Investec Group, a niche private bank and wealth manager, experienced a boost in its share price following the release of a half-year profit update.
- Increased interest income: The company benefited from higher interest rates, which resulted in a rise in its net interest income during the six-month period ending in September.
- Growth in client base and lending: Investec also reported growth in its client base and lending activities in both South Africa and the UK, contributing to its profit gains.
- Positive earnings outlook: The company expects its basic earnings per share for the six-month period to be between 67.2p and 69.2p, which is 33% to 37% higher compared to the same period in the previous year.
- Headline earnings per share on the rise: Investec anticipates that its headline earnings per share, a profit measure excluding one-time items, will be 6% to 12% higher.
- Impact of interest rates on bad debts: Similar to other banks, Investec experienced an increase in bad debts as a result of aggressive interest rate hikes. However, its South African operations performed slightly better in this regard than its UK operations.
- Favorable interest rate impact: Rising interest rates had a positive impact on the company’s net interest income, supported by a growing lending book.