Investec doubled down on its full-year targets today after a surge in activity in South Africa helped offset a slump in the UK.
The FTSE 100 lender projected earnings per share to land between 41.7p to 43.3p, a three per cent to seven per cent rise from the prior year.
The growth projection was largely fueled by its South African business, where funds under management in its wealth arm increased 13.8 per cent to £30.7bn from £27bn.
The financier expects the region’s operating profit to increase 14 per cent from the prior year, where it generated £223.6m.
Core loans grew 6.3 per cent to £37bn, while customer deposits also jumped 2.8 per cent to £46bn.
UK hit by heavy spending
The UK business failed to match the boom in activity in South Africa. Investec expects operating profit to fall two per cent to six per cent behind the previous period.
Investec’s UK chief executive, Ruth Leas, said the cooling performance reflected the firm’s heavy spending to expand its UK footprint, coupled with interest rates decisions made by the Bank of England
“We’re continuing to invest in our private banking franchise, as well as our corporate mid-market franchise…and of course we have had lower average interest rates,” said Leas.
“So that overall combination has resulted in what we are estimating for the half year.”
The bank has previously unveiled plans to boost its UK private bank in a bid to increase its London presence and lift its UK market share to roughly 13 per cent, injecting £30m into the arm.
It is a key part of ambitious multi-year targets for the company set by its chief executive, Fani Titi, which run to 2030.
Despite the earnings drag, UK mortgage lending increased nine to ten per cent while client retention remained high.
The firm’s tie-up with Rathbones also delivered a lift in funds under management to £120.7bn, up from £113.6bn the prior quarter.
