Investec plc

Ladies and gentlemen, good morning. I always love the zebras galloping along. It really is my pleasure to welcome you to this presentation of our interim results. I will be joined by what I call the A-Team. Nishlin will follow me and he will go through the unpacking of the group performance. And we will then have Ruthless, the chief executive of the business in the UK, giving us a bit more of a feel of why the business has done as well as it has. And of course, Richard Wainwright, who will give us a feel of the our South African business. That is the A team. So let me start. It is always pleasing to present a good set of results. Obviously, we have alerted the market to the fact that our performance will be good. And as you know, the backdrop has been particularly challenging with high inflation, high interest rates, volatility within markets, given some of the problems, particularly geopolitically. So it hasn't been an easy environment to deliver the results. So on behalf of 7,400 of us, it is my absolute pleasure to present these results, and obviously we will be joined by my colleagues. So if you look at the graphic that we have on the screen, we try to manage the business over the long term. It may be a six months result presentation, but our focus is always on the long term. And you can see that over the last three or four years, we have delivered consistent results that have continued to deliver into the promises that we made to the market in February 2019. And we are now at a point where we are comfortably meeting the targets that we set at that time. I mean, clearly we've continued to entrench and grow our client franchises. And in these numbers, in the graphic, the second graphic, you can see that we continue to see good growth in funds under management, good growth in our loan books, and importantly also good growth in our deposit books. These are the drivers of long-term performance growth. The performance you see today is actually a consequence of the growth that we saw last year in our client numbers and in the books that we were able to grow from last year. In this period, we also have concluded a pretty strategic transaction for us in that we combined our wealth business in the UK with Rathbones, consequently creating the UK's largest and leading discretionary fund manager. Very, very proud about the transaction and very hopeful about the benefits that that transaction brings. will create for us. We're also nearing the completion of our share buyback program. We announced that we would be buying back shares worth about 350 million sterling. We are close to it. In rent terms, we are now just under seven billion rent. in terms of the buyback nichelin will talk a little more about other strategic actions that we undertook over the last 18 months or so and their impact on the numbers So if I may just look at the snapshot of the numbers, we have reported adjusted earnings per share. It's a bit difficult to see that far. Adjusted earnings per share of 38.7 P, which represents a growth of just under 18% in pound terms, and in rent terms, 39%, a pretty predictable performance. Our adjusted operating profit at 441 million sterling represents an 11% increase over the prior year in pounds and a 32% increase in rents. Clearly, you can see the impact of a depreciating rent on our numbers. And for our South African shareholders, we thought we will try to get a few metrics reported also in rents. Our cost-to-income ratio has improved to 53.3%, reflecting the fact that our revenues continue to grow faster than our costs. And Nicheline will unpack that a little later. our credit loss ratio at 32 bps remains within our through the cycle target range so we're quite comfortable with the asset quality of our book and in fact our exposures are well covered by collateral we also did signal that in the uk we will have a slightly elevated credit loss ratio and ruth is here to unpack that a little later I have indicated that our return on equity is now inside of the haggard range, helped this time by strong operational performance, but also the impact of the share buyback in reducing the number of shares. Richard will tell you that because we used cash from the South African balance sheet that we have foregone interest earnings in South Africa. I leave that to Richard to unpack a little later. Lastly, on this slide, if you look at net asset value, which grew in pound terms just under 10%, in rent terms about 27%, 26%, we have specifically two particular contributions, one being operational earnings. We're generating a lot of capital. The second is obviously the impact of the combination of Rathbones and Investec wealth and investment. We were very pleased that the board declared a dividend of 15.5 P, which is an increase of 15% over the prior period in line with the increase in adjusted EPS. So we're quite pleased with the performance. If we look at the geographic performance of the business, you can see that the important metrics are going in the right way. And we have shown you the performance in home currency so that you can see the impact of the rent on our numbers. The loan book in each geography grew quite nicely, higher single digits. Deposits equally have grown pleasingly. Funds under management have grown, and clearly within the UK context, we are now reporting IWI funds under management inside of Rathbones. indicated the cost of income ratio in South Africa fairly flat, a good improvement within the UK business, and Ruth will unpack the credit loss ratio of 55 basis points. In South Africa, we continue to see our credit experience being much stronger than where we have guided in terms of our through the cycle range of 20 to 30 basis points. return on equity and return on tangible equity very pleasingly within the ranges that we have The numbers are obviously quite good in terms of financial performance, but we manage the business for the interest of all our stakeholders. Sustainability for us remains a key priority. As you know, we did indicate that we will be going down the route of more granular disclosures. We disclosed our scope three emissions last year, and we will continue down the route of making sure that we continue to sharpen our disclosures as the standards become better understood across the world. We also have published the commitments, both short-term, medium-term and long-term, that we will live by over the next period. As our purpose indicates, We exist to create enduring worth. So we manage the business for the long term and for all our shareholders. Nish, I think it's your time to unpack the numbers. Ruth, I'll make sure that your papers are still here.

