Investec Group H2 2026 Earnings Report

Investec Group EPS Results

• Actual EPS: GBX 79.10
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Investec Group Revenue Results

• Actual Revenue: $1.34 billion
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Investec Group Announcement Details

• Quarter: H2 2026
• Date: 5/21/2026
• Time: Before Market Opens
• Conference Call Date: Thursday, May 21, 2026
• Conference Call Time: 4:00AM ET

Investec Group (LON:INVP) engages in the provision of various financial products and services in South Africa, the United Kingdom, and internationally. The company provides private banking services; wealth services, including wealth and portfolio management, stockbroking, and offshore and retirement investment, and intergenerational wealth solutions; savings accounts; personal and property financing, and finance for practice; and insurance solutions covering severe illness, disability, life, mortgage and income protection, and business overloads. It also offers business banking solutions, such as trade and debtor, asset and leverage, structured property, technology asset, supply chain, and medical practice financing services, as well as financing for corporate and private equity firms; transaction banking, private capital, and forex and risk management solutions; foreign exchange services; and provides instant access and call, notice, and fixed-term deposit accounts, as well as money market services and equity structured products. In addition, the company is involved in the advisory; treasury and risk management for foreign exchange, commodities, interest rates, liquidity management, and equity structuring; fixed-income instruments; execution and custody solutions for institutions, hedge funds, corporates, and intermediaries; securities lending; and clearing services. Investec Group was founded in 1974 and is based in Sandton, South Africa.

Investec Group H2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Adjusted EPS rose 4.8% despite a difficult macro backdrop, supported by double-digit growth in funds under management and high-teen growth in loans and deposits.
• Positive Sentiment: Revenue momentum was strong, with non-interest income up 13.6% and adjusted operating profit increasing 3.4% to GBP 951 million, while the credit loss ratio improved to 36 basis points.
• Neutral Sentiment: Costs remain elevated due to heavy investment; the cost-to-income ratio was 52.9% and management said much of the GBP 282 million platform investment will weigh on results until revenues start contributing more meaningfully from FY2028.
• Positive Sentiment: Capital and shareholder returns stayed solid, with tangible net asset value up 9.2%, the full-year dividend raised 5.5% to GBP 0.385, and the planned share buyback completed.
• Neutral Sentiment: Management reiterated long-term targets for ROE of 16% and ROTE of 18% by FY2030, while guiding near-term ROE around 13%-14% and noting more uncertainty around interest rates and the U.K. operating environment.

Presentation

[Fani Titi, CEO at Investec Group]

Good morning. It's our pleasure to welcome you to this results presentation. We're coming to you today from our London offices, and we're really looking forward to presenting our business to you. Just as I start, it is clear that we are operating in a very challenged environment. Geopolitics has dominated markets for quite some time, and we also know that we are in a period where there is substantial change that is occasioned by artificial intelligence. We see great volatility, and yet our business has been able to produce resilient results. I'm really grateful to my colleagues for the work that they have done over the last period. In times of volatility, it is important that we hold high levels of capital and high levels of liquidity. Liquidity may be expensive, but it is important that we continue to be conservative in our positioning.

[Fani Titi, CEO at Investec Group]

This enables us firstly to continue to support our clients, also to reinvest in the business. As indicated from last year, we are in a heightened investment period, choosing to have faith in the future by investing today for a larger, better business for our clients. We've been making steady progress on our investment program, later today we will give you a peek into our private clients business. Importantly, we also will give you a brief update on our corporate mid-market business and the progress we have made since we made the announcement last year. We look forward to do that in the second half of the day.

[Fani Titi, CEO at Investec Group]

As we indicated in our announcement, we're very confident that from 2028, the investment program will begin to show very positive results, and that will result in an inflection in our growth and an inflection in our returns to shareholders. As we announced last year and the year before, we remain committed to reaching ROEs of 16% by financial year 2030 and 18% ROTE by that time. Importantly, these returns are a consequence of what we do for our clients. It is really important for us in the business not to lose sight of what we mean to our clients, how we serve them, how we support them through very difficult times, and how we continue to be their trusted partner throughout their life cycles. Turning to the results.

[Fani Titi, CEO at Investec Group]

We see adjusted earnings per share increasing by 4.8%, as I said, in a very challenged environment. We have seen, if you look at key drivers of performance, a double-digit growth in funds under management. That really is pleasing in an environment that is so volatile and quite tough. We also see a high teens increase in loans and advances and, similarly, a high teens increase in deposits. That tells us that our clients continue to trust us and continue to see us as a preferred provider to them. If you look at the third block in terms of our net asset value, that has increased over the prior year by 8.3%. That means we're generating substantial capital that allows us, as I said earlier, to reinvest in our business, but also to reward the providers of capital.

