Investec Group (OTCPK:ITCF.Y) Trading Update Transcript

Summary of Investec Group Trading Update (September 19, 2025) Company Overview - Company: Investec Group (OTCPK:ITCF.Y) - Period Covered: Five months ended August 31, 2025, and expected results for six months ending September 30, 2025 Key Financial Performance - Revenue Growth: Revenue supported by increased activity levels and higher average advances, alongside net inflows in the Wealth business [5] - Net Core Loans: Increased by 4.7% annualized to GBP 33 billion, driven by growth in corporate lending and private line lending [5] - Customer Deposits: Decreased by 1.9% annualized to GBP 40.8 billion, due to optimization strategy in South Africa [5][6] - Funds Under Management: Increased by 7.8% to GBP 25.2 billion, with strong inflows in discretionary funds [6] - Earnings Per Share: Expected adjusted earnings per share to be between 2% behind to circa 5% ahead of the prior period [6] - Cost to Income Ratio: Expected to be between 52% to 54% [6] - Credit Loss Ratio: Expected to be within the range of 25 to 45 basis points, indicating strong overall credit quality [7] - Return on Equity (ROE): Expected to be between 13% to 14%, within the medium-term target range of 13% to 17% [7] - Return on Tangible Equity: Expected to be between 15% to 16%, within the medium-term range of 14% to 18% [7] Strategic Initiatives - Capital Management: Share buyback program commenced, repurchasing approximately GBP 46 million [3] - Investment in Growth: Continued investment in people and technology for strategic growth despite inflationary pressures [5] - Long-term Strategy: Focus on building scale, leveraging existing client franchises, and enhancing propositions [3] Market and Economic Context - Macroeconomic Environment: The group is navigating a challenging macroeconomic backdrop while making progress on strategic objectives [3] - Interest Rates Impact: Lower average interest rates negatively impacted earnings from the investment portfolio, but fee income growth has been strong [5][28] Regional Insights - South Africa: Non-wholesale deposit growth was 8.5% annualized, while wholesale deposits declined by 12.8% annualized [6] - UK Business: Credit loss ratio expected to be at the upper end of the guided range due to the nature of the corporate mid-market business [11][13] Additional Insights - Credit Quality: Overall credit quality remains strong despite some idiosyncratic events affecting credit loss ratios [11][13] - Wealth Business Performance: Strong growth in annuity fees and discretionary assets under management, with net inflows of ZAR 9.3 billion [29] Conclusion - Outlook: The company remains optimistic about its performance and will provide more detailed guidance in November [18][22]