Investec plc

Okay, I suggest we start. Good morning and welcome to the beautiful city of Cape Town from which we are hosting this presentation of the results. The screens are not on, so we're going to first start with a short video and then get into the presentation. Thank you. Thank you. As usual, I'm going to be joined by my colleagues, Nishlin Samuj, our finance director, Kumesh Mudlia, the chief executive of our South African business, and Ruth Lees, the chief executive of our UK and other business, to review the results. We're going to try to go through the basic presentation in 45 minutes, have about 15, 20 minutes of questions or more if needed. So to start off with just an overview, we're obviously very pleased with the solid results that we have published earlier today for the period, six-month period ending the 30th of September 2024. Really great results. And ROE, as you see, in fact, sorry, not ROE first. Let me start with adjusted earnings per share of 39.5p, which is at the upper end of the range that we guided in September when we had a pre-close. If you look at the graph on the left, you will see that in the first half of 22, we reported adjusted EPS of 26.3, and you can see a progression of performance over this time, showing that our business has had underlying momentum over a period of time. Now, just looking at the underlying drivers of our business, and these being funds under management, loan books, and deposits, you again can see in the second graph that there is a level of... In fact, we haven't shown a time series, but I will talk a little bit about the performance over this year. But if you were to plot a time series, you again will see increasing momentum. It would be difficult with three... drivers to have a time series, the graph would be to congest it. In this environment, at least the first six months of it, we saw a level of muted activity because there was a lot of uncertainty. If you think about pending elections at that time in South Africa, in the UK, in India, and of course the big one in the USA. You also had a level of unprecedented geopolitics, and that risk continues as we go. You also had the effects on both corporates and consumers of the higher for longer interest rates. So these factors combined to mute activity in the first half of the reporting period. I'm pleased to say that when you go to the outlook, we will report that we see and improving operating environment. Despite how difficult the environment was, Our client franchises continued to show resilience, and our performance benefited from the fact that we have a diverse source of revenue streams. So let me talk about each of the drivers fairly briefly, starting with funds under management. Our business, our wealth business in South Africa, which incorporates Switzerland, recorded a double-digit growth in funds under management to 23%. 6.4 billion pounds. Most pleasing we saw inflows of 10 billion rand. For our business, this is really a fantastic performance. Our associate, RefBonds, showed steady progress with funds under management of 108.8 billion pounds. We also saw an increase of just over 5% in our loan books to 31.7 billion pounds. And equally, we saw our deposits grow by just under 5% annualized to 3%. a number of 40.4 billion pounds. So overall, the drivers of our performance trended positively. And Nishlin will go into a lot more details around this a little later. If you look at the third graph, which we've entitled NAB per share, we see that the business continues to generate strong levels of capital. And this is important because it enables us to reinvest in the business, it enables us to fund new growth initiatives, but it also enables us to continue to make distributions to the providers of capital, our shareholders. And I know that most of our colleagues in the business are also shareholders. I'm also pleased then to report that the board approved a dividend, declared a dividend of 16.5 P, which is an increase of 6.5% over the prior period. I'm in Cape Town, so let me code the rent numbers as well. In rents, the dividend is 3 rent 80, which is an increase of 8%. So later in the presentation, Nishlin will cover our investment in technology. As I say, we generate capital and we reinvest in the business. And then Ruth and Kumesh will talk briefly about where we are investing in our businesses and where we see growth over the next little while. So these will be good presentations for you to see where we're focusing our investment as we go forward. The last graph on the right shows our return on equity of 13.9%, which is in line with guidance and is within the upgraded through the cycle range of 13% to 17%. And this is notwithstanding the fact that last year, after doing the deal with Rathbones, we had an increase in our capital as we realized a gain on the combination of our investor wealth and investment business in that combination with Rathbones. So comparative numbers are not as easy given that increase in capital. So we are very, very happy today. with an ROE of 13.9. On an ROTE basis, we printed 16.4%, which is really fantastic a performance. And I would like, obviously, to give credit to all our colleagues for the stellar work of supporting our clients because these profits are a consequence of what we do for our clients. This sterler first half performance tees up nicely the business to achieve its full year guidance of ROE of 14% and ROTE of 16%. So I'm going to go a little bit into this. into the results, starting with pre-provision operating profit, which as we see there, increased again double digit to 542 million pounds. We saw good growth in net interest income, we saw a good growth in non-interest revenue and our costs grew at a rate much lower than the revenue growth that we realized, so opening up the jaws. Nishlin will talk into the specifics of that. of that performance, but really the engine continues to do particularly well given how difficult the macro environment has been. And talking about costs, we saw an improvement in the