Wrap Text
Reviewed preliminary condensed consolidated financial results for the year ended 31 March 2014
Investec Bank Limited
Incorporated in the Republic of South Africa
Registration number 1969/004763/06
JSE share code: INLP
ISIN: ZAE123000048393
Reviewed preliminary condensed consolidated financial results for the year ended 31 March 2014
Consolidated income statement
Year to 31 March
R'mn Reviewed Audited
2014 2013
Interest income 17 063 15 809
Interest expense (12 147) (10 926)
Net interest income 4 916 4 883
Fee and commission income 1 567 1 051
Fee and commission expense (174) (109)
Investment income 334 459
Trading income arising from
– customer flow 343 119
– balance sheet management and other trading activities 235 220
Other operating loss (5) (3)
Total operating income before impairment losses on loans and advances 7 216 6 620
Impairment losses on loans and advances (638) (868)
Operating income 6 578 5 752
Operating costs (4 113) (3 629)
Profit before taxation 2 465 2 123
Taxation (315) (245)
Profit after taxation 2 150 1 878
Calculation of headline earnings
Year to 31 March
R'mn Reviewed Audited
2014 2013
Profit after taxation 2 150 1 878
Preference dividends paid (108) (109)
Earnings attributable to ordinary shareholders 2 042 1 769
Headline adjustments, net of taxation:
Revaluation of investment properties^ 46 –
Gain on realisation of available-for-sale financial assets^ (2) (28)
Headline earnings attributable to ordinary shareholders 2 086 1 741
^Taxation on headline earnings adjustments amounted to R18.2 million
(2013: R10.9 million).
Consolidated statement of total comprehensive income
Year to 31 March
R'mn Reviewed Audited
2014 2013
Profit after taxation 2 150 1 878
Other comprehensive income:
Items that may be reclassified to the income statement:
Fair value movements on cash flow hedges taken directly to other
comprehensive income* (75) (194)
Fair value movements on available-for-sale assets taken directly to other
comprehensive income* (212) 86
Gain on realisation of available-for-sale assets recycled to the income
statement* (2) (39)
Foreign currency adjustments on translating foreign operations 414 441
Total comprehensive income 2 275 2 172
Total comprehensive income attributable to ordinary shareholders 2 167 2 063
Total comprehensive income attributable to perpetual preference shareholders 108 109
Total comprehensive income 2 275 2 172
*Net of taxation of R120 million (2013: R1.4 million).
Condensed consolidated statement of changes in equity
Year to 31 March
R'mn Reviewed Audited
2014 2013
Balance at beginning of the year 23 509 20 933
Total comprehensive income for the year 2 275 2 172
Issue of ordinary shares – 1 361
Dividends paid to ordinary shareholders (75) (848)
Dividends paid to perpetual preference shareholders (108) (109)
Balance at the end of the year 25 601 23 509
Condensed consolidated cash flow statement
Year to 31 March
R'mn Reviewed Audited
2014 2013
Net cash inflow/(outflow) from operating activities 7 412 (14 560)
Net cash outflow from investing activities (154) (58)
Net cash (outflow)/inflow from financing activities (2 181) 4 191
Effects of exchange rate changes on cash and cash equivalents 410 406
Net increase/(decrease) in cash and cash equivalents 5 487 (10 021)
Cash and cash equivalents at the beginning of the year 14 973 24 994
Cash and cash equivalents at the end of the year 20 460 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
At 31 March Reviewed Audited
R'mn 2014 2013
Assets
Cash and balances at central banks 5 927 5 677
Loans and advances to banks 32 672 23 278
Non-sovereign and non-bank cash placements 9 045 5 875
Reverse repurchase agreements and cash collateral on securities borrowed 6 442 7 668
Sovereign debt securities 34 815 33 730
Bank debt securities 21 538 20 969
Other debt securities 11 933 6 258
Derivative financial instruments 12 299 12 161
Securities arising from trading activities 1 316 1 357
Investment portfolio 8 834 9 102
Loans and advances to customers 148 562 135 726
Own originated loans and advances to customers securitised 2 822 2 379
Other loans and advances 552 672
Other securitised assets 1 503 1 168
Interest in associated undertakings 52 45
Deferred taxation assets 75 55
Other assets 1 771 1 166
