Investec has warned that its wealth and investment business’s first half performance will be “behind the prior period.”
According to a pre-close briefing statement covering the first half of the year ended 31 March 2019, the UK part of the business was “impacted by higher costs, largely driven by growth in headcount to support IT initiatives and the implementation of the Markets in Financial Instruments Directive II (MiFID II) and the General Data Protection Regulation (GDPR) “
At the same time “lower activity levels” impacted the South Africa arm.
Despite this it is expected to report higher funds under management. “Since 31 March 2018 assets under management have increased by 2.4 percent to £57.4 billion (an increase of 7.1 percent on a currency neutral basis),” it said.
Net inflows to the end of August 2018 were £0.6 billion with “solid discretionary net inflows partially offset by outflows relating to discontinued services.”
The bank will release its interim results on 15 November 2018.
At the same time as releasing the pre-close briefing, the bank also said that while there are “ compelling current and potential linkages” between its specialist banking and wealth & investment businesses, there are “limited synergies” with Investec Asset Management.
As a result, the board has decided to demerge and list the asset management business. This is still subject to approval from the regulator and shareholders, but the process is expected to complete in the next twelve months.
"Our individual businesses are well-positioned strategically, with strong market positions and good prospects. It is now the right time to demerge and list our asset management business to support it in the next phase of its development,” Stephen Koseff, chief executive, and Bernard Kantor, managing director, said in a joint statement. “In recent years we have also made good progress in expanding our banking and wealth management franchises in our two key markets and improving their operational and financial performance. We believe the transaction will allow these businesses to fulfil their full potential and shareholders will benefit from future value creation through direct ownership of two separately listed companies."