cost-to-income ratio to just under 51%. When we guide later, we will indicate that for the year, we would expect a cost-to-income ratio of between 51% and 53% because we have to continue to invest in our people, to invest in technology, and to back the initiatives for growth that we have identified. So you will see that we will never skimp on investment and on expenditure that is necessary today. to improve the experience of our clients. Nichelin will talk a little more about that. Fixed operating costs increased by 6.7% to reflect exactly the fact that we are investing in people and operating platforms. But also in this period, we saw significant inflationary pressures. Variable remuneration in each geography grew in line with the profitability of the respective geography. In the next slide, I will go into each of the geographies quite briefly. Next, I want to talk about the credit loss ratio of 42 basis points, which, as we guided, is at the higher end through the cycle range of 25 BIPs to 45 BIPs. The South African credit loss ratio is at the lower end of the range, and the UK credit loss ratio is elevated, as again, we did indicate that within the UK market, the higher for longer interest rates have had a significant impact. On the mid-market, which is where we play, and Ruth will talk about how we serve that market holistically, We do not, however, see any trend deterioration, so we remain quite comfortable with the quality of the credit in our loan books. In fact, as we go forward, as we expect interest rates to reduce, we would expect that the cost of credit should improve, albeit the reductions in interest rates are expected to be slower than before. If we look at the combined effect of the growth in pre-provision operating profit, costs, credit loss ratio, we have the final outcome of a 7.6% increase in adjusted operating profit to 475%. million pounds now looking at our business through a geographic lens I'll talk firstly about deposits. We see a very pleasing growth in our deposits in the UK with a growth of 8.1% annualized within what is a very competitive deposit market. In fact, when Nichlin talks about the UK market, we talk about a repricing of deposits to show how competitive that environment is. In South Africa, we saw in rents a reduction of 6.2%, but this is as a consequence of us implementing a strategy that focuses on us increasing the more effective retail deposits. And in this case, we increased those by a very pleasing 6.9%. We also shedding shorter term wholesale deposits while at the same time we're lengthening the term of our deposit book. So this is right in line with strategy. We're increasing deposits where we want to and we are shedding deposits where there is a lower efficiency. So we're really quite pleased with that performance. You see in South Africa an amazing performance on an adjusted operating profit basis that our profits and rents went up 21.9%. And for most of us, we know how anemic growth has been in this market. So this is a commendable achievement. In the UK, we saw adjusted operating profit down by 5.4%. And just to give you a bit of color on it, the performance of the bank, the specialist bank, was down only 2.4%. And Nishlan will go into a bit more detail to give you color. I've already talked about the cost. of deposits. There will be a few other aspects that Nicholin will cover to give a bit more detail on it. Secondly, within the UK context, we saw the share of our profits from our associate company, Rathbones, being 10% lower than the profits that we had reported from IWNI UK in the prior period. And when we did the transaction at the time, we did say for the first few years, there will be a deterioration in the profits we get, but over the years and in year three, we will see a pickup in contribution. And in fact, we've already seen an improvement in the operating margin of Rathbone. So quite as expected. I'm going to just pick on then on the ROE and ROTE. The South African ROE of 19.9% is at the very top end of our through the cycle range of 16 to 20%. I've said to Quimesh, I want to make sure that there is enough investment in the business. So this ROE is really high. Let's invest in our people. Let's invest in our business. Quimesh will talk about investment in the mid-market. And there's a level of investment in transactional banking there. So we need to put in the money. to make sure that we invest for the future, but also that our current systems do well. Commendable ROE of 19.9. In the UK, equally, we printed a very strong ROTE of 13.5%. You obviously have to compare that performance with UK performance, top of the class performance, as I say. So really pleased. with the performance of our businesses. If we move now to our commitment to sustainability, I'm not going to go into a lot of detail, as you know. Our purpose is to create enduring worth that we create and we try to generate profits because we believe as we do so, we can contribute positively both to the economy but also generally to the planet. So we continue to make progress in terms of sustainability generally, but in particular, with respect to the commitments that we have made to reaching net zero by 2050. Those who follow us will know that we have had significant disclosures around our fossil fuel commitments in our annual statements, and there are disclosures on our website over this period. Mark Kahn, where is the doctor? Mark Khan sitting here, has been doing a lot of work in both geographies with our teams, in particular in the banks, to make sure that we can improve on our understanding of transition finance and sustainable finance. And to that end, we will be publishing. At the end of our financial year, when we have our results in May, our commitments with respect to this. I'm not going to go into more detail. One of the areas of activity also is in advocacy. We are encouraging our clients and our suppliers to go down the route of decarbonization. With that, I'm going to ask Nishlin to go into the detail of the presentation. Thank you, Nish.

