Investec Limited. FINANCIAL INFORMATION (excluding the results of Investec plc)

Transcription

1 Investec Limited FINANCIAL INFORMATION (excluding the results of Investec plc) Unaudited condensed consolidated financial information for the six months ended 30 September IFRS Rand

2 Overview of results 30 Sept 30 Sept 2016 % change 31 March Total operating income before impairment losses on loans and advances () % Operating costs () % Operating profit before goodwill and acquired intangibles () % Headline earnings attributable to ordinary shareholders () % Cost to income ratio 53.4% 53.8% 52.3% Total capital resources (including subordinated liabilities) () % Total shareholders equity () % Total assets () % Net core loans and advances () % Customer accounts (deposits) () % Cash and near cash balances () (17.2%) Funds under management () % Capital adequacy ratio 14.3% 14.4% 14.1% Tier 1 ratio 10.8% 10.8% 10.7% Common equity tier 1 ratio 10.0% 9.8% 9.9% Leverage ratio 7.6% 7.3% 7.3% Defaults (net of impairments) as a % of net core loans and advances 0.74% 1.25% 1.02% Net defaults (after collateral and impairments) as a % of net core loans and advances Annualised credit loss ratio (i.e. income statement impairment charge as a % of average core loans and advances) 0.30% 0.29% 0.29% Total gearing ratio (i.e. total assets excluding assurance assets to equity) 9.4x 10.2x 9.8x Loans and advances to customers: customer accounts (deposits) 78.6% 74.2% 75.0% 2 Investec Limited silo financial information

3 Consolidated income statement Six months to 30 Sept Six months to 30 Sept 2016 Year to 31 March Interest income Interest expense (12 492) (11 716) (23 242) Net interest income Fee and commission income Fee and commission expense (246) (260) (491) Investment income Share of post taxation operating profit of associates Trading income arising from customer flow balance sheet management and other trading activities Other operating income/(loss) 16 (1) 5 Total operating income before impairment losses on loans and advances Impairment losses on loans and advances (373) (323) (659) Operating income Operating costs (4 841) (4 568) (9 238) Operating profit before goodwill and acquired intangibles Impairment of goodwill (5) (26) Amortisation of acquired intangibles (26) (26) (51) Profit before taxation Taxation on operating profit before goodwill and acquired intangibles (443) (690) (1 440) Taxation on acquired intangibles Profit after taxation Profit attributable to Asset Management non-controlling interests (65) (83) (156) Profit attributable to other non-controlling interests (343) (350) (1 039) Earnings attributable to shareholders Investec Limited silo financial information 3

4 Consolidated statement of total comprehensive income Six months to 30 Sept Six months to 30 Sept 2016 Year to 31 March Profit after taxation Other comprehensive income: Items that may be reclassified to the income statement Fair value movements on cash flow hedges taken directly to other comprehensive income* (35) Fair value movements on available-for-sale assets taken directly to other comprehensive income* Gains on realisation of available-for-sale assets recycled to the income statement* (46) (60) (61) Foreign currency adjustments on translating foreign operations 65 (387) (676) Total comprehensive income Total comprehensive income attributable to ordinary shareholders Total comprehensive income attributable to non-controlling interests Total comprehensive income attributable to perpetual preferred securities and other Additional Tier 1 securities Total comprehensive income * Net of taxation of R43.6 million [Six months to 30 September 2016: R167.3 million; year to 31 March : R371.3 million]. 4 Investec Limited silo financial information

5 Headline earnings Six months to 30 Sept Six months to 30 Sept 2016 Year to 31 March Earnings attributable to shareholders Dividends paid to perpetual preference shareholders (230) (219) (451) Earnings attributable to ordinary shareholders Headline adjustments: (142) (80) (263) Impairment of goodwill 5 26 Revaluation of investment properties* (96) (25) (260) Gain on realisation of available-for-sale assets recycled to the income statement* (46) (60) (61) Loss on non-current assets held for sale* 32 Headline earnings attributable to ordinary shareholders * Taxation on headline earnings adjustments amounted to R45.3 million [Six months to 30 September 2016: R31.8 million, year to 31 March : R55.1 million]. Investec Limited silo financial information 5

6 Consolidated balance sheet At 30 Sept 31 March 30 Sept 2016 Assets Cash and balances at central banks Loans and advances to banks Non-sovereign and non-bank cash placements Reverse repurchase agreements and cash collateral on securities borrowed Sovereign debt securities Bank debt securities Other debt securities Derivative financial instruments Securities arising from trading activities Investment portfolio Loans and advances to customers Own originated loans and advances to customers securitised Other loans and advances Other securitised assets Interests in associated undertakings Deferred taxation assets Other assets Property and equipment Investment properties Goodwill Intangible assets Non-current assets held for sale Other financial instruments at fair value through profit or loss in respect of liabilities to customers Liabilities Deposits by banks Derivative financial instruments Other trading liabilities Repurchase agreements and cash collateral on securities lent Customer accounts (deposits) Debt securities in issue Liabilities arising on securitisation of own originated loans and advances Current taxation liabilities Deferred taxation liabilities Other liabilities Liabilities to customers under investment contracts Insurance liabilities, including unit-linked liabilities Subordinated liabilities Equity Ordinary share capital Share premium Treasury shares (1 988) (1 189) (1 362) Other reserves Retained income Shareholders equity excluding non-controlling interests Other Additional Tier 1 securities in issue Non-controlling interests Perpetual preferred securities issued by subsidiaries Non controlling interests in partially held subsidiaries Total equity Total liabilities and equity Investec Limited silo financial information

