Investec flags up to 29% full-year profit drop
Investec warned on Friday of an up to 29% drop in full-year profit, sending its Johannesburg-listed shares down 1.6% in early trade.
The financial services group said it expected adjusted earnings per share, which reflect profits on ordinary operations of 24-27 pence in the year to March 31, down from 33.9 pence a year earlier reflecting its spin-off of asset manager Ninety One.
CEO Fani Titi said the bank's performance was in line with guidance given during the first half and demonstrated its underlying strength.
"We are encouraged by the momentum we are seeing across our business, the continued recovery of markets and the positive developments related to COVID-19 vaccines," he added, though he added that the long-term impact of the pandemic remained uncertain.
The pandemic has hit both of Investec's major markets - South Africa and Britain, where it also has a listing - adding to tough market conditions in both.
Investec said it had been hurt in 2020 by lower interest rates, falling client activity and currency depreciations, as well as hefty costs related to hedging on its British structured deposits book which was laid out at its interim results in November, souring investors.
It has since announced plans to exit the business, but expects to continue incurring costs including another 53 million pounds in the second half of its financial year.
Adjusted operating profit for its UK specialist bank, which housed the business, would be "significantly" behind the previous year as a result, it said.
Its overall adjusted operating profit would be between 16% and 24% lower, Investec said.
It said its board would consider a final dividend. Investec was the only South African lender to declare an interim payout last year, despite guidance against such payouts from the central bank which has since been relaxed.
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