It's funny, that's perfectly on time. Now the pressure's on. Morning to everyone, and it's an absolute privilege to be in front of you. I think just as I unpack the results, let's just set the context because we talk about a tough macroeconomic environment, and let's just take a look at some of that. I think if you look at GDP growth in both markets that we operate in and in several markets, there's obviously been constraints applying. And, you know, we did see some of the post-recovery from the COVID period, and that's pretty much coming through the system. But the constraint and the inflationary impact and the battle to bring inflation under control is underway. I think we still hear some conflicting views in terms of how long that will take, but that battle is in play. Looking at markets, markets have been volatile. I think since September last year, we've seen an improvement in markets. Since our March year end, they've actually have pulled back a little bit in certain jurisdictions and have moved forward in certain jurisdictions. But the volatility remains. In terms of the RAND, we've said that we have around about an 18.6% depreciation rate in the Rand Sterling, and since the year end, the South African Rand has weakened by about 4.5%, so not that material on the balance sheet overall. In terms of global interest rates, I think we have seen global interest rates climb sharply, and in certain jurisdictions they are having a longer impact. But I think what's important for us as we unpack the Investec results is really to look at interest rates in our two markets. I think whilst we have seen interest rates climb sharply, I think the time where we experience zero rates, particularly in the UK bank, since the financial crisis, that time is over. And whilst we anticipate rates to normalize at some point or to come back at some point, it's definitely not to that low level that is reflected on that chart. From a South African perspective, rates have climbed. It's a little higher than where we would desire it to be, and we will expect some normalization of rates, but again, just cognizant of the long-term positioning. When we go through these results, we're mindful of... short-term measurement. So to some extent, some of these strategic actions might have had a negative impact on revenue, a positive impact on earnings per share because of the way accounting works. But I think all of these really position the group well for the future. The Rat Bones transaction, which completed on the 21st of September, really created a business with a strong platform and Investec's commitment to that particular market being part of the DNA of our client pool. With Investec holding 41.25% interest in the business, we now effectively will report it as an associate. So you will see revenue recognized as a single line as profitability, and that's an after-tax return. So it has created a 2% improvement in our cost-to-income ratio. Overall, when Fani quotes the improvement to 53.3%, That's an improvement on a comparative of 55.5% having adjusted for this effect. I think from a Burnstone perspective, Investec Property Fund, that is now pretty much independent from Investec. We continue to hold just over 24% interest in the underlying fund, and we're excited about the business. We're excited about how it is positioned. And with the sale of the property management company into the fund itself, it really positions it for the future. Last year, we distributed 15% of our hold in 91, and we hold just over 10% on our UK balance sheet. And then the buyback. We've executed around about 6.8 billion rand, and that's reduced revenue by about 300 million rand. But you see operating profit increasing by 10% and adjusted earnings increasing by 17%. And that's really where the positive impact of these actions are reflected in these results. And then with regard to our investment in BUD, in the BUD group, or formerly known as IEP, we continue to realize the underlying portfolio in a responsible and positive manner. Funds under management. I think last year you would have seen us report funds under management of just over 60 billion rand. Well, part of that, 60 billion pounds, 40 billion of those funds under management are now part of the rat bones group. And with the combination, we now have a business that manages just over 100 billion pounds of AUM in this market. The South African business, and I think when Richard unpacks it, you will see that that business generated net inflows in this type of market of just over 7.3 billion rand in the period, something that we are really proud of for the business. And that continues to be a well-placed business in the South African context, managing international clients. Loans and advances growing by 8.7% on an annualized neutral currency basis and customer accounts growing by 3.4% again underpins the growth in the business that will support the future. In terms of revenue, revenue has now grown by 14.6% to just over a billion pounds, in fact, close to 1.044 billion pounds for the half year. And if we look at the line items, again, just noting that currency does have an impact, so some of the Stronger returns from South Africa are reflected in a subdued manner in a sterling set of accounts, but we will go through some of the detail. Net interest income growing by £75 million in this period is really a function of the growth in the book and sustained growth over the last few years, as well as higher interest rates benefiting the endowment capital that we have in the group. Net fees and commissions actually grew positively in both geographies. And to some extent, the constraints in the market is really reflected in this line because you have lower turnover, particularly in our private client lending spaces and mortgage origination, just given where rates are at this point in time. In terms of income from investments and associate income, there's about 28 million pounds that we have foregone. And that's really the distribution of 91 and not equity accounting IEP. So the negative is really the representation of that. And for all intents and purposes, not real growth in terms of overall investment income in these markets. Trading income reflects continued strong customer flow activity across our balance sheets, as well as some of our structural