Sure, it's an absolute privilege to be here to present these results. I mean, I don't know where in the world you could have a backdrop of Table Mountain just in front of you. And I think as we go through these results, we were last in town, I think, when we presented our CMD back in 2019. And it's been absolutely amazing to just watch the trajectory of the business through that cycle and really reflect the power and the growth and the depth of the business as we move forward. Now, I'm just going to give you some backdrop in terms of what we operated in and the environment. And I think as Fani has highlighted earlier, You know, if you look at the underlying GDP environment in both South Africa and the UK, it's been relatively subdued over this period. And in fact, you know, understanding that we've come out of COVID, understanding that there have been abnormalities as you measure through these periods. but there are still quite significant constraints that apply. That being said, I think as we look forward and as we look into the next financial year, notwithstanding what is a difficult budget announcement that has come through in the tax environment that has just been announced by the labor government that the society has to absorb, I think there is still an expectation that you will see underlying growth and an improvement in growth, and our projection is is a forecast in the UK of 1% growth in the 2024 year and a 1.8% growth in the 2025 year. And in South Africa, I think just having the stability that we have had on fundamentals such as electricity and obviously the positive environment that the GNU has brought in, notwithstanding a lot of the noise that sits in the system, because there's a lot to balance in the equation. I think the expectation of GDP picking up to 1.7% and knowing that we need to challenge ourselves to get that much higher to deal with some of the structural constraints in this environment. I think if we look at markets, just reflecting on the JSC, that was up 19.6% from September 2023 and a very similar rate since March 2024. And that is reflected in our funds under management. but I think we are also proud of the net inflows that that business has been able to maintain. Across the world, we've seen improving markets as some of the uncertainties have unfolded over the period. From an exchange rate perspective, I'm glad that I don't have to talk too much about neutral currency and rand and pound and the rest of it because it creates complexity with the average rate really being highly comparable. as we look at sterling results. From a balance sheet perspective, the South African contribution to our DLC GBP balance sheet is much stronger because the RAND is actually strengthened over this period, particularly as we compare against March. We've started to see global interest rates starting to reset towards what would be levels that I think are more normalized, but they remain high. And, you know, to some extent, some of the risks that continue to play out are still in play, but at least we are seeing good signs around inflation. Some of the short-term prints of inflation, I think, do get exaggerated in certain instances, but the overall trend in all of the geographies that we operate in is in the right direction. And I think just to understand from an interest rate perspective, if you look at average interest rates, over the period of You know, from a closing perspective, interest rates dropped by 25 basis points. We anticipate probably another drop of 25 basis points today. In South Africa, the base rate in the UK has dropped by 25 basis points. And in fact, at this point in time, it's at 4.75%. Average rates for the period did continue to climb up a bit as we obviously started from a much lower base back in September 23. Now, bringing that picture together, you know, Farnie's highlighted some of these numbers, so I'm not going to overemphasize them, but I think we are, you know, quite proud of where we've landed up as a business in the context of the environment that we have operated in, with funds under management up 11.9% and 8.4% in neutral currency. I think from a rat bones perspective, The combination, it's still early days. In fact, we executed the combination on the 30th of September 2023. So this is the one-year point that we are marking our interest in the 41.25% holding. And I think some key stats that's important for us is we saw the operating margin improve to just over 25% in this period. We have seen Minor outflows in terms of AUM in the last print of the AUM, but again, relatively strong considering the combination that has taken place reporting AUM at 108.8 billion pounds. Core loans in this period growing by 2.7%. This is an aggregated number, so it represents a lot that was going on in the balance sheet. And with higher interest rates, corporates have been quite defensive. We saw higher rates of repayments over the period. And from a private client perspective, I think we have been quite pleased with what we started to see as a pickup in activity and similar in the corporate market itself. So core loans in advance is growing up to $31.7 billion. Fannie's really gone into detail around deposits, so I'm not going to get into that detail. Now, if we unpack group performance, And yeah, I've got to thank Donovan. He's done some animation, so I might go a bit offbeat on this, but forgive me. But I think just trying to unpack adjusted operating profit growing by 7.6% from $441 million to $475 million. Let's focus on the key drivers. Revenue grew by 5.6% over the period. And if we look at the growth, net interest income growing by 2% and non-interest revenue growing