Wrap Text
Reviewed interim condensed consolidated financial results for the six months to 30 September 2013
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 2013
Consolidated income statement
Reviewed Reviewed Audited
Six months to Six months to Year to
30 September 30 September 31 March
R'million 2013 2012 2013
Interest income 8 294 8 533 15 809
Interest expense (5 906) (6 139) (10 926)
Net interest income 2 388 2 394 4 883
Fee and commission income 748 485 1 051
Fee and commission expense (115) (50) (109)
Investment income 308 15 459
Trading income arising from
customer flow 162 45 119
balance sheet management and other trading activities 210 175 220
Other operating (loss)/income (5) 1 (3)
Total operating income before impairment losses
on loans and advances 3 696 3 065 6 620
Impairment losses on loans and advances (299) (403) (868)
Operating income 3 397 2 662 5 752
Operating costs (1 929) (1 660) (3 629)
Profit before taxation 1 468 1 002 2 123
Taxation (146) (145) (245)
Profit after taxation 1 322 857 1 878
Headline earnings
Profit after taxation 1 322 857 1 878
Preference dividends paid (53) (52) (109)
Earnings attributable to ordinary shareholders 1 269 805 1 769
Headline adjustments, net of taxation:
Gain on realisation of available-for-sale financial assets (26) (28)
Headline earnings attributable to ordinary shareholders 1 269 779 1 741
Condensed 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 2013 2012 2013
Profit after taxation 1 322 857 1 878
Other comprehensive income*:
Fair value movements on cash flow hedges taken directly
to other comprehensive income (115) (59) (194)
Fair value movements on available-for-sale assets taken
directly to other comprehensive income (330) 65 86
Gain on realisation of available-for-sale assets recycled
to the income statement (1) (36) (39)
Foreign currency adjustments on translating foreign
operations 270 170 441
Total comprehensive income 1 146 997 2 172
Total comprehensive income attributable to ordinary
shareholders 1 093 945 2 063
Total comprehensive income attributable to perpetual
preference shareholders 53 52 109
Total comprehensive income 1 146 997 2 172
*All items in other comprehensive income are or may subsequently be reclassified to the income statement.
Net of taxation of (R13.8) million (six months to 30 September 2012: R11 million; year to 31 March 2013: R13.8 million).
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 2013 2012 2013
Balance at the beginning of the period 23 509 20 933 20 933
Total comprehensive income 1 146 997 2 172
Issue of ordinary shares 500 1 361
Dividends paid to ordinary shareholders (75) (649) (848)
Dividends paid to perpetual preference shareholders (53) (52) (109)
Balance at the end of the period 24 527 21 729 23 509
Condensed consolidated cash flow statement
Reviewed Reviewed Audited
Six months to Six months to Year to
30 September 30 September 31 March
R'million 2013 2012 2013
Net cash inflow/(outflow) from operating activities 5 194 (8 993) (14 560)
Net cash outflow from investing activities (97) (6) (58)
Net cash (outflow)/inflow from financing activities (2 219) 2 401 4 191
Effects of exchange rate changes on cash and cash
equivalents 244 129 406
Net increase/(decrease) in cash and cash equivalents 3 122 (6 469) (10 021)
Cash and cash equivalents at the beginning of the period 14 973 24 994 24 994
Cash and cash equivalents at the end of the period 18 095 18 525 14 973
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
Reviewed Audited Reviewed
30 September 31 March 30 September
R'million 2013 2013 2012
Assets
Cash and balances at central banks 7 270 5 677 4 007
Loans and advances to banks 20 336 23 278 17 840
Non-sovereign and non-bank cash placements 7 722 5 875 9 859
Reverse repurchase agreements and cash collateral on
securities borrowed 6 067 7 668 8 970
Sovereign debt securities 31 811 33 730 35 164
Bank debt securities 22 247 20 969 24 095
Other debt securities 10 673 6 258 6 099
Derivative financial instruments 11 622 12 161 12 691
Securities arising from trading activities 2 398 1 357 848
Investment portfolio 9 386 9 102 6 140
Loans and advances to customers 144 276 135 726 127 477
Own originated loans and advances to customers securitised 2 347 2 379 2 337
Other loans and advances 638 672 675
Other securitised assets 1 629 1 168 1 071
Interest in associated undertakings 49 45 41
Deferred taxation assets 60 55 55
Other assets 1 328 1 166 1 159
Property and equipment 236 224 250