[Fani Titi, CEO at Investec Group]

Looking at the last graphic on this chart, we see that return on equity is at 13.6%. If you look at that graph, it looks flat, but I have to remind you that in September 2023, we concluded a combination of our IW&I business with Rathbones, and that increased our capital base. The return that you see there on a like-for-like basis is 1.2% higher compared to the 2023 and 2024 number that you see there. Steady progress in delivery of returns to our shareholders. Nishlan will unpack the numbers much more a little later. Just a number of comments on this slide. We see our cost-to-income ratio being at 52.9%, which is in the middle of our 52%-54% guided range. Cost discipline continues.

[Fani Titi, CEO at Investec Group]

Although I must point out that because we're making significant investments and we are capitalizing a very small portion of that investment, clearly there is an impact on our profitability. As I said earlier, we are focused on the future, we will take the pain in the short term. We see our credit loss ratio improving slightly from 38 basis points to 36 basis points. Credit quality continues to be good. Clearly, interest rates have not come down to the extent we had expected. If we do get to that period, which at the moment looks a bit far given the impact of the closure of the Strait of Hormuz and the war in the Middle East, inflation may be higher for longer. We may not see the expected reduction in interest rates, but very pleased with the credit loss ratio and asset quality in general.

[Fani Titi, CEO at Investec Group]

If you look at our tangible net asset value at GBP 5.531, that is an increase of 9.2% relative to the prior year. Very happy with the performance of the business in that regard. The board declared a final dividend that takes our total dividend for the year to GBP 0.385, representing an increase of 5.5% over the prior period. We are also pleased that we've completed the share buyback that we announced at this time last year, that we would return to our shareholders about GBP 110 million or ZAR 2.5 billion in terms of the buyback. Really pleased that has been completed. We always manage our capital dynamically. The first call is to reinvest in the business. To the extent that we do not have enough investment, we would then return capital and special dividends.

[Fani Titi, CEO at Investec Group]

Our dividend policy remains unchanged, so we continue to be quite predictable in terms of returning capital to our shareholders. We also have indicated that we remain open to potential opportunities, particularly in the wealth space, where we would like to continue to make inroads and to increase the share of our capital light revenues. Later today, we will talk about our private client business, as I've said, and you will see what plans we have to boost the revenues that come from that segment of our client franchises. Moving along. While we obviously pursue profits as we do, and we do so in service of our clients, we also are very mindful of our responsibility to make sure that we are a positive contributor both to society and that we also do make sure that we reduce our impact on the environment.

[Fani Titi, CEO at Investec Group]

We've continued to meet our fossil fuel requirements and commitments. We also are driving quite hard throughout the businesses our targets and activities related to sustainable and transition finance. We last year announced a target of GBP 18 billion or so. We were able to achieve our first-year target of over GBP 3 billion. We continue to do a lot of work in helping our clients, firstly, to understand what is required in terms of transition and climate, and obviously then advocating and helping them to have their own plans. As we continue to report on our Scope 3 emissions, this is quite important. The advocacy, helping our clients and making them really come along the journey, as it were, over time. We continue to be very pleased with our progress towards our commitments to net zero by 2050.

[Fani Titi, CEO at Investec Group]

On that note, I'm going to ask Nishlan to go a little deeper into the numbers. Nish.

[Nishlan Samujh, Group CFO at Investec Group]

Thanks, Fani. It's always a privilege to stand up in front of you. If I get into the numbers, I think just a little bit on the context. The macro economic environment, actually in this period that we're reporting, was improving from a year-over-year perspective. We've seen GDP growth improvement in both markets that we operate in and, in fact, across the geographies that we do. You do see an outlook there, which seems to indicate that there might be a bit of tempering, and from a South African perspective, possibly higher achievement. However, that's at risk. I think if we look at the impacts that have come through in the first quarter, and to some extent, the fact that inflation and the impact of inflation is still in the system and the constraints of supply are still in the system.

[Nishlan Samujh, Group CFO at Investec Group]

I think at the end of the day, let's hope we can get there. From an interest rate perspective, again, we were in this period in a reducing interest rate cycle, and we've seen average interest rates drop over the period from South Africa from about 11.5% to 10.5%, and from a PLC perspective, from 495 to 404. To some extent we will continue to see the drop-off as that averaging effect comes out of the system. However, the outlook for interest rates is definitely changing. To an extent, our economic outlook was for interest rates to actually reduce by about 50-75 basis points over this financial year. The reality is we see these rates remaining at least steady for most of this financial year with some risk to the extent that you may see some lift up depending on inflation outlook.

[Nishlan Samujh, Group CFO at Investec Group]

From a markets perspective, we do report in sterling, and the contribution from the South African balance sheet is stronger in this period given the fact that the closing exchange rate has actually improved by just over four, well, close to 5%. Interestingly enough, the average exchange rate for the period is actually identical year-on-year. There's very little income statement noise. Similarly, from markets perspective, if you look at this chart, we'd probably think the world is pretty rosy out there because markets have improved quite strongly. Actually, on April 25, we did see quite a sharp drop-off, and to some extent that influenced AUM as well as fees in the first quarter of this financial year, but quite a sharp recovery as we looked forward.