growing by 12.2%, contributing $418 million to the total of $1.1 billion in the period. NRI really benefited from high interest rates, as I've indicated, and higher lending books. But as we've detailed, there has been a higher cost of deposits, pretty much acute in the UK market. Non-interest revenue in the period growing by 12.2%. supported by almost all lines except for trading income in the non-interest income line with strong growth in fees, particularly from our wealth business and from our private client businesses. Investment income benefiting from that re-rate that we've seen in the market. And to the extent, there was a non-repeat of some of the gains that we had in the prior year on our trading income as we executed our structural hedge in the UK. From an ECL perspective, ECL growing from 46 million quid to 67 million pounds, and the credit loss ratio growing to 42 basis points. Again, given the environment that we've operated in, pretty much in line with what we have been anticipating and indicating to the market. The majority of these impairments are really driven by specific impairment experiences, but no trends to call out. We don't see any deterioration in the major areas that we operate in. And in fact, as we implemented the forward look of the economic outlook in the regions, we have had some release of portfolio impairments over the period. And I'll unpack some of the asset quality just now. And then from an operating cost perspective, operating costs increasing by 0.8%. We saw fixed costs increasing by 6.7% over the period, and that's really driven by higher personnel cost, which is the majority of those costs, as well as IT spend and other areas of business activity over the period, and that included and increasing specific headcount in areas that we're quite excited at from a growth perspective, as well as inflationary increases. And bringing that together, you know, the cost-to-income ratio, as we've indicated, is pretty low at 50.8% in this period. That's where we are. Now, Fani has indicated that I'll give you some detail on technology. And I think as we reflect on technology, for us, it's not an easy topic to present in a highly summarized fashion because it's an area that involves quite deep effort and work as we work through an evolving environment, particularly as technology continues to enhance capability. But I think what we want to reflect on is just to give you some of the areas that we are strategically focused on. from an IT perspective. And when I go through what the numbers mean, the majority of the cost of this sits in the run rate that we represent in the income statement. And really, at the core of it is for our delivery to our clients. and for a delivery of what Investec is known as, and the continuation of really deepening the personal relationship that we are able to offer from a digital perspective. Obviously, preparing and continually enhancing our platforms to be able to interact on a much higher scale and to focus on the growth that the business has been able to deliver. And for our colleagues, obviously ensuring that the digital workplace is something that is usable and makes sense and that you are able to interact with the technology, in particular developments around AI and so forth. I think modernizing a platform as a banking business, I mean, often you would hear about legacy systems and fintech and where the world is today, but I think we are very conscious around the need to be continuously within the modern world. because that really influences how you interact with the rest of the world. And to date, we've effectively transferred about 48% of our platform onto the cloud. And we do this very cautiously. We do it in a way to ensure that we don't give away the ability and the strength that we have as an organization to manage our own platforms. Obviously, getting into the right architecture and engineering capability will continuously help us to deliver as we move forward. protecting our platform and ensuring that we are very, very mindful of developments, particularly around cyber, and ensuring that we are able to monitor and deal with digital threats remains something that you've got to operate on 24-7. And from an AI perspective, we don't have the same reach and depth as some of the giants that are out there. So what we do do is we partner. We partner with entities that we know are at the forefront of development, and we try and find ways to incorporate that into our platforms. And if we bring it into the outcomes of these things, for this period we spent just over 20% of our overall operating costs at about £109.2 million, which is a material number. And as I've indicated before, that represents pretty much the run rate because we have about 9.9 million pounds of capitalized software in our balance sheet. So relatively small element of capitalized cost. The majority of the spend is really sitting in the run rate. And as I've indicated, 48% of our estate now in the cloud. Okay, let's get into some detail around the divisions. So from a UK perspective, Fani, again, I think you've, you know, when you say Nish is going to provide more detail, I think he's provided the detail already. So I'm going to get into this pretty easy. Yeah, from a UK perspective, we saw profitability decrease from 235 million pounds to 222 million pounds. As Fani has indicated, at this stage of where we are with the Walt business and the work that's been done Again, I think a number to call out is that that business has achieved a run rate synergies by the end of September for about 25.5 million pounds, which when we originally drew up the timeframe, we expected to