7 Condensed consolidated statement of changes in equity Six months to 30 Sept Six months to 30 Sept 2016 Year to 31 March Balance at the beginning of the period Total comprehensive income Share-based payments adjustments Dividends paid to ordinary shareholders (1 048) (1 473) (1 975) Dividends declared to other equity holders included in non-controlling interests and other Additional Tier 1 securities (130) (123) (256) Dividends paid to perpetual preference shareholders included in non-controlling interests and other Additional Tier 1 securities (100) (96) (195) Dividends paid to non-controlling interests (414) (240) (638) Issue of ordinary shares Movement of treasury shares (664) (341) (1 165) Other equity movements (2) Net equity impact of non-controlling interest movements Balance at the end of the period Investec Limited silo financial information 7

8 Segmental business analysis income statement For the six months to 30 September Asset Management Wealth & Investment Specialist Banking Group costs Total group Net interest income Net fee and commission income Investment income Share of post taxation operating profit of associates Trading income arising from customer flow balance sheet management and other trading activities Other operating income Total operating income before impairment on loans and advances Impairment losses on loans and advances (373) (373) Operating income Operating costs (1 002) (506) (3 207) (126) (4 841) Operating profit/(loss) before goodwill, acquired intangibles and non-controlling interests (126) Profit attributable to non-controlling interests (65) (343) (408) Profit/(loss) before goodwill, acquired intangibles, taxation after non-controlling interests (126) Cost to income ratio 63.9% 67.8% 47.5% n/a 53.4% Total assets () For the six months to 30 September 2016 Asset Management Wealth & Investment Specialist Banking Group costs Total group Net interest income Net fee and commission income Investment income Share of post taxation operating income of associates Trading income arising from customer flow balance sheet management and other trading activities (17) (1) Other operating (loss)/income (2) 1 (1) Total operating income before impairment on loans and advances Impairment losses on loans and advances (323) (323) Operating income Operating costs (1 004) (499) (2 943) (122) (4 568) Operating profit/(loss) before goodwill, acquired intangibles and non-controlling interests (122) Profit attributable to non-controlling interests (83) (350) (433) Profit/(loss) before goodwill, acquired intangibles, taxation and after non-controlling interests (122) Cost to income ratio 56.6% 64.1% 49.6% n/a 53.8% Total assets () Investec Limited silo financial information

9 Additional income statement note disclosures Net interest income 2016 For the six months to 30 September Notes Balance sheet value Interest income Balance sheet value Interest income Cash, near cash and bank debt and sovereign debt securities Core loans and advances Private client Corporate, institutional and other clients Other debt securities and other loans and advances Other interest-earning assets Total interest-earning assets For the six months to 30 September Notes Balance sheet value Interest expense Balance sheet value Interest expense Deposits by banks and other debt-related securities (1 181) (1 097) Customer accounts (deposits) (10 415) (9 967) Other interest-bearing liabilities (281) (176) Subordinated liabilities (615) (476) Total interest-bearing liabilities (12 492) (11 716) Net interest income Net annualised interest margin 1.82% 1.89% Notes: 1. Comprises (as per the balance sheet) cash and balances at central banks; loans and advances to banks; non-sovereign and non-bank cash placements; reverse repurchase agreements and cash collateral on securities borrowed; sovereign debt securities; bank debt securities. 2. Comprises (as per the balance sheet) loans and advances to customers; own originated loans and advances to customers securitised. 3. Comprises (as per the balance sheet) other securitised assets. 4. Comprises (as per the balance sheet) deposits by banks; debt securities in issue; repurchase agreements and cash collateral on securities lent. 5. Comprises (as per the balance sheet) liabilities arising on securitisation of own originated loans and advances. Investec Limited silo financial information 9

10 Additional income statement note disclosures (continued) Net fee and commission income For the six months to 30 September 2016 Asset management and wealth management businesses net fee and commission income Fund management fees/fees for assets under management Private client transactional fees Fee and commission expense (63) (81) Specialist Banking net fee and commission income Corporate and institutional transactional and advisory services Private client transactional fees Fee and commission expense (183) (179) Net fee and commission income Annuity fees (net of fees payable) Deal fees Investment income For the six months to 30 September Investment portfolio (listed and unlisted equities)* Debt securities (sovereign, bank and other) Investment properties Other asset categories Total The following table analyses investment income generated by the asset portfolio shown on the balance sheet Realised Unrealised Dividend income Funding and other net related (costs)/income (37) 13 (24) Realised Unrealised (182) (36) (38) (256) Dividend income Funding and other net related (costs)/income (22) 17 (5) * Including embedded derivatives (warrants and profit shares). 10 Investec Limited silo financial information

11 Additional IAS 34 disclosures Analysis of assets and liabilities by measurement basis At 30 September Total instruments at fair value Total instruments at amortised cost Insurance related linked instruments at fair value Non-financial instruments Total Assets Cash and balances at central banks Loans and advances to banks Non-sovereign and non-bank cash placements Reverse repurchase agreements and cash collateral on securities borrowed Sovereign debt securities Bank debt securities Other debt securities Derivative financial instruments Securities arising from trading activities Investment portfolio Loans and advances to customers Own originated loans and advances to customers securitised Other loans and advances Other securitised assets Interests in associated undertakings Deferred taxation assets Other assets Property and equipment Investment properties Goodwill Intangible assets Other financial instruments at fair value through profit or loss in respect of liabilities to customers Liabilities Deposits by banks Derivative financial instruments Other trading liabilities Repurchase agreements and cash collateral on securities lent Customer accounts (deposits) Debt securities in issue Liabilities arising on securitisation of own originated loans and advances Current taxation liabilities Deferred taxation liabilities Other liabilities Liabilities to customers under investment contracts Insurance liabilities, including unit-linked liabilities Subordinated liabilities Investec Limited silo financial information 11

