Creating enduring worth | |
Investec annual report 2023 | |
Investec plc silo (excluding Investec Limited) annual financial statements |
Alternative performance measures We supplement our IFS figures with alternative performance measures used by management internally and which provide valuable, relevant information. These measures are highlighted with the symbol shown here. The description of alternative performance measures and their calculation is provided in the alternative performance measures section. | |
Page references Refers readers to information elsewhere in this report. | |
Website Indicates that additional information is available on our website: www.investec.com | |
Group sustainability Refers readers to further information in the Investec Group's 2023 sustainability report which is published and available on our website: www.investec.com | |
Reporting standard Denotes our consideration of a reporting standard | |
Unaudited information Indicated information which has not been audited. | |
Integrating sustainability Indicates where we have incorporated sustainability content, aims and ambitions. |
01 | Operational and strategic overview | Our business at a glance | |
Overview of the Investec Group’s and Investec plc’s organisational structure | |||
Overview of the activities of Investec plc | |||
Salient features | |||
02 | Risk management and governance | ||
Risk management approach and framework | |||
Year in review from a risk perspective | |||
Principal risks | |||
Investec plc Audit Committee report | |||
Directors’ report | |||
03 | Annual financial statements | Directors’ responsibilities | |
Independent auditor’s report to the members of Investec plc | |||
Consolidated income statement | |||
Consolidated statement of comprehensive income | |||
Consolidated balance sheet | |||
Consolidated cash flow statement | |||
Consolidated statement of changes in equity | |||
Accounting policies | |||
Notes to the annual financial statements | |||
Notes to risk and capital management | |||
Parent Company annual financial statements | Balance sheet | ||
Statement of changes in shareholders’ equity | |||
Notes to the Investec plc parent company annual financial statements | |||
Alternative Performance Measures | |||
Definitions | |||
Glossary | |||
Corporate information |
01 | Contents | Investec plc Annual Financial Statements 2023 | |||
CONTENTS | |||||
01 | Operational and strategic overview | Investec plc Annual Financial Statements 2023 | |||
01 | Operational and strategic overview | Investec plc Annual Financial Statements 2023 | |||
Our purpose | ||||||
Our purpose is to create enduring worth. | ||||||
Our mission | ||||||
Investec is a distinctive bank and wealth manager, driven by commitment to our purpose, values, core philosophies and culture. We deliver exceptional service to our clients in the areas of banking and wealth management, striving to create long- term value for all of our stakeholders and contributing meaningfully to our people, communities and the planet. | ||||||
Our distinction | Our strategic direction | |||||
The Investec distinction is embodied in our entrepreneurial culture, supported by a strong risk management discipline, client-centric approach and an ability to be nimble, flexible and innovative. We do not seek to be all things to all people. Our aim is to build well- defined, value-adding businesses focused on serving the needs of select market niches where we can compete effectively and build scale and relevance. | The One Investec strategy is, first and foremost, a commitment to drawing on the full breadth and depth of relevant capabilities to meet the needs of each client, regardless of specialisation or geography. One Investec is also about improving internal operating efficiencies; ensuring that investments in infrastructure and technology support our differentiated service offering across the entire Group, not just within specific operating units or geographies. And in our allocation of capital, the One Investec strategy demands a disciplined approach to optimising returns, not merely for one region or business area but for the Group as a whole. | |||||
Our unique positioning is reflected in our iconic brand, our high-touch and high-tech approach and our positive contribution to society, macro-economic stability and the environment. Ours is a culture that values purposeful thinking and stimulates extraordinary performance. We take pride in the strength of our leadership team, our people are empowered and committed to our values and culture. | ||||||
Our values* | ||
Deep client partnerships, built on trust and out-of-the-ordinary service, are the bedrock of our business | ||
We are dedicated to building meaningful relationships with all our stakeholders | ||
We uphold cast-iron integrity in all we do | ||
We are committed to living in society, not off it | ||
We embrace our responsibility to the environment | ||
We thrive on change and challenge convention with courage, constantly adapting to an ever-changing world | ||
We believe in open and honest dialogue to test decisions, seek consensus and accept responsibility | ||
We trust our people to exercise their judgement, promoting entrepreneurial flair and freedom to operate within the context of prudent risk parameters and unwavering adherence to our values | ||
We embrace diversity in a deeply caring organisation in which everyone can bring their whole selves. | ||
*We have recently realigned our values through extensive consultation and dialogue, across the organisation, with all business areas and geographies, ensuring that they reflect our steadfast beliefs and our aspirations. The processes has been bottom up and top down and then aggregated the wisdom of the organisation to reflect the depth of our thinking and the way we conduct ourselves |
01 | Operational and strategic overview | Investec plc Annual Financial Statements 2023 | |||
OUR BUSINESS AT A GLANCE | |||||
A circular on the establishment of our DLC structure was issued on 20 June 2002 and is available on our website. |
How we are structured | |||||||||
Non-Southern African operations | Southern African operations | ||||||||
Investec plc | Investec Limited | ||||||||
LSE primary listing | JSE primary listing | ||||||||
JSE secondary listing | NSX secondary listing | ||||||||
A2X secondary listing | BSE secondary listing | ||||||||
A2X secondary listing | |||||||||
Investec Bank Limited | Investec Wealth & Investment SA Group | ||||||||||||
Investec Bank plc | |||||||||||||
Investec Wealth & Investment Limited | |||||||||||||
