Wrap Text
Reviewed interim condensed consolidated financial
results for the six months to 30 September 2012
Investec Bank Limited
(Registration number 1969/004763/06)
Share code: INLP
ISIN: ZAE000048393
Reviewed interim condensed consolidated financial
results for the six months to 30 September 2012
Consolidated income statement
Reviewed Reviewed Audited
Six months to Six months to Year to
30 September 30 September 31 March
R'million 2012 2011* 2012
Interest income 8 533 8 003 15 850
Interest expense (6 139) (5 759) (11 581)
Net interest income 2 394 2 244 4 269
Fee and commission income 485 639 1 146
Fee and commission expense (50) (14) (91)
Investment income 15 94 589
Trading income arising from
customer flow 45 136 259
balance sheet management and other trading activities 175 86 175
Other operating income 1 10
Total operating income before impairment on loans
and advances 3 065 3 185 6 357
Impairment losses on loans and advances (403) (357) (833)
Operating income 2 662 2 828 5 524
Operating costs (1 660) (1 667) (3 351)
Profit before taxation 1 002 1 161 2 173
Taxation (145) (157) (215)
Profit after taxation 857 1 004 1 958
Headline earnings
Profit after taxation 857 1 004 1 958
Preference dividends paid (52) (53) (104)
Earnings attributable to ordinary shareholders 805 951 1 854
Headline adjustments, net of taxation (26) (42)
Gain on realisation of available-for-sale financial assets (26) (42)
Headline earnings attributable to
ordinary shareholders 779 951 1 812
* As restated for reclassifications detailed in the commentary section of this report.
Consolidated statement of total comprehensive income
Reviewed Reviewed Audited
Six months to Six months to Year to
30 September 30 September 31 March
R'million 2012 2011 2012
Profit after taxation 857 1 004 1 958
Other comprehensive income:
Cash flow hedge movements taken directly to other
comprehensive income** (59) (335) (354)
Fair value movements on available-for-sale assets taken
directly to other comprehensive income** 65 (18) 84
Gain on realisation of available-for-sale assets recycled
through the income statement** (36) (42)
Foreign currency adjustments on translating
foreign operations 170 341 229
Total comprehensive income 997 992 1 875
Total comprehensive income attributable to ordinary
shareholders 945 939 1 771
Total comprehensive income attributable to perpetual
preference shareholders 52 53 104
Total comprehensive income 997 992 1 875
** Net of taxation of R11 million (Six months to 30 September 2011: (R137 million), Year to 31 March 2012: Nil).
Condensed consolidated statement of changes in equity
Reviewed Reviewed Audited
Six months to Six months to Year to
30 September 30 September 31 March
R'million 2012 2011 2012
Balance at the beginning of the period 20 933 18 837 18 837
Total comprehensive income for the period 997 992 1 875
Issue of ordinary shares 500 949 1 684
Dividends paid to ordinary shareholders (649) (680) (1 359)
Dividends paid to perpetual preference shareholders (52) (53) (104)
Balance at the end of the period 21 729 20 045 20 933
Consolidated balance sheet
Reviewed Audited Reviewed
30 September 31 March 30 September
R'million 2012 2012 2011*
Assets
Cash and balances at central banks 4 007 9 303 6 932
Loans and advances to banks 17 840 19 191 12 641
Non-sovereign and non-bank cash placements 9 859 7 885 5 025
Reverse repurchase agreements and cash collateral on
securities borrowed 8 970 5 098 5 501
Sovereign debt securities 35 164 30 222 34 714
Bank debt securities 24 095 27 695 24 451
Other debt securities 6 099 6 284 5 475
Derivative financial instruments 12 691 10 595 18 917
Securities arising from trading activities 848 1 628 2 592
Investment portfolio 6 140 6 036 6 081
Loans and advances to customers 127 477 122 615 117 988
Own originated loans and advances to customers securitised 2 337 2 302 2 201
Other loans and advances 675 669 735
Other securitised assets 1 071 1 057 1 272
Interest in associated undertakings 41 38 89
Deferred taxation assets 55 46 40
Other assets 1 159 1 074 1 362
Property and equipment 250 308 287
Investment properties 1 5 5
Intangible assets 89 96 110
Loans to group companies 8 099 3 805 5 255
Total assets 266 967 255 952 251 673
Liabilities
Deposits by banks 16 244 13 933 9 399
Derivative financial instruments 10 710 8 570 18 224
Other trading liabilities 484 172 398
Repurchase agreements and cash collateral on
securities lent 18 954 18 174 15 635
Customer accounts (deposits) 178 979 176 094 172 079
Debt securities in issue 1 484 1 738 1 827
Liabilities arising on securitisation of own originated loans
and advances 2 934 2 933 3 028
Liabilities arising on securitisation of other assets 492 492 600
Current taxation liabilities 1 151 1 113 1 074
Deferred taxation liabilities 49 9 437
Other liabilities 2 446 3 082 2 061
233 927 226 310 224 762
Subordinated liabilities 11 311 8 709 6 866
Total liabilities 245 238 235 019 231 628
Equity
Ordinary share capital 30 29 28
Share premium 14 026 13 527 12 793
Other reserves 21 (119) (83)
Retained income 7 652 7 496 7 307
Total equity 21 729 20 933 20 045
Total liabilities and equity 266 967 255 952 251 673
* As restated for reclassifications detailed in the commentary section of this report.