12 Additional IAS 34 disclosures (continued) Financial instruments carried at fair value The table below analyses recurring fair value measurements for financial assets and financial liabilities. These fair value measurements are categorised into different levels in the fair value hierarchy based on the inputs to the valuation technique used. The different levels are identified as follows: Level 1 quoted (unadjusted) prices in active markets for identical assets or liabilities Level 2 inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) Level 3 inputs for the asset or liability that are not based on observable market data (unobservable inputs) Assets and liabilities related to the long-term assurance business attributable to policyholders are categorised as level 1 in the fair value category. Fair value category At 30 September Total instruments at fair value Level 1 Level 2 Level 3 Assets Loans and advances to banks Non-sovereign and non-bank cash placements Reverse repurchase agreements and cash collateral on securities borrowed Sovereign debt securities Bank debt securities Other debt securities Derivative financial instruments Securities arising from trading activities Investment portfolio Loans and advances to customers Other assets Liabilities Derivative financial instruments Other trading liabilities Repurchase agreements and cash collateral on securities lent Customer accounts (deposits) Other liabilities Net financial assets/(liabilities) at fair value (202) Transfers between level 1 and level 2 There were no transfers between level 1 and level 2 in the current period. The group transfers between levels within the fair value hierarchy when the significance of the unobservable inputs change or if the valuation methods change. 12 Investec Limited silo financial information

13 Additional IAS 34 disclosures (continued) Level 3 instruments The following table is a reconciliation of the opening balances to the closing balances for fair value measurements in level 3 of the fair value hierarchy. All instruments are at fair value through profit or loss: Balance at 1 April Total gains recognised in the income statement 116 Purchases 223 Sales (2) Transfers out of level 3 (106) Foreign exchange adjustments 7 Balance at 30 September For the period ended 30 September, R105.6 million has been transferred out of level 3 into level 2 as a result of the inputs to the valuation method becoming observable in the market as a selling price became available. The following table quantifies the gains/(losses) included in the income statement recognised on level 3 financial instruments: For the six months to 30 September Total Realised Unrealised Total gains/(losses) included in the income statement for the period recognised in Investment income 116 (5) 121 Sensitivity of fair values to reasonably possible alternative assumptions by level 3 instrument type The fair value of financial instruments in level 3 are measured using valuation techniques that incorporate assumptions that are not evidenced by prices from observable market data. The following table shows the sensitivity of these fair values to reasonably possible alternative assumptions, determined at a transactional level: At 30 September Balance sheet value Valuation method Significant unobservable input changed Range which unobservable input has been changed Potential impact on the income statement Favourable changes Unfavourable changes Assets Other debt securities 112 Price earnings Price earnings multiple (10%)/10% 17 (2) Derivative financial instruments 10 Comparable sales Property value (10%)/10% 1 (1) (1 301) Investment portfolio Price earnings EBITDA * 930 (883) Discounted cash flow Precious and industrial metal prices (10%)/6% 128 (340) Other Various ** 59 (78) Total (1 304) * The EBITDA has been stressed on an investment-by-investment basis in order to obtain favourable and unfavourable valuations. ** The valuation sensitivity for certain equity investments has been assessed by adjusting various inputs such as expected cash flows, discount rates, earnings multiples rather than a single input. It is deemed appropriate to reflect the outcome on a portfolio basis for the purpose of this analysis as the sensitivity of the investments cannot be determined through the adjustment of a single input. In determining the value of level 3 financial instruments, the following are principal inputs that do require judgement: Price-earnings multiple The price-to-earnings ratio is an equity valuation multiple. It is a key driver in the valuation of unlisted investments. EBITDA The group s earnings before interest, taxes, depreciation and amortisation. This is the main input into a price earnings multiple valuation method. Property value and precious and industrial metal prices Property value and the price of precious and industrial metals is a key driver of future cash flows on these investments. Investec Limited silo financial information 13

14 Additional IAS 34 note disclosures (continued) Measurement of financial assets and liabilities at level 2 The table below sets out information about the valuation techniques used at the end of the reporting period in measuring financial instruments categorised as level 2 in the fair value hierarchy: Assets Valuation basis/techniques Main assumptions Non-sovereign and non-bank cash placements Discounted cash flow model Yield curve Reverse repurchase agreements and cash collateral on securities borrowed Discounted cash flow model Black-Scholes Yield curve Volatilities Bank debt securities Discounted cash flow model Yield curve Other debt securities Discounted cash flow model Yield curve Derivative financial instruments Discounted cash flow model Black-Scholes Yield curve Volatilities Securities arising from trading activities Adjusted quoted price Liquidity adjustment Investment portfolio Adjusted quoted price Liquidity adjustment Loans and advances to customers Discounted cash flow model Swap curves and discount rates Liabilities Derivative financial instruments Discounted cash flow model Black-Scholes Yield curve Volatilities Other trading liabilities Discounted cash flow model Yield curve Repurchase agreements and cash collateral on securities lent Discounted cash flow model Yield curve Customer accounts (deposits) Discounted cash flow model Yield curve Other liabilities Discounted cash flow model Yield curve Fair value of financial assets and liabilities at amortised cost The following table sets out the fair value of financial instruments held at amortised cost where the carrying value is not a reasonable approximation of fair value. At 30 September Carrying amount Fair value Assets Sovereign debt securities Bank debt securities Other debt securities Loans and advances to customers Liabilities Deposits by banks Repurchase agreements and cash collateral on securities lent Customer accounts (deposits) Debt securities in issue Subordinated liabilities Investec Limited silo financial information