01 | Operational and strategic overview | Investec plc Annual Financial Statements 2023 | |||
OVERVIEW OF THE INVESTEC GROUP'S AND INVESTEC PLC'S ORGANISATIONAL STRUCTURE | |||||
Focus on helping our clients create and preserve wealth | A highly valued partner and adviser to our clients | |||||
High net worth (HNW) private clients | Corporate, private, intermediary, government and institutional clients | |||||
Private client banking activities | Corporate and investment banking activities | |||||||
•Lending •Private capital •Transactional banking •Savings •Foreign exchange. | •Lending •Treasury and risk management solutions •Advisory •Institutional research, sales and trading. | |||||||
UK Channel Islands | UK and Europe Channel Islands USA India | |||||||
Our high-touch and high-tech private client offering provides transactional banking, lending, private capital, savings and foreign exchange tailored to suit our clients’ needs. Our target market includes HNW active wealth creators (with >£300 000 annual income and >£3mn net asset value). Our savings offering targets primarily UK retail savers. | Our client-centric, solution-driven offering provides Corporate Banking and Investment Banking services to private companies, private equity and sponsor-backed companies and publicly listed companies. | |||||||
Natural linkages between the private client and corporate business | ||||||||
01 | Operational and strategic overview | Investec plc Annual Financial Statements 2023 | |||
OVERVIEW OF THE ACTIVITIES OF INVESTEC PLC | |||||
We exist to free our clients from the burden of having to look after their financial affairs on their own. We strive to do this every day, via the quality of our professional advice, the excellence of the service we deliver and through the preservation and growth of our clients' wealth. |
Investment and savings | Financial planning | Pensions and retirement | ||||||||
•Discretionary and advisory portfolio management services for private clients •Specialist investment management services for charities, pension schemes and trusts •Financial planning advice for private clients •Specialist portfolio management services for international clients •Platform-based managed portfolio service (MPS) for advisers •Range of specialist funds for direct clients and advisers. | •Retirement planning •Succession planning •Bespoke advice and financial reviews. | •Discretionary investment management for company pension and Self Invested Personal Pensions (SIPPs) •Advice and guidance on pension schemes. | ||||||||
01 | Operational and strategic overview | Investec plc Annual Financial Statements 2023 | |||
OVERVIEW OF THE ACTIVITIES OF INVESTEC PLC CONTINUED | |||||
31 March 2023 | 31 March 2022 | % change | |
Income statement and selected returns | |||
Earnings attributable to ordinary shareholders (£’000) | 293 131 | 235 854 | 24.3% |
Adjusted operating profit (£’000) | 387 174 | 286 944 | 34.9% |
Operating costs (£’000) | 854 875 | 775 866 | 10.2% |
Cost to income ratio | 65.3% | 71.3% | |
Return on average assets* | 1.04% | 0.88% | |
Return on average risk weighted assets* | 1.69% | 1.40% | |
Net interest income as a % of operating income | 56.3% | 44.4% | |
Non-interest income as a % of operating income | 43.7% | 55.6% | |
Annuity income as a % of total operating income | 80.0% | 73.6% | |
31 March 2023 | 31 March 2022 | % change | |
Balance sheet | |||
Total assets (£’million) | 28 386 | 27 946 | 1.6% |
Net core loans (£’million) | 15 563 | 14 423 | 7.9% |
Cash and near cash balances (£’million) | 8 550 | 8 871 | (3.6%) |
Customer accounts (deposits) (£’million) | 19 122 | 18 294 | 4.5% |
Funds under management (£’million) | 42 422 | 44 419 | (4.5%) |
Gearing ratio (total assets to equity) | 10.4x | 10.4x | |
Level 3 (fair value assets) as a % of total assets | 6.5% | 6.4% | |
Core loans to equity ratio | 5.7x | 5.4x | |
Loans and advances to customers as a % of customer deposits | 81.4% | 78.9% | |
Credit loss ratio | 0.37% | 0.17% | |
Stage 3 exposures as a % of gross core loans subject to ECL | 2.3% | 2.1% | |
Stage 3 exposures net of ECL as a % of net core loans subject to ECL | 1.8% | 1.6% | |
Other regulatory ratios | |||
LCR | 383% | 457% | |
NSFR | 147% | 145% | |
Capital and leverage ratios^ | |||
Total Capital ratio | 17.2% | 16.5% | |
Tier 1 ratio | 13.1% | 12.8% | |
Common Equity Tier 1 ratio | 11.7% | 11.4% | |
Leverage ratio | 9.2% | 9.0% |
01 | Operational and strategic overview | Investec plc Annual Financial Statements 2023 | |||
SALIENT FEATURES | |||||
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
Investec plc Board | |||||||||||||||||
DLC Audit Committee | DLC Remuneration Committee | DLC Nominations and Directors’ Affairs Committee (DLC Nomdac) | DLC Board Risk and Capital Committee (DLC BRCC) | DLC Social and Ethics Committee (DLC SEC) | |||||||||||||
DLC IT Risk and Governance Committee | Investec plc Asset and Liability Committee | DLC Capital Committee | Group Executive Risk Committee (Group ERC) | Group ESG Executive Committee | |||||||||||||
Investec plc Capital Committee | |||||||||||||||||
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
RISK MANAGEMENT APPROACH AND FRAMEWORK | |||||
Further detail on key judgements |
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
YEAR IN REVIEW FROM A RISK PERSPECTIVE | |||||
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
YEAR IN REVIEW FROM A RISK PERSPECTIVE CONTINUED | |||||
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
PRINCIPAL RISKS | |||||
Connected client ecosystems | Growth initiatives | Optimisation of returns | Entrepreneurial culture | Digitalisation | Strategic use of data | |||||||
Credit and counterparty risk | 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 thereby resulting in a loss to the Group, arising when funds are extended, committed, invested, or otherwise exposed through contractual agreements, whether reflected on- or off-balance sheet | ||||||||
Link to strategy and opportunities | Monitoring and mitigation activities •Independent credit committees exist in the UK which also have oversight of regions where we assume credit risk. These committees operate under Board-approved delegated limits, policies and procedures •There is a high level of executive involvement in decision-making with non-executive review and oversight •Our credit exposures are to a select target market comprising high-income and high net worth individuals, established corporates, small and medium-sized enterprises, financial institutions and sovereigns •Our risk appetite continues to favour lower risk, income-based lending, with exposures well collateralised and credit risk taken over a short to medium term •Investec has a limited appetite for unsecured debt, thus the credit risk mitigation technique most commonly used is the taking of collateral, with a strong preference for tangible assets •Portfolio reviews (including stress testing analyses) are undertaken on all material businesses, where the portfolios are analysed to assess any migration in portfolio quality, highlight any vulnerabilities, identify portfolio concentrations and make appropriate recommendations, such as a reduction in risk appetite limits or specific exposures. | ||||||||