[Nishlan Samujh, Group CFO at Investec Group]

I think as we get into March, markets have reacted to the war, have reacted to some of the constraints at play, but not significantly overall. That brings us to the drivers, I think I'm quite pleased to report. Growth of 15.4% or 10.5% in neutral currency of FUM with very strong net inflows. We also did have an acquisition in this period bolstering our activity in Switzerland, which has added just over GBP 300 million of AUM, and net inflows of around about ZAR 23 billion into our discretionary portfolio in South Africa. Similarly, we've seen core loans grow by 9.6%, and in fact, in our private client portfolios in both South Africa and in the U.K., we saw growth of over 10% in terms of lending activity.

[Nishlan Samujh, Group CFO at Investec Group]

Not all of that is beneficial to the same extent to the bottom line, because in a highly competitive environment, margins continue to be under pressure. If we look at the group performance, the blank page is so that I can introduce an income statement in a way that we can just follow the dots, okay? Bear with me. At the very bottom, we had adjusted operating profit growing by 3.4% in the period, from GBP 920 million to GBP 951 million, with total revenue growing by 4.2% over the period. Net interest income reduced by 1.6%, and for our business, lower interest rates results in lower earnings for our endowment capital. We have very little impact on structural hedges, but that has had some impact in terms of protecting margin from a U.K. perspective.

[Nishlan Samujh, Group CFO at Investec Group]

We continue to improve the cost of money and the cost of deposits by continuing to focus on the growth of our retail deposit base, as well as the strong growth in our loan books, which has helped to effectively neutralize the impact of low interest rates. Non-interest income grew strongly over the period, growing by 13.6%, supported across the business by increased activity with our clients, by realizations of some of our exposures in a positive manner, and at the end of the day, really driven by core activity driving fees across the business. Our expected credit loss, as Fani had indicated, remained at about 36 basis points. It's in fact fairly comparable year-on-year. To some extent, we had lower recoveries, and therefore, that does mask the fact that there was actually a better improvement in the overall experience in terms of credit loss ratio.

[Nishlan Samujh, Group CFO at Investec Group]

You would see from an asset quality perspective, pretty much comparable year-on-year. Operating costs did increase by 4.7%, and in fact, fixed costs are up over inflation in both geographies. I'll unpack some of the investment activity that's going through the income statement as we look forward. Cost-to-income ratio at 52.9%, again, within the 52%-54% guidance that we have provided. If we get into some of the aspects, if I look at, in particular, IT spend, that remains at about 20% of our overall cost base, with total expenditure in this period of GBP 246 million. What I will draw to your attention is the bar chart on the right-hand side, where you see within this financial year, we actually spent around about 50% of that on areas of growth and enhancing our platforms.

[Nishlan Samujh, Group CFO at Investec Group]

That includes implementation of new age technology into the organization, as well as modernization of our platforms. Some of those are still in play, but we do have delivery that comes online within the next year and the following financial year, which is going to bring significant change. I think, like all of us did see with Mythos coming out three weeks ago, we are not in a static world. AI continues to develop at a pace and continues to have an influence. In fact, if any of you have picked up our analyst booklet, that booklet was reviewed by one of our agents. If you pick up an error, please ask the computer, okay? If you look at our organization, we have 7,777 permanent employees in the organization, but we also have 800 agents that are now running deeply into the organization.

[Nishlan Samujh, Group CFO at Investec Group]

To some extent, we are starting to see benefit, but it is still early to measure where that leads to. I think our commitment to you is that we see ourselves continuing to operate within our cost-to-income ratios of 52-54. On the flip side, there is a cost to implementing technology, and from our organization perspective, we will continue to stay as close as possible to development out there. I think from a cyber perspective, we remain highly vigilant. We are close to new age development and have access in the right places, which we will continue to develop. Our responsibility is also to make sure that we have the right ways to deploy. At the end of the day, you are going to need to be able to check and understand what has been deployed.

[Nishlan Samujh, Group CFO at Investec Group]

It's not just easy accepting code because it's been written by a machine. You have the responsibility to make sure that that code is actually deployed correctly. On the very bottom right-hand side, our cloud modernization, when we first start speaking to you guys, that was at about 8%. Last year, we reported it at 48%, and this year we're at 58%, and we expect that to continue to increase dramatically. Why that is fundamental is because we shift into, again, the New Age world, where, at the end of the day, we leverage the capability that is out there rather than simply sitting with the capability being developed internally. All of this is done with protecting our balance sheet. To date, we have capitalized GBP 20.5 million of software, relative to a significant balance sheet that remains insignificant overall.

[Nishlan Samujh, Group CFO at Investec Group]

In fact, in the next sheet, you will see that since 2025 to 2028, we're actually deploying around about GBP 282 million in investing in our platforms. This will include capability that humans bring into play as well as software capability, but that influences our mid-market strategy, it influences our private client strategies, as well as new platforms that we're bringing into play. Some of the technology, as we've seen on the deployment of our new finance platforms and the built-in capability that is coming from our service providers is hell of exciting because we can see the transformation. In some places, some of our research teams tell us that implementations that took months are now being measured in days and weeks because of what's been deployed.