be at around about 15 million pounds at this point in time. So they are ahead, both in momentum and positive execution on certain aspects. The specialist bank, profitability reducing by 2.4%. The slide says 2.5%, but it's the way the rounding works, to 202.3 million pounds. And when I went through the income statement, you saw some impact on net interest income, non-interest income positively influenced by fees, investment income, and to some extent, slightly lower trading income in the period. And group investments is really the dividend that we receive from 91 on our 10% holding that we have. Group costs marginally up. There are some stranded costs in those costs, as we indicated at the end of March, and we'll continue to manage that actively as we move forward. And looking at ECL from a UK perspective, printing a credit loss ratio of 67 basis points, we guide through the cycle range of between 50 to 60. And when Farnie deals with the outlook, we're kind of of the view that we should be in that range by year end. Again, as I've indicated, this is really an experience of some specific impairments and nothing to call out from an overall book perspective. And in particular, a line that we watch is you can see that the stage three book of 531 million pounds is fairly consistent. Sorry, 528 million is fairly consistent with what we saw at the end of March. I think from a coverage perspective, you do see the coverage reducing from 30 basis points to 26 basis points for stage one. And that's really driven by models and the economic outlook. Moving on to South Africa, South Africa printing a growth in profitability of 21.9%, with the specialist bank producing a growth of 13.8% in the context of the environment that we have operated in. And again, strongly supported by the fact that interest income continued to increase, and that's really higher average rates and higher book. And we haven't seen the same deposit pricing extent of re-rate And as Fani has indicated, we've quite actively managed our overall deposit book to achieve that outcome. From a non-interest perspective, I think strong fee growth, and that's really a support from our wealth business as well as our private client businesses and our corporate businesses remaining quite active in the market in terms of which we operate in. Investment income both in the specialist bank and in group investments grew significantly. quite well in this period. And in fact, the birthstone mark-to-market is represented in the group investments portfolio, and we've seen a nice uplift in the valuation of that stock in this period. Group costs, yeah, increasing by 14%. I think we can do a little better there, so we'll watch it. From a credit loss perspective, 16 basis points. in South Africa. And I think on a gross basis, we operate in between 20 and 25 basis points. It's really influenced by recoveries, and we saw much higher recoveries, particularly in the second half of last year. And to some extent, we continue to see model releases as the economic environment improves. We are quite comfortable where the coverage ratio is. To some extent, you will continuously see volatility in the coverage ratio for stage three because it's really dependent on the level of collateral that supports that underlying position. And from a wealth business, again, we are quite proud of the net inflows that this business has continued to achieve today. in the context of a high interest rate environment, with overall fund increase in 7.9% to 540.9 billion in the period. I think it's also worth calling out that the drive is around the operating profit increase into 28.2%. It's really driven by the underlying sustained inflows, growth in fee income generated from some of our structured products, and strong client retention and client activity picking up in this period as trading activity picked up. An operating margin for the business, that includes Switzerland at 31.4%, and the South African business printing an operating margin of 33%. This picture really just summarizes everything that I've presented, so there's very little to call out. But, you know, noting that we had operating profit increase by 8% over the period. And from a return on equity, and, you know, this slide really just also gives you some insight into where we have the capital deployed from a group perspective, noting that when we measure capital requirements from a UK perspective, we continue to measure under standardized. And from a South African perspective, we measure under ARB. but strong return on equity and tangible equity. Obviously, we do have capital light businesses within the mix. So to some extent, you will have some pressure on ROE as you carry some of those businesses from a capital perspective. Our net asset value per share has really been influenced by profitability generated and distributions to shareholders over the period, similarly with tangible net asset value per share. The differential between the two is really the goodwill allocated to our rat bones business. And from a capital perspective, continuing to manage capital on a basis that we are really forward-looking and ensuring that the platforms can support the growth across the geographies in which we operate in. I think it's noteworthy just calling out that the CET1 ratio of 12.6% from a UK perspective measured on standardized within the context of maintaining a leverage ratio of 9.9%. From a South African perspective, CET1 ratio measured in advance at 14.8%, with a leverage ratio of 6.3%. We've maintained strong cash and near-cash levels, and we remain conservative on our overall balance sheet. And that's the numbers. So, Ruth, over to you.