15 Additional note disclosures Extract of operating costs For the six months to 30 September 2016 Staff costs Premises expenses (excluding depreciation) Equipment expenses (excluding depreciation) Business expenses Marketing expenses Depreciation, amortisation and impairment of property, equipment and intangibles Extract of reverse repurchase agreements and cash collateral on securities borrowed and repurchase agreements and cash collateral on securities lent 30 Sept 31 March Assets Reverse repurchase agreements Cash collateral on securities borrowed Liabilities Repurchase agreements Extract of other debt securities 30 Sept 31 March Bonds Commercial paper 70 Floating rate notes Liquid asset bills 298 Asset-based securities Other investments Extract of securities arising from trading activities 30 Sept 31 March Bonds Floating rate notes 6 Listed equities Unlisted equities Extract of loans and advances to customers and other loans and advances 30 Sept 31 March Gross loans and advances to customers Impairments of loans and advances to customers (1 213) (1 204) Specific impairments (739) (883) Portfolio impairments (474) (321) Net loans and advances to customers Gross other loans and advances to customers Impairments of other loans and advances to customers (25) (24) Specific impairments (6) (6) Portfolio impairments (19) (18) Net other loans and advances to customers Investec Limited silo financial information 15

16 Additional note disclosures (continued) Extract of securitised assets and liabilities arising on securitisation 30 Sept 31 March Gross own originated loans and advances to customers securitised Impairments of own originated loans and advances to customers securitised (6) (6) Specific impairments (1) (1) Portfolio impairments (5) (5) Net own originated loans and advances to customers securitised Total other securitised assets Other assets 30 Sept 31 March Settlement debtors Trading properties Prepayments and accruals Trading initial margin Investec Import Solutions debtors Fee debtors Corporate tax assets Other Debt securities in issue 30 Sept 31 March Bonds and medium-term notes repayable in: Less than three months Three months to one year One to five years Greater than five years Other liabilities 30 Sept 31 March Settlement liabilities Other non-interest-bearing liabilities Other creditors and accruals Extract of perpetual preference share capital 30 Sept 31 March Perpetual preference share capital * * Perpetual preference share premium * Less than R1 million. Extract of deferred taxation 30 Sept 31 March Losses carried forward Extract of subordinated liabilities 30 Sept 31 March Remaining maturity: In one year or less, or on demand In more than one year, but not more than two years In more than two years, but not more than five years In more than five years Investec Limited silo financial information

17 Additional note disclosures (continued) Amounts subject to enforceable netting arrangements Effects of offsetting on balance sheet Related amounts not offset Offsetting At 30 September Gross amounts Amounts offset Net amounts reported on the balance sheet Financial instruments (including non-cash collateral) Net amount Assets Cash and balances at central banks Loans and advances to banks (5 551) Non-sovereign and non-bank cash placements Reverse repurchase agreements and cash collateral on securities borrowed (952) Sovereign debt securities (6 920) Bank debt securities (498) Other debt securities (982) Derivative financial instruments (3 572) (2 993) Securities arising from trading activities (59) Investment portfolio Loans and advances to customers (1 877) Own originated loans and advances to customers securitised Other loans and advances Other securitised assets Other assets (11 000) (12 404) Liabilities Deposits by banks (838) Derivative financial instruments (8 285) (2 993) Other trading liabilities Repurchase agreements and cash collateral on securities lent (8 520) Customer accounts (deposits) (1 877) Debt securities in issue Liabilities arising on securitisation of own originated loans and advances Liabilities arising on securitisation of other assets Other liabilities Subordinated liabilities (11 000) (11 513) Investec Limited silo financial information 17

18 Additional note disclosures (continued) Amounts subject to enforceable netting arrangements Effects of offsetting on balance sheet Related amounts not offset Offsetting (continued) At 31 March Gross amounts Amounts offset Net amounts reported on the balance sheet Financial instruments (including non-cash collateral) Net amount Assets Cash and balances at central banks Loans and advances to banks (4 655) Non-sovereign and non-bank cash placements Reverse repurchase agreements and cash collateral on securities borrowed (892) Sovereign debt securities (4 393) Bank debt securities (561) Other debt securities (805) Derivative financial instruments (3 284) (3 495) Securities arising from trading activities (108) Investment portfolio Loans and advances to customers (1 688) Own originated loans and advances to customers securitised Other loans and advances Other securitised assets Other assets (9 627) (10 254) Liabilities Deposits by banks (643) Derivative financial instruments (7 296) (3 495) Other trading liabilities Repurchase agreements and cash collateral on securities lent (5 552) Customer accounts (deposits) (1 688) Debt securities in issue Liabilities arising on securitisation of own originated loans and advances Other liabilities Subordinated liabilities (9 627) (9 047) Investec Limited silo financial information

19 Capital adequacy Capital structure and capital adequacy 30 Sept^ 31 March^ Shareholders equity Shareholders equity per balance sheet Perpetual preference share capital and share premium (3 183) (3 183) Non-controlling interests Non-controlling interests per balance sheet Non-controlling interests excluded for regulatory purposes (9 051) (8 987) Regulatory adjustments to the accounting basis Cash flow hedging reserve Deductions (1 824) (720) Goodwill and intangible assets net of deferred taxation (671) (720) Investment in financial entity (1 153) Common equity tier 1 capital Additional tier 1 capital Additional tier 1 instruments Phase out of non-qualifying additional tier 1 instruments (2 359) (2 359) Non-qualifying surplus capital attributable to non-controlling interests (56) (69) Non-controlling interest in non-banking entities Tier 1 capital Tier 2 capital Collective impairment allowances Tier 2 instruments Phase out of non-qualifying tier 2 instruments Non-qualifying surplus capital attributable to non-controlling interests (3 060) (2 973) Total regulatory capital Risk-weighted assets Capital ratios Common equity tier 1 ratio 10.0% 9.9% Tier 1 ratio 10.8% 10.7% Total capital adequacy ratio 14.3% 14.1% Leverage ratio 7.6% 7.3% ^ Investec Limited s capital information includes unappropriated profits. If unappropriated profits are excluded from capital information, Investec Limited s common equity ratio would be 15bps lower (March : 24bps lower). Investec Limited silo financial information 19