Property and equipment 219 224
Investment properties 84 1
Intangible assets 102 90
Loans to group companies 1 924 11 673
Non-current assets classified as held for sale 731 –
303 218 279 274
Liabilities
Deposits by banks 22 407 17 861
Derivative financial instruments 9 259 9 232
Other trading liabilities 1 431 1 063
Repurchase agreements and cash collateral on securities lent 17 686 18 188
Customer accounts (deposits) 204 903 185 311
Debt securities in issue 5 366 4 091
Liabilities arising on securitisation of own originated loans and advances 1 369 2 933
Liabilities arising on securitisation of other assets 156 588
Current taxation liabilities 1 288 1 142
Deferred taxation liabilities 61 61
Other liabilities 3 193 2 799
267 119 243 269
Subordinated liabilities 10 498 12 496
277 617 255 765
Equity
Ordinary share capital 32 32
Share premium 14 885 14 885
Other reserves 364 175
Retained income 10 320 8 417
25 601 23 509
Total liabilities and equity 303 218 279 274
Commentary
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.
Overview of results
Investec Bank Limited, a subsidiary of Investec Limited, posted an increase in headline earnings attributable to ordinary
shareholders of 19.8% to R2,086 million (2013: R1,741 million). The balance sheet remains strong with a capital adequacy
ratio of 15.3% as calculated in terms of Basel III (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
Salient operational features of the year under review include:
Total operating income before impairment losses on loans and advances increased by 9.0% to R7,216 million
(2013: R6,620 million). The components of operating income are analysed further below:
- Net interest income was marginally ahead of the prior year at R4,916 million (2013: R4,883 million) with the bank
benefiting from an increase in its loan portfolio, offset by a lower return earned on the credit investment portfolio.
- Net fee and commission income increased 47.9% to R1,393 million (2013: R942 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 decreased by 27.2% to R334 million (2013: R459 million) largely due to a lower return earned on
the bank's fixed income portfolio. The bank's unlisted principal investments portfolio continued to perform well.
- Trading income arising from customer flow increased to R343 million (2013: R119 million) due to increased client
activity, notably in forex transactions.
- Trading income arising from other trading activities increased 6.8% to R235 million (2013: R220 million) reflecting
improved activity on the balance sheet.
Impairments on loans and advances decreased from R868 million to R638 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 0.44%. The
percentage of default loans (net of impairments but before taking collateral into account) to core loans and advances
amounts to 1.50% (2013: 1.93%). The ratio of collateral to default loans (net of impairments) remains satisfactory at
1.55 times (2013: 1.44 times).
The ratio of total operating costs to total operating income amounts to 57.0% (2013: 54.8%). Total operating expenses
at R4,113 million were 13.3% higher than the prior year (2013: R3,629 million) largely as a result of increased variable
remuneration given improved profitability.
As a result of the foregoing factors profit before taxation increased by 16.1% to R2,465 million (2013: R2,123 million).
Accounting policies and disclosures
These annual 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 Guides 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 year ended 31 March 2014 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 12
Disclosure of Interests in Other Entities, IFRS 13 Fair Value Measurement, Presentation of other comprehensive income
(Amendments to IAS 1), IAS 19 Employee Benefits. Adoption of IFRS 10, IFRS 11, IFRS 12 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 an exit price 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 measurement of assets and liabilities of the Group, but
has resulted in additional disclosures.
The financial results have been prepared under the supervision of Glynn Burger, the Group Risk and Finance Director.
The annual financial statements for the year ended 31 March 2014 will be posted to stakeholders on 30 June 2014.