Further information | |||||||||
Risk appetite and tolerance metric | Positioning at 31 March 2023 | ||||||||
We target a credit loss ratio of less than 0.5% (less than 1.5% under a weak economic environment/stressed scenario). We target Stage 3 net of ECL as a % of net core loans subject to ECL to be less than 2% (excluding the legacy portfolio*; less than 4% under a weak economic environment/stressed scenario). We target Stage 3 net of ECL as a % of CET1 less than 25%. | We currently remain within all tolerance levels given the current weakened economic environment. The Group credit loss ratio was calculated at 0.37% for 31 March 2023 (31 March 2022: 0.17%). Stage 3 net of ECL as a % of net core loans subject to ECL was 1.7% (excluding the Legacy portfolio*). Stage 3 net of ECL as a % of CET1 is 12.9%. | ||||||||
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
PRINCIPAL RISKS CONTINUED | |||||
Connected client ecosystems | Growth initiatives | Optimisation of returns | Entrepreneurial culture | Digitalisation | Strategic use of data | |||||||
Concentration risk | Concentration risk refers to the risk that could arise from a single client or counterparty, group of connected counterparties, or from a particular geography, asset class, supplier or industry. Concentration risk may occur when counterparties are mutually affected by similar economic, legal, regulatory or other factors which could hinder their ability to meet contractual obligations | ||||||||
Link to strategy and opportunities | Monitoring and mitigation activities •As a matter of course, concentration risk is well managed and exposures are well spread across geographies and industries •We target a diversified funding base, avoiding undue concentrations by investor type, maturity, market source, instrument and currency •Consideration is given to concentration risk when assessing outsourcing and third parties, both within the business and across the financial sector systemically •We target a diversified loan portfolio, lending to clients we know and understand. Credit and counterparty risk is always assessed with reference to the aggregate exposure to a single counterparty or group of related parties to manage concentration risk. In order to manage concentration, we will consider a sell-down of exposures to market participants •Concentration risk can also exist where loan maturities are clustered to single periods in time. Loan maturities are monitored on a portfolio and a transaction level. | ||||||||
More information | |||||||||
Risk appetite and tolerance metric | Positioning at 31 March 2023 | ||||||||
We limit our core loan exposure to a single/ connected individual or company to £120 million for Investec plc. We also have a number of risk tolerance limits and targets for specific asset classes. Third party and outsourcing concentrations are permitted in relation to regulated, systemically important entities, external auditors or specialist global network infrastructures. Where strategic decisions result in concentration risk in third parties outside of these classifications, these decisions are based on considered analysis where the benefits outweigh the risks and appropriate controls have been deployed for managing and monitoring the associated risks. | We maintained this risk tolerance level throughout the year. | ||||||||
Country risk | Country risk refers to the risk of lending to a counterparty operating in a particular country or the risk inherent in a sovereign exposure, i.e. the risk of exposure to loss caused by events in that country. Country risk covers all forms of lending or investment activity whether to/with individuals, corporates, banks or governments | ||||||||
Link to strategy and opportunities | Monitoring and mitigation activities •Exposures are only to politically stable jurisdictions that we understand and have preferably operated in before •The legal environment should be tested, have legal precedent in line with the Organisation for Economic Co-operation and Development (OECD) standards and have good corporate governance •In certain cases, we may make use of political risk insurance to mitigate exposure where deemed necessary. | ||||||||
Further information | |||||||||
Risk appetite and tolerance metric | Positioning at 31 March 2023 | ||||||||
We have a preference for primary exposure in the Group’s main operating geography (i.e. the UK). We will accept exposures where we have a branch or local banking subsidiary and tolerate exposures to other countries where we have developed a local understanding and capability or we are facilitating a transaction for a client. | We maintained this risk tolerance level in place throughout the year. | ||||||||
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
PRINCIPAL RISKS CONTINUED | |||||
Connected client ecosystems | Growth initiatives | Optimisation of returns | Entrepreneurial culture | Digitalisation | Strategic use of data | |||||||
Climate, nature and biodiversity risk | The risk that our lending and investment activities give rise to unintended biodiversity and/ or physical climate deterioration through not managing transition risk in alignment with the Paris goals | ||||||||
Link to strategy and opportunities | Monitoring and mitigation activities •We recognise the complexity and urgency of climate change. We are committed to supporting the transition to a clean and energy efficient world while preserving biodiversity and the wellbeing of our people and our planet •Investec’s climate change position statement and climate change framework stems from the belief that the greatest impact we can have is to partner with our clients to decarbonise their activities and to offer products and services that help accelerate a cleaner and healthier world •Our environmental policy considers the risks and opportunities that climate change, nature and biodiversity degradation present to the global economy •Accordingly, climate-related, nature-related and biodiversity risks are considered by the relevant credit committee or investment committee when making lending or investment decisions •There is also oversight by the Group ESG Executive Committee and the DLC Social and Ethics Committee on general sustainability issues, including climate-related, nature-related and biodiversity matters •The Group ESG Executive Committee coordinates climate-related and biodiversity risks and opportunities across geographies and businesses from both a strategy and policy perspective. | ||||||||