20 Capital adequacy (continued) Capital requirements 30 Sept 31 March Capital requirements Credit risk prescribed standardised exposure classes Corporates Secured on real estate property Short-term claims on institutions and corporates Retail Institutions Other exposure classes Securitisation exposures Equity risk Listed equities Unlisted equities Counterparty credit risk Credit valuation adjustment risk Market risk Interest rate Foreign exchange Commodities 2 3 Equities Operational risk standardised approach Risk-weighted assets Credit risk prescribed standardised exposure classes Corporates Secured on real estate property Short-term claims on institutions and corporates Retail Institutions Other exposure classes Securitisation exposures Equity risk Listed equities Unlisted equities Counterparty credit risk Credit valuation adjustment risk Market risk Interest rate Foreign exchange Commodities Equities Operational risk standardised approach Investec Limited silo financial information

21 Capital adequacy (continued) Movement in total regulatory capital The table below analyses the movement in common equity tier 1, additional tier 1 and tier 2 capital during the year. Total regulatory capital flow statement 30 Sept 31 March Opening common equity tier 1 capital New capital issues Dividends (1 278) (2 426) Profit after taxation Treasury shares (664) (1 165) Gain on transfer of non-controlling interests 73 Share-based payment adjustments Movement in other comprehensive income Goodwill and intangible assets (deduction net of related taxation liability) Investment in financial entity (1 153) Other, including regulatory adjustments and transitional arrangements 36 (936) Closing common equity tier 1 capital Opening additional tier 1 capital Other, including regulatory adjustments and transitional arrangements 12 (505) Movement in minority interest in non-banking entities 5 (13) Closing additional tier 1 capital Closing tier 1 capital Opening tier 2 capital New tier 2 capital issues Redeemed capital (2 205) (2 519) Collective impairment allowances Other, including regulatory adjustments and transitional arrangements (35) (1 543) Closing tier 2 capital Closing total regulatory capital Investec Limited silo financial information 21

22 Capital adequacy (continued) A summary of capital adequacy and leverage ratios 30 Sept^ 31 March^ Common equity tier 1 (as reported) 10.0% 9.9% Common equity tier 1 ( fully loaded )^^ 10.0% 9.9% Tier 1 (as reported) 10.8% 10.7% Total capital adequacy ratio (as reported) 14.3% 14.1% Leverage ratio** permanent capital 8.1% # 7.8% # Leverage ratio** current 7.6% # 7.3% # Leverage ratio** ( fully loaded )^^ 7.2% # 6.8% # Reconciliation of leverage ratios 30 Sept 31 March Total assets per accounting balance sheet Deconsolidation of non-financial/other entities ( ) ( ) Consolidation of banking associates Total assets per regulatory balance sheet Reversal of accounting values: Derivatives (11 214) (9 842) Securities financing transaction (21 916) (30 567) Regulatory adjustments: Derivative market value Derivative add-on amounts per the mark-to-market method Securities financing transaction add-on for counterparty credit risk Off-balance sheet items Add-on for written credit derivatives Exclusion of items already deducted from the capital measure (1 822) (718) Exposure measure Tier 1 capital Leverage ratio** current 7.6% # 7.3% # Tier 1 capital fully loaded ^^ Leverage ratio** fully loaded ^^ 7.2% # 6.8% # ^ Investec Limited s capital information includes unappropriated profits. If unappropriated profits are excluded from the capital information, Investec Limited s common equity tier 1 ratio would be 15bps lower (March : 24bps lower). ^^ Based on the group s understanding of current regulations, fully loaded is based on Basel III capital requirements as fully phased in by ** The leverage ratios are calculated on an end-quarter basis. # Based on revised BIS rules. 22 Investec Limited silo financial information

