Investec Group pre-close trading update and trading statement

Investec today announces its scheduled pre-close trading update for the year ending 31 March 2022 (FY2022). Commentary on the Group’s financial performance in this pre-close trading update represents the 11 months ended 28 February 2022 and compares forecast FY2022 to FY2021 (31 March 2021).

FY2022 earnings update and guidance

The Group is pleased to update the FY2022 adjusted earnings per share guidance to between 51p and 55p, from the 48p to 53p range guided in November 2021.

For the year ending 31 March 2022, the Group expects:

• Adjusted operating profit before tax between £642 million and £683 million (FY2021: £377.6 million).
- The Southern African business’ adjusted operating profit to be at least 30% ahead of prior year in Rands (FY2021: R5 510 million, £251.6 million).
- The UK business’ adjusted operating profit to be at least 120% higher than prior year (FY2021: £126.0 million).

• Adjusted earnings per share between 51p and 55p (or 76% to 90% ahead of prior year) (FY2021: 28.9p).
• Basic earnings per share between 48p and 52p (or 90% to 106% ahead of prior year) (FY2021: 25.2p).
• Headline earnings per share between 49p and 53p (or 84% to 99% ahead of prior year) (FY2021: 26.6p).

The above expectations are predicated on the following year to date performance:

Group operating performance is above the pre-COVID comparative period, benefitting from strategic execution and post-pandemic economic recovery.

• Pre-provision adjusted operating profit increased, supported by continued client acquisition, growth in funds under management (FUM) and higher average advances.

- The revenue momentum experienced in the first half of the financial year continued into the second half. Net interest income benefitted from lower funding costs and higher average lending books. Increased client activity, higher lending turnover and supportive market conditions underpinned the growth in non-interest revenue over the period.
- Fixed operating expenditure was well contained in line with the Group’s focus on cost efficiencies, while variable remuneration grew in line with revenue. The cost to income ratio improved as revenue grew faster than costs.
- Expected credit loss impairment charges were significantly lower given limited default experience and certain recoveries. Post-model overlays have been maintained.
- On average, the Rand/Pounds Sterling exchange rate appreciated by c.5% over the period.

• For the period ended 28 February 2022:

- The Wealth & Investment business grew FUM by 6.6% to £61.9 billion, driven by net inflows of £2.0 billion and positive market conditions. Current market volatility may impact FUM at 31 March 2022.
- Within Specialist Banking, core loans grew by 8.9% to £28.8 billion, driven by corporate lending and residential mortgage growth in both geographies.

The Group is well capitalised with strong liquidity, above Board approved minimums, and is well positioned to pursue identified growth opportunities.

The Group has no material direct or indirect exposure to Russia or Ukraine; however, the outlook may be affected by uncertainty arising from the likely impacts of the Russian invasion of Ukraine on the global economy and financial markets.

Other information

The financial information on which this trading statement is based, has not been reviewed and
reported on by the external auditors.

An investor conference call will be held today at 09:00 UK time /11:00 South African time. Please register for the call at www.investec.com/investorrelations

Year end results
The results for the year ending 31 March 2022 are scheduled for release on Thursday,19 May 2022.

“The Group’s trading performance for the eleven months ended on 28 February 2022 has surpassed the pre-COVID comparative period, benefitting from strategic execution over the past three years, and post-pandemic recovery. We have seen good momentum across all our businesses and continued growth in revenue. The recovery in performance underscores the continued resilience of our client franchises and our strong balance sheet leaves us well positioned to pursue identified growth opportunities.” Fani Titi, CEO, Investec Group