Investec’s strategic alignment boosts business

SHARE   |   Sunday, 06 July 2014   |   By Kabelo Adamson

Investec Limited, an investment and asset management outfit listed on the Botswana Stock Exchange (BSE) foreign bourse, has revealed that its strategic alignment towards low capital intensive businesses and the simplification of Specialist Banking business model over the past few years have resulted in a scalable platform from which the group’s business continue to grow.

The investment group, which has businesses in investment banking, retail banking as well as related banking services, has announced in its annual report for the period stretching from the 1st of April 2013 to the 31st of March 2014 that it has recorded an increase of six percent in operating profit. Investec Limited has its core business focused mainly in South Africa, United Kingdom and Australia but over-stretches to several other countries.

Though the group has acknowledged decline in profits in the Australian market, it was however not the case in South Africa and UK where business recorded an increase in operating profits of 25.3 percent and 24.4 percent respectively. The group blames the depreciation of Rand to Pounds exchange rate of approximately 20 percent over the year for contributing to the group’s overall negative results even though it says during the period it experienced an improved operating environment across all areas of operations.

The group says in the 2014 financial year significant progress was made in terms of reshaping the group and dealing with a number of legacy issues. “The group’s businesses have sound franchises which have continued to broaden their client bases and grow organically,” reads part of the report.

Reflecting on its strategic priorities from a year ago, Investec says momentum in Asset Management was maintained while the Wealth and Investment business wing also performed well in organically growing its market share and internationalising its offering. As part of its strategy to improve returns in the Specialist Bank, 2014 saw Investec investing a significant time and resources on simplifying the business model.

Investec has maintained that equity market returns in 2013 were the strongest since 2009 due to central banks preserving accommodative monetary policy across the globe. The company further says it has noticed increased consumer confidence and business in both the UK and the USA. However global economic growth remained below the long term trend.

In Australia, the group blames slower mining demand and a squeeze on domestic expenditure for the through the fiscal consolidation programme which took toll on the pace of output expansion.  It is a different story in the UK market as the economy has experienced a strong recovery over the past year as a result of increased confidence, easier access to credit and better global economic conditions.

“Most sectors and regions of the economy are now showing positive growth trends, with recent signs that business investment is also starting to pick up,” says the report.