Hello and good morning, everybody. Absolutely wonderful to be here in Cape Town to talk with you this morning. When I left London, it was snowing, so it is really fantastic to be in the warm glow of the blue sky in the summer sunshine here down in Cape Town. It's also very refreshing to be part of the very positive spirit of the people of South Africa post the outcome of the recent elections, and we look forward to the future of with optimism and hope, and I'll leave Kamesh to talk about that in his part of the presentation. Focusing on the northern hemisphere and our businesses internationally, we continue to focus on building the scale and relevance of our businesses, and we have our sights set on becoming the leading financial services group in the mid-market in the UK and Europe. We have created for ourselves a unique positioning in the mid-market in the UK and Europe in that we have multiple competitors in every activity that we do, but there is no one competitor in the mid-market space providing the breadth and depth of capabilities that we provide to the mid-market. And that is across private banking and corporate and investment banking. And if I reflect back to May 2020, which is the first time that I presented these cogs to the market. We spoke about taking our clients on their personal journey and their business journey, putting the client truly at the center of everything that we do, creating one leadership team across the bank, taking away all silos, and making sure that we are focused on accelerating our client acquisition and growth, and making sure we can increase the share of wallet from across all our clients. And I'm very happy to be able to say that this is working and we are working towards getting that momentum going even faster towards a flywheel momentum. There's a natural muscle now of referrals of business and opportunities between all areas of the bank that works day by day. And over the past year, we increased our referrals internally. by 150% on average. You know, one and a half times what we saw the year before, and I can just see that momentum growing as we move further in time. So a really connected client ecosystem and a differentiator in the markets in which we operate, where we do differentiate in terms of exceptional client service. You'll see a small mention at the top of the slide here to high-tech and high-touch services. We are very focused also on our digital capability and investment in digital and tech digitalization. We have worked on rebuilding a number of our core platforms over the past few years so that we can more easily and better bring about change in a dynamic way as we go forward from a tech point of view. And also focusing on our capabilities digitally. to enhance the client experience. So investing in the client experience in corporate FX, for example, we're very proud of what we've done from a digital infrastructure behind our savings platform. We've also created a business current account and many other things from a digital and tech perspective. So a high tech, high touch approach and very focused on that as we go forward in time. The operating environment that surround us, Farnie and Nishlan did talk a little bit around that or a lot around that in the earlier part of the presentation. A few years ago, we had the great resignation and now, not we invested, but the market was speaking about the great resignation. I think this was the great election here. And in the six months since we spoke to you last, we first had the outcome of the... India elections, South Africa, and then of course the UK and now the US. So new policies coming out, people still to take office. There is certainly, if not uncertainty, certainly facing a lot of change to deal with, and the business has done very well under these circumstances. Very much positively welcome the words from the Chancellor of the Exchequer in the UK, Rachel Rees, who spoke at Mansion House just about a week ago. It was the most proactive pro-city speech we have heard for some time, really focusing on moving away from risk elimination post the global financial crisis to a positive approach encouraging regulators to focus on their secondary objective of competitiveness and making adjustments to parts of the UK economy. where we are uncompetitive relative to our competitors, for example, the senior managers regime and various other elements of the market. So that is a very positive boost for financial services, and we look forward to more clarity coming out around those policies as we go forward. Farnie mentioned that there were a number of tax changes initially that came through in the budget, and we are navigating that. As usual, we will need to adapt and absorb and move forward, and the business has navigated multiple uncertainties and changes already. over the past few years and will continue to do so. So our areas of focus for the strategy as we look forward We wish to accelerate our current strategy, growing and deepening our client franchises. If you look into our headcount underlying, you will see that we have invested heavily in hiring originators and revenue generators. We created that space to be able to invest for the long term by really enhancing our operational efficiency and working on cost discipline over the past few years, and we have now invested in hiring revenue generators and are positioned for growth when it comes. You do need to make sure that you make these investments before the growth comes. When you bring