INVESTEC plans to distribute a 15 percent stake in Ninety One to its shareholders, the group said yesterday in its results for the six months to September 30.
Investec was previously the parent company of international asset management firm Ninety One, but had retained a 25 percent shareholding after the two businesses demerged last year.
“Given the group’s strong capital generation, capital optimisation strategy, and in line with previous communication that 15 percent of Ninety One is surplus to our capital requirements, the board has resolved to distribute the 15 percent holding to shareholders, while retaining an approximate 10 percent interest,” Investec said in a statement yesterday.
The distribution would be subject to regulatory, shareholder and other approvals.
Investec chief executive Fani Titi said the decision to unbundle the stake was in line with strategy to optimise the allocation of capital.
Meanwhile, as indication that the business was returning to normal after the Covid-19 pandemic, the dividend for the six months to September 30 was doubled to 11 pence (R2.32), from 5.5p at the same time in 2020, resulting in a payout ratio of 41.8 percent.
Also, the guidance for the full 2022 financial year was raised to between 48p and 53p from the range that was guided in May 2021, of 36p to 41p.
“We have worked hard to simplify and focus our business to deliver improved shareholder returns. Our performance is back to the levels seen in 2019, pre the Covid-19 pandemic, and the business is now positioned for growth,” said Titi.
In the six months, Investec’s credit impairment charges fell 84.5 percent, while the credit loss ratio fell to 7 basis points from 47bps at the end of September 2020.
Group revenue increased by 30.5 percent. Adjusted headline earnings per share rose 134.8 percent to 26.3p, supported by better market conditions, strong revenue momentum and resilient client franchises.
“Our performance reflects higher income levels and significantly lower impairment charges, partly offset by increased operating costs. The underlying client franchises showed resilience with continued momentum in client acquisition in both geographies which underpinned loan and deposit growth within banking, and net inflows in wealth management,” the group said.
The prior interim period was also negatively impacted by the general economic contraction brought on by Covid-19-related lockdowns, which affected transactional levels, net interest margins, valuations and impairments.
Wealth & Investment funds under management (FUM) increased 8.6 percent to £63 billion, underpinned by net inflows of £1.5bn, market recovery and good investment performance.
Loan books within Specialist Banking grew 7.2 percent to £28.3bn given increased activity levels and continued client acquisition in both geographies.
The cost to income ratio improved to 64 percent from 72. Strong capital, funding, and liquidity positions were maintained.
The group said the macro-economic environment was improving, but that the global recovery remained uneven.
Investec said consumer and business confidence in the group’s core markets was likely to continue to be tested by the ongoing presence of Covid-19, along with the consequences of Brexit in the UK and the slow progress in implementing economic reforms in South Africa.
BUSINESS REPORT ONLINE