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INVESTEC BANK LTD - Reviewed Preliminary condensed consolidated financial results for the year ended 31 March 2013

Release Date: 23/05/2013 08:03
Code(s): INLP     PDF:  
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Reviewed Preliminary condensed consolidated financial results for the year ended 31 March 2013

Investec Bank Limited
(Registration number 1969/004763/06)
Share code: INLP
ISIN: ZAE000048393

Reviewed preliminary condensed consolidated financial results for the year ended 31 March 2013

Consolidated income statement  
                                                     
Year to 31 March                                                             Reviewed    Audited   
R'million                                                                        2013       2012 
  
Interest income                                                                15 809     15 850   
Interest expense                                                             (10 926)   (11 581)   
Net interest income                                                             4 883      4 269   
Fee and commission income                                                       1 051      1 146   
Fee and commission expense                                                      (109)       (91)   
Investment income                                                                 459        589   
Trading income arising from                                                         
  customer flow                                                                  119        259   
  balance sheet management and other trading activities                          220        175   
Other operating (loss)/income                                                     (3)         10   
Total operating income before impairment losses                                     
on loans and advances                                                           6 620      6 357   
Impairment losses on loans and advances                                         (868)      (833)   
Operating income                                                                5 752      5 524   
Operating costs                                                               (3 629)    (3 351)   
Profit before taxation                                                          2 123      2 173   
Taxation                                                                        (245)      (215)   
Profit after taxation                                                           1 878      1 958   
Headline earnings                                                                   
Profit after taxation                                                           1 878      1 958   
Preference dividends paid                                                       (109)      (104)   
Earnings attributable to ordinary shareholders                                  1 769      1 854   
Headline adjustments, net of taxation                                               
Gain on realisation of available-for-sale financial assets^                      (28)       (42)   
Headline earnings attributable to ordinary shareholders                         1 741      1 812   

^ Taxation on headline earnings adjustments amounted to R10.9 million (Year to 31 March 2012 R16.3 million).

Condensed consolidated statement of total comprehensive income

Year to 31 March                                                             Reviewed   Audited   
R'million                                                                        2013      2012
   
Profit after taxation                                                           1 878     1 958   
Other comprehensive income:                                                               
Fair value movements on cash flow hedges taken directly                                   
to other comprehensive income*                                                  (194)     (354)   
Fair value movements on available-for-sale assets taken directly                          
to other comprehensive income*                                                     86        84   
Gain on realisation of available-for-sale assets recycled                                 
to the income statement*                                                         (39)      (42)   
Foreign currency adjustments on translating foreign operations                    441       229   
Total comprehensive income                                                      2 172     1 875   
Total comprehensive income attributable to ordinary shareholders                2 063     1 771   
Total comprehensive income attributable to perpetual                                      
preference shareholders                                                           109       104   
Total comprehensive income                                                      2 172     1 875   

* Net of taxation of R13.8 million (Year to 31 March 2012: R nil).                        

Condensed consolidated statement of changes in equity

Year to 31 March                                                             Reviewed   Audited   
R'million                                                                        2013      2012 
  
Balance at the beginning of the year                                           20 933    18 837   
Total comprehensive income for the year                                         2 172     1 875   
Issue of ordinary shares                                                        1 361     1 684   
Dividends paid to ordinary shareholders                                         (848)   (1 359)   
Dividends paid to perpetual preference shareholders                             (109)     (104)   
Balance at the end of the year                                                 23 509    20 933   


Condensed consolidated cash flow statement    
                                       
Year to 31 March                                                             Reviewed   Audited   
R'million                                                                        2013      2012 
  
Net cash (outflow)/inflow from operating activities                          (14 560)     8 353   
Net cash outflow from investing activities                                       (58)      (37)   
Net cash inflow from financing activities                                       4 191     2 064   
Effects of exchange rate changes on cash and cash equivalents                     406       146   
Net (decrease)/increase in cash and cash equivalents                         (10 021)    10 526   
Cash and cash equivalents at the beginning of the year                         24 994    14 468   
Cash and cash equivalents at the end of the year                               14 973    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).

Consolidated balance sheet   
                                                                     
At 31 March                                                                  Reviewed   Audited   
R'million                                                                        2013      2012   
Assets                                                                                            
Cash and balances at central banks                                              5 677     9 303   
Loans and advances to banks                                                    23 278    19 191   
Non-sovereign and non-bank cash placements                                      5 875     7 885   
Reverse repurchase agreements and cash collateral on securities borrowed        7 668     5 098   
Sovereign debt securities                                                      33 730    30 222   
Bank debt securities                                                           20 969    27 695   
Other debt securities                                                           6 258     6 284   
Derivative financial instruments                                               12 161    10 595   
Securities arising from trading activities                                      1 357     1 628   
Investment portfolio                                                            9 102     6 036   
Loans and advances to customers                                               135 726   122 615   
Own originated loans and advances to customers securitised                      2 379     2 302   
Other loans and advances                                                          672       669   
Other securitised assets                                                        1 168     1 057   
Interest in associated undertakings                                                45        38   
Deferred taxation assets                                                           55        46   
Other assets                                                                    1 166     1 074   
Property and equipment                                                            224       308   
Investment properties                                                               1         5   
Intangible assets                                                                  90        96   
Loans to group companies                                                       11 673     3 805   
                                                                              279 274   255 952   
Liabilities                                                                                       
Deposits by banks                                                              17 861    13 933   
Derivative financial instruments                                                9 232     8 570   
Other trading liabilities                                                       1 063       172   
Repurchase agreements and cash collateral on securities lent                   18 188    18 174   
Customer accounts (deposits)                                                  185 311   176 094   
Debt securities in issue                                                        4 091     1 738   
Liabilities arising on securitisation of own originated loans and advances      2 933     2 933   
Liabilities arising on securitisation of other assets                             588       492   
Current taxation liabilities                                                    1 142     1 113   
Deferred taxation liabilities                                                      61         9   
Other liabilities                                                               2 799     3 082   
                                                                              243 269   226 310   
Subordinated liabilities                                                       12 496     8 709   
                                                                              255 765   235 019   
Equity                                                                                            
Ordinary share capital                                                             32        29   
Share premium                                                                  14 885    13 527   
Other reserves                                                                    175     (119)   
Retained income                                                                 8 417     7 496   
Total equity                                                                   23 509    20 933   
Total liabilities and equity                                                  279 274   255 952   