23 Credit and counterparty risk management Credit and counterparty risk is defined as the risk arising from an obligor s (typically a client or counterparty) failure to meet the terms of any agreement. Credit and counterparty risk arises when funds are extended, committed, invested, or otherwise exposed through contractual agreements, whether reflected on- or off-balance sheet. Credit and counterparty risk arises primarily from three types of transactions: Lending transactions through loans and advances to clients and counterparties creates the risk that an obligor will be unable or unwilling to repay capital and/or interest on loans and advances granted to them. This category includes bank placements where we have placed funds with other financial institutions Issuer risk on financial instruments where payments due from the issuer of a financial instrument may not be received Trading transactions, giving rise to settlement and replacement risk (collectively counterparty risk): - Settlement risk is the risk that the settlement of a transaction does not take place as expected, with one party effecting required settlements as they fall due but not receiving the performance to which they are entitled - Replacement risk is the risk following defaults by the original counterparty resulting in the contract holder having to enter into a replacement contract with a second counterparty in order to fulfil the transaction. The relevant credit committees within Investec will also consider wrong-way risk at the time of granting credit limits to each counterparty. In the banking book environment, wrong-way risk occurs where the value of collateral to secure a transaction, or guarantor, is positively correlated with the probability of default of the borrower or counterparty. For counterparty credit risk resulting from transactions in traded products (such as OTC derivatives), wrong-way risk is defined as exposure to a counterparty that is adversely correlated with the credit quality of that counterparty. It arises when default risk and credit exposure increase together. Credit and counterparty risk may also arise in other ways and it is the role of the Global Risk Management functions and the various independent credit committees to identify risks falling outside these definitions. The following tables provide an analysis of the credit and counterparty exposures. An analysis of gross credit and counterparty exposures Credit and counterparty exposures decreased by 0.3% to R464.8 billion largely as a result of a decrease in loans and advances to banks and a decrease in reverse repurchase agreements and cash collateral on securities borrowed. Cash and near cash balances amounted to R103 billion and are largely reflected in the following line items in the table below: cash and balances at central banks, loans and advances to banks, non-sovereign and non-bank cash placements, sovereign debt securities. R'million 30 Sept 31 March % change Average* Cash and balances at central banks % Loans and advances to banks (33.2%) Non-sovereign and non-bank cash placements % Reverse repurchase agreements and cash collateral on securities borrowed (28.3%) Sovereign debt securities % Bank debt securities % Other debt securities % Derivative financial instruments (15.6%) Securities arising from trading activities >100% 824 Loans and advances to customers (gross) % Own originated loans and advances to customers securitised (gross) (7.0%) Other loans and advances (gross) (6.0%) 326 Other assets % Total on-balance sheet exposures % Guarantees ^ (23.1%) Contingent liabilities, committed facilities and other % Total off-balance sheet exposures (2.5%) Total gross credit and counterparty exposures pre - collateral or other credit enhancements (0.3%) * Where the average is based on a straight-line average for period. ^ Excludes guarantees provided to clients which are backed/secured by cash on deposit with the bank. 23

24 A further analysis of our on-balance sheet credit and counterparty exposures The table below indicates in which class of asset (on the face of the consolidated balance sheet) our on-balance sheet credit and counterparty exposures are reflected. Not all assets included in the balance sheet bear credit and counterparty risk. R'million Total credit and counterparty exposure Assets that we deem to have no legal credit exposure Note reference Total balance sheet At 30 September Cash and balances at central banks Loans and advances to banks Non-sovereign and non-bank cash placements Reverse repurchase agreements and cash collateral on securities borrowed Sovereign debt securities Bank debt securities Other debt securities Derivative financial instruments Securities arising from trading activities Investment portfolio Loans and advances to customers (1 213) Own originated loans and advances to customers securitised ( 6) Other loans and advances 316 ( 25) Other securitised assets Interest in associated undertakings Deferred taxation assets Other assets Property and equipment Investment properties Goodwill Intangible assets Non-current assets classified as held for sale Other financial instruments at fair value through profit or loss in respect of liabilities to customers Total on-balance sheet exposures At 31 March Cash and balances at central banks Loans and advances to banks Non-sovereign and non-bank cash placements Reverse repurchase agreements and cash collateral on securities borrowed Sovereign debt securities Bank debt securities Other debt securities Derivative financial instruments Securities arising from trading activities Investment portfolio Loans and advances to customers (1204) Own originated loans and advances to customers securitised (6) Other loans and advances 336 (26) Other securitised assets Interest in associated undertakings Deferred taxation assets Other assets Property and equipment Investment properties Goodwill Intangible assets Non-current assets classified as held for sale Other financial instruments at fair value through profit or loss in respect of liabilities to customers Total on-balance sheet exposures Largely relates to exposures that are classified as equity risk in the banking book. 2. Largely relates to impairments. 3. Largely cash in securitised vehicles Other assets include settlement debtors where we deem to have no credit risk exposure as they are settled on a delivery against payment basis.

25 Summary of gross credit and counterparty exposure by industry Gross core loans and advances Other credit and counterparty exposures Total R'million 30 Sept 31 March 30 Sept 31 March 30 Sept 31 March High net worth and professional individuals Lending collateralised by property-largely to private clients Agriculture Electricity, gas and water (utility services) Public and non-business services Business services Finance and insurance Retailers and wholesalers Manufacturing and commerce Construction Corporate commercial real estate Other residential mortgages Mining and resources Leisure, entertainment and tourism Transport Communication Total Private client loans account for 66.9% of total gross core loans and advances, as represented by the industry classification High net worth and professional individuals and 'lending collateralised by property'. A more detailed analysis of the private client loan portfolio is provided further on. The remainder of core loans and advances largely relate to corporate client lending and are well diversified across variuos industry classifications. A more detailed analysis of corporate client lending is provided further on. Other credit and counterparty exposures are largely reflective of cash and near cash balances held with institutions and central banks, thus the large balance reflected in 'public and non-business services' and 'finance and insurance' sectors. These exposures also include off-balance sheet items such as guarantees, committed facilities and contingent liabilities, diversified across several industries. 25

