Investec PLC and Ltd on Thursday reported a dip in interim profit as impairment charges mounted, with the financial services firm facing high inflation, rising interest rates and ongoing market volatility.

The Sandton, Johannesburg-based company said pretax profit from continuing operations dropped 20% to £404.3 million for the six months that ended September 30 from £508.4 million a year earlier.

Investec classified its UK Wealth & Investment as discontinued after this unit merged with Rathbones Group PLC in September. Investec now owns a 41% stake in Rathbones.

For the first half, expected credit loss impairment charges surged 57% to £46.3 million from £29.4 million. The credit loss ratio was 32 basis points, compared to 16 basis points, towards the upper end of

its through-the-cycle range of 25bps to 35bps.

Net interest income was up 12% to £682.6 million from £607.8 million, driven by strong corporate loan growth and rising global interest rates.

Funds under management in Southern Africa rose 2% to £20.2 billion as at September from £19.8 billion as at March 31, mainly driven by discretionary net inflows of R 7.3 billion and currency translation gains on dollar-denominated portfolios, partly offset by non-discretionary net outflows of R 2.6 billion.

Investec declared an interim dividend of 15.5 pence, up 15% from 13.5p.

Earnings per share surged 38% to 69.6p from 50.6p, and headline EPS rose 15% to 36.9p from 32.0p. EPS includes a gain of £361.8 million on the combination of Investec Wealth & Investment UK with Rathbones.

Since November last year, Investec has repurchased about 64.7 million shares or 6.4% of shares in issue, amounting to R 6.8 billion or £300 million. It launched its R 7 billion, about £350 million, share buyback in November last year.

Chief Executive Officer Fani Titi said: ‘The group has delivered strong results against a difficult macroeconomic backdrop which was characterised by high inflation, elevated global interest rates and persistent market volatility.’

Investec expects its credit loss ratio to remain within a range of 25bps to 35bps.

Shares in Investec were down 0.2% at 532.30 pence each on Thursday morning in London, but traded 0.1% higher at R 118.62 each in Johannesburg.

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