In the group’s full year results, it said operating profit its wealth and investment business rose 30.5% to £66.1m for the year on the back of better operating margins and higher average funds under management.
Investec CEO Stephen Koseff, speaking at the release of the results said: “the wealth and investment business has seen the benefit of the integration of acquisitions, good markets and very strong positioning and performance across the spectrum.”
The group’s asset management division grew operating profit 2.4% to £143.8m. According to Koseff the group’s asset management division continues to produce very strong long term investment performance, but said this had been a bit weak in the short term.
But, he remains bullish on the prospects for the business which he said had faced a few headwinds over the course of the past year.
“The minute the Fed started to talk tapering you had money moving away from emerging markets, and money that had previously been designated to emerging markets being diverted elsewhere. This had an impact because we manage a lot of money in emerging markets. But this effect seems to have subsided and you are starting to see that momentum again,” he said.
According to the group, operating margin within asset management remained stable at 34.7%.
On the wealth management side, Investec expanded its business in the UK during the year. Koseff said: “the UK business has expanded across geographies, it has been investing in infrastructure and talent and is getting into a good space.”
At a broader level, Investec said it has made progress in its efforts to simplify its business model, partly through the impending sale of its “professional finance and asset finance and leasing businesses in Australia, the sale of its trust businesses, the sale of Lease Direct Finance, and the potential sale of its Kensington business”.
It added: “The group’s core businesses have sound franchises and have continued to broaden their client base and grow organically. The asset management and wealth management businesses have invested in distribution platforms, IT and online infrastructure, and experienced portfolio fund managers to support future revenue growth. The Specialist Banking businesses have continued to focus on efficiency and balance sheet optimisation whilst managing down legacy portfolios.”
For the year, the group reported a 6% jump in operating profit to £451.8m, but said if one strips out the effects of the significant rand depreciation through the period and look at the performance in ‘home currency’ terms, operating profits rose 20% on the previous year.