These reviewed preliminary 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.

Commentary

Overview of results
Investec Bank Limited, a subsidiary of Investec Limited, posted a decrease in headline earnings attributable to
ordinary shareholders of 3.9% to R1,741 million (2012: R1,812 million). The balance sheet remains strong with a
capital adequacy ratio of 16.2% as calculated in terms of Basel III (2012: 16.1% as per Basel II). 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 year ended
31 March 2012.

Salient operational features of the period under review include:

-  Total operating income before impairment losses on loans and advances increased by 4.1% to R6,620 million
   (2012: R6,357 million). The components of operating income are analysed further below:

-  Net interest income increased by 14.4% to R4,883 million (2012: R4,269 million) largely as a result of higher
   lending balances 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 10.7% to R942 million (2012: R1,055 million) and customer flow
   trading income decreased 54.1% to R119 million (2012: R259 million) as a result of lower activity in the corporate
   and institutional banking businesses.

-  Investment income decreased by 22.1% to R459 million (2012: R589 million) largely due to a weaker performance
   from the bank's listed principal investments portfolio.

-  Trading income arising from other trading activities increased 25.7% to R220 million (2012: R175 million) reflecting
   improved activity on the balance sheet management desk.

-  Impairments on loans and advances increased from R833 million to R868 million. Default loans have decreased
   significantly since 31 March 2012, with an improvement reported in the private client business partially offset by
   an increase in corporate loans defaulting in the period. The credit loss charge as a percentage of average gross
   core loans and advances has improved from 0.69% at 31 March 2012 to 0.65%. The percentage of default loans
   (net of impairments but before taking collateral into account) to core loans and advances amounts to 1.93%
   (2012: 2.79%). The ratio of collateral to default loans (net of impairments) remains satisfactory at 1.44 times
   (2012: 1.68 times).

-  The ratio of total operating costs to total operating income amounts to 54.8% (2012: 52.7%). Total operating expenses
   at R3,629 million were 8.3% higher than the prior year (2012: R3,351 million).

-  As a result of the foregoing factors profit before taxation decreased by 2.3% to R2,123 million (2012: R2,173 million).

Accounting policies and disclosures
These reviewed year-end 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 SAICA Financial Reporting Guide as issued by the Accounting Practices Committee
and Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council and the Companies
Act 71 of 2008.

The accounting policies applied in the preparation of the results for the year ended 31 March 2013 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 year ended
31 March 2013 will be posted to stakeholders on 28 June 2013. These accounts will be available on the group's website
at the same date.

On behalf of the Board of Investec Bank Limited

Fani Titi                          Stephen Koseff                       Bernard Kantor
Chairman                           Chief Executive Officer              Managing Director

22 May 2013

Review conclusion
KPMG Inc. and Ernst & Young Inc., the Group's independent auditors, have reviewed the preliminary condensed consolidated
financial results and have expressed an unmodified review conclusion on the preliminary 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 20
Notice is hereby given that preference dividend number 20 has been declared for the period 01 October 2012 to
31 March 2013 amounting to 353.18222 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, 14 June 2013.

The relevant dates for the payment of dividend number 20 are as follows:

Last day to trade cum-dividend                                                   Friday, 07 June 2013
Shares commence trading ex-dividend                                              Monday, 10 June 2013
Record date                                                                      Friday, 14 June 2013
Payment date                                                                    Tuesday, 25 June 2013

Share certificates may not be dematerialised or rematerialised between Monday, 10 June 2013 and Friday,
14 June 2013, 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 Dividends Tax (Dividends Tax) of 15% (subject
  to any available exemptions as legislated).
- No Secondary Tax on Companies ("STC") credits have been utilised in respect of this preference share dividend
  declaration.
- The net dividend amounts to 300.20489 cents per preference share for preference shareholders liable to pay the
  Dividends Tax and 353.18222 cents per preference share for preference shareholders exempt from paying the Dividends
  Tax.

By order of the Board

B Coetsee
Company Secretary

22 May 2013

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 ^, D Friedland*, M P Malungani, Sir David J Prosser , K X T Socikwa
B Tapnack ^, P R S Thomas, C B Tshili          
^ Executive    British  * Appointed 01 March 2013

Company Secretary:
B Coetsee

www.investec.com
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