Investec tones down investment prospects
Bank waits for risk to settle
DESPITE sitting on £10.4 billion (R140.7bn) in cash and near cash balances, banking group Investec is cautious about being acquisitive and would rather stand on the sidelines observing what direction the European markets take.
Investec chief executive Stephen Koseff told analysts and investors at the group’s pre-close briefing yesterday that, if Investec was brave, it would have bought Spanish bonds three months ago when that market was promising.
However, Investec felt that not many areas were worth taking the risk.
Koseff said he had paid a visit to Ireland to explore investment opportunities there.
“There are some areas where I think we can take a bit more risk but we’d have to be cautious,” he said yesterday, referring to Ireland and the UK.
Investec reported that the Sandton-based Investec Limited held £5.9bn in cash and near cash balances while Londonbased Investec plc held £4.5bn. This amounted to 33 percent of the group’s liability base.
The dual-listed group said it expected operating profit for the six months to September to be in line with that recorded in the first half of the past year. Last year, Investec posted interim operating profit before tax of £223.6m.
Although the South African operations were expected to perform ahead of the prior year in rand terms and Australia would be returning to profit, the overall results would stagnate due to the 15 percent depreciation of the average rand/pound exchange rate.
Koseff said the South African business had increased revenues across the board and costs were below inflation. Australia, on the other hand, experienced a significant decline in impairments.