Investec to return cash to shareholders in R7bn share buyback

Investec announced a R7 billion share buyback programme on Thursday as its charges ahead with plans to return excess cash to its shareholders.

This came as it delivered a strong set of combined interim results for Investec Limited and Investec plc to the end of September.

It reported an increase in headline earnings per share (Heps) of 29.6% to 32 pence per share, or 663 cents per share in rand terms.

Reporting an 18.9% increase in total operating profit to £1.13 billion (R23.2 billion) for the six-month period, the private lender said it expects to continue operating with surplus cash in South Africa for the rest of its financial year. It also plans to continue returning excess capital to its shareholders.

The company plans to execute the share purchase over 18 months, Fani Titi, group CEO of Investec said in a presentation.

“Our strong capital generation enables us to return surplus capital to shareholders, and despite the macroeconomic outlook, our robust balance sheet positions us well to pursue identified growth opportunities,” said Titi.

Investec initially announced a share purchase programme amounting to R1.2 billion in October, in line with its intention to use its capital surplus position to optimise its capital base in South Africa.

Its board proposed an interim dividend of 13.5p per share, up 22.7% compared to the prior period.

Despite the group’s positive liquidity position, Investec’s funds under management fell 7.6% during the half-year, to £59 billion (R1.2 trillion) due to challenging macroeconomic conditions.

Titi expects interest rates to continue their upward trajectory and said the South African environment was better placed to tolerate the rises, compared to the UK.

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“Clearly in the UK, the increases in the interest rates come from a low base, so their impact will be much more pronounced.

“There is also a cost-of-living crisis, and as you know, there is also a fiscal problem … given the short-lived government of [former British prime minister] Liz Truss,” said Titi.

Many central banks around the world have been aggressively raising interest rates to curb rocketing inflation, with consumer price inflation in the UK rising to 11.1% in the 12 months to October – a 41-year high.

Shares in Investec Ltd closed 0.66% up at R93.86 on Thursday.

Listen to Investec Group CFO Nishlan Samujh speaking about the group’s latest results on SAFM Market Update with Moneyweb: