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Investec CEO Stephen Koseff. Photo: Simphiwe Mbokazi.

Against a backdrop of volatile markets and low levels of activity the third quarter of Investec's (INP,INL) 2012 financial year has proven to be challenging, the company said Friday.

Releasing its Interim Management Statement, the group said the asset management and wealth management businesses continued to see net inflows however overall assets under management pre the acquisition of Evolution Group plc declined.

The Specialist Banking businesses benefited from growth in both margin and fee income but earnings from principal activities decreased substantially.

The group said for the nine months ended December 2011, it recorded an increase in total operating income net of insurance claims and depreciation of leased assets of 4.6%, while net interest income was 7.7% ahead of the prior year.

Net fees and commissions were 16.3% ahead of the prior year and income from principal transactions was 31.3% behind the prior year.

Operating costs increased by 6.8% compared to the prior year and operating profit before goodwill, acquired intangibles, non-operating items and taxation and after non-controlling interests is 5.6% behind the prior year.

It noted that the credit loss charge as a percentage of average gross loans and advances annualised for the period amounted to 1.00% (31 March 2011: 1.27%).

Recurring income as a percentage of total operating income amounted to approximately 69%.

The group had approximately GBP9.5 billion of cash and near cash available to support its activities, it said.

Since end March 2011 - the end of the group's financial year, third party assets under management increased 1.9% to GBP90.6 billion - an increase of 8.2% on a currency neutral basis. These numbers include GBP6.9 billion acquired from the Evolution Group plc.

Customer accounts (deposits) decreased 0.7% to GBP24.3 billion - an increase of 5.6% on a currency neutral basis and core loans and advances decreased 3.2% to GBP18.2 billion - an increase of 4.7% on a currency neutral basis.

Core advances (excluding own originated securitised assets) as a percentage of customer deposits were 70.6% (31 March 2011:72.4%).

In September 2011, the Evolution Group and Investec announced that they had reached agreement on the terms of a recommended share offer, to be implemented by way of a Court sanctioned scheme of arrangement, under which it was proposed that Investec would acquire the entire issued ordinary share capital of the Evolution Group. The scheme became effective on 22 December 2011, whereupon Investec issued 53.8 million shares at a value of 326.8 pence each as consideration for the acquisition.

Investec is set to hold a pre-close briefing on 15 March 2012. - I-Net Bridge