Year End Results Presentation 21 May 2020
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: changes in the political and/or economic environment that would materially affect the Investec group ❑ changes in the economic environment caused by Covid-19, the resulting lockdowns and government programmes aimed to stimulate the economy ❑ changes in legislation or regulation impacting the Investec group’s operations or its accounting policies ❑ changes in business conditions that will have a significant impact on the Investec group’s operations ❑ changes in exchange rates and/or tax rates from the prevailing rates at 31 March 2020 ❑ changes in the structure of the markets, client demand or the competitive environment ❑ ▪ A number of these factors are beyond the Investec group’s control ▪ These factors may cause the Investec group’s actual future results, performance or achievements in markets in which it operat es to differ from those expressed or implied ▪ Any forward looking statements made are based on knowledge of the group at 20 May 2020 ▪ Unless otherwise stated, all information in this presentation has been prepared on a statutory basis 2
Agenda Overview – Fani Titi, Chief Executive Overview – Fani Titi, Joint Group Chief Executive Officer 1. 1. Financial Review – Nishlan Samujh, Group Finance Director 2. Investec post demerger – Fani Titi 3. 4. Closing and Q&A 3
“ The system delivers these events with regularity. The problem we have today is that these events are delivered so much faster.” Nassim Nicholas Taleb , “Black Swan” author, on the advent and spread of Coronavirus. 4
COVID-19 Response Our people Our clients Our communities ▪ ▪ ▪ Increased health and safety across all Priority is business continuity and we remain Global Executive Team and board members fully operational at all times donated from salaries with a portion going to the buildings including appropriate PPE and Solidarity Fund in SA screening ▪ Maintain constant contact with clients to assist with financial solutions/ restructuring advice to get ▪ Senior leaders and staff donated via salary ▪ Swiftly enabled c95% of staff across the world clients through this period deductions to community initiatives focused on: to work from home ▪ Provided COVID-19 relief to c.16k client cases in 1. Food security: Feeding hundreds of ▪ Extensive wellbeing offering providing online the UK and c.3.5k client cases in SA thousands of people across the SA, UK, support for staff in terms of physical, mental, ▪ Experienced credit function reviewing sensitive India and New York emotional, social and financial wellbeing restructurings and debt deferrals ▪ Investec Pulse conducts weekly monitoring of 2. Economic continuity: R5.6mn to Solidarity ▪ Approved for accreditation under the UK’s productivity, ability to cope and extent of Fund and continue to pay all youth interns in Coronavirus Business Interruption Loan feeling supported SA Scheme (CBILS) with an 80% government ▪ Financial support for employees where guarantee on losses that may arise on facilities of 3. Healthcare: Funding screening, PPE, required (salary advances, payment holidays, up to £5mn provided to businesses with Turnover capacity, healthcare workers and doctors debt consolidation) < £45mn 4. Education: Enabling 2,000 Promaths and ▪ Involved in the South African Future Trust 2,000 other students to learn online (SAFT) extending direct financial support to the employees of SMMEs with turnover of <R25mn and the COVID-19 Loan Scheme offered to SA clients who have an annual turnover of <R300mn Committed £3.2mn (R70mn) to COVID-19 relief for communities with 40% allocated to date Refer to our website for more information on our response to COVID-19 5
Overview 0 1 2 Difficult trading Client franchises have Strong balance sheet with environment throughout shown resilience robust capital and liquidity the year, exacerbated levels by COVID-19 in Q4 3 4 5 Increased provisioning Progress made on strategic Cautious short-term levels, continue to monitor initiatives, demerger of outlook, building for credit exposures Ninety One completed and the long term heightened cost discipline 6