These financial statements 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
21 May 2014
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 22
Notice is hereby given that preference dividend number 22 has been declared for the period 01 October 2013 to
31 March 2014 amounting to 360.14541 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,
13 June 2014.
The relevant dates for the payment of dividend number 22 are as follows:
Last day to trade cum-dividend Friday, 06 June 2014
Shares commence trading ex-dividend Monday, 09 June 2014
Record date Friday, 13 June 2014
Payment date Tuesday, 24 June 2014
Share certificates may not be dematerialised or rematerialised between Monday, 09 June 2014 and Friday,
13 June 2014, 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).
- No Secondary Tax on Companies ("STC") credits has been utilised in respect of this preference share dividend
declaration.
- The net dividend amounts to 306.12360 cents per preference share for shareholders liable to pay the Dividend Tax
and 360.14541 cents per preference share for preference shareholders exempt from paying the dividend tax.
By order of the board
B Coetsee
Company Secretary
21 May 2014
Registered office Transfer secretaries
100 Grayston Drive Computershare Investor Services (Pty) Ltd
Sandown, Sandton, 2196 70 Marshall Street, Johannesburg, 2001
Investec Bank Limited Sponsor
(Registration number 1969/004763/06) Investec Bank Limited
Share code: INLP
ISIN: ZAE000048393
Directors Company Secretary
F Titi (Chairman), D M Lawrence ^ (Deputy Chairman), B Coetsee
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
Analysis of assets and liabilities at fair value and amortised cost
Financial
instruments
Financial at Non-
At 31 March 2014 instruments amortised financial
R'mn at fair value cost instruments Total
Assets
Cash and balances at central banks – 5 927 – 5 927
Loans and advances to banks 26 32 646 – 32 672
Non-sovereign and non-bank cash placements 27 9 018 – 9 045
Reverse repurchase agreements and cash collateral on
securities borrowed 6 442 – – 6 442
Sovereign debt securities 31 418 3 397 – 34 815
Bank debt securities 8 312 13 226 – 21 538
Other debt securities 5 337 6 596 – 11 933
Derivative financial instruments 12 299 – – 12 299
Securities arising from trading activities 1 316 – – 1 316
Investment portfolio 8 834 – – 8 834
Loans and advances to customers 13 008 135 554 – 148 562
Own originated loans and advances to customers securitised – 2 822 – 2 822
Other loans and advances – 552 – 552
Other securitised assets – 1 503 – 1 503
Interest in associated undertakings – – 52 52
Deferred taxation assets – – 75 75
Other assets 2 1 288 481 1 771
Property and equipment – – 219 219
Investment properties – – 84 84
Intangible assets – – 102 102
Loans to group companies (1 341) 3 265 – 1 924
Non-current assets classified as held for sale – – 731 731
85 680 215 794 1 744 303 218
Liabilities
Deposits by banks 1 22 406 – 22 407
Derivative financial instruments 9 259 – – 9 259
Other trading liabilities 1 431 – – 1 431
Repurchase agreements and cash collateral on securities lent 3 320 14 366 – 17 686
Customer accounts (deposits) 19 473 185 430 – 204 903
Debt securities in issue 3 135 2 231 – 5 366
Liabilities arising on securitisation of own originated loans
and advances – 1 369 – 1 369
Liabilities arising on securitisation of other assets – 156 – 156
Current taxation liabilities – – 1 288 1 288
Deferred taxation liabilities – – 61 61
Other liabilities 517 989 1 687 3 193
Subordinated liabilities – 10 498 – 10 498
37 136 237 445 3 036 277 617
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 that the entity can access at the
measurement date.
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).
