Investec warns of first-half profit drop as restructuring costs bite
* H1 costs nearly double to 42 mln stg
* Brexit, trade wars, FX a drag; demerger on track
* London-listed shares down 6.1%
(Recasts, adds detail, background, bullet points, updates
By Pushkala Aripaka and Simon Jessop
LONDON, Sept 20 (Reuters) - Anglo-South African financial
services company Investec said its first-half
profit will be lower than a year ago due to a jump in
restructuring costs and as global trade tensions and Brexit roil
its key markets.
Investec, which provides asset management and specialist
banking services, has been streamlining its operations by
selling and shutting some units and restructuring businesses.
Investec's London-listed shares fell as much as 10% in early
deals to lead fallers in the mid-cap index, after it
revealed costs would nearly double to 42 million pounds ($53
million) and headline earnings per share are expected to be 15%
to 18% down on last year.
At 1010 GMT, the stock was trading down 6.1%.
In a pre-close trading update, Investec said the hike in
costs related to the closure of its private equity direct
investments business in Hong Kong, part of its UK wealth
operation and the restructuring of its Irish branch in
preparation for Britain's exit from the European Union, although
this was partially offset by the sale of its Irish wealth
Plans to spin off its asset management unit were on track to
complete next year at a cost of 7.5 million pounds.
Investec said it remains committed to the bank and wealth
unit's three-year targets.
Earnings were also hit by a 2.8% depreciation of the rand
against sterling during the period, it said, adding to market
weakness, including in its British banking operations.
"Market variability and persistent uncertainty relating to
Brexit and global trade wars, has negatively impacted investment
banking fees and trading income," Investec said as it warned
that its UK specialist banking unit's profit would be
($1 = 0.7975 pounds)
(Reporting by Pushkala Aripaka in Bengaluru
Editing by Saumyadeb Chakrabarty and Elaine Hardcastle)
First Published: 2019-09-20 08:41:08
Updated 2019-09-20 12:30:18
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