Investment properties 1 1 1
Intangible assets 95 90 89
Loans to group companies 4 612 11 673 8 099
Total assets 284 803 279 274 266 967
Liabilities
Deposits by banks 11 591 17 861 16 244
Derivative financial instruments 8 919 9 232 10 710
Other trading liabilities 705 1 063 484
Repurchase agreements and cash collateral on securities lent 15 581 18 188 18 954
Customer accounts (deposits) 200 512 185 311 178 979
Debt securities in issue 5 079 4 091 1 484
Liabilities arising on securitisation of own originated loans
and advances 2 659 2 933 2 934
Liabilities arising on securitisation of other assets 572 588 492
Current taxation liabilities 1 143 1 142 1 151
Deferred taxation liabilities 246 61 49
Other liabilities 2 865 2 799 2 446
249 872 243 269 233 927
Subordinated liabilities 10 404 12 496 11 311
Total liabilities 260 276 255 765 245 238
Equity
Ordinary share capital 32 32 30
Share premium 14 885 14 885 14 026
Other reserves 44 175 21
Retained income 9 566 8 417 7 652
Total equity 24 527 23 509 21 729
Total liabilities and equity 284 803 279 274 266 967
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.
Commentary
Overview of results
Investec Bank Limited, a subsidiary of Investec Limited, posted an increase in headline earnings attributable to ordinary
shareholders of 62.9% to R1,269 million (2012: R779 million). The balance sheet remains strong with a capital adequacy
ratio of 15.2% as calculated in terms of Basel III (31 March 2013: 16.2%). 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 2012.
Salient operational features for the six months under review include:
Total operating income before impairment losses on loans and advances increased by 20.6% to R3,696 million (2012:
R3,065 million). The components of operating income are analysed further below:
Net interest income was inline with the prior year at R2,388 million (2012:R2,394 million) with the bankbenefiting from an increase in its loan portfolio, offset by less interest earned on surplus cash portfolios given the decline in interest
rates.
- Net interest income was in line with the prior year at R2,388 million (2012: R2,394 million) with the bank benefiting from an increase in its loan portfolio, offset by less interest earned on surplus cash portfolios given the decline in interest rates.
- Net fee and commission income increased 45.5% to R633 million (2012: R435 million) largely as a result of a good performance from the corporate business with strong growth in project finance renewable energy and structured finance fees. The professional finance business continued to perform well.
- Investment income increased significantly to R308 million (2012: R15 million) largely due to a solid performance from the bank's unlisted principal investments portfolio.
- Trading income arising from customer flow increased to R162 million (2012: R45 million) due to increased client activity, notably in forex transactions.
- Trading income arising from other trading activities increased 20.0% to R210 million (2012: R175 million) reflecting improved activity on the balance sheet.
Impairments on loans and advances decreased from R403 million to R299 million. The credit loss charge as a percentage
of average gross core loans and advances has improved from 0.65% at 31 March 2013 to 0.42%. The percentage of
default loans (net of impairments but before taking collateral into account) to core loans and advances amounts to 2.12%
(31 March 2013: 1.93%). The ratio of collateral to default loans (net of impairments) remains satisfactory at 1.36 times
(31 March 2013: 1.44 times).
Total operating expenses at R1,929 million were 16.2% higher than the prior year (2012: R1,660 million) largely as a
result of increased personnel costs and variable remuneration given improved profitability. The ratio of total operating
costs to total operating income amounts to 52.2% (2012: 54.2%).
As a result of the foregoing factors, profit before taxation increased by 46.5% to R1,468 million (2012: R1,002 million).
Accounting policies and disclosures
These 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 SAICA Financial Reporting Guide as issued by the Accounting Practices Committee and the
Companies Act 71, of 2008.
The accounting policies applied in the preparation of the results for the six months ended 30 September 2013 are
consistent with those adopted in the financial statements for the year ended 31 March 2013 except as noted below.