More information | |||||||||
Risk appetite and tolerance metric We take a cautious approach with respect to industries that are known to have negative consequences on climate change or that cause environmental and/or biodiversity damage. Financial risk from climate change, nature and biodiversity is a highly important topic which helps to inform decisions. We acknowledge that our approach will evolve as new regulations, recommendations and best practices regarding climate, nature and biodiversity (in specific the Task force for Nature Related Financial Disclosures (TNFD)) matures. | Positioning as of 31 March 2023 We maintained this risk tolerance level in place throughout the year. | ||||||||
Environmental, social and governance (ESG) risk | The risk that our lending and investment activities give rise to unintended environmental, social and economic consequences | ||||||||
Link to strategy and opportunities | Monitoring and mitigation activities •Investec has a holistic approach to sustainability, which runs beyond recognising our own footprint on the environment, includes our many community activities and is based on a broader responsibility to our environment and society •Accordingly, ESG risks are considered by the relevant credit committee or investment committee when making lending or investment decisions •There is also oversight by the Group ESG Executive Committee and the DLC Social and Ethics Committee on general ESG and sustainability matters •The Group ESG Executive Committee coordinates general sustainability and ESG risks and opportunities across geographies and businesses from both a strategy and policy perspective •We have linked ESG metrics and KPIs to Executive Directors compensation. | ||||||||
More information | |||||||||
Risk appetite and tolerance metric We take a cautious approach with respect to industries falling in our high-risk ESG categories and that may have negative environmental and/or social impacts. It is important to consider potential financial risk that could result from unmanaged ESG risks. We are continually monitoring best practice in this area and will continue to develop and enhance our approach over time. | Positioning as of 31 March 2023 We maintained this risk tolerance level in place throughout the year. | ||||||||
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
PRINCIPAL RISKS CONTINUED | |||||
Connected client ecosystems | Growth initiatives | Optimisation of returns | Entrepreneurial culture | Digitalisation | Strategic use of data | |||||||
Investment risk | Investment risk arises where the Group invests in unlisted companies and select property investments, as well as certain listed investments (predominantly relating to Ninety One) with risk taken directly on the Group’s balance sheet | ||||||||
Link to strategy and opportunities | Monitoring and mitigation activities •Independent credit and investment committees in the UK provide oversight of regions where we assume investment risk •Risk appetite limits and targets are set to limit our exposure to equity and investment risk •As a matter of course, concentration risk is avoided and investments are well spread across geographies and industries. | ||||||||
Further information | |||||||||
Risk appetite and tolerance metric | Positioning at 31 March 2023 | ||||||||
We have moderate appetite for investment risk, and set a risk tolerance of less than 30% of CET1 capital for our unlisted principal investment portfolio. | Our unlisted investment portfolio amounted to £315 million, representing 15.2% of CET1. | ||||||||
Market risk in the trading book | Traded market risk is the risk of potential value changes in the trading book as a result of changes in market factors such as interest rates, equity prices, commodity prices, exchange rates, credit spreads and the underlying volatilities where derivatives are traded. The trading book is defined as positions in financial instruments and commodities, including derivative products and other off-balance sheet instruments that are held within the trading businesses | ||||||||
Link to strategy and opportunities | Monitoring and mitigation activities •To identify, measure, monitor and manage market risk, we have independent market risk management teams •The focus of our trading activities is primarily on supporting our clients. Our strategic intent is that proprietary trading should be limited and that trading should be conducted largely to facilitate client flow •Within our trading activities, we act as principal with clients or the market. Market risk exists where we have taken on principal positions resulting from market making, underwriting and facilitation of client business in the foreign exchange, interest rate, equity, credit and commodity markets •Measurement techniques used to quantify market risk arising from our trading activities include sensitivity analysis, Value at Risk (VaR), stressed VaR (sVaR), expected shortfall (ES) and extreme value theory (EVT). Stress and scenario analyses are used to add insight to possible outcomes under severe market disruptions. | ||||||||
Further information | |||||||||
Risk appetite and tolerance metric | Positioning at 31 March 2023 | ||||||||
Market risk arises through our trading activities which are primarily focused on supporting client activity. Appetite for proprietary trading is limited. We set an overall tolerance level of a one-day 95% VaR of less than £3.5 million. | We met these internal limits; one-day 95% VaR was £0.4 million at 31 March 2023. | ||||||||
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
PRINCIPAL RISKS CONTINUED | |||||
Connected client ecosystems | Growth initiatives | Optimisation of returns | Entrepreneurial culture | Digitalisation | Strategic use of data | |||||||
Liquidity risk | Liquidity risk refers to the possibility that, despite being solvent, we have insufficient capacity to fund increases in assets or are unable to meet our payment obligations as they fall due, in normal and stressed conditions. This includes repaying depositors or maturing wholesale debt. This risk arises from mismatches in the timing of cash flows, and is inherent in all banking operations and can be impacted by a range of institution-specific and market-wide events | ||||||||