hedging activity coming through that line. Other operating income, really marginal improvement over here. Cost-to-income ratio improving to 53.3% from 55.6%. And again, I reiterate, these are completely rebased for the business as we look forward. Operating income increasing by 8.6% and operating costs increasing by 4.1%. Now, we've provided forward guidance that we anticipate the cost-to-income ratio to be in the range of 55% for the full year. So there is a rebase in our target of less than 63%, and we'll communicate that rebase when we get to the full year results. If we unpack costs, now, to some extent, again, the RAND is underplaying the growth in costs because we've continued to invest in our businesses. We've continued to add investments. you know, skills and systems that will really underpin the business as we look forward. And, you know, overall, however, costs growing on a fairly muted basis with personnel costs growing by just over 5% in a high inflation environment. Our group investments portfolio, there will come a time when we don't track this in this level of detail, but we have about £272 million of capital deployed. And against, you know, 91, which continues to produce an ROE in our books of just over 20%. The Burnstone Group, relatively muted contribution in this current period. And the Budd Group, we've changed the measurement basis to that of fair value. So we're not representing the equity accounted income from the underlying business any longer. And with the ROE, if at around about 3.9%, there is an element of drag on the overall ROE. Now, if we look at the overall performance, bringing the picture together, you see that operating profit has grown by 11% from 397.1 million pounds to 441.4 million pounds. With South Africa growing by 6% over the period, again, I just reiterate that there are certain elements that have been foregone because of the strategic actions, but a strong contribution on the very, very bottom line. The ROE in South Africa now at 16%, with ROTE at 16.1%. From a UK perspective, we see the bank in the UK growing by 61%, and the wealth business contributing just over 11%. And again, heading into South Africa, I think I forgot to mention the wealth business growing by 37% in RAND terms, a very strong contribution, given the underpin of the continued growth in AUM over the period and prior periods. Group investments, these lines are expected to be read because that's really where we've had the execution with regard to some of the actions that I've mentioned before. But again, with the UK printing an ROE improvement from 11.1% to 13.6% and return on tangible equity at 16.7% overall. I think, you know, adjusted operating profit growing by 14.3%. If we just look at credit loss, what we attempted to do on this chart is just to give you some history. starting at pretty much pre-pandemic, and this is a six-monthly view, because you can see that we've had some degree of normalization of impairments as we've come out of COVID and the sort of release of some of those provisions held at that stage. But we continue to maintain robust provisions on our balance sheet for the overall exposures, taking into consideration the level of collateral that is supported. So if we look at our absolute impairment charge of credit loss ratio of 32 basis points, we've indicated that in the UK that credit loss ratio is around about 55 basis points. And to some degree, that represents some individual higher provisioning in certain exposures, but nothing that we call out from an overall asset quality perspective because we've really seen robustness in our overall book. South African business continues to benefit from some recoveries, and that credit loss ratio at eight basis points, we guide the market to the fact that we will anticipate that over time it will tend towards the 20 to 30 basis points. And from an absolute number perspective, as you look on the left-hand side and the right-hand side of the chart, we do end up with a higher level at this stage, but we also have higher books. So that's really anticipated. Unpacking ROE and capital deployed across the group, I think from a UK perspective, you see that the capital base is now an average of 2.7 billion pounds. There is some increase in the capital base because of the rat bones transaction, on which we recognized a gain as we marked the associate to its transaction value. And from a South African perspective, with capital at about 1.8 billion pounds, A few years ago, that was closer to £2.2 billion, so we have pulled in capital given the strategic actions that have been taken. That business continues to generate capital and will continue to build. And again, unpacking ROE. In the UK, the differential between ROE and ROTE really represents the nature of being invested significantly in a capitalized business. That's in rat bones. Just to give you some detail around the growth in net asset value, really underpinned by growth in profitability in the period. It would... a fair amount of distribution to shareholders, the gain from the rat bones transaction, and some negativity because of the weakening of the RAND. And then from a tangible net asset value perspective, we have actually separated the investment in our associate, identifying a portion that is intangible, and that is really what's represented in the 77 million pounds. Now, we would have previously had some intangibles in our carrying value of wealth and investment in the UK. Our capital and liquidity positions remain robust and strong. You see that our cash and near cash position of 16.4 billion pounds and at loans and advances to customers as a percentage of our customer deposits at 76.9 billion pounds. In South Africa, we report under the advanced methodology. Sorry, Fadi, I used the wrong quote. Yeah, percent, not pounds. In South Africa, we report under the advanced methodology, and you see that the capital ratio is reduced from 14.7% to 13.2%. Again, that's intentional, and it was really execution of some of the strategic actions on that particular balance sheet. In the UK, we report under standardized with a capital ratio of 11.7% and a leverage ratio of 8.7%. Overall capital ratios, again, remaining well ahead in total. So that's the summary of the group. I'm now going to hand over to Ruth. Thank you.

