Investec drives up interim profit

18th Nov 2010 07:29

South African investment bank Investec ramped up profit during the first half thanks mainly to big gains at its asset management and capital markets.Operating profit for the six months to 30 September before various other items rose 5.6% to £228.2m, but was up over 34% if you take out last year's £46m gain from the repurchase of debt.It said back in September that half year operating profit would be marginally higher than the year before as growth in its fund business outweighed weaker demand for loans.Profit before tax jumped to £277.8m from £203.9m in 2009, but that includes a net gain of £73.5m from the purchase of Rensburg Sheppards.Net inflows at the asset management business were £1.9bn, lifting assets under management by 6.7% to £49.5bn. Operating profit leapt 69% to £48.9m as stock markets rallied.Capital Markets did even better, making £133.5m during the period, up over 81% on a year ago. That was put down to good levels of activity across the advisory and structuring businesses, especially within the principal finance, structured finance and structured equity derivatives teams. Profits were also up sharply at investment banking, wealth & investment and property investments, but private banking and group services fell into the red.Group net interest income was up 8% to £321m and impairment losses on loans and advances fell to £122.8m from £134.3 last year.There has been a negative impact on short-term earnings and return on equity, the company said, as uncertainty over banking regulations forces the firm to maintain excess levels of liquidity and capital until it gets further clarity."Looking ahead there are, of course, reasons for caution, but we are encouraged by the overall levels of activity we see in our businesses," said managing director Bernard Kantor.It also confirmed that it has agreed to sell Rensburg Fund Management to Franklin Templeton Global Investors Limited (UK) for £45m in cash. Expect the deal to complete early next year.