Rate cuts to ease consumer pressure, boost loan activity: Investec CEO

South Africa’s GNU has a ‘business-friendly posture’ which lifts confidence, says Fani Titi.

The overall expectation of interest rate cuts globally will herald a period of improved confidence, more loan activity, and less pressure on consumers and clients, says Fani Titi, group CEO of Investec.

During a pre-close media call on Friday, Titi shared the group’s trading update for the five months ending 31 August 2024, noting low activity levels early in the period due to national elections in South Africa and the UK.

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Investec has a dual listing on the London and Johannesburg stock exchanges and operates in South Africa and the UK.

“In South Africa, the government of national unity’s (GNU) posture seems more business-friendly, and the confidence levels have increased. In the UK, though, there is still a level of uncertainty,” he says.

There should be more clarity once the new Labour government under Keir Starmer delivers its Autumn Statement, which will provide more detail on taxes. “That will feed confidence into the economy,” Titi notes.

The group expects its headline earnings per share for the six months ending 30 September to be between 1.4% lower and 3.5% higher than the corresponding period in 2023.

Strategic actions, including the amortisation of intangible assets associated with the combination of Investec Wealth and Investment UK with the Rathbones Group in the current period, will affect the comparability of its year-on-year financial performance.

The merger with Rathbones, valued at £839 million (R19 billion), received regulatory approval in August 2023.

Read: £839m Investec UK/ Rathbones merger gets regulatory go-ahead

Investec foresees its credit loss ratio in the UK for the period to be around the upper end of the through-the-cycle range of 25 to 45 basis points. “The overall credit quality remained strong – in line with the position at FY2024 with no evidence of trend deterioration.”

In Southern Africa, the credit loss ratio is expected to be below the midpoint of the through-the-cycle range of 15 to 35 basis points.

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Group return on equity is expected to be between 13% and 14% – within the group’s medium-term target range of 13% to 17%.

Funds under management in Southern Africa increased by 10.7% to R541.39 billion (£23.2 billion), compared to R487.67 billion (£20.9 billion) on 31 March 2024. It notes that net discretionary inflows of R8.5 billion were augmented by net inflows of R1.3 billion in non-discretionary funds under management.

Titi says the group maintained strong capital and liquidity levels to continue supporting clients and scaling growth opportunities in an improving economic environment. The trading update is in line with its FY2025 guidance.

Read: Investec eyes business banking for growth 

Investec is expected to announce its interim results for the six months ending 30 September in November.

The group’s share price traded 2.75% lower mid-morning at R133.02.

Investec share price 

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