Link to strategy and opportunities | Monitoring and mitigation activities •Our banking entity in the UK is ring-fenced from the Investec Group's banking entity in South Africa and is required to meet the UK regulatory liquidity requirements •Each geographic entity must be self-sufficient from a funding and liquidity standpoint •Investec plc undertakes an annual Internal Liquidity Adequacy Assessment Process (ILAAP) which documents the approach to liquidity management across the firm, including IBP (solo basis). This document is reviewed and approved by IBP BRCC, DLC BRCC and by the IBP and DLC Boards •We maintain a liquidity buffer in the form of unencumbered cash, government or rated securities (typically eligible for repurchase with the central bank), and near cash well in excess of the regulatory requirements as protection against unexpected disruptions in cash flows •The Group maintains contingency funding plans designed to protect depositors, creditors and shareholders and maintain market confidence during adverse liquidity conditions •The maintenance of sustainable prudent liquidity resources takes precedence over profitability •We target a diversified funding base, avoiding undue concentrations by investor type, maturity, market source, instrument and currency •Our core loans must be fully funded by stable funding •The Group does not rely on committed funding lines for protection against unforeseen interruptions to cash flow •The balance sheet risk management teams independently monitor key daily funding metrics and liquidity ratios to assess potential risks to the liquidity position, which further act as early warning indicators of potential normal market disruptions •Daily liquidity stress tests are carried out in order to help accurately measure the liquidity profile and ensure that in the absence of market or funding liquidity during periods of stress, we would continue to meet our obligations. | ||||||||
Further information | |||||||||
Risk appetite and tolerance metric | Positioning at 31 March 2023 | ||||||||
We carry a high level of liquidity in all our banking subsidiaries in order to be able to cope with shocks to the system, targeting a minimum cash and near cash to customer deposit ratio of 25%. | Total cash and near cash balances amounted to £8.6 billion at year end representing 44.7% of customer deposits. | ||||||||
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
PRINCIPAL RISKS CONTINUED | |||||
Connected client ecosystems | Growth initiatives | Optimisation of returns | Entrepreneurial culture | Digitalisation | Strategic use of data | |||||||
Interest rate risk in the banking book (IRRBB) | IRRBB arises from the impact of adverse movements in interest rates on both net interest earnings and economic value of equity. IRRBB is an inherent consequence of conducting banking activities, and arises from the provision of retail and wholesale (non- trading) banking products and services | ||||||||
Link to strategy and opportunities | Monitoring and mitigation activities •The daily management of IRRBB is centralised within the Treasury of each banking entity and is subject to local independent risk and local Asset and Liability Committee (ALCO) review •Together with the business, the treasurer develops strategies regarding changes in the volume, composition, pricing and interest rate characteristics of assets and liabilities to mitigate the interest rate risk and ensure a high degree of net interest margin stability over an interest rate cycle. These are presented, debated and challenged in the Liability Product and Pricing Forum and the ALCO •Each banking entity has its own Board-approved IRRBB policy and risk appetite, which is clearly defined in relation to both income risk and economic value risk •The policy dictates that long-term (>one year) IRRBB is materially eliminated. Where natural hedges between banking book items do not suffice to reduce the exposure within defined limits, interest rate swaps are used to transform fixed rate assets and liabilities into variable rate items •IRRBB is measured and analysed by utilising standard tools of traditional interest rate repricing mismatch and net present value (NPV) sensitivity to changes in interest rate risk factors. | ||||||||
Further information | |||||||||
Risk appetite and tolerance metric | Positioning at 31 March 2023 | ||||||||
A movement in rates can result in a negative impact on revenues across the banking industry. This risk is managed within the Group's risk appetite framework as a proportion of capital and net interest income in order to limit volatility. | Investec plc is within these tolerance metrics. The UK regulatory framework requires banks to assess their Pillar II requirements, including those related to IRRBB, as part of systems and processes included in their ICAAP. | ||||||||
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
PRINCIPAL RISKS CONTINUED | |||||
Connected client ecosystems | Growth initiatives | Optimisation of returns | Entrepreneurial culture | Digitalisation | Strategic use of data | |||||||
Capital risk | The risk that we do not have sufficient capital to meet regulatory requirements or that capital is inefficiently deployed across the Group | ||||||||
Link to strategy and opportunities | Monitoring and mitigation activities •Investec plc's approach to capital management utilises both regulatory capital as appropriate to the jurisdiction in which it operates and internal capital, which is an internal risk-based assessment of capital requirements •A detailed assessment of the regulatory and internal capital position is undertaken on an annual basis and is documented in the Internal Capital Adequacy Assessment Process (ICAAP). The ICAAP is reviewed by PLC and DLC Capital Committees before being recommended for approval to DLC BRCC and the Board •The determination of target capital is driven by our risk profile, strategy and risk appetite, taking into account the regulatory and market factors applicable to the Group •At the most fundamental level, we seek to balance our capital consumption between prudent capitalisation in the context of the Group’s risk profile and optimisation of shareholder returns •Our internal capital framework is designed to manage and achieve this balance •The framework has been approved by the Board. The Investec plc Capital Committee is responsible for assisting the DLC Capital Committee (mandated by DLC BRCC) for the oversight and management of capital and leverage. •The leverage ratio is considered and monitored as part of the capital management framework. | ||||||||