These reviewed interim condensed consolidated financial results are published to provide information to holders of Investec Bank
Limited's listed non-redeemable, non-cumulative, non-participating preference shares.
Condensed consolidated cash flow statement
Reviewed Reviewed Audited
Six months to Six months to Year to
30 September 30 September 31 March
R'million 2012 2011 2012
Cash inflows from operations 1 364 1 566 2 630
Increase in operating assets (17 629) (28 311) (24 511)
Increase in operating liabilities 7 272 28 140 30 234
Net cash (outflow)/inflow from operating activities (8 993) 1 395 8 353
Net cash outflow from investing activities (6) (4) (37)
Net cash inflow from financing activities 2 401 216 2 064
Effects of exchange rate changes on
cash and cash equivalents 129 213 146
Net (decrease)/increase in cash and cash equivalents (6 469) 1 820 10 526
Cash and cash equivalents at the beginning of the period 24 994 14 468 14 468
Cash and cash equivalents at the end of the period 18 525 16 288 24 994
Cash and cash equivalents are defined as including cash and balances at central banks, on demand loans and advances to
banks and non-sovereign and non-bank cash placements (all of which have a maturity profile of less than three months).
Commentary
Overview of results
Investec Bank Limited, a subsidiary of Investec Limited, posted a decrease in headline earnings attributable to ordinary
shareholders of 18.1% to R779 million (2011: R951 million). The balance sheet remains strong with a capital adequacy
ratio of 16.9% (31 March 2012: 16.1%). For full information on the Investec Group results, refer to the combined results of
Investec plc and Investec Limited or the group's website http://www.investec.com
Financial review
Unless the context indicates otherwise, all comparatives referred to in the financial review relate to the six months ended
30 September 2011. Operating profit is before taxation and headline adjustments.
Salient operational features of the period under review include:
- Total operating income before impairment losses on loans and advances decreased by 3.8% to R3,065 million (2011:
R3,185 million). The components of operating income are analysed further below:
- Net interest income increased by 6.7% to R2,394 million (2011: R2,244 million) largely as a result of improved
margins and a sound performance from the bank's fixed income portfolio, partially offset by higher costs on
subordinated liabilities.
- Net fee and commission income decreased 30.4% to R435 million (2011: R625 million) and customer flow trading
income decreased 66.9% to R45 million (2011: R136 million) as a result of lower activity in the corporate and
institutional banking businesses.
- Investment income decreased by 84.0% to R15 million (2011: R94 million) largely due to a weaker performance
from the bank's principal investments portfolio.
- Trading income arising from other trading activities increased significantly to R175 million (2011: R86 million) reflecting
improved activity on the balance sheet management desk.
- Impairments on loans and advances increased from R357 million to R403 million. Default loans remained in line with
31 March 2012, with an improvement reported in the private client business offset by some corporate loans defaulting
in the period. The credit loss charge as a percentage of average gross loans and advances has improved from 0.69%
at 31 March 2012 to 0.62%. The percentage of default loans (net of impairments but before taking collateral into
account) to core loans and advances amounts to 2.49% (31 March 2012: 2.79%). The ratio of collateral to default loans
(net of impairments) remains satisfactory at 1.58 times (31 March 2012: 1.68 times).
- The ratio of total operating costs to total operating income amounts to 54.2% (2011: 52.3%). Total operating expenses
at R1,660 million were in line with the prior period.