The group has adopted the following new standards and amendments to standards, including any consequential
amendments to other standards: IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IFRS 13
Fair Value Measurement, Presentation of other comprehensive income (Amendments to IAS 1), IAS19 Employee
Benefits. Adoption of IFRS 10, IFRS 11 and IAS 19 has had no material impact on the group. IFRS 13 has been applied
prospectively from 1 April 2013. The standard defines fair value as being a market-based measurement and sets out in
a single IFRS a framework for the measurement of fair value. Application of the standard has not had a material impact
on the recognition and measurement of assets and liabilities of the group.
The financial results have been prepared under the supervision of Glynn Burger, the Group Risk and Finance Director.
The summary financial statements for the six months ended 30 September 2013 will be posted to stakeholders on
29 November 2013. These summary financial statements will be available on the group's website at the same date.
Analysis of assets and liabilities at fair value and amortised cost
Financial Financial
at 30 September 2013 instruments at instruments at Non-financial
R'million fair value amortised cost instruments Total
Assets
Cash and balances at central banks 7 270 7 270
Loans and advances to banks 755 19 581 20 336
Non-sovereign and non-bank cash placements 15 7 707 7 722
Reverse repurchase agreements and cash
collateral on securities borrowed 5 459 608 6 067
Sovereign debt securities 28 484 3 327 31 811
Bank debt securities 9 272 12 975 22 247
Other debt securities 4 231 6 442 10 673
Derivative financial instruments 11 622 11 622
Securities arising from trading activities 2 398 2 398
Investment portfolio 9 386 9 386
Loans and advances to customers 14 102 130 174 144 276
Own originated loans and advances to
customers securitised 2 347 2 347
Other loans and advances 638 638
Other securitised assets 1 107 522 1 629
Interest in associated undertakings 49 49
Deferred taxation assets 60 60
Other assets 90 676 562 1 328
Property and equipment 236 236
Investment properties 1 1
Intangible assets 95 95
Loans to group companies (66) 4 678 4 612
86 855 196 945 1 003 284 803
Liabilities
Deposits by banks 3 11 588 11 591
Derivative financial instruments 8 919 8 919
Other trading liabilities 705 705
Repurchase agreements and cash collateral on
securities lent 2 615 12 966 15 581
Customer accounts (deposits) 11 740 188 772 200 512
Debt securities in issue 2 875 2 204 5 079
Liabilities arising on securitisation of own
originated loans and advances 2 659 2 659
Liabilities arising on securitisation of other assets 572 572
Current taxation liabilities 1 143 1 143
Deferred taxation liabilities 246 246
Other liabilities 670 781 1 414 2 865
Subordinated liabilities 10 404 10 404
28 099 229 374 2 803 260 276
Financial instruments carried at fair value
The table below analyses recurring fair value measurements for financial assets and financial liabilities. These fair value
measurements are categorised into different levels in the fair value hierarchy based on the inputs to the valuation
technique used. The different levels are identified as follows:
Level 1 quoted (unadjusted) prices in active markets for identical assets or liabilities
Level 2 inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (ie as prices) or indirectly (ie derived from prices)
Level 3 inputs for the asset or liability that are not based on observable market data (unobservable inputs)
Total Fair value measurement
at 30 September 2013 instruments
R'million at fair value Level 1 Level 2 Level 3
Assets
Loans and advances to banks 755 755
Non-sovereign and non-bank cash placements 15 15
Reverse repurchase agreements and cash collateral on
securities borrowed 5 459 5 459
Sovereign debt securities 28 484 28 484
Bank debt securities 9 272 1 572 7 700
Other debt securities 4 231 3 572 555 104
Derivative financial instruments 11 622 584 11 280 (242)
Securities arising from trading activities 2 398 2 398
Investment portfolio 9 386 2 503 264 6 619
Loans and advances to customers 14 102 14 102
Other securitised assets 1 107 1 107
Other assets 90 90
Intergroup (66) (66)
86 855 39 203 41 171 6 481
Liabilities
Deposits by banks 3 3
Derivative financial instruments 8 919 557 8 362
Other trading liabilities 705 705
Repurchase agreements and cash collateral on securities lent 2 615 2 615
Customer accounts (deposits) 11 740 11 740
Debt securities in issue 2 875 2 875
Liabilities arising on securitisation of other assets 572 572
Other liabilities 670 2 668
28 099 1 836 26 263
The following table is a reconciliation of the opening balances to the closing balances for fair value measurements in level
3 of the fair value hierarchy:
R'million
Balance at 1 April 2013 84
Transfers due to application of IFRS 13* 6 230
Restated balance at 1 April 2013 6 314
Total gains or losses included in the income statement 465
Purchases 62
Sales (113)
Issues (158)
Settlements (105)
Foreign exchange adjustments 16
Balance as at 30 September 2013 6 481
*All reclassifications into Level 3 at 1 April 2013 occurred as a result of inputs to the valuation model being regarded as unobservable as a result of
applying the principles in IFRS 13.