[Nishlan Samujh, Group CFO at Investec Group]

Part of what we've got to do is to make sure that we drive it deeply into the organization, and that's really where the effort is right now. This investment is significant. It's GBP 282 million, and for South Africans, that's ZAR 6.3 billion. If you look at this chart, you will see that the majority of that cost on an annual basis is expensed and carried in our income statement with a small element that is capitalized as we see it come through. The majority of this on early stage is actually operating on a cost-to-income ratio of greater than 100%. When we get to a later stage, this will bring in and come into our 52%-54% as revenue starts kicking in, and we see that really happening from FY 2028. If I get into our divisional reviews.

[Nishlan Samujh, Group CFO at Investec Group]

From a U.K. perspective, overall operating profit increased by 1.3% to 462.7%. The contribution from Wealth and Investments, so that's our share of Rathbones' earnings, actually grew by 17%. In the year to December, Rathbones reported a growth in earnings of just over 4%, and some of that differential is that we're actually accruing at 43% rather than 41.25%, given the level of Treasury stock that is held within that particular business. Our banking business reported just over GBP 400 million or close to GBP 402 million from GBP 410 million, absorbing lower interest rates, and greater activity countering that. Group Investments is really our return on our investment in 91, which sits at about 9.2%, following their combination activity with Sanlam, and that's really dividend flow that comes in, giving us a return on equity of about 18% on that investment. Group costs we continue to manage tightly.

[Nishlan Samujh, Group CFO at Investec Group]

Looking at the mix of earnings, I think I've covered this in some detail. Some weakness in NII, really absorbing lower interest and a highly competitive market offset by book growth and strong fee generation and other non-interest revenue growth in the period. The cost-income ratio at 54%, again, is influenced by some of those investments that I've indicated that has been charged through the income statement. Cost income is a function of revenue and costs, and I've unpacked some of that detail. If we look at impairments, again, the overall credit loss ratio improving from 60 basis points to 57 basis points, but still at the high end of our guided credit loss ratio.

[Nishlan Samujh, Group CFO at Investec Group]

With interest rates having come down to some extent, and us seeing that it may plateau at these levels at this stage, we don't necessarily see a letup in this area in the short term. Our overall guided levels we still remain pretty comfortable with. I think if we look at the staging and the quality of the book, there is nothing to call out. We see no deteriorating trends in any of our portfolios. Obviously, we will continue to pursue recoveries where we can. At the end of the day, the trending between stage one and Stage 3, we remain pretty comfortable with. Wealth and investment from a U.K. perspective is purely a story of Rathbones, and I think they've provided a quarterly update to the end of March, reporting AUM of GBP 113.6 billion.

[Nishlan Samujh, Group CFO at Investec Group]

Rathbones remains committed to enhancing their operating margin to 30%, having reported a margin in total for the period of 25.2%, closer to 20% towards the end of the year. Their view is that they anticipate getting to a 30% margin by the end of the quarter of their financial year ended December 31, 2026. I think there's been strong implementation of combining these businesses. There's a lot of complexity in bringing together these business platforms. At the end of the day, delivering GBP 76 million of achieved synergies is well ahead of what was communicated at the time of the execution of the transaction. Shifting to South Africa, operating profit increased by 5.2%, with our wealth and investment business generating an 8.2% growth in operating profit. The banking business 6%. Group investments will continue to reduce.

[Nishlan Samujh, Group CFO at Investec Group]

It may remain volatile because there are some elements that are held at fair value, but we continue to realize these portfolios for value, and therefore, that line will continue to become less relevant. Group costs are up in the period, but as you would see from a combined group perspective, well managed. Looking at the split of earnings, in South Africa, we did see NII grow, and that's notwithstanding lower interest rates. Obviously, the base is very different from a U.K. and a South African perspective. Growing our retail deposit base and enhancing our margin through the cost of funding, noting that our business and commercial banking element still has very little influence in the overall cost of money in both jurisdictions. Again, NII up by 11.3% in the period, strongly supported by growth in fees.

[Nishlan Samujh, Group CFO at Investec Group]

The overall cost-to-income ratio for the specialist bank at 48.6%, I think, is a strong base, and the costs are well managed across the business. I think across both South Africa and the U.K., we saw headcount increase by 2.8%, but that has been very specifically focused on areas of growth. We look at the credit loss ratio in South Africa, it's 14 basis points. Last year it was 15 basis points. Again, there's nothing much to call out in terms of changes to the book and behavior of the overall book itself. Obviously, in both South Africa and the U.K., to the extent that we reached the end of March, some of the economic outlook did worsen.