Further information | |||||||||
Risk appetite and tolerance metric | Positioning at 31 March 2023 | ||||||||
We intend to maintain a sufficient level of capital to satisfy regulatory requirements and our internal target ratios. We target a Total Capital ratio range of between 14% and 17% on a consolidated basis for Investec plc and we target a minimum Tier 1 ratio of >11% and a CET1 ratio of >10%. We are a lowly leveraged firm and target a leverage ratio in all our banking subsidiaries in excess of 6%. | Investec plc met all these targets. Capital has grown over the period. The leverage ratio is 9.2%. | ||||||||
Reputational risk | Reputational risk is damage to our reputation, name or brand. Reputational risk is often associated with strategic decisions made and also arises as a result of other risks manifesting and not being appropriately mitigated or managed | ||||||||
Link to strategy and opportunities | Monitoring and mitigation activities •We have various policies and practices to mitigate and/or manage reputational risk, including strong values that are regularly and proactively reinforced •Reputational risk is mitigated and/or managed as much as possible through detailed processes and governance/escalation procedures from business units to the Board, and from regular, clear communication with shareholders, customers and all stakeholders •The Group has a disclosure and market communications policy which is reviewed and approved annually by Group ERC and DLC BRCC. | ||||||||
Further information | |||||||||
Read more on page 78 of the Investec Group's 2023 risk and governance report. | |||||||||
Risk appetite and tolerance metric | Positioning at 31 March 2023 | ||||||||
We have a number of policies and practices in place to mitigate and/or manage reputational risks. | We have continued to mitigate and/or manage these risks where possible throughout the year. | ||||||||
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
PRINCIPAL RISKS CONTINUED | |||||
Connected client ecosystems | Growth initiatives | Optimisation of returns | Entrepreneurial culture | Digitalisation | Strategic use of data | |||||||
Business and strategic risk | Business and strategic risk relates to external market factors that can create income volatility | ||||||||
Link to strategy and opportunities | Monitoring and mitigation activities •The risk of loss caused by income volatility is mitigated through diversification of income sources, reducing concentration of income from any one type of business or geography and maintaining a flexible cost base •Group strategy is directed towards generating and sustaining a diversified income base for the Group •In the instance where income falls, we retain the flexibility to reduce costs (particularly variable remuneration), thereby maintaining a competitive cost to income ratio. | ||||||||
Further information | |||||||||
Read more on pages 5 to 82 of the Investec Group’s 2023 integrated and strategic annual report. | |||||||||
Risk appetite and tolerance metric | Positioning at 31 March 2023 | ||||||||
We seek to maintain an appropriate balance between revenue earned from capital light and balance sheet driven activities. Ideally capital light revenue should exceed 50% of total operating income, dependent on prevailing market conditions. We have a solid annuity income base supported by diversified revenue streams, and target an annuity income ratio in excess of 65%. We seek to maintain strict control over fixed costs. The Group has a cost to income ratio target of below 67%. | Capital light activities contributed 34.2% to total operating income and balance sheet driven activities contributed 65.8%. Annuity income amounted to 80.0% of total operating income. The cost to income ratio amounted to 65.3%. | ||||||||
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
PRINCIPAL RISKS CONTINUED | |||||
Connected client ecosystems | Growth initiatives | Optimisation of returns | Entrepreneurial culture | Digitalisation | Strategic use of data | |||||||
Operational risk | Operational risk is defined as the potential or actual impact to the Group as a result of failures relating to internal processes, people, systems or from external events. The impact can be financial as well as non-financial such as customer detriment, reputational or regulatory consequences | ||||||||
Link to strategy and opportunities | Monitoring and mitigation activities •The Group manages operational risk through an embedded operational risk management framework •Operational risk sub-types which are significant in nature are managed by dedicated specialist teams within the Group. These operational risk sub-types are addressed in specific, detailed risk policies and procedures, but are included within the operational risk management framework and are reported and monitored within the operational risk appetite •These sub-types include: –Business disruption and operational resilience risk –Conduct risk –Data management risk –Financial crime risk –Fraud risk –Information security and cyber risk –Legal risk –Model risk –People risk –Physical safety and security risk –Processing and execution risk –Regulatory compliance risk –Tax risk –Technology risk –Third party risk. | ||||||||
Further information | |||||||||
Risk appetite and tolerance metric | Positioning at 31 March 2023 | ||||||||
We maintain sound operational risk practices to identify and manage operational risk. We monitor the level of acceptable operational risk exposure/loss through qualitative and quantitative measures. | The Group continued to monitor operational risk losses against the tolerance levels with appropriate escalation where required. | ||||||||
Operational risk – Business disruption and operational resilience risk | The risk associated with disruptive incidents which may impact important business services and critical functions/resources including processes, premises, staff, equipment, third party services and systems | ||||||||
Link to strategy and opportunities | Monitoring and mitigation activities •The Group maintains continuity through appropriate resilience strategies that cater for disruptions, irrespective of the cause •These strategies include, but are not limited to, relocating the impacted business to alternate processing sites, enabling staff to work from home, the application of high availability technology solutions, obtaining third party dependency business continuity assurances and ensuring readiness of physical solutions for critical infrastructure components •Resilience testing is conducted annually to validate continuity strategies and ensure they remain effective and appropriate. This includes annual recovery testing for all key systems that support important/critical business services. | ||||||||