26 Detailed analysis of gross credit and counterparty exposure by industry R'million At 30 September Cash and balances at central banks Loans and advances to banks Non-sovereign and non-bank cash placements Reverse repurchase agreements and cash collateral on securities borrowed Sovereign debt securities Bank debt securities Other debt securities Derivative financial instruments Securities arising from trading activities Loans and advances to customers (gross) Own originated loans and advances to customers securitised (gross) Other loans and advances (gross) Other assets Total on-balance sheet exposures Guarantees^ Contingent liabilities, committed facilities and other Total off-balance sheet exposures Total gross credit and counterparty exposures pre-collateral or other credit enhancements ^ Excludes guarantees provided to clients which are backed/secured by cash on deposit with the bank. R'million At 30 September Cash and balances at central banks Loans and advances to banks Non-sovereign and non-bank cash placements Reverse repurchase agreements and cash collateral on securities borrowed Sovereign debt securities Bank debt securities Other debt securities Derivative financial instruments Securities arising from trading activities Loans and advances to customers (gross) Own originated loans and advances to customers securitised (gross) Other loans and advances (gross) Other assets Total on-balance sheet exposures Guarantees^ Contingent liabilities, committed facilities and other Total off-balance sheet exposures Total gross credit and counterparty exposures pre-collateral or other credit enhancements High net worth and professional individuals ^ Excludes guarantees provided to clients which are backed/secured by cash on deposit with the bank. Construction Lending collateralised by property - largely to private clients Corporate commercial real estate Agriculture Other residential mortgages Electricity, gas and water (utility Public and nonbusiness services) services Mining and resources Leisure, entertainment and tourism Business services Transport Finance and insurance Communication Retailers and wholesalers Total Manufacturing and commerce 26

27 Detailed analysis of gross credit and counterparty exposure by industry R'million At 31 March Cash and balances at central banks Loans and advances to banks Non-sovereign and non-bank cash placements Reverse repurchase agreements and cash collateral on securities borrowed Sovereign debt securities Bank debt securities Other debt securities Derivative financial instruments Securities arising from trading activities Loans and advances to customers (gross) Own originated loans and advances to customers securitised (gross) Other loans and advances (gross) Other assets Total on-balance sheet exposures Guarantees^ Contingent liabilities, committed facilities and other Total off-balance sheet exposures Total gross credit and counterparty exposures pre-collateral or other credit enhancements R'million At 31 March High net worth and professional individuals ^ Excludes guarantees provided to clients which are backed/secured by cash on deposit with the bank. Construction Lending collateralised by property - largely to private clients Corporate commercial real estate Retailers and wholesalers Transport Communication Total Cash and balances at central banks Loans and advances to banks Non-sovereign and non-bank cash placements Reverse repurchase agreements and cash collateral on securities borrowed Sovereign debt securities Bank debt securities Other debt securities Derivative financial instruments Securities arising from trading activities Loans and advances to customers (gross) Own originated loans and advances to customers securitised (gross) Other loans and advances (gross) Other assets Total on-balance sheet exposures Guarantees^ Contingent liabilities, committed facilities and other Total off-balance sheet exposures Total gross credit and counterparty exposures pre-collateral or other credit enhancements ^ Excludes guarantees provided to clients which are backed/secured by cash on deposit with the bank. Agriculture Other residential mortgages Electricity, gas and water (utility Public and nonbusiness services) services Mining and resources Leisure, entertainment and tourism Business services Finance and insurance Manufacturing and commerce 27

28 Gross credit and counterparty exposures by residual contractual maturity at 30 September Up to three R'million Cash and balances at central banks months months - one year - five years - years - >10 years - Total Loans and advances to banks Non-sovereign and non-bank cash placements Reverse repurchase agreements and cash collateral on securities borrowed Sovereign debt securities Bank debt securities Other debt securities Derivative financial instruments Securities arising from trading activities Loans and advances to customers (gross) Own originated loans and advances to customers securitised (gross) Other loans and advances (gross) Other assets Total on-balance sheet exposures Guarantees^ Contingent liabilities, committed facilities and other Total off-balance sheet exposures Total gross credit and counterparty exposures pre-collateral or other credit enhancements ^ Excludes guarantees provided to clients which are backed/secured by cash on deposit with the bank. Three to six Six months to One to Five to 10 28

29 An analysis of our core loans and advances, asset quality and impairments Core loans and advances comprise : R'million 30 Sept 31 March Loans and advances to customers as per the balance sheet Add: own originated loans and advances to customers securitised as per the balance sheet Net core loans and advances to customers The tables that follow provide information with respect to the asset quality of our core loans and advances to customers. R'million 30 Sept 31 March Gross core loans and advances to customers Total impairments (1 219) (1 210) Specific impairments (740) (884) Portfolio impairments (479) (326) Net core loans and advances to customers Average gross core loans and advances to customers Current loans and advances to customers Past due loans and advances to customers (1-60 days) Special mention loans and advances to customers Default loans and advances to customers Gross core loans and advances to customers Current loans and advances to customers Default loans that are current and not impaired Gross core loans and advances to customers that are past due but not impaired Gross core loans and advances to customers that are impaired Gross core loans and advances to customers Total income statement charge for impairments on core loans and advances (372) (661) Gross default loans and advances to customers Specific impairments (740) (884) Portfolio impairments (479) (326) Defaults net of impairments Aggregate collateral and other credit enhancements on defaults Net default loans and advances to customers (limited to zero) - - Ratios Total impairments as a % of gross core loans and advances to customers 0.48% 0.51% Total impairments as a % of gross default loans 39.72% 33.46% Gross defaults as a % of gross core loans and advances to customers 1.21% 1.52% Defaults (net of impairments) as a % of net core loans and advances to customers 0.74% 1.02% Net defaults as a % of net core loans and advances to customers - - Annualised credit loss ratio (i.e. income statement impairment charge on core loans as a % of average gross core loans and advances) 0.30% 0.29% 29

30 An age analysis of past due and default core loans and advances to customers R'million 30 Sept 31 March Default loans that are current days days days days > 365 days Past due and default core loans and advances to customers (actual capital exposure) days days days days > 365 days Past due and default core loans and advances to customers (actual amount in arrears) A further age analysis of past due and default core loans and advances to customers R'million At 30 September Current watchlist loans 1-60 days days days days > 365 days Total Watchlist loans neither past due nor impaired Total capital exposure Gross core loans and advances to customers that are past due but not impaired Total capital exposure Amount in arrears Gross core loans and advances to customers that are impaired Total capital exposure Amount in arrears At 31 March Watchlist loans neither past due nor impaired Total capital exposure Gross core loans and advances to customers that are past due but not impaired Total capital exposure Amount in arrears Gross core loans and advances to customers that are impaired Total capital exposure Amount in arrears