[Nishlan Samujh, Group CFO at Investec Group]

To an extent, we picked up about GBP 9 million of impairments across South Africa and U.K. for the change that we had to absorb given the conflict and the constraint environment. Looking at wealth and investment, I think Hubert is sitting here and smiling because these numbers are strong. AUM or FAM growing by 9.8% to GBP 609.6 billion. This business did re-platform its underlying platform and has implemented new systems with significant capability for internationally active clients. All of that had gone live in April and to a great extent has been absolutely successful. Operating margin at 29.6%. Given the nature of the business, I think that is hell of a strong. That brings us to the overall picture for the group. I'm not going to repeat the numbers. I think we've got a lot of the detail across.

[Nishlan Samujh, Group CFO at Investec Group]

Our returns on equity achieved in the period. I think it's worth noting that that return on equity is also absorbing growth in capital that had to be deployed in the period. This is in particular for Chris Steward because he did ask me to please explain how does 3.5% result in 4.7% growth in adjusted earnings. There's a couple of other things that move other than the profitability. Number one is the cost of additional capital instruments, our AT1 and perpetual preference shares. In fact, in this period, that cost reduced by 6.9% as we had some pre-issued instruments, the older instruments falling off over the period, and some of that double count is now out of the system. We also managed to issue instruments at better pricing in this period.

[Nishlan Samujh, Group CFO at Investec Group]

Tax has obviously followed profitability, the impact of buybacks is to reduce revenue as we lose the interest on that capital. The ultimate benefit coming through with lower weighted average number of shares in issue, which closed at 850.3 million shares. In fact, if we fast-forward to the next year, that full weighting should take that number on an equalized basis down to about 840 million shares. I've spoken about our return on equity and where we are right now. This sheet also gives you some idea of where the capital is deployed across the group, noting that from a U.K. perspective, a large portion is deployed in our investment in Rathbones, and therefore the differential between tangible and intangible.

[Nishlan Samujh, Group CFO at Investec Group]

A recon of our net asset value will indicate a period in which it's really driven by profitability, net of distributions, including buybacks that were executed, as well as a stronger Rand, to some extent positively contributing. The difference between net asset value and tangible net asset value is really the goodwill and intangibles that arises on our investment in the wealth business. In fact, if I strip that out, the tangible net asset value is actually around about GBP 625 million. Looking at capital and liquidity, we remain fairly defensive from a balance sheet perspective and will continue to do so. You see high levels of cash and near cash. Overall, CET1 ratios are strong at 13% from a U.K. perspective. To some extent, you see South Africa dropping from 14.8 to 13.6. That's absolutely expected.

[Nishlan Samujh, Group CFO at Investec Group]

The drivers for that is, to some extent the buyback has been skewed to South Africa, as well as the fact that a capital floor has now come into play, which means that when we calculate risk-weighted assets, we are actually calculating and carrying capital at a higher level because there's a capital floor which in our book limits some of the benefit of a much higher collateralized and lower risk book itself. That will introduce another shock absorber and another buffer into the capital ratio, specifically pointed at credit risk-weighted assets. Mr. Titi, it's over to you.

[Fani Titi, CEO at Investec Group]

Thank you, Nish.

[Nishlan Samujh, Group CFO at Investec Group]

Yes.

[Fani Titi, CEO at Investec Group]

I think Nish gave us a really good feel of how the numbers come together over this period. I'm now going to look ahead a little bit, and as I do so, let me just say that our client franchises are very defensive within an environment that is very volatile. We have private clients that are generally more resilient than normal retail clients. In bad times, like the times we're in, where uncertainty is high, volatility can be unnerving, these clients are durable. Whether you talk about our wealth clients, you talk about our private banking clients, and obviously we do serve corporate clients that have a level of resilience as well. This gives us the confidence that over varying environments and economic cycles, our business model should remain resilient.

[Fani Titi, CEO at Investec Group]

We also have very deep client relationships that help us in times of difficulty, that we can be close to our clients, we can support them, help them through these times. They continue to lean on us quite heavily because our view is that of being a long-term partner to our clients. We are less transactional. We are more relationship based in the long term. As I said, we are also making investments that will support our ability to expand our client ecosystems and client franchises, do more for our clients, and as a consequence, get more from them, but in a win-win situation. While the environment looks tight, we remain comfortable that our model is resilient in the long term. That's why we are happy to again commit and tell you that we are on track to reaching our 2030 targets.

[Fani Titi, CEO at Investec Group]

Nishlan gave you a sense of the quantum of the investments we have been making. We are pleased that we are now getting this year, this financial year, to the peak of that investment cycle. He also indicated that we expense a large portion of those investments. A combination of a peaking of investment and the starting of revenues coming through makes a big difference for us. In 2028, we indicate that our corporate mid-market proposition in South Africa should meaningfully impact on our earnings. We do see an inflection point in our returns from 2028 and the other investments in the U.K., both in corporate mid-market and private client, and the expanded offering in private clients in South Africa should lead to a much more enhanced set of returns for us in 2030.