in new people in different areas across corporate and investment banking and private client activities, it takes a natural period of time to bid in and then to be able to deliver And we are well poised to see that growth when it comes. Interest rates are coming down in the UK, albeit a little slower than we would have liked. But nevertheless, we do expect an upswing to come. And we are ready for that, which will enable us to grow our scale and our market share. We still have very small market share in all the markets in which we operate. So a very large runway to grow. The UK, therefore, does present ourselves with a very exciting market opportunity and then internationally connected to other geographies, which are also showing very strong growth, like the United States and also India, where we have businesses that have been growing over the past number of years and, of course, very integrated also with our business in the Channel Islands region. and I will now talk to Europe. We speak about our focus for the future to increase the runway, to grow on the front foot in continental Europe. We are working on a solution to be able to flexibly operate in Europe. Brexit has put in place some obstacles towards that, and we are working towards moving those out of the way so that we can be very front-footed in our growth in Europe. We have been lending in Europe for well over 10 to 15 years in direct lending and in fund solutions, and we will continue to do that. We've also done treasury risk solutions and hedging and risk management in that part of the world for many years. We've now hired a number of people in the Netherlands to continue that activity. We have some people based in Ireland doing that, and as you know, last year we made the acquisition of of a majority stake in Capital Mind which really boosted our advisory revenues across the continent giving us an immediate footprint across multiple countries in Europe and really a focus on capital light revenues which is where our attention is focused building up that non-interest revenue as well. We really didn't have a strong mix of M&A advisory revenues in the business about four or five years ago so this has grown substantially over the past four or five years. That part of the market is challenging But as I say, we are looking to growth coming through and cautiously optimistic about where that can go as we go forward in time. We are working on advancing our alternative investment management strategy. Many times we are presented to the market, I've explained that we have a very strong origination capability in the mid-market, but that our balance sheet has limitations in terms of how much risk we can take on. We can originate far more than we can actually hold on balance sheet. We also like to run a diversified risk management approach and therefore distribute some of the risk that we take on. One of the ways for distribution of risk is through alternative investment funds There's a lot of interest from both private clients, wealth management clients and institutions into the private credit space and into alternatives. We've been active in this space for as long as I can remember and have very strong track records of performance in all of these activities. We are growing funds, raising funds in private debt fund one and now fundraising for private debt fund two in the direct lending space. We have now launched real estate funds in terms of growing that distribution. We also have private credit funds out in India and for many years we did run aviation funds. So this is growing, it is nascent, and when this gets to critical mass we can do more with it. We're also looking at other innovative ways of bringing in external capital, for example in fund finance, where we recently did a very large transaction to bring in about a billion euros of committed capital to our fund finance activities from a very highly reputable private equity manager. So very exciting options there, which is giving us a whole expansion to the size of our balance sheet and continuing to manage our risk in a well diversified way. And lastly, we are working closely from the banking point of view with our colleagues at Rathbones. We've been delighted that they've moved into our building in 30 Gresham Street into their newly renovated offices upstairs, which obviously brings the collaboration together. and the long-term committed partnership between our private client area and wealth management. And we're pleased to say that the referrals both ways are going well, and we continue to invest in that relationship in order to enhance the level of referrals that will be going both between our private client business to wealth management and to Rathbones and referrals that are coming into the bank. So overall, in sum, the business has performed well over the past six months. Of course, you have headwinds from reducing interest rates, but nevertheless, that income has been made up across other areas of the business. The loan book showing growth of around just over 2% there, underlying that on a currency-neutral basis, actually, the loan book grew significantly. just over 4%, which is very good against a backdrop of low or anemic growth that we've seen in the markets in the UK and actually in Europe. And we look forward to gaining more market share, growing more strongly, and ultimately becoming the leading financial services group in the mid-market in the UK and Europe. I'll now hand over to Kamesh to talk about South Africa.