Results presentation p For the year ended 31 I 03 I 2011
2 The year in review y
Mixed operating environment Exchange rates Equity markets 12.0 120 +12 0% +12.0% 11 5 11.5 110 Rand/£ +5.4% 11.0 ed to 100 +0.7% 100 10.5 Rebase 10.0 90 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 1.24 80 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 1.20 1 20 JSE FTSE ASX Euro/£ 1.16 Interest rates 1.12 8 1.08 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 6 2.00 4 1.85 % % A$/£ 1.70 2 1.55 0 Mar 10 Mar-10 May 10 May-10 Jul 10 Jul-10 Sep 10 Sep-10 Nov-10 Nov 10 Jan 11 Jan-11 Mar 11 Mar-11 1.40 1 40 SAJIB (3m) UKINT (3m) AUINT (3m) USINT (3m) Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 Source: Datastream 3
Focused on reshaping the business Strong operational performance from 5 of 6 core divisions 2011 with overall results constrained by the slow recovery of non- performing loans performing loans ► Positioned the group as a specialist bank and asset manager ► Focused on realigning the business model by building our non banking revenue ► Focused on realigning the business model by building our non-banking revenue streams ► Continued globalising our Asset Management business ► Globalising the Wealth and Investment business ► Bought out the minorities of Rensburg Sheppards ► Consolidated wealth management business from Private Bank ► Consolidated wealth management business from Private Bank ► Maintained high levels of liquidity and capital in response to the fluid banking environment and intensified regulatory requirements 2012 Foundation for growth in place 4
Realigning the business model P Positioned the group as a specialist bank and asset manager iti d th i li t b k d t Capital light and fiduciary ► Build third party funds under management ► Clear differentiation of Asset markets and products Management Principal Transactions Wealth Management Specialist funds Structured Transactions Transactions Transaction Market making Capital intensive banking Loans and and proprietary and proprietary p p y deposits Advisory ► Grow loan portfolio ► Increase customer deposits p ► Price risk appropriately 5
Good progress in building capital light revenues Proprietary risk capital Proprietary risk capital Third party assets and Third party assets and 1,400 £1 150 mn advisory 1,200 £805 mn 1,000 (35% of Net interest n) total) total) (41% (41% Net fees and Net fees and income of income of 800 800 (£'m of commissions of £681 mn 600 total) £788 mn 400 ( (24% of Principal Principal 200 00 Other Other total) transactions of of - £469 mn £17 mn 2003 2004 2005 2006 2007 2008 2009 2010 2011 Third party assets and advisory Net interest income and principal transactions Net interest income and principal transactions Net interest income and principal transactions after impairments Third party asset management Net interest income and and advisory revenue principal transactions ► Lending portfolios ► Lending portfolios ► Asset management ► Asset management ► Wealth management ► Principal transactions ► Advisory services ► Structured transactions Containing costs ► Transactional banking Maintaining credit quality g q y ► Market making ► Market making services services Strictly managing risk and liquidity ► Property funds 6
Resulting in strong contribution from asset management and wealth management businesses management and wealth management businesses Contribution to group earnings 31 Mar-11 Contribution to group earnings 31 Mar-10 Asset and wealth management Asset and wealth businesses businesses management 25.3% businesses 38.6% Specialist banking Specialist banking Specialist banking b businesses i businesses 61.4% 74.7% 7