- As a result of the foregoing factors profit before taxation decreased by 13.7% to R1,002 million (2011: R1,161 million).
Accounting policies and disclosures
These reviewed interim condensed consolidated financial results have been prepared in terms of the recognition and
measurement criteria of International Financial Reporting Standards, the presentation and disclosure requirements of
IAS 34, Interim Financial Reporting, the AC 500 Standards as issued by the Accounting Practices Board and the Companies
Act 71 of 2008.
The accounting policies applied in the preparation of the results for the period ended 30 September 2012 are consistent
with those adopted in the financial statements for the year ended 31 March 2012. The financial results have been prepared
under the supervision of Glynn Burger, the Group Risk and Finance Director.
The financial statements for the period ended 30 September 2012 will be posted to stakeholders on 30 November 2012.
These accounts will be available on the group's website at the same date.
Restatements
Consistent with the year ended 31 March 2012, the Investec group has positioned its strategic disclosures around three
core business areas namely, Asset Management, Wealth & Investment and Specialist Banking. In some respects the group
believes that it has historically overcomplicated its external disclosures by elaborating on six core areas of business. As
you would have already seen in the group's recent presentations, all the banking businesses have been combined under
one broader umbrella of Specialist Banking. As a result the group has chosen to refine some of its disclosures, which
have impacted the disclosures for Investec Bank Limited, and are explained further below. The group believes that these
refinements provide greater clarity on the key income and balance sheet drivers of its business.
Consolidated income statement
Consistent with the year ended 31 March 2012, the previously reported principal transaction income line item has been
split into the following line items:
- Investment income: income, other than net interest, from securities held for the purpose of generating interest yield,
dividends and capital appreciation.
- Customer flow trading income: income from trading activities arising from facilitating customer activities.
- Income from balance sheet management and other trading activities: includes proprietary trading income and other
gains and losses as well as income earned from the balance sheet management desk.
For the six months to 30 September 2011 New As previously Reclassifica-
R'million format reported tions
Interest income 8 003 8 003
Interest expense (5 759) (5 759)
Net interest income 2 244 2 244
Fee and commission income 639 639
Fee and commission expense (14) (14)
Principal transactions 316 (316)
Investment income 94 94
Trading income arising from
customer flow 136 136
balance sheet management and other trading activities 86 86
Total operating income before impairment on loans
and advances 3 185 3 185
Consolidated balance sheet
The main driver behind the revision to the balance sheet is to enable a better understanding of Investec's exposures and
to minimise the number of reconciliation items to the detailed risk disclosures on the website. It is noted that there are no
measurement changes nor are there any changes to total assets, liabilities, and equity and the cash flow statement.
Each category of reclassification is noted below, and is consistent with the presentation at 31 March 2012:
- Cash equivalent corporate paper
Cash equivalent advances to customers has been renamed to "non-sovereign, non-bank cash placements". These
balances represent short-term placements in corporates that run an in-house treasury function.
- Loans and securitisation
To better align the balance sheet with the bank's risk management disclosures, loans and advances and securitised
assets that form part of our "core" lending activities have been separated from assets that are in warehoused facilities
and structured credit investments arising out of our securitisation and principal finance activities. This has resulted in
a need to split loans and advances and securitised assets into two balance sheet categories for each. Securitised
liabilities has been split into two line items to enable the relationship with securitised assets to be clearly identified.
- Securities reclassification
The bank's previous balance sheet split securities (other than lending-related) into two key line items being trading
and investment securities. This classification was driven by the accounting rule sets that mainly distinguish between
instruments fair valued through profit or loss, those carried at amortised cost (held to maturity) and those fair
valued through equity (available-for-sale). The bank is of the view that disclosure of the nature of exposures on the
balance sheet, distinguishing between instruments held to manage balance sheet liquidity, as principal exposure and
balance sheet instruments arising from trading desk activities provides more meaningful disclosure on the face of
the balance sheet. The line item "securities arising from trading activities" includes all instruments (other than derivative
instruments) that are held on balance sheet in relation to trading activities.