Thank you, Fani. I see my papers are here. Thank you, Nishlan. Good morning, everybody. And it's a real pleasure to host the interim results here at our offices in London. A warm welcome to Stephen Kossoff, one of our founders, who's here with us today. A real honor and a pleasure to have you with us in London. I'm going to begin with providing a short overview of our strategic positioning, strategic positioning of Investec in the UK. I will then move on to provide some highlights around the Investec PLC figures and provide some details on that. And lastly, have a look at where we see growth opportunities going forward. Next year, Investec Group will celebrate its 50th anniversary, and we in the UK have been here for 30 years. We recently celebrated that anniversary. So a long time for us in terms of history, not a long time from a British history point of view, but certainly for us as Investec, arriving in the UK 30 years ago, we have been building a fundamentally scalable platform which has reached a strong level of scale at this point in time. This is an exceptionally competitive market, as you all know. We are competing with the very best of British banks, US banks, European banks, as well as private credit funds, FinTech, and everybody else who is here in London, which, after everything everybody has said, is still a very, very attractive place to do business. And we consider it to continue to be a financial center in the world. but a very competitive space. So we had to carve out for ourselves a niche or target market areas where we could actually compete. We have to differentiate ourselves from others. So we have found a space in the mid-market in the UK, and we see ourselves as unique in this space in that we deliver a breadth of capabilities, really a diversity of what we offer in this space. Our strong competitors typically do one or two or three things of the things that we do. For example, strong competitors in equity capital markets, or strong competitors in mortgages, or strong competitors in asset finance, or in real estate finance. But in terms of bringing this all together, in terms of corporate and investment banking activities, as well as private banking activities, taking our clients on both their personal journeys and their business journeys here in the small and mid cap space in the UK is something unique, and actually we don't have a competitor similar to us, of the order of size and scale that we are at, and actually providing a seamless experience to clients. These are clients that we have dealt with for many, many years. We have built deep client relationships, and we continue to acquire new clients, even in this challenging macroeconomic environment, acquiring new clients as well as doing more business with our existing clients. So today we have a net core loan book of 16.3 billion pounds, customer deposits of 19.9 billion pounds. For the six months to September 23, Investec PLC has delivered 235.4 million pounds of adjusted operating profit and a return on tangible equity of 16.7%. We see this business as high tech and high touch. We're not apologizing for being high touch. The mid-market space is a place where relationship banking is still alive and well. It is a place where banking is not commoditized, where our pricing is not necessarily the cheapest, but where we can actually differentiate ourselves in terms of relationship, in terms of service, in terms of our ability to execute a transaction, to say we'll do something, commit to doing that and do that, and be very agile in our approach, and always focused on providing exceptional service. In what we've been driving over the last few years since COVID in a connected client ecosystem, structured the bank as one single bank, one leadership team. We've arranged our sales with the client truly at the center of what we do. Investec has always been around putting the client truly at the center of what we do, arranged around client groupings, private clients, private companies, private equity, listed companies, and then, of course, interacting from a wealth management perspective, servicing these business needs and the personal needs. This is really resonating with our clients. In fact, our greatest client acquisition comes from referral from existing clients, which means that they are really enjoying the client experience with us, and it is consistent across different areas of our business, whether you're interacting with us on the private client side or in terms of corporate and investment banking. On the private client side, we have grown our franchise very strongly. We have found a niche where we can compete even in a market like this where mortgage demand has been subdued. We have acquired new clients each and every month. and we continue to build for the franchise. So a strong momentum here across all our activities, lending, advisory, hedging, transactional banking, and deposits. From a deposit perspective, we are substantially retail funded across the retail market of the United Kingdom. Our wealth business interacts with thousands of clients on the wealth management side, and then of course we have the clients that we interact with in corporate and investment banking. So what I'm trying to portray to you is that we really touch and interact with a large portion of the community in London and in the broader UK, and then very much internationally connected to our other businesses in the United States, in Europe, based in Ireland, in the Channel Islands, and of course in India. Each of these businesses connecting to the global franchises that we have and growing strongly together with us. These cogs and the momentum in the business really driving together and moving forward strongly. Snapshot of the results. Nishlan has covered quite a lot of this already, so I will just draw out a few highlights to tell you where we stand here. Revenue for Investec PLC, I'm talking to both banking and wealth management here, £595.4 million of revenue, which is 24% up from the prior period. If you look at our adjusted operating profit, which I mentioned earlier, this is 41.4% up on the prior period. I mentioned our return on tangible equity on the previous slide, but looking at return on equity, still strong at 13.6%. And the cost to income ratio improving significantly down to 53.9%. Here's some detail for you to really unpack how the numbers come together, which you can look at later. We saw 9.1% growth in our net core loans to the 16.3 billion book. This is diversified across different areas of activity. It is that diversity that enables us to grow in spite of challenging market conditions. There are always pockets of growth in areas where, you know, certain areas where there's muted growth, for example, in mortgages. Of course, mortgage demand is significantly down in the U.K., given the spike in interest rates that we've seen, and also given that we deal only with high net worth individuals when doing mortgages, and these individuals have sought to reduce their mortgages, paying down their debts, using excess liquidity in order to do so, and therefore redemptions have actually also been high in the mortgage space. But our corporate and other lending has actually grown at a much faster pace. We have not changed our lending standards. We are as cautious as always in terms of lending in these types of environments, particularly where interest rates have increased so much. What you are seeing in our loan growth is that we are gaining market share in each of the areas where we are doing business. In many of our businesses, we are only one or 2% or single digit figures in terms of market share. Therefore, in order to grow and take advantage of that across 10 or 15 different lines of business, if each one is doing a net increase of approximately 30 to 50 million pounds, you can reach these loan growth figures quite easily. Deposit raising there comfortably at 8.4% annualized increase. We are well seasoned to compete in the deposit space. We've always had to pay more than the high street banks in terms of deposit raising. It is competitive now