Investec stock declines on rising bad debts, fall in profit
Renée Bonorchis
Financial Services Editor
INVESTEC’s share price closed more than 3% lower yesterday, after the banking group said its net profit before tax for the nine months to December had fallen 16,6% due to rising bad debts.
Although profit figures are expected to show a decline, Investec also said core loans and advances had grown by 12,9%, customer deposits increased by 6,2% and the group’s capital adequacy ratios were well above those required by Basel 2, with the local bank showing a ratio of 13,5%. The group added that it had about £4,7bn (about R68bn) in cash and near cash.
Rob Nagel, an equity analyst at Cadiz African Harvest, said Investec had shored up an enormous amount of capital that would stand the investment bank in good stead if it wanted to take risks in the future. “Investec has now shown it’s almost in a league of its own,” Nagel said.
In the past year Investec’s share price has been clobbered, losing 40% of its value, partly because of its London listing and its exposure to the negative sentiment surrounding international banks. Nagel said this meant the upside in Investec’s share price “could be huge” — he was rating it as a good stock to buy.
Since the beginning of last year Investec’s stock has shed 40% of its value but the bank said yesterday it had continued to contain costs and that net operating income had increased by 9,2%. |
