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Investec Group (LSE:INVR) indicated a stable financial performance for the first half in an update released on Friday, despite facing economic uncertainties earlier in the year.
The company projected pre-provision adjusted operating profit for the half-year to fall between £520 million and £550 million, reflecting an increase of 6.7% to 12.9% compared to the same period last year.
Adjusted earnings per share were anticipated to range from 37.2p to 40.2p, showing a variation from 4.0% below to 4.0% above the previous year's figure of 38.7p. Headline earnings per share were expected to fall between 35.3p and 38.2p, indicating a potential decline of 1.4% to a growth of 3.5%, influenced by costs related to strategic initiatives and the amortization of intangible assets from the Rathbones combination.
A significant drop in basic earnings per share was projected, with estimates indicating a decline of 45% to 50% compared to the prior year's figure, attributed to one-off gains from the UK Wealth and Investment combination with Rathbones and the deconsolidation of Burstone.
The group noted that its credit loss ratio was likely to be at the higher end of its through-the-cycle range of 25 to 45 basis points, while overall credit quality remained strong.
Performance in southern Africa was expected to be robust, with adjusted operating profit forecasted to be at least 15% higher than the previous year. In contrast, the UK business, which includes the Rathbones Group, could see a decline in operating profit by 5% to 11% due to increased impairments and slower growth.
The group's return on equity (ROE) was projected to fall between 13.0% and 14.0%, aligning with its medium-term target range. Revenue growth was supported by balance sheet expansion and contributions from growth initiatives, aided by a favorable interest rate environment.
Non-interest revenue benefited from strong client acquisition and positive inflows within the southern Africa wealth and investment division. However, trading income lagged due to reduced client flows and lower risk management gains.
Funds under management in southern Africa grew by 10.7%, reaching £23.2 billion, driven by strong net inflows. Investec also highlighted the completion of the disposal of Assupol by Bud Group Holdings to Sanlam, facilitating its exit from the Bud Group.
The group confirmed that it remains on track to meet its full-year guidance for 2025 and is scheduled to release interim results on November 21. At 0821 BST, shares in Investec Group were down 2.2% at 578.5p.
