Investec Plc reported a resilient first-half performance despite a difficult macroeconomic backdrop on Thursday, with adjusted earnings per share rising 2.5% to 40.5p as diversified income streams and continued client activity helped offset lower interest rates and weaker investment income in South Africa.
Group chief executive Fani Titi said the firm had "delivered resilient results in a challenging macro-economic environment characterised by geopolitical uncertainty and ongoing market volatility," adding that its progress reflected its commitment to clients and the strength of its business model.
"Our commitment to supporting our clients and the diverse nature of our revenue streams underpinned our financial performance," he said.
"Over the past 12 months, we have returned £376m to shareholders ... through ordinary dividends and share buybacks."
Adjusted operating profit fell 1.4% to £468.1m, while revenue edged 0.6% lower to £1.10bn on a sterling basis but rose 2.4% in rand terms.
Net interest income benefited from growth in average lending books and lower funding costs in Southern Africa, though that was offset by lower average interest rates.
Non-interest income rose on higher fee income in the UK banking operation and increased annuity fees in the South African wealth arm, but trading and investment income fell short of the prior period, which had been buoyed by positive sentiment after South Africa's Government of National Unity was formed.
Credit performance remained robust, with the credit loss ratio improving to 35 basis points from 42 basis points a year earlier, within the group's through-the-cycle range.
Expected credit loss charges fell to £59.3m, and Investec said overall credit quality showed "no evidence of trend deterioration".
Return on equity slipped to 13.6% from 13.9%, while return on tangible equity eased to 15.7%.
The board declared an interim dividend of 17.5p per share, up 6.1% year-on-year and representing a payout ratio of 43.2%.
The group had repurchased about £46m of a £100m buyback programme launched in May.
Net asset value per share rose 5.6% since March to 608.1p, while tangible NAV increased 7.4% to 527.9p.
Lending and deposit growth remained steady, with net core loans rising 8% on an annualised basis to £33.7bn and customer deposits increasing 3.6% to £41.9bn.
Funds under management in the Southern African wealth business grew 13.4% to £26.5bn, supported by £478m of net discretionary and annuity inflows and a strategic acquisition by the group's Swiss arm.
Titi said Investec was "progressing well" with plans to build scale, deepen client relationships and allocate capital more effectively, targeting an incremental return on equity uplift of about 200 basis points by the 2030 financial year.
"Our strong capital generation has allowed us to deliver sustainable returns to our shareholders, invest in initiatives to enhance our offering, and support our clients, colleagues, and societies through an evolving economic environment," he said.
Looking ahead, Investec said it expected second-half performance to be broadly in line with the first six months.
It forecast a full-year return on equity of around 13.7%, within its 13% to 17% target range, and said the credit loss ratio should remain within its through-the-cycle parameters.
The group said the cost-to-income ratio would likely rise to between 52% and 54% amid ongoing investment and inflationary pressures, but that capital and liquidity levels remained strong.
At 0921 GMT, shares in Investec Group were up 0.03% in London at 580.17p.
Reporting by Josh White for Sharecast.com.