for the high street banks the deposit raising space, our brand, our rating very good at A1 by Moody's, Triple B by Fitch and the general brand recognition around Investec and the way and the service experience we provide in raising deposits has led to a comfortable experience in terms of being able to stay ahead, increase deposits and actually reduce our overall cost of funds at the same time. Our revenue has increased by 27%. This is a combination of both strong increase in net interest income as well as non-interest revenue. I explained that we've had strong book growth. We are always cautious from a liquidity and cash perspective, being a non-systemic bank in the UK, running long cash balances, and of course this has also served us well in terms of the benefits coming through from higher interest rates. On non-interest revenue, we are pleased to see that our fee income has remained resilient and actually increased slightly through this period. And again, there are pockets of activity, for example, equity capital markets and the world of IPOs and M&A, where things might be a little bit slower than other areas, and our lending fees coming through strongly. And actually, in the corporate advisory listed space, we have had certain fees come through strongly during this particular period. period trading income from customer flow is also delivered during this particular period from a cost perspective we remain disciplined we implemented a number of changes when covert hit back in 2020 we focused on simplifying the business and then put our minds towards focus and fixed operating costs even in this period have increased only 2.3 percent well below the prevailing UK inflation rate. Overall operating costs having increased 9.9%. This is reflecting more of an increase in variable remuneration, which is reflective of the overall increase in profits that we've seen. Getting to the credit loss ratio, we indicated to the market at the trading update that our credit loss ratio would be above the through the cycle range of 30 to 40 basis points, and it has come through at 55 basis points. You can see that back in 2019, this was around 41 basis points. To put this in context, you saw the chart that Nishlan put up earlier today of the spike in interest rates. It looks like my daughter's pen slightly being pushed to the side and a sharp line upwards. But 14 rate rises in 12 months is something that is not experienced as normal cyclical activity. Clearly, that is an unusual impact that we've had to deal with through this last year or so. And that type of unusual and unusual strong spike in interest rates would, of course, affect certain counterparties, and that is what we have seen. Small number of idiosyncratic impacts on counterparties. If we look at the overall book, in spite of these rate increases, strong asset quality and strongly performing book. To put it in context, you can see below there, total ECL charges of £39.3 million. This has increased £11 million on a total net for loan book of £16.3 just to put that overall in context. So we're very comfortable with the overall asset quality of the book. And we saw inflation yesterday print down at 4.6%. We have seen interest rates already pause. So we are guiding to a credit loss ratio for the full year, around 50 to 60 basis points. That would be on the basis that current conditions continue as they are. But of course, if rates turn and start to come down, you will have a different outlook. picture as we go forward. And I think Barney pointed out earlier that we, you know, our total coverage, you know, at 1.1% over the overall book, we're comfortable from a coverage perspective and as a lender, we're always focused on loss given default and we take great care in making sure we are well covered in our lending. Looking at wealth and investment, we retain a 41.25% shareholding in Rathbones. We are very excited for this combination, which has brought together 100 billion pounds, putting us at the leading private client wealth manager in the United Kingdom. We have already enacted a strategic partnership with Rathbones in terms of our high net worth clients and how we service them going forward. And we expect this to bear strong fruit as we go forward in time. Opportunities for us to create funds under management for Rathbones through our high net worth client capability and actually in the last couple of years we'd actually created approximately half a billion pounds of funds under management in each of the years through to March 22 and March 23 for the wealth business and we expect that to increase in time as we develop this partnership further and of course referrals also coming from Rathbones to us and a greater opportunity also to expand our broader deposit and other product offering to the broader Rathbones client base. And now to just round off, growth opportunities. I was just standing here reflecting back to 2020 and the last few years. I don't think there has been a time. I think we had an afternoon off maybe from uncertainty. Other than that, every so often there's been just another shock and another type of uncertainty, each of which I don't think any of us could ever have imagined before. We have amazing teams who do a lot of stress testing, but each time I don't think that we've actually included the stresses that we've faced. So overall, I think we've adapted ourselves, as has the rest of the market, to being able to deal with uncertainty, not to be flippant about it. Each time the shocks come, you learn something new every single day. But what I'm trying to say is that in spite of all of this, we are on the front foot as the UK Bank in terms of our positioning, UK Bank and other in terms of where we're placed in in international markets, and we are now focused on increasing what already is a good scale, but increasing that further, increasing the scale and relevance of our established client franchises. Those client franchises span corporate lending, fund solutions, which includes fund finance, real estate lending, aviation finance, power and infrastructure finance, asset finance, high net worth lending. In each of these, we have strong capabilities. where we are able to originate very, very strongly. We are able to portfolio manage. We have many people that I see sitting in the room here who have long tenure with us. They have developed seasoned experience in terms of dealing with clients and dealing with this experience and leading these businesses, and we have very good track records in each of the lending activities that we've done. The same can be said for our advisory activities and also in terms of the other activities. We do treasury risk management and solutions and all the other things that we do. So I said earlier, we have very small market share. We have a great runway to grow in, and just scaling that up and increasing that scale and relevance will deliver great performance. We also want to grow further in continental Europe. We've been operating in continental Europe for many, many years, over 20 years really. We do lending in Europe. We do treasury risk solutions and also advisory. Recently we increased our stake in Capital Mind, which is M&A advisory in Europe, giving us an immediate footprint across Europe. countries, selected countries that we choose to operate in. We only lend in selected countries. And of course, Brexit has caused some issues in terms of the flexibility with which you can go into Europe. And we are working on a more flexible solution now to take forward our growth opportunities in Europe. Most of our clients who are operating in the UK, or many of them, also have interest in the UK. This is a giant market on the doorstep of the UK. we want to be able to access and this gives us a real strong opportunity for growth which we are already experienced in have lending books in and experience in hedging and advisory in that space already the third thing which we haven't spoken much about externally but have been busy working on internally for a very long time is advancing our alternative investment fund strategy in terms of