Specialist banking impacted by increase in impairments and defaults impairments and defaults Defaults and core loans ► The uncertain pace of economic recovery has slowed the improvement in the level of non- slowed the improvement in the level of non- 8% performing loans and defaults have continued 20 to increase 18.8 7% ► Credit loss charge increased from 1.16% to ► Credit loss charge increased from 1 16% to 6% 6% 1.27% 15 5% 4.66 4% 4% Impairment analysis by geography 10 £'bn 3% £'000 31 Mar-11 31 Mar-10 % change UK (112,567) (138,732) (18.9%) 2% 2% 5 Ireland (97,918) (49,598) 97.4% 1.27 Southern Africa (77,538) (70,841) 9.5% 1% Australia (30,207) (27,410) 10.2% Impairment losses on loans and 0% 0 advances advances (318 230) (318,230) (286 581) (286,581) 11 0% 11.0% Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Net defaults (before collateral) as a % of core loans Impairment losses on loans and advances in home currency and advances (lhs) Southern Africa (R'mn) (860) (863) (0.3%) Credit loss ratio (lhs) Australia (A$'mn) (49.5) (51.3) (3.5%) Net core loans (rhs) 8
Moving through the impairment cycle ► We believe we are moving through the cycle and expect to see a reduction in W b li i th h th l d t t d ti i impairments during the 2012 financial year Impairments 350 300 250 Private Banking n £'mn 200 150 Capital Markets 100 Other 50 0 2007 2008 2009 2010 2011 9
Delivered a stable group performance Mar 11 Mar-11 Mar 10 Mar-10 % Change % Change Operating profit* before tax (£’000) 0.5% 434 406 432 258 Operating profit* before tax and impairment losses 4.7% 752 636 718 839 on loans and advances (£’000) Attributable earnings* (£’000) Attributable earnings (£ 000) 5 9% 5.9% 327 897 327 897 309 710 309 710 Adjusted EPS* (pence) (4.2%) 43.2 45.1 DPS (pence) 6.3% 17.0 16.0 Net tangible asset value per share (pence) 6.1% 343.8 324.1 Total shareholders’ equity (£’bn) 20.3% 4.0 3.3 Core loans and advances to customers (£’bn) C l d d t t (£’b ) 4 8% 4.8% 18 8 18.8 17 9 17.9 *Before goodwill, acquired intangibles, non-operating items and after non-controlling interests 10
Supported by core earnings drivers Third party assets under management Customer accounts (deposits) and loans Up 20% 100 30 Up 11% 88.9 24.4 25 80 20 18.8 60 £'bn £’bn 15 £ £ 40 10 20 20 5 0 0 2005 2006 2007 2008 2009 2010 2011 2005 2006 2007 2008 2009 2010 2011 Net core loans Customer deposits Other Wealth and Investment* Asset Management *Incorporates funds under advice as previously reported within the Private Bank. Historic numbers have been restated accordingly. 11
And a sound capital and liquidity position Capital position Cash and near cash balances Capital adequacy ratio 11,000 Investec Bank 17.6% (Australia) Limited 19.2% 16.8% Investec plc 15.9% 10,000 Average 15.9% Investec Limited 15.6% 0% 5% 10% 15% 20% 25% £'mn 9,000 31-Mar-11 31-Mar-10 Tier 1 ratio 14 7% 14.7% Investec Bank I t B k (Australia) Limited 16.6% Total 31 Mar-11 £9.3bn 8,000 11.6% Investec plc Investec Limited £4.8 bn 11.3% Investec plc £4.5 bn 11.9% Investec Limited 12.1% 7,000 Mar 10 Mar-10 May 10 May-10 Jul 10 Jul-10 Sep-10 Sep 10 Nov-10 Nov 10 Jan-11 Jan 11 Mar-11 Mar 11 0% 0% 5% 5% 10% 10% 15% 15% 20% 20% 31-Mar-11 31-Mar-10 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 12 capital ratios
Financial Targets ROE and EPS targets difficult to achieve in this environment g X 20%) Mar-11 Mar-11 mes) end 11.2% 2.5x 1.7 – 3.5 tim er cove E ROE (Target: > Divide (Target: Mar-10 Mar-10 13.5% 2.8x X * EPS Mar-11 Mar-11 -17% RPI) Ltd: 15.9% acy ( (4.2%) ) al th 10%> UK R Capita Plc: 16.8% Plc: 16 8% Adjusted* adequa (Target: 14- growt (Target: Mar-10 Mar-10 Ltd: 15.6% 6.4% Plc: 15.9% ( 61.7% come Mar-11 5%) 61 7% (Target: <65 Cost to inc Note: The original targets were disclosed in May 2004 and are medium to Mar-10 long-term targets. We aim to achieve them through varying market 57.8% conditions. The capital adequacy and dividend cover targets were revised in November 2008 November 2008. ( *As determined in accordance with IFRS. Adjusted EPS is before goodwill, non-operating items , acquired intangibles and after the accrual of dividends attributable to perpetual preference 13 shareholders
14 Operational review p
Divisional performance Operating profit* by business for 31 Mar-11 Asset Management g 52 6% 52.6% Wealth and Investment 56.2% Property Activities 42.5% Private Banking >100% Investment Banking 62.1% Capital Markets 35.1% • Before goodwill, acquired intangibles and before taxation but after non-controlling interests 15
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