[Fani Titi, CEO at Investec Group]

Because 2030 is a bit far, we thought to give the market a sense of what we think the path towards 2030 is. That's why we have given you a midterm report about our expectations in 2028. Again, as a consequence of the success of the investment we have made. In the afternoon, we will give you a bit more color on the delta that we expect from our private clients businesses. Last year, we gave you a sense of the delta in profits and returns that we expect from our corporate mid-market business. In the immediate term, volatility is high, in particular in the U.K., where you also have a political.

[Fani Titi, CEO at Investec Group]

While we have seen our clients do more, for instance, in the last quarter of the year, the first quarter of the calendar year, we were participant alongside our clients in some of the larger capital raises in the U.K. The environment is such that decisions are now being delayed a bit because there is a level of volatility. Who comes in as Prime Minister and when do they come in? What type of policies will they have? Short term, a bit more uncertain in the U.K. We're guiding for next year that we expect ROE of between 13% and 14%, largely in line with where we are this year. From 2028, 13.8%-14.2%, picking up to our long-term outlook. We're also guiding that our South African business will continue to be at the top end of its performance range.

[Fani Titi, CEO at Investec Group]

Obviously, the bank continues to perform well there, and you saw the strong numbers from our wealth and investment business. We are getting returns at the top end of the market if you look at South African operations. Again, this underlines the fact that our clients are resilient. They continue to be opportunity focused even in tough markets. It really is important to choose your clients carefully because if you get that right and you can get the service model right and the relationships are long-term, you are likely to do better in the long term. In the U.K., given the fact that the short term has a higher level of uncertainty, Nish showed you the retention of capital within our U.K. business. As we said, we continue to invest. We see returns at the lower end through the cycle range of 13%-17%.

[Fani Titi, CEO at Investec Group]

Again there, we are quite comfortable and confident that the investments we are making will bear fruit. Nishlan indicated that we're comfortable with the asset quality of our business. As we look forward, we see the credit loss ratio being within the target range that we have indicated, 25-45 basis points. We came in at the center of that at 36 basis points this year. Asset quality, as I say, remains particularly positive. As we look out in terms of our businesses, we have people that are quite passionate about our clients, a commitment to those clients, and we can only be thankful for the quality of clients we have and for the support that they have given us. The markets are competitive, particularly in low growth scenarios, the fight for clients is quite fierce.

[Fani Titi, CEO at Investec Group]

That we have been able to continue to depend on the custom of our clients is really particularly pleasing. As we look forward, our business remains focused. We do fewer things for the people that we have chosen to work for in terms of our client pools. Our business continues to enhance scale, and with scale comes a level of efficiency, and we remain particularly relevant to our clients. If we are not relevant to clients, we generally do pack our bags because we are really not adding much to them. We don't want to be a price taker as such. We want to be a value-adding partner to our client and to be rewarded accordingly for the value that we add. Scale and relevance are important. Strongly capitalized, as Nish indicated.

[Fani Titi, CEO at Investec Group]

Despite capital floors reducing a little bit our capital levels in South Africa, liquidity remains high. These are uncertain times, we have to be conservatively capitalized and our liquidity has to be conservative as well. We generate strong capital, we are able to reinvest in the business, we are able to continue to reward our shareholders with steady dividends in terms of our dividend policy. Where we have excess capital, we do return that capital to our shareholders as such. The opportunities for growth are significant. Ours is of well-defined opportunities on which we are executing. I've given you a sense of the progress we're making in South Africa. I've given you a sense that we are hiring in the U.K. for our corporate mid-market.

[Fani Titi, CEO at Investec Group]

This afternoon we'll give you, or later this morning, we'll give you a sense of the scale of the opportunity, the credibility of our ability to deliver into those opportunities. We look forward with confidence, as I said earlier today, we are dedicated to making sure that we deliver enduring worth to our clients, to our colleagues inside of our business. If our colleagues are happy and looked after internally, they are in a much better position to continue to support our clients. We are a positive contributor to society where we do operate. I live in South Africa, as most people will know, when I'm here and Ruth takes us through a lot of the work that we do in our communities, we are filled with pride that we are a positive contributor to society.

[Fani Titi, CEO at Investec Group]

We talked about our sustainability targets, and we continue to be a responsible corporate citizen and making sure that the endowment we have in our planet, we can hand over to the next generations, and we have not been a negative impactor to those. At this juncture, we will go into questions. I don't even remember how we go into. We start in the room. Thank you. The order is always important. Any questions from inside this room? Okay, no questions. I'm sure Stephen Koseff is listening in from Sydney. He says if you don't get questions, just move on. I will move on to Johannesburg. I've got Donald with a big smile. Danny? We have an echo. If we could fix the echo, please.

[Danny Emersleben, Director of Private Credit Management at Investec Group]

Morning, Fani. No questions in the room, but we do have a couple of questions online.

[Fani Titi, CEO at Investec Group]

Thank you.

