Investec forecasts earnings growth as South Africa offsets UK decline

Investec, the Anglo-South African bank and wealth manager, has issued a financial forecast projecting a modest rise in adjusted earnings per share of between 3% and 7% compared to the previous interim period. The group expects adjusted earnings per share to fall between 41.7p and 43.3p.

The bank’s performance shows a divergence between its two primary regions. The Southern African arm is expected to drive growth, with funds under management in the wealth business increasing by nearly 14% since March to £30.7 billion. This strong performance in South Africa is expected to offset a projected decline in the UK business, where operating profit is forecast to decrease by 2% to 6%.

In the UK, the bank cited challenges such as falling interest rates, which impact the endowment effect, and increased pricing competition that has narrowed lending margins. Despite these headwinds, core loans rose to £37 billion at the end of August, and customer deposits reached £46 billion. The bank described its overall lending quality as sound and reaffirmed its long-term profitability targets for 2030.