31 An age analysis of past due and default core loans and advances to customers at 30 September (based on total capital exposure) R'million Current watchlist loans 1-60 days days days days > 365 days Total Past due (1-60 days) Special mention Special mention (1-90 days) Special mention (61-90 days and item well secured) Default Sub-standard Doubtful Total An age analysis of past due and default core loans and advances to customers at 30 September (based on actual amount in arrears) R'million Current watchlist loans 1-60 days days days days > 365 days Total Past due (1-60 days) Special mention Special mention (1-90 days) Special mention (61-90 days and item well secured) Default Sub-standard Doubtful Total An age analysis past due and default core loans and advances to customers at 31 March (based on total capital exposure) R'million Current watchlist loans 1-60 days days days days > 365 days Total Past due (1-60 days) Special mention Special mention (1-90 days) * - 3* 156 Special mention (61-90 days and item well secured) Default Sub-standard Doubtful Total An age analysis of past due and default core loans and advances to customers at 31 March (based on actual amount in arrears) R'million Current watchlist loans 1-60 days days days days > 365 days Total Past due (1-60 days) Special mention Special mention (1-90 days) Special mention (61-90 days and item well secured) Default Sub-standard Doubtful Total * Largely relates to solvent deceased estates and bonds under registration at the deeds office. Due to the lengthy external process with respect to these exposures, which are out of the control of Investec, these exposures have been classified as special mention and will remain there until settled or their credit quality deteriorates. 31

32 An analysis of core loans and advances to customers R'million Gross core loans and advances neither past due nor impaired Gross core loans and advances that are past due but not impaired Gross core loans and advances that are impaired Total gross core loans and advances (actual capital exposure) Specific impairments Portfolio impairments Total net core loans and advances (actual capital exposure) Actual amount in arrears At 30 September Current core loans and advances (467) Past due (1-60 days) (6) Special mention (1) Special mention (1-90 days) (1) Special mention (61-90 days and item well secured) Default (740) (5) Sub-standard (5) Doubtful (740) Total (740) (479) At 31 March Current core loans and advances (319) Past due (1-60 days) (2) Special mention (1) Special mention (1-90 days) (1) Special mention (61-90 days and item well secured) Default (884) (4) Sub-standard (4) Doubtful (884) Total (884) (326)

33 An analysis of core loans and advances to customers and impairments by counterparty type R'million Private client, professional and high net worth individuals Corporate sector Insurance, financial services (excluding sovereign) Public and government sector (including central banks) Trade finance and other Total core loans and advances to customers At 30 September Current core loans and advances Past due (1-60 days) Special mention Special mention (1-90 days) Special mention (61-90 days and item well secured) Default Sub-standard Doubtful Total gross core loans and advances to customers Total impairments (730) (245) (16) (64) (164) (1 219) Specific impairments (475) (41) - (60) (164) (740) Portfolio impairments (255) (204) (16) (4) - (479) Net core loans and advances to customers At 31 March Current core loans and advances Past due (1-60 days) Special mention Special mention (1-90 days) Special mention (61-90 days and item well secured) Default Sub-standard Doubtful Total gross core loans and advances to customers Total impairments (581) (401) (18) (62) (148) (1 210) Specific impairments (360) (316) - (60) (148) (884) Portfolio impairments (221) (85) (18) (2) - (326) Net core loans and advances to customers

34 An analysis of core loans and advances by risk category at 30 September R'million Gross core loans Gross defaults Aggregate collateral and other credit enhancements on defaults Balance sheet impairments Income statement impairments^ Lending collateralised by property (365) (149) Commercial real estate (211) (61) Commercial real estate - investment (177) (31) Commercial real estate - development (2) Commercial vacant land and planning (34) (28) Residential real estate (154) (88) Residential real estate - development (132) (93) Residential vacant land and planning (22) 5 High net worth and other private client lending (110) 30 Mortgages (64) (14) High net worth and specialised lending (46) 44 Corporate other lending (265) (98) Acquisition finance (29) (74) Asset-based lending (164) (24) Fund finance (6) Other corporates and financial institutions and governments (72) 5 Asset finance Small ticket asset finance Large ticket asset finance Project finance (1) Resource finance Portfolio impairments (479) (155) Total (1 219) (372) An analysis of core loans and advances by risk category at 31 March R'million Gross core loans Gross defaults Aggregate collateral and other credit enhancements on defaults Balance sheet impairments Income statement impairments^ Lending collateralised by property (214) (93) Commercial real estate (151) (53) Commercial real estate - investment (133) (74) Commercial real estate - development Commercial vacant land and planning (18) 10 Residential real estate (63) (40) Residential real estate - development (42) (42) Residential vacant land and planning (21) 2 High net worth and other private client lending (146) (284) Mortgages (60) (24) High net worth and specialised lending (86) (260) Corporate and other lending (524) (182) Acquisition finance (132) (55) Asset-based lending (148) (41) Fund finance Other corporate and financial institutions and governments (72) (32) Asset finance (9) Small ticket asset finance (9) Large ticket asset finance Project finance Resource finance (172) (50) Portfolio impairments (326) (102) Total (1 210) (661) ^ Where a positive number represents a recovery. Asset quality trends Trends in the above graph are for the year ended 31 March, unless otherwise stated. 34