[Danny Emersleben, Director of Private Credit Management at Investec Group]

The first question is from Siphelele Mdudu from Matrix Fund Managers. Well done on a strong, solid set of results. Credit losses in South Africa remain exceptionally low. To what extent is that driven by the quality of the book versus a deliberately conservative risk culture? Put differently, is there a risk that the group is leaving growth and profitability on the table?

[Fani Titi, CEO at Investec Group]

We do get this question from time to time. As I said, we choose the client pools we serve quite carefully. That is what gives us the resilience that we have reported. Obviously, as we go forward, we have indicated that we will go into some segments that are likely to push that credit loss ratio up. In the business and commercial banking sector in South Africa, we would expect that we would have a credit loss ratio that is higher than the private banking and the CIB private clients and CIB credit loss ratio. We will be taking more risk, but again, we will choose our clients carefully there.

[Fani Titi, CEO at Investec Group]

I think we did indicate that the sweet spot will be at the upper end of the business and commercial banking market, probably between ZAR 100 million of revenue to ZAR 300 million revenue, even though the overall revenue qualifier starts lower at ZAR 30 million. Choice of clients, how we serve them, do we understand their needs carefully and do we structure as we do? We are conservative by nature, so I understand the question. We will be taking more risk as we build our ecosystem a lot wider. The same can be said about the U.K. We have a mid-market corporate positioning in the U.K., so our credit loss ratio is higher. Our through the cycle target here is 35%-55% to give you an indication of the nature of client that we target in the corporate mid-market, and we're comfortable with that.

[Fani Titi, CEO at Investec Group]

As indicated, we will be investing much deeper into the corporate banking part of that business. In the U.K., our credit loss experience in the private client space is next to nothing really because, again, that is the type of client that we service there. Comfortable with asset quality, comfortable with the nature of clients we serve, but also committed to investing further. We will see some increase in the credit loss ratio, but I do not expect that to be substantially worse than where we are today, given the choice of client. Appreciate the positive comment from, was it Siphelele?

[Danny Emersleben, Director of Private Credit Management at Investec Group]

Thanks, Fani. The next question is from Harry Botha of Bank of America. What are your expectations for loan growth in FY 2027 in both S.A. and the U.K.?

[Fani Titi, CEO at Investec Group]

Look, we showed you loan growth upwards of 5%. I think in neutral currency, around 6%, 7% or so percent. As Nishlan indicated, in the U.K. in the short term, the environment is constrained. Our people are quite excited about the challenge to continue to see significant loan growth. Ruth and the team were talking last evening about the ambition that they have for loan growth. We continue to see that level of loan growth. The environment in the short term, as I said, is quite constrained. In South Africa, we've seen higher loan growth rates. As Nishlan indicated, the environment improved. We are now at a point where commentaries that interest rates may rise given the geopolitical situation, in particular, the impact of oil prices on economies.

[Fani Titi, CEO at Investec Group]

Even in that environment, we will still see good loan growth, but I don't want to commit to numbers when there is, in the short term, such a significant level of uncertainty. Our people are positive people, and we have taken that approach into financial year 2027.

[Danny Emersleben, Director of Private Credit Management at Investec Group]

The next question is from Sharada Patel of Citi. What specifically drove an increase in Stage 2 and three ratios in the U.K. corporate lending book? What trends are you seeing in the U.K.?

[Fani Titi, CEO at Investec Group]

Thank you. I was just about to call Nishlan. Now I'm going to call Ruth to come to the fore. Ruth, do you want to come through? We have people in South Africa and across, so I'd rather you took the stage.

[Ruth Leas, CEO at Investec Bank]

Thank you. Good morning, everyone. Happy to answer about exposures into Stage 2 and Stage 3. Really no trend deterioration in terms of what we're seeing. Usual movements that you would see across a large diversified book that we have. In fact, movements into Stage 3 have actually slowed relative to previous periods. Overall, a solid and resilient asset quality performance and the credit loss ratio reducing slightly over the period.

[Fani Titi, CEO at Investec Group]

Thank you. Ruth, was there another question? I thought that was the only question.

[Danny Emersleben, Director of Private Credit Management at Investec Group]

We have a question from Chris Steward of Ninety One. Please could Fani unpack his comments regarding potential inorganic initiatives to grow non-margin revenues in private client businesses. Which geographies, size, bolt-on or transformational, noting the market's aversion to the payment of goodwill and share issuances?

[Fani Titi, CEO at Investec Group]

Hi, Chris. I hope you were pleased to see that slide that Nishlan put up reconciling growth in adjusted EPS, operating profit in adjusted EPS. At least let's start there. With respect to inorganic activity, I think this team has been very disciplined around capital allocation. If you look at the first five years of our tenure as a team, we were able to lift returns both in terms of ROE and ROTE by about 200 basis points, and it was largely a capital allocation disciplined exercise. We committed that we will always look at returns above our cost of equity. Obviously, you have a different cost of equity in each of the large markets that we operate in South Africa and in the U.K. That discipline will continue to the extent we have an opportunity to make an acquisition.