Further information | |||||||||
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
PRINCIPAL RISKS CONTINUED | |||||
Connected client ecosystems | Growth initiatives | Optimisation of returns | Entrepreneurial culture | Digitalisation | Strategic use of data | |||||||
Operational risk – Conduct risk | The risk associated with inappropriate behaviours or business activities that may lead to client, counterparty or market detriment, erosion of Investec values, culture and ethical standards expected of its staff, reputational and/or financial damage to the Group | ||||||||
Link to strategy and opportunities | Monitoring and mitigation activities •Our approach to conduct risk is driven by our values and philosophies, ensuring that the Group operates with integrity and puts the wellbeing of its clients at the heart of how the business is run •Products and services are scrutinised and regularly reviewed to identify any issues early on and to make sure they are escalated for appropriate resolution and, where necessary, remedial action taken •The conduct risk policy is designed to create an environment for consumer protection and market integrity within the business, supported with the right conduct risk management framework •Risk and Conduct Forums have the objective of ensuring that the Group maintains a client- focused and fair outcomes-based culture. | ||||||||
Further information | |||||||||
Operational risk – Data management risk | The risk associated with poor governance in acquiring, processing, storing and protecting data. Issues with data quality, reliability or corruption can adversely impact business decisions, client services and financial reporting | ||||||||
Link to strategy and opportunities | Monitoring and mitigation activities •The Group drives robust data governance principles across the business, including data ownership, management, quality control, taxonomies and defined data architecture •Consistent mechanisms are in place for data consolidation, storage and reporting •Data flows and reconciliations are automated, and integration between systems is streamlined to reduce the need for manual tasks, minimise data processing delays and eliminate single points of failure •Data quality is monitored, reported and enhanced in line with business needs and regulatory principles •Predictive intelligence is increasingly obtained through data analytics to support proactive risk management •Data retention and destruction processes are designed to meet business needs and comply with applicable legal obligations. | ||||||||
Further information | |||||||||
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
PRINCIPAL RISKS CONTINUED | |||||
Connected client ecosystems | Growth initiatives | Optimisation of returns | Entrepreneurial culture | Digitalisation | Strategic use of data | |||||||
Operational risk – Financial crime risk | The risk associated with the possibility of handling proceeds of crime, financing of terrorism, proliferation financing, sanctions breaches and bribery or corruption, as well as any related regulatory breaches | ||||||||
Link to strategy and opportunities | Monitoring and mitigation activities •Established policies and procedures are in place to promote business with clients in such a manner that minimises the risk of the Group’s products being used for money laundering and terrorist or proliferation financing •There is regular reporting to the DLC Audit Committee as well as Group ERC •A risk-based approach supports these objectives, while complying with the Group’s regulatory compliance obligations. At a high level the control framework ensures that: –Sufficient information about clients is obtained –All clients and prospective clients are risk rated and verification commensurate with their risk profile is conducted –All prospective and existing clients and relevant related parties are screened against relevant lists (including applicable sanctions list) to identify increased financial crime risk –Staff are appropriately trained –Suspicious transactions and terrorist financing are identified and reported –Existing and prospective clients that are not within the Group’s financial crime risk appetite are exited or declined. | ||||||||
Further information | |||||||||
Operational risk – Fraud risk | The risk associated with any kind of criminal conduct arising from fraud, corruption, theft, forgery and misconduct by staff, clients, suppliers or any other internal or external stakeholder | ||||||||
Link to strategy and opportunities | Monitoring and mitigation activities •The Group manages internal and external fraud risk through an integrated framework which includes global policies, standards and methodologies •Detection and prevention systems are utilised to help identify potential fraud, reaching out to clients where appropriate to validate or discuss concerns •Fraud risk assessments are conducted to proactively identify and map existing preventative and detective controls to the relevant fraud risks to ensure effective mitigation •Fraud prevention and detection controls are enhanced on an ongoing basis in response to increased fraud losses across the industry and new fraud modus operandi •Industry collaboration assists with fraud prevention efforts and the recovery of funds that have been paid away •Adherence to fraud prevention policies is proactively monitored •Practices which comply with updated regulations, industry guidance and best practice are embedded within the Group •Awareness of existing and horizon fraud threats is created through internal training and education of clients and intermediaries on fraud prevention and detection. | ||||||||
Further information | |||||||||
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
PRINCIPAL RISKS CONTINUED | |||||
Connected client ecosystems | Growth initiatives | Optimisation of returns | Entrepreneurial culture | Digitalisation | Strategic use of data | |||||||
Operational risk – Information security and cyber risk | The risk associated with unauthorised access, use, disclosure, modification or destruction of information assets, including cyber threats to the Group’s operations and data | ||||||||
