higher RWA than banks applying the advanced approach to similar portfolios, thus understating capital ratios 13 Maintained low leverage ratios Leverage ratios e e age at os Sep-09 Mar-09 Sep-08 Core loans to capital ratio 5.8x 6.2x 6.6x Core loans* to customer deposits 89.5% 103.6% 104.9% Total gearing 12.1x 12.9x 13.4x Total gearing (excluding securitised assets) 11.2x 11.7x 12.3x Note: Excluding own originated assets which have been securitised 14
Impairments and defaults increased in line with guidance • The performance of the loan portfolio has Defaults and core loans declined as a result of the weaker credit 5% 5% 20 20 cycle 17.3 4% 16 • Impairments losses on loans and advances 3.9% has increased from £48.3mn to £94.3mn 3% 12 (excluding Kensington) as in line with i li ith ( l di K i ) £'bn guidance previously provided 2% 8 1.1% • Credit risk however, remains appropriately 1% 4 managed and net defaults (after collateral managed and net defaults (after collateral and impairments) are covered 100% 0% 0 Mar- Mar- Mar- Mar- Mar- Mar- Mar- Mar- Sep- 02 03 04 05 06 07 08 09 09 Net defaults (before collateral) as a % of N t d f lt (b f ll t l) % f core loans and advances Credit loss ratio Core loans 15 Operational review 16
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