Difficult trading environment throughout the year exacerbated by COVID-19 % (yoy) ▪ UK economic activity has faced both 3.0 domestic (Brexit) and global headwinds (trade, industrial slowdown) 2.5 Mean: 1.9% ▪ However COVID-19 will completely change UK GDP growth 2.0 the landscape 1.5 ▪ As at 31 March 2020, our base case 1.0 assumptions for calendar year 2020 forecast a peak to trough GDP contraction of c.9.4% 0.5 2010 2011 2012 2013 2014 2015 2017 2018 2019 ▪ % (yoy) The South African economy was already in recession by the end of 2019 on mainly 4.0 structural issues 3.0 ▪ This recession will likely carry over into Mean: 1.7% 2.0 most of 2020 given the impact of the SA GDP growth lockdowns enforced to combat COVID-19 1.0 ▪ As at 31 March 2020, our base case 0.0 assumptions for calendar year 2020 -1.0 forecast a peak to trough GDP contraction 2010 2011 2012 2013 2014 2015 2017 2018 2019 of 10.9% Source: Macrobond 7
Group results highlights ▪ Group adjusted operating profit: £609mn, 16.8% behind prior year (2019: £732mn) ▪ Adjusted earnings per share: 46.5p, 23.6% behind prior year (2019: 60.9p) ▪ Net asset value per share: 414.3p, 4.6% behind prior year (2019: 434.1p) ▪ Group return on equity (ROE): 11.0% (2019: 14.2%) ▪ Dividends, full year dividend per ordinary share: 11.0p (2019: 24.5p) ▪ No final dividend declared given regulatory guidance in South Africa and the UK ▪ Successfully distributed 73.4p of value per share via Asset Management demerger ▪ Group cost to income ratio: 68.2% (2019: 67.3%) ▪ Group credit loss ratio: 52bps (2019: 31bps) Note: Adjusted operating profit is operating profit before goodwill, acquired intangibles and strategic actions, less profit attributable to other non-controlling interests. 8
Results reflect macro backdrop, offsetting good performance from lending franchises £’mn Total group Continuing operations ▼ 16.8% ▼ 24.1% 700 Ninety One Specialist Bank ▪ Sound performance from 10 600 lending franchises ▪ Lower investment and 85 179 500 trading income Divisional ▪ Higher expected credit 34 adjusted 8 1 7 losses 400 ▪ £105mn COVID-19 impact operating profit* 609 300 Wealth & Investment performance 552 ▪ Net inflows and higher average AUM 419 200 ▪ Technology spend and regulatory levies in UK 100 ▲ 2.3% in GBP ▼ 10.9% in GBP ▼ 44.3% ▼ 10.8% ▲ 5.7% in ZAR ▲ 16.1% ▼ 8.5% in ZAR ▲ 5.8% in GBP 0 Mar-19^ Specialist Specialist Wealth Wealth Group Costs Mar-20 Mar-19 Asset Mar-20 Asset Mar-20 Continuing Banking Banking UK & Other SA Continuing Management Management operations UK & Other SA operations variance *Operating profit before goodwill, acquired intangibles and strategic actions, less profit attributable to other non-controlling interests. 9 ^Continuing operations Restated.
Progress made on strategic initiatives Continued to simplify Delivered cost savings in FY2020 and focus the business with further opportunities identified ▪ ▪ Successfully demerged Investec Asset Management business, Total operating costs from continuing operations reduced by resulting in capital uplift 7% ▪ Closure and run down of the Hong Kong direct investments ▪ Reduced operating costs in UK Specialist Bank by £96mn in business FY 2020, of which fixed operating costs reduced by £32mn (7%) ▪ Closed Click & Invest ▪ We remain committed to reducing costs with enhanced focus ▪ Sold Irish Wealth & Investment given the challenging revenue outlook ▪ Restructured the Irish Branch ▪ The net earnings impact of the strategic actions was £711.3mn gain in the current year (demerger: £806.4mn gain, Other: £95.1mn) 10
Agenda Overview – Fani Titi 1. Financial Review – Nishlan Samujh, Group Finance Director Financial Review – Nishlan Samujh, Group Finance Director 2. 2. Investec post demerger – Fani Titi 3. 4. Closing and Q&A 11
Continuing Operations results highlights Adjusted operating profit Adjusted Earnings per share Net Asset Value per share £419mn 33.9p 414.3p (2019: £552 mn) (2019: 48.7p) (2019: 434.1p) 30.4% behind prior year 4.6% behind prior year 24.1% behind prior year Credit Loss ratio Return on Equity (ROE) Cost to Income ratio 52bps 8.3% 68.2% (2019: 31bps) (2019: 12.0%) (2019: 67.3%) Note: Adjusted operating profit is operating profit before goodwill, acquired intangibles and strategic actions, less profit attributable to other non-controlling interests. Cost to income ratio for Continuing Operations includes Group costs 12
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