Financial Level within the
At 31 March 2014 instruments fair value hierarchy
R'mn at fair value Level 1 Level 2 Level 3
Financial assets
Loans and advances to banks 26 – 26 –
Non-sovereign and non-bank cash placements 27 – 27 –
Reverse repurchase agreements and cash collateral on
securities borrowed 6 442 2 968 3 474 –
Sovereign debt securities 31 418 31 418 – –
Bank debt securities 8 312 2 227 6 085 –
Other debt securities 5 337 5 278 – 59
Derivative financial instruments 12 299 – 12 545 (246)
Securities arising from trading activities 1 316 1 316 – –
Investment portfolio 8 834 2 357 362 6 115
Loans and advances to customers 13 008 – 13 008 –
Other assets 2 2 – –
Loans to group companies (1 341) – (1 341) –
85 680 45 566 34 186 5 928
Financial liabilities
Deposits by banks 1 – 1 –
Derivative financial instruments 9 259 – 9 259 –
Other trading liabilities 1 431 763 668 –
Repurchase agreements and cash collateral on securities lent 3 320 2 963 357 –
Customer accounts (deposits) 19 473 – 19 473 –
Debt securities in issue 3 135 – 3 135 –
Other liabilities 517 – 517 –
37 136 3 726 33 410 –
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
Year to 31 March
R'mn 2014
Balance at 1 April 2013 83
Transfers due to application of IFRS 13^ 6 230
Total gains or losses included in the income statement (78)
Purchases 832
Sales (363)
Issues (175)
Transfers out of Level 3 (126)
Transfers into Level 3 239
Transfer to non-current assets held for sale (731)
Foreign exchange adjustments 17
Balance as at 31 March 2014 5 928
^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. For the year ended 31 March 2014, investments to the value of R239 million has been transferred into Level 3 due to inputs into the valuation
model becoming unobservable. R126 million has been transferred out of Level 3 due to inputs becoming observable.
The group transfers between levels within the fair value hierarchy when the observability of inputs change or if the valuation
methods change.
The following table quantifies the gains or (losses) included in the income statement recognised on Level 3 financial instruments:
Year to 31 March
R'mn 2014
Net interest expense (2)
Investment income (133)
Trading income arising from customer flow 57
Total gains or (losses) included in the income statement (78)
R151.2 million of the total loss shown in investment income is an unrealised loss.
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
Balance Range which statement
sheet Significant unobservable Favourable Unfavourable
value unobservable input has been changes changes
At 31 March 2014 R'mn Valuation method input changed stressed R'mn R'mn
Assets
Other debt securities 59
Discounted cash flows Discount rates (3)/2% 8 (7)
Derivative financial
instruments (246) 134 (77)
Black Scholes Volatilities 25%/40% 74 (41)
(50bps)/
Discounted cash flows Credit spreads 50bps 4 (12)
Other- Various- -
56 (24)
Investment portfolio 6 115 Other- Various- -
1 260 (702)
Total 5 928 1 402 (786)
-Other – The valuation sensitivity for the private equity and embedded derivates (profit share portfolios) has been assessed on an adjustment to various inputs such
as expected cash flows, discount rates, PE ratios. It is deemed appropriate to reflect the outcome in totalility for the purposes of this analysis.
Fair value of financial assets and liabilities at amortised cost
At 31 March 2014 Carrying Fair
R'mn value value
Financial assets
Cash and balances at central banks 5 927 5 927
Loans and advances to banks 32 646 32 646
Non-sovereign and non-bank cash placements 9 018 9 018
Sovereign debt securities 3 397 3 476
Bank debt securities 13 226 13 790
Other debt securities 6 596 6 780
Loans and advances to customers 135 554 135 958
Own originated loans and advances to customers securitised 2 822 2 822
Other loans and advances 552 552
Other securitised assets 1 503 1 503
Other assets 1 288 1 288
Loans to group companies 3 265 3 747
215 794 217 507
Financial liabilities
Deposits by banks 22 406 22 718
Repurchase agreements and cash collateral on securities lent 14 366 14 419
Customer accounts (deposits) 185 430 185 657
Debt securities in issue 2 231 2 231
Liabilities arising on securitisation of own originated loans and advances 1 369 1 369
Liabilities arising on securitisation of other assets 156 156
Other liabilities 989 989
Subordinated liabilities 10 498 10 575
237 445 238 114
www.investec.com
Date: 22/05/2014 07:58:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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