[Fani Titi, CEO at Investec Group]

Again, our pecking order in terms of use of capital obviously is reinvest. Firstly, have capital that is above board set minima so that you are conservatively positioned with respect to absorbing risk in an uncertain and volatile market. That's one. Two, make sure that we have capital to reinvest in the business, and I think we have proven and demonstrated the investment that we are making. Then to the extent that there are accretive opportunities, and we talked about an acquisition in wealth in Switzerland, that Nishlan talked about where we showed you an increase in funds under management, a delta of GBP 333 million. We have been quite disciplined in what we do. Bolt-ons will be interesting to always look at because you're able to add to capacity quite quickly.

[Fani Titi, CEO at Investec Group]

Where we do look at possibilities of inorganic activity, we will be very disciplined. We are not a reckless bunch by any stretch of the imagination. I have said last year that we desire contribution from capital light businesses, particularly wealth businesses to be at least a third of our earnings. We will pursue that over time, but within the constraints of capital allocation discipline. We are aligned with shareholders, in terms of their concern on this one. Chris, I have no sleepless nights thinking about that issue.

[Danny Emersleben, Director of Private Credit Management at Investec Group]

Thanks, Fani. We have two more questions online. The first is a follow-up from Chris Steward of Ninety One. Noting the ROE target of 13.8%-14.6% in FY 2028. The target of 16% for FY 2030. Does this imply a 14.6%-16% range for FY 2029, with FY 2029 being the end of most analysts' three-year forecast time horizon?

[Fani Titi, CEO at Investec Group]

Chris, I will say you're pushing it, right? We've given the market a view around our medium-term ambition in terms of ROE of 16% by 2030, and ROTE of 18% by 2030. We acknowledge that that horizon is a bit long. What we have done is we've given you a 28 signpost. I think it would be irresponsible of me to give 2027, 2028, 2029, 2030, 2031, 2032. Chris, you've pushed it, I'm afraid I'm not falling into that trap. Thank you, though.

[Danny Emersleben, Director of Private Credit Management at Investec Group]

Thanks, Fani. The last question is from Jared from All Weather. Please explain why there was no change in the discretionary motor finance provision in light of what has happened elsewhere in the sector.

[Fani Titi, CEO at Investec Group]

Thank you for that question. Firstly, I think we were at pains over the last 12 months or so to indicate that our exposure to this sector was very small. We came into it very late and our practices have been particularly conservative. We took a number of assumptions when we made the initial provision. Those assumptions ranged from who's in the net, what level of take-up of a redress scheme would be likely, so on and so forth. We also had assumptions around the rate of interest that may have to be paid on the redress amount. A combination of those conservative assumptions made it such that when the final redress scheme was announced, and we ran the scenarios again and the computations, we were comfortable that we remain adequately provided. I suppose I can go back to Siphelele's question.

[Fani Titi, CEO at Investec Group]

Sometimes we can be a bit risk-averse and conservative. I guess that's a good thing. Comfortable with the provision, not a big issue in our lives and we continue to invest in the business, and we continue to serve our clients. Thanks, Donald.

[Danny Emersleben, Director of Private Credit Management at Investec Group]

Thanks, Fani. One more comment, rather, from Chris Steward of Ninety One. He just mentioned that.

[Fani Titi, CEO at Investec Group]

Sounds like Steve Jobs, one more thing.

[Danny Emersleben, Director of Private Credit Management at Investec Group]

He thinks the absolute and relative share price performance over the past five years has been reflective of the capital discipline that has been exhibited, and as investors, we should not forget that.

[Fani Titi, CEO at Investec Group]

We should not?

[Danny Emersleben, Director of Private Credit Management at Investec Group]

He says, "Please don't let us forget that.

[Fani Titi, CEO at Investec Group]

Oh, forget it. Okay, thanks, Donald. Chris, thank you for that comment. Clearly, we have a task ahead, an ambition that we have laid out. Execution discipline is really important as we go forward. I'm grateful that our board supported us in taking pretty tough decisions around capital allocation. You may remember that we resized the infrastructure here in the U.K. bank, that we exited certain of the geographies where we did not have scale and critical mass. It's been a painful period, a necessary set of decisions that we took. The discipline to look to generate returns above the cost of capital remains the guiding principle. Beyond capital allocation, our ability to serve clients distinctively will determine our long-term success. Appreciative of the comment and I want to thank everyone for participating in the results presentation. We will take probably, what, 10 minutes?

[Fani Titi, CEO at Investec Group]

Is 10 okay? 10 minutes. We will be back at 10 after the hour to get into really something that I'm very excited to share with you, our private clients' proposition as we go forward. Thank you so much, ladies and gentlemen. Thank you.

Participants

Executives

• Danny Emersleben, Director of Private Credit Management
• Fani Titi, CEO
• Nishlan Samujh, Group CFO

Analysts

• Ruth Leas, CEO at Investec Bank