Observable inputs are defined as inputs that are developed using market data, such as publicly available information about actual events or transactions,
and that reflect the assumptions that market participants would use when pricing the asset or liability. All other inputs have been considered to be
unobservable.
The following table quantifies the gains or losses included in the income statement recognised on level 3 financial
instruments:
Six months to 30 September 2013
R'million
Total gains or losses included in the income statement for the period
Net interest income (2)
Fee and commission expense (77)
Investment income 528
Trading income arising from customer flow 16
465
Sensitivity of fair values to reasonably possible alternative assumptions by Level 3 instrument type
The fair value of financial instruments in level 3 are measured using valuation techniques that incorporate assumptions
that are not evidenced by prices from observable market data. The following table shows the sensitivity of these fair
values to reasonably possible alternative assumptions, determined at a transactional level:
Reflected in the income
Range which statement
unobservable R'million
Significant unobservable input has Favourable Unfavourable
At 30 September 2013 input changed been stressed changes changes
Assets
Other debt securities Discount rates (24%)-24% 1 (1)
Derivative financial instruments Credit spreads, volatilities, cash flows
EBITDA (20%)-25% 310 (47)
Investment portfolio Price earnings multiple, net asset
value, WACC, EBITDA (25%)-10% 1 160 (1 036)
1 471 (1 084)
Fair value of financial instruments at amortised cost
at 30 September 2013 Carrying Fair
R'million value value
Assets
Cash and balances at central banks 7 270 7 270
Loans and advances to banks 19 581 19 581
Non-sovereign and non-bank cash placements 7 707 7 707
Reverse repurchase agreements and cash collateral on securities borrowed 608 608
Sovereign debt securities 3 327 3 434
Bank debt securities 12 975 13 511
Other debt securities 6 442 6 528
Loans and advances to customers 130 174 130 181
Own originated loans and advances to customers securitised 2 347 2 347
Other loans and advances 638 638
Other securitised assets 522 522
Other assets 676 676
Loans to group companies 4 678 4 678
196 945 197 681
Liabilities
Deposits by banks 11 588 11 749
Repurchase agreements and cash collateral on securities lent 12 966 13 033
Customer accounts (deposits) 188 772 189 088
Debt securities in issue 2 204 2 204
Liabilities arising on securitisation of own originated loans and advances 2 659 2 659
Other liabilities 781 781
Subordinated liabilities 10 404 10 530
229 374 230 044
On behalf of the Board of Investec Bank Limited
Fani Titi Stephen Koseff Bernard Kantor
Chairman Chief Executive Officer Managing Director
20 November 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 21
Notice is hereby given that preference dividend number 21 has been declared for the period 01 April 2013 to
30 September 2013 amounting to 355.12278 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,
06 December 2013.
The relevant dates for the payment of dividend number 21 are as follows:
Last day to trade cum-dividend Friday, 29 November 2013
Shares commence trading ex-dividend Monday, 02 December 2013
Record date Friday, 06 December 2013
Payment date Tuesday, 17 December 2013
Share certificates may not be dematerialised or rematerialised between Monday, 02 December 2013 and Friday,
06 December 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 in this specific class.
- 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 dividend declaration amount to R17 622 569 (114.07943 cents per preference share) and consequently the STC credits utilised are sufficient to cover a portion of any Dividend Tax and the remaining 241.04335 cents dividend per preference share will be subject to Dividends Tax (subject to any available exemptions as legislated).
- Shareholders subject to Dividends Tax will receive a net dividend of 318.96628 cents per preference share and shareholders exempt from paying the Dividend Tax will receive a net dividend of 355.12278 cents per preference share.
By order of the board
B Coetsee
Company Secretary
20 November 2013
Registered office Transfer secretaries
100 Grayston Drive Computershare Investor Services (Pty) Ltd
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
Company Secretary
B Coetsee
Date: 25/11/2013 01:10:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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