our overall balance sheet We are limited in terms of what we can take onto balance sheet because we run a very disciplined risk management approach, trying to keep our exposures granular. And also the clients that we bank in the bid market easily outgrow us over time. And they are needing larger and larger facilities to take forward. So we can originate far more risk then we can actually hold on our own balance sheet. And if we look over the last couple of years, we will have distributed approximately 6 billion pounds of risk, which you don't see on our balance sheet just through our general activity. That is a very large flow of activity coming through our businesses each and every week. And we want to monetize that in terms of looking at the opportunity for earning capital-light revenues by bringing in external capital to participate alongside us. Over the last decade or so, we've probably raised of the order of approximately two and a half billion at different times for different funds. Right now, we have about a billion pounds of committed capital For funds activity, that would be in aviation, for example, in private credit or in direct lending. These are funds that we have in the UK as well as in India and span these activities that we do in the funds. And bringing in external capital enables us to augment our balance sheet activity and our lending activity and actually meet our clients' needs, our clients who are growing stronger and stronger. So this is in the early stages of development. In the past, we have done this in a more ad hoc approach, making space for ourselves to do bigger transactions and to facilitate our clients' needs, but we are now looking at this far more deliberately and strategically in taking this forward, really also in relation to reverse inquiry coming to us with a great interest from external capital looking at these alternative assets, which we are actually well experienced in, have track record in many of these things, so it's early stages, but we are looking to take this forward as we go forward as a growth area. And then both Vani Nishlan and myself have spoken about the scale benefits that can be achieved through a combination of investing wealth and investment with rat bones. There are exciting prospects to come through there. Clearly, it's early days, but we will be looking with interest to see those benefits realized as we go forward. Thank you very much. I'll now hand over to Richard Wainwright.

Thank you, Ruth. I want to see if I can see. I may need my glasses. Are they going to go on to the next page? I've got to hit it here. Okay. Okay, so good morning, ladies and gentlemen. It's an absolute honor and a privilege for me to represent these very pleasing results on behalf of 5,000 colleagues that I have in South Africa that managed to do this. And as Fani initially have said, in a very tough, not only macro-environment, macro-economic environment, but also a very difficult socio-political environment in South Africa and a geopolitical environment around the world. So to represent those 5,000 colleagues with results like this is very pleasing. I know one shouldn't do it, but Fani led the way yesterday and he pointed out some unsung heroes. So let me just very quickly thank some unsung heroes in South Africa. These are people that largely go unrecognized, but they make a big difference in the life of our staff, and in particular, our clients. Because very often, this is the first touch that our clients will have with investing. And that is our security staff, our frontline reception staff, If you ever walk into any one of our restaurants, in our various offices in South Africa, the people that work in our restaurants, and the people that work 24-7 in our client service center, it's tough to single out people, but these people make a big difference in the lives of our people and of our staff. So a special thank you to you. I know we often speak about our bankers, our support staff, our professional staff and our IT staff. These people do make a difference. So our strategic positioning in South Africa is pretty well known. We are not all things to all people. We are a specialist bank and private client wealth manager that services a very select group of clients. We have been very razor focused on what we want to achieve since we set our objectives in February 2019. And we have proven now that we can achieve these kind of results with the focus, the dedication, the diversification that we have in our business model, and the resilience that we've proven. And apologies to my international colleagues, kind of reminds me of our Springbok winning rugby team. Diversified, focused on what you want to achieve and able to produce a resilient performance. Kind of reminds me of that. So I'm extremely proud of these results. And as I said, it's a great privilege. So for the half year, having produced adjusted operating profits of $4.8 billion, growth of 8% in our core loans, now at close to $340 billion, customer deposits of $460 billion, and quite proud of the fact that we now have funds under management in our private client wealth business. of $465 billion. What we often don't talk about is we have additional funds under management in the specialist bank, adjusting for a double counting of about a further $20 billion. So almost reaching the half billion or half a trillion mark. So very, very good, well-positioned business in South Africa. think at a cultural level one of the things that we always remind ourselves whilst we think we are large and we we have to thank our founders for the brand and the position that we have in South Africa what we do culturally is that continue to remind our people we actually small think small think entrepreneurial and deliver an out of the ordinary service level to our client that's what enables us to deliver these kind of results so our revenue up at 10.5 billion, up over 10% for the year. Operating costs up at 12.2%, which has resulted in a slight deterioration in our cost-to-income ratio, but well within our target ranges. Our credit loss ratio well below, in fact, half of what our guidance is of 20 to 30 basis points through the economic cycles at 8%. Sorry, 8 basis points. And again, A lot of our stakeholders, rating agency and analysts, often ask me, why is that? And again, this goes to the Springbok analogy. We have, as a society in South Africa, very, very, very resilient people. And in particular, in our corporate market, and it's been confirmed to me by various rating agencies, international rating agencies, that they're often surprised that the notwithstanding the economic environment that we're in and the high interest rates, that corporate South Africa has continued to be very resilient in the face of very tough circumstances. So we are partly a beneficiary of that as well. So just at operating profit up at $4.8 billion, and as Nishan said, our return on equity, which we've had a very big laser focus on for the last four years, now above our cost of capital, It's taken a lot of work and a lot of strategic actions to do that. So hopefully the market at some point will give us some benefit for that. Just unpacking the numbers a little bit. The wealth and investment business showing an incredible performance, increasing its earnings by 36%. You heard Nishan speak about new flows, 7.4 billion of new flows for the half year into that business. And this is largely as a result of the one investor strategy. And that doesn't happen overnight. This is a large number of people across the private bank and the wealth business working together, headed up by Kamesh Mudlia, driving this integrated approach where we service clients holistically, similar to what Ruth was talking about in the UK. The specialist banking operations showing an increased performance, so growing earnings 14.7%. very, very pleasing. And you can see the impact of some of the strategic actions that Fani and Nishan spoke about under group investments where you've had the 91 performance, the deconsolidation of Investec property fund, and the different accounting treatment now