Cash Loans
As Total equivalent and Securities
At 30 September 2011 New previously reclassi- corporate securiti- reclassi-
R'million format reported fications paper sation fication
Total assets reclassified
Cash equivalent advances
to customers 5 025 (5 025) (5 025)
Non-sovereign and non-bank
cash placements 5 025 5 025 5 025
Sovereign debt securities 34 714 34 714 34 714
Bank debt securities 24 451 24 451 24 451
Other debt securities 5 475 5 475 5 475
Trading securities 50 691 (50 691) (50 691)
Securities arising from
trading activities 2 592 2 592 2 592
Investment portfolio 6 081 6 081 6 081
Investment securities 22 622 (22 622) (22 622)
Loans and advances
to customers 117 988 118 723 (735) (735)
Securitised assets 3 473 (3 473) (3 473)
Own originated loans and
advances to customers
securitised 2 201 2 201 2 201
Other loans and advances 735 735 735
Other securitised assets 1 272 1 272 1 272
200 534 200 534
Total liabilities reclassified
Liabilities arising on
securitisation 3 628 (3 628) (3 628)
Liabilities arising on
securitisation of own originated
loans and advances 3 028 3 028 3 028
Liabilities arising on
securitisation of other assets 600 600 600
3 628 3 628
Commentary on line of business segmental reclassifications
The Investec Group previously reported segmental disclosures by six core business lines as well as including a segment for
the group's central functions. The group is now disclosing its segmental disclosures in three core business lines, namely,
Asset Management, Wealth & Investment and Specialist Banking. In this regard:
- The income statement format has been revised as discussed above.
- To align with the information provided to the Chief Operating Decision Maker, the Private Banking, Investment Banking,
Capital Markets and Group Services and Other divisions have now been grouped under one banner and collectively
referred to as Specialist Banking for Investec Bank Limited.
- Accordingly no additional disclosures have been provided regarding the segmental results as the bank only has one
segment. Significant information was provided in the income statement and balance sheet for this segment. The total
operating profit has, however, not changed from that which was previously reported.
On behalf of the Board of Investec Bank Limited
Fani Titi Stephen Koseff Bernard Kantor
Chairman Chief Executive Officer Managing Director
14 November 2012
Review conclusion
KPMG Inc. and Ernst & Young Inc., the Group's independent auditors, have reviewed the interim condensed consolidated
financial results and have expressed an unmodified review conclusion on the interim condensed consolidated financial
results, which is available for inspection at the company's registered office.
Investec Bank Limited
Preference share dividend announcement
Registration number: 1969/004763/06
Share code: INLP
ISIN: ZAE000048393
Non-redeemable non-cumulative non-participating preference shares ("preference shares")
Declaration of dividend number 19
Notice is hereby given that preference dividend number 19 has been declared for the period 01 April 2012 to 30 September
2012 amounting to 367.67936 cents per share payable to holders of the non-redeemable non-cumulative non-participating
preference shares as recorded in the books of the company at the close of business on Friday, 07 December 2012.
The relevant dates for the payment of dividend number 19 are as follows:
Last day to trade cum-dividend Friday, 30 November 2012
Shares commence trading ex-dividend Monday, 03 December 2012
Record date Friday, 07 December 2012
Payment date Tuesday, 18 December 2012
Share certificates may not be dematerialised or rematerialised between Monday, 03 December 2012 and Friday,
07 December 2012, both dates inclusive.
Additional information to take note of:
- The Investec Bank Limited company tax reference number: 9675/053/71/5
- The issued preference share capital of Investec Bank Limited is 15 447 630 preference shares.
- The dividend paid by Investec Bank Limited is subject to South African Dividend Tax (Dividend Tax) of 15% (subject to
any available exemptions as legislated).
- The total Secondary Tax on Companies ("STC") credits utilised as part of this declaration amount to R56 797 747.12
(367.67936 cents per preference share) and consequently the STC credits utilised are sufficient to cover the 15%
Dividend Tax required and shareholders will receive a net dividend of 367.67936 cents per preference share.
By order of the board
B Coetsee
Company Secretary
14 November 2012
Registered office Transfer secretaries
100 Grayston Drive Computershare Investor Services (Pty) Limited
Sandown, Sandton, 2196 70 Marshall Street, Johannesburg, 2001
Investec Bank Limited
(Registration number 1969/004763/06)
Share code: INLP
ISIN: ZAE000048393
Directors:
F Titi (Chairman), D M Lawrence^ (Deputy Chairman), S Koseff^ (Chief Executive), B Kantor^ (Managing Director)
S E Abrahams, G R Burger^, M P Malungani, Sir D J Prosser, K X T Socikwa, B Tapnack^, P R S Thomas, C B Tshili
^Executive British
Company Secretary:
B Coetsee
www.investec.com
Date: 15/11/2012 09:03:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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