IRISH BAD debt costs nearly doubled to £97 million at Investec last year, the South African bank said yesterday. Results show that Irish impairments accounted for 31 per cent of total bad debts at the bank, which jumped by 11 per cent to £318 million.
“It’s disappointing,” Investec managing director Bernard Kantor said, “but we think the cycle is peaking and we look forward to lower impairment figures going forward.”
The investment bank and asset manager posted a surprise 5 per cent decline in overall full-year profit, hit by a hefty loss at its private banking business and the surge in European bad debts.
Investec posted a £91.4 million loss in private banking, where some wealthy customers had delayed writing down the value of their assets immediately after the global credit crisis.
“We do recognise that we did get caught in the final phase of a bull market and had to rethink some of what we did in this business,” chief executive Stephen Koseff told an investor conference in London.
“Lots of entrepreneurial clients had taken too much leverage . . . and were caught out by the crisis. We, alongside them, have suffered as a consequence.”
Investors shrugged off the lower profit, however, and focused on the stronger performance of Investec’s other units, such as asset management and capital markets, sending its shares slightly higher.
“If you just assume that they won’t make a loss in private banking going forward, then the numbers are actually really good,” said Rob Nagel, senior portfolio manager at Cadiz Asset Management in Cape Town.
Mr Kantor said the bank could need to raise £75 million in new capital to meet UK banking regulations. “If you take it at its very worst, maybe a maximum of £60 to £75 million.”
Banks around the world are being required to hold more capital to stave off another financial crisis.
Investec said pretax operating profit increased to £434.41 million from £432.26 million in the previous year.
Investec had said in March that it expected a slight rise in pretax operating profit, citing strength in its funds and markets businesses. – (Reuters)