for IEP. And we will have time with our stakeholders and analysts and shareholders to unpack the impacts of that. If you adjust for that, you just look at what our client franchise businesses have done It's about a 17 to 18% improvement in earnings. And I'll talk about the opportunities that we foresee in that space. So as I've said, continuing growth in our core loans and advances over 8%. And really if you unpack this a little bit, you'll see it in the analyst booklet. Where has that growth come from? It really has come from our corporate presence across the various segments and specializations that we have in the corporate market. So around about an 18% growth in corporate. Our private client mortgages and pure private client advances has also grown at around 8.9%. And our real estate residential income producing real estate portfolio is relatively flat. And that is a consequence of what's happening in that market. How our clients have responded and how we've supported that. And actually we're very pleased with that. So very strong growth overall from a core loans perspective. Revenue up 14.4%. And our cost-to-income ratio in the bank itself, in the specialist bank, well below 50%. This is a leading market position. When you compare it to our peers, we're below the best of the rest, I would say. A very good performance on costs. Credit loss ratio, I think we've said that we're at eight basis points, very much less than half of our guidance. Like Ruth, if we do a forward looking, we don't see an overall deterioration in our portfolios, our lending portfolios overall. These are largely one source. But given the macroeconomic environment and with interest rates probably going to be a little bit higher for longer, there's speculation of Is cuts going to start in March? Are they going to start in June? Well, March is our year end, but no cuts probably before our year end. So we may get some slight deterioration and a move more towards the 20 basis points. But where we are right now, similar to Ruth, we don't see any stresses in the portfolio, and there's nothing specifically that we're worried about. So we continue to be well-provisioned. Just moving on to our wealth and investment, just to unpack that a little bit, as I said, funds under management increasing 6.9% to $465 billion, with inflows on the discretionary funds under management of $7.3 billion, adjusted operating profits up almost 37%, and the margin actually improving to 29.5%. And as some of our wealth colleagues pointed out to us yesterday, Again, this kind of performance doesn't happen overnight. This has been a journey and an investment in this business over a long period of time, a track record that's been built, a culture of service, and a growing international presence. I think it is worthwhile talking about our Swiss platform that we've built, which does sit underneath the UK bank, but it is an opportunity for us to offer a Swiss platform for our South African clients, which we think is very strategic for us in the medium to long term. But just moving on to our growth opportunities, again, given the macro and socio-political environment in South Africa, Very low business confidence, almost zero growth in the economy. You know, us various stakeholders ask me very often, how do you expect to get growth? And as I said earlier, if you think that you're small, and we are the smallest of the big five banks, we think there are pockets of environments where we can gain market share. So the first one, and Fani and I have spoken about this for a number of years, is in the private client space. But we've had consistent client acquisition growths in our private client space now for about 12 years. I'm looking at Ganesh. Probably averaged around 7% to 8% per year. We would like to accelerate that 10% to 12%. How do we get this growth? Where do we see it? We look at how the world has changed, how professionals have changed, new opportunities to service various professional categories, like in the IT world, like in the financial services world. These would be markets that historically Investec brand was unknown when we didn't target those markets. So whilst we have ambitions to double our client base, it is difficult in this kind of environment. but we are very focused on client acquisition. So all the metrics that we measure around our private clients, whether it be growth in our client numbers or in growth in what we service to these clients, whether it be our life offering, our investment offering, all of those are growing fairly strongly and at rates that we're very pleased with. So that's going to give us a lot of sustainability in both our private bank and our wealth business. In the mid-market, and Ruth spoke a lot about her positioning in the bank here and the UK's positioning in the corporate mid-market. In South Africa, we often refer to this business banking. So Investec has not traditionally been known as a business bank. But we have quietly been working on building this kind of capability. We've invested from an IT perspective in our transactional banking capability. It's largely complete. We are growing our client base here. We think we have a distinctive service offering that is very competitive and compelling for these clients. So we are growing our client base. We have more clients taking on our transactional banking capability. And we can complement that IT approach with our well-known service levels that Investec is well-known for. So we think over the medium term, a gaining market share in this, and it is a very competitive environment. We know that. given our approach and our people, combined with the tech capability that we have, that we can compete there over the next three to five years. The opportunities on the African continent, whether it be trade finance or social infrastructure, we're doing this in a very disciplined, focused way. I do look at our founder down here, who warns us every day. But The role that we're playing together with some of our colleagues in the UK, we have a very distinctive offering around our export credit agency capability in our London office and our Johannesburg office. And some of the transactions we've been able to do really is making a social difference on the continent. And we do it in a very risk-conscious way using export credit agencies from around the world. And as the continent grows, and many of these countries are growing faster than us in South Africa, there is a lot of infrastructure need, and in particular social infrastructure. And what I mean by that is roads, schools, clinics, hospitals, and the like. So there is opportunity for us there. And then in South Africa, finally, it's just the transition – both the transition to more renewable clean energy, but also the impact of what's happened with the state-owned enterprise of Eskom. I think I've been on public record in saying in 10 years' time, I don't think Eskom will be producing much electricity in South Africa. It won't attract the capital and certainly doesn't have the people. But what you've seen happening in South Africa is Many of our clients, whether they be domestic or international, raising funds, coming in and building very large-scale power plants. I think that's going to accelerate. We're well-positioned to capture that opportunity, not just in the power plants themselves, but the downstream impact. We've recently, for example, just launched, under a different band, a solar residential facility. business called ReCharge. It's now launched. We're going to roll that out. We have numerous clients that are very active in the downstream power sector, whether it be importing solar panels or batteries or manufacturing new types of batteries. That's a very large sector of the economy that's going to grow as Eskom slowly moves out of generation. We'll end up just probably running the grid. So we think, given our culture, our market positioning, are relative size, but notwithstanding the macro, there are growth opportunities for us. So we're very focused on that, and hopefully we can continue to deliver for you. Thank you very much.

