Behind the headlines, this IVTJF report encourages me to continue holding my slightly profitable position now:
Investec sees H1 2010 profit lower
Thu Sep 17, 2009 6:09am EDT
* Impairments rising; S.Africa, Australia operations weak
* Core loans and advances up 3 pct to 16.7 bln pounds
* Shares up, outpace stronger market (Adds CEO, trader comments, background)
By Serena Chaudhry
JOHANNESBURG, Sept 17 (Reuters) - South African investment bank and asset manager Investec (INLJ.J) expects first-half profit for 2010 to be lower due to rising impairments and weaker performances at its Australian and South African units.
Investec, which is also listed in London (INVP.L), said on Thursday it expected the annualised credit loss ratio on core loans and advances to be between 0.95-1.1 percent for the six months to end-September and said net operating income would fall.
Core loans and advances since end-March rose 3 percent to 16.7 billion pounds ($27.64 billion).
The firm said its UK and European operating profits would be higher than the previous corresponding period, but said first-half profit at its Australian and South African operations would be lower.
"It has been quite hard to originate loans," Chief Executive Stephen Koseff said at an investor briefing.
"Many people say that banks are not lending, but the reality is that people are not borrowing, more than banks are not lending."
Unlike South Africa's main domestic lending banks, Investec had some exposure to the U.S. sub-prime market, although it has not suffered the huge losses seen at some of its international counterparts.
But its South African operations have been hit due to a drop in consumer demand as the country battles its first recession in 17 years.
Its shares rose 2.47 percent to 56.05 rand by 0922 GMT, outpacing a stronger JSE financial index .JFINI. In the U.K., its shares rose 2.52 percent to 4.40 pence.
"It did go better this morning ... What is encouraging is that it hasn't been hit. People seem to be taking the trading update well," Tubby Goodwin, a trader at Investec Securities in Johannesburg, said.
Investec said its business in capital markets was performing ahead of the first half of 2009, thanks mainly to its Kensington Group unit, where business had improved as house prices stabilise. The total book at Kensington, which Investec acquired in August 2007, fell to 4.9 billion pounds from 5.2 billion.
Investec, South Africa's fifth-largest bank by assets, said it had 6.6 billion pounds of cash and near cash to support the group as it seeks to strengthen its market position on signs the financial system is stabilising.
"I think there's opportunities in lots of sectors ... We're open for business, moving out of defensive mode," Koseff said.
The company reported in May full-year profit dropped by a quarter as its loan book was under pressure. |
