Investec sees welcome rise in lending activity post-election

SA is a different place than before May, says bank CEO.

When Investec recently hosted a South African ministerial delegation in London, the specialist bank introduced the delegates to 10 asset managers who collectively represent $19 trillion (R344 trillion) in assets under management.

“Three years ago, we would not have been able to gather that many representatives who would want to meet with an SA delegation,” says Investec Bank CEO Cumesh Moodliar, who believes there has been a meaningful shift in South Africa since the elections in May this year.

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He spoke to Moneyweb last Thursday on the sidelines of the group’s interim results presentation for the six months ended 30 September 2024.

Read: Investec posts record interim dividend as profits climb

“When we presented Investec’s year-end results in May, there was this anticipation of what the outcome will be. And here we stand, six, seven months later, and it’s a different place.”

At the beginning of October, Deputy President Paul Mashatile and 18 ministers of the newly formed government of national unity (GNU) cabinet were in London to foster trade and investment between South Africa and the United Kingdom (UK). They were accompanied by several corporates, including Investec.

“How the government team showed up … they were there as a collective charged with running the country. It was not a case of individuals wearing their own party hat,” Moodliar says.

Investec has since engaged with numerous ministers across all political parties, which, he notes, gives the impression of people who want to get the work done for the greater good of the country.

GDP growth 

The fact that South Africa has had just under 300 days of no load shedding has also moved sentiment.

“We believe Eskom is on the right path, and the stability in generation is one of the most significant factors that will influence growth and productivity,” says Moodliar.

Investec’s view is that South Africa will see GDP growth of 1.7% in 2025.

“There are more optimistic views out there. But the reality is we have to get our growth rate up and in line with our emerging market peers. We believe the GNU’s pro-growth strategies will support it.”

Read:
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At Eskom, there has now been a shift from concerns about generation to concerns about transmission and grid capacity – opening opportunities for Investec’s corporate and institutional banking business segment, Moodliar notes.

Read: No load shedding until 2029 – key report

“If we consider the current debt-to-GDP ratio, it is evident that the structural reforms can only take place when private sector players come in.”

Of concern, though, is that there does not seem to be enough urgency in fixing logistics – ports and rail – in South Africa.

Read:
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“We’re also not seeing enough fixed investment, which is essential to drive the next chapter of growth in South Africa.”

Red lights over the medium to longer term are the uncertainty around trade policies under a Donald Trump presidency, “especially the benefits we have under Agoa [African Growth and Opportunities Act] and a possible slow-down in China, which in turn will affect South Africa as [a] commodity-driven economy”, Moodliar notes.

Read:
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Individual clients

The positivity following the formation of a GNU has also spilt over to Investec’s individual clients.

“We’ve seen a lot more enquiries about broader investment opportunities in the country. It was very much risk-off in the first six months of this year when people wanted to wait and see about the election and also where interest rates will go. But since July, there has been a definite uptick in lending activity.”

Moodliar says Investec’s strategic focus is strong in the private client segment, which has grown by just under 8% year on year.

Listen: Are we seeing a consumer-led GNU recovery?

“We also continue to evolve our international proposition for our clients,” he notes.

South African bank clients currently have just under 12 000 UK bank accounts. Investec is also growing its Swiss platform for high-net-worth South Africans, where it offers services from its office in Zurich.

“That has created a halo effect for the rest of our business in these areas.”

Investec also recently opened an office in Dubai to service expat South Africans and UK residents currently working and living in the Gulf Region.

“We are looking [at] how we can support these clients, although we don’t intend to be credit-granting or deposit-taking.”

Read: Investec opens Dubai office with eye on South African, UK expats

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