Thanks, Richard. I'm going to bring it home. I'm really glad that we could present both Ruth and Richard. Most of you will know that in the next 18 months, 24 months, Richard will be retiring. So this is really an important moment. opportunity for him to present. We have Yanku Meshmudlia, who alongside Ruth will present in May next year on this podium. And as you can see, the booths are quite big that Richard has there. Richard, thank you for your service to this business. You'll be around with us for quite a long time. Richard is one of the best bankers you can work with. I'm really pleased that we've had the opportunity to work with him, and the results are quite fantastic. Just in closing, because we've taken more time than we had thought we would take, I'm going to take two minutes to wrap it up. We remain hopeful that we can see the momentum that we have seen into The first half continue. As we said, there's a lot of opportunity on the corporate side. There's a lot of opportunity on the private banking side in terms of lending. When you look at the private banking essay and you look at the overall growth, a big portion of commercial book being specialized property, we really haven't seen much activity there. But in the banking piece, we have seen quite some good opportunity there. Ruth has indicated that on the corporate side, there has been quite a lot of opportunity in the areas that we are operating. We expect interest rates to remain high over this period, but the expectation that in the second half next year, we may start to see rates coming down as inflation continues to moderate. That expectation may bring confidence into markets and we may see a bit more activity than we have seen. So we hope there will be confidence going into that. So our expectation is for moderate book growth and therefore the level of growth that we have seen in our profitability, we would expect to continue. Ruth has talked about where we see impairments in the UK business on a book of 16.3 billion, comfortable with where we are. We've seen a growth of 60%. Ruth, I won't promise that you will repeat that promise in the second half, but we're quite excited. about where we are positioned. You saw in Richard's business, a very pleasing level of growth. So our expectation is that we will maintain ROE performance on the upper side of our midpoint, which we obviously would be very pleased with if we are able to achieve that. As Richard indicated, and I think Ruth indicated as well, we are fairly agile as a business. We have small market shares and we are able to be nimble in servicing our clients. You know that we've asked our colleagues here to come into the office for four days a week because we want to keep the energy going. We want to be close to our clients. We want to make sure that our younger colleagues get to learn from the other colleagues. So excited about the environment we're in. Tough, but we have the agility to navigate this environment. I'm going to rest it there, and we can then go into questions. I think we're going to start in this room. Stephen, Philip is standing at the back there. I know you asked about where the chimney is. I think the chairman came maybe a minute late and is just ending room only now. Philip, welcome. Questions from this room? OK, while we think about questions, shall we go to Johannesburg? Anything from Johannesburg?

Fani, I don't think there's any questions here, and there's nothing on the webcast. We're going to try a chorus call now. Thank you.

Over the COVID period, we renovated our building in Joburg, and it's a beautiful building for our colleagues to work in. Last week I was in Cape Town, and even there we've renovated our building, and the environment at Investec, characterizes the energy that every one of us brings into this business. We don't have any questions in Jobo on the webcast. Any last question in Johannesburg? Stephen warns against me offering an opportunity for a question. But I'm offering it. Okay.

No questions, Marnie. You guys have clearly done an amazing job.

So thank you very much for your attendance. And again, for my colleagues around the world, thank you so much for looking after our clients, looking after our other colleagues. It was fantastic, Richard. that you recognize those people that we take for granted. I always say to outsiders that if you walk into an invested building, we don't quite own this one. In Johannesburg, we own the whole building. From the time you see somebody who lets you into the building or somebody who takes you to a room, or somebody who offers you coffee or offers you food in the restaurant, you know there's something different about this business because there's that personal touch, that degree of ownership, that sense of interest in our clients, in our colleagues. So thank you very much. It's time to get back to work, Richard, Ruth, and Nishlin. Thank you so much for your attendance.