Investec Announces Record Dividend Driven by Robust Loan Growth

Investec is poised to deliver a record dividend for the third year in a row, as the bank’s operating profit has surpassed the £1 billion (R24 billion) mark for the first time.

The specialized lender, which operates in the UK and South Africa, revealed on Thursday that its “pre-provisioned” adjusted operating profit increased by 7.8% to exceed £1.04 billion (R25.1 billion) for the financial year concluding on 31 March 2025.

Read the Sens here.

Read: Investec announces record interim dividend driven by profit growth

Headline earnings per share (Heps) saw a modest drop to 72.6 pence from 72.9 pence, while return on equity decreased to 13.9% from 14.6%, yet remained within the bank’s target range of 13%-17%.

Investec has declared a final dividend of 36.5 pence per share, surpassing the 35.7 pence-per-share estimate from six analysts surveyed by Bloomberg.

The company has benefited from lending growth, continuous client acquisition, and strong net inflows into discretionary and annuity funds under management. A decrease in the cost of funds in southern Africa somewhat offset the effects of deposit repricing in its UK operations.

Group CEO Fani Titi announced during a media call on Thursday that the group plans to launch a share buyback program of approximately £100 million (R2.5 billion) over the coming year as part of its ongoing capital optimization strategies in South Africa.

Since 2023, the lender has invested roughly £300 million (R7.2 billion) in share buybacks, Titi noted.

Net interest income rose slightly by 1.5% to £1.36 billion (R32.79 billion), while non-interest revenue demonstrated stronger growth of 11.5%, climbing to £832.4 million (R20.1 billion).

Deposits grew by 4.1% to £41.2 billion during the period, with the bank’s net interest income rising by 1.5% to £1.36 billion, driven by lending growth.

The cost-to-income ratio improved to 52.6%, while the bank’s credit loss ratio stood at 38 basis points, falling within the group’s through-the-cycle range of 25 to 45 basis points.

Motor vehicle finance investigation

Investec continues to navigate regulatory uncertainties in the UK due to the Financial Conduct Authority (FCA)’s ongoing examination of motor finance commissions. The group has maintained the £30 million (R723.6 billion) provision established in FY2024, asserting that it “remains appropriate” in light of the current legal uncertainties. No additional charges have been recorded in FY2025.

While the group is closely monitoring developments, it acknowledged that the ultimate financial implications of the FCA investigation or potential remediation measures may “materially vary,” depending on further guidance or legal outcomes.

Read: Investec keeps R684m provision for UK motor finance probe for the time being

Outlook

Investec anticipates a group ROE of around 14% for FY2026.

Given global economic uncertainties, Investec’s management remains hopeful about the group’s positioning. “We are scaling and leveraging our client franchises, allocating capital wisely, and investing in clearly defined growth initiatives,” Titi commented.

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