Link to strategy and opportunities | Monitoring and mitigation activities •In light of the broad range of risks to which information resources are exposed, this risk is managed by addressing both internal and external threat exposures •Internal threats relate to data theft, inappropriate access or confidentiality breaches by staff –These are mitigated by implementing risk-appropriate data protection controls to safeguard information assets in line with data sensitivity and business criticality –Access to systems and data is closely controlled and privileged IT access is restricted and actively monitored –A dedicated insider threat team drives proactive discovery of confidential data, targeted monitoring, and response to potential data loss events. •External threats relate to cyberattacks such as ransomware, denial of service and cyber fraud –This is mitigated by an adaptive cyber strategy integrating prediction, prevention, detection and response capabilities –Robust security controls leverage defence-in-depth and advanced technologies to protect against sophisticated attacks –Cyber risk is actively monitored by a 24/7 global cyber team and threat intelligence services, and security incident response processes are continuously improved –Cyber controls are stress-tested through security assessments and attack simulations, run both internally and in conjunction with independent specialists –Periodic updates to the Board keep them abreast of the threat landscape and informed on the Group’s security position –Regular security training to all staff ensures high levels of awareness and vigilance. | ||||||||
Further information | |||||||||
Operational risk – Legal risk | The risk associated with losses resulting from any of our rights not being fully enforceable or from our obligations not being properly performed. This includes our rights and obligations under contracts entered into with counterparties. Such risk is especially applicable where the counterparty defaults and the relevant documentation may not support the anticipated rights and remedies in the transaction | ||||||||
Link to strategy and opportunities | Monitoring and mitigation activities •Members of the legal risk function are mandated to ensure we keep abreast of developments and changes in the nature and extent of our activities, and to benchmark our processes against best practice •There is a central independent in-house legal team with embedded business unit legal officers where business volumes or needs dictate •The Group maintains adequate insurance to cover key insurable risks •The legal risk function is supplemented by a pre-approved panel of third party legal firms to be utilised where necessary •The key principles of the legal risk policy describe the overall responsibility of the legal risk function, outline how legal risks are to be assessed and how material legal risks should be reported and escalated where necessary. | ||||||||
More information | |||||||||
Read more on page 78 of the Investec Group's 2023 risk and governance report. | |||||||||
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
PRINCIPAL RISKS CONTINUED | |||||
Connected client ecosystems | Growth initiatives | Optimisation of returns | Entrepreneurial culture | Digitalisation | Strategic use of data | |||||||
Operational risk – Model risk | The risk associated with the adverse consequences that arise from decisions based on incorrect or misused model outputs (including reports). Material sources of model risk include: credit model risk, liquidity model risk, trading book model risk and non-trading IRRBB model risk | ||||||||
Link to strategy and opportunities | Monitoring and mitigation activities •The Group manages model risk through embedded, risk specific frameworks and policies •The frameworks address roles and responsibilities, governance processes and committees and approaches to managing and monitoring model risk •Models are subject to regular, independent validation by specialist risk teams •The relevant committees are mandated to oversee model risk and have delegated further oversight and approval to appropriate sub-committees. | ||||||||
Further information | |||||||||
Operational risk – People risk | The risk associated with the inability to recruit, retain and engage diverse talent across the organisation and remain aligned to the Investec cultures and values | ||||||||
Link to strategy and opportunities | Monitoring and mitigation activities •We focus on building a strong, diverse and capable workforce by providing a workplace that stimulates and rewards distinctive performance •Investec invests significantly in opportunities for the development of all employees, and in leadership programmes to enable current and future leaders of the Group •Internal mobility is a valued mechanism for the development and retention of people •Our people and organisation team plays a critical role in assisting the business to achieve its strategic objectives, which are matched to learning strategies and market trends •The people and organisation team is mandated to enable the attraction, development and retention of talent who can perform in a manner consistent with our culture and values •The people and organisation team also works with leadership to strengthen the culture of the business, ensure its values are lived, build capability and contribute to the long-term sustainability of the organisation. | ||||||||
Further information | |||||||||
Read more on pages 110 and 111 of the Investec Group's 2023 integrated and strategic annual report and the Investec Group’s 2023 sustainability report which is published and available on our website: www.investec.com | |||||||||
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
PRINCIPAL RISKS CONTINUED | |||||
Connected client ecosystems | Growth initiatives | Optimisation of returns | Entrepreneurial culture | Digitalisation | Strategic use of data | |||||||
Operational risk – Processing and execution risk | The risk associated with the failure to process, manage and execute transactions and/or other processes (such as change) completely, accurately and timeously due to human error or inadequate process design or implementation | ||||||||
Link to strategy and opportunities | Monitoring and mitigation activities •The Group seeks to minimise process failures or human error which can disrupt operations or impact delivery of services to clients •Policies, processes, procedures and monitoring controls which mitigate against control failures are implemented to protect clients, markets and the Group from detriment •We manage operational capacity to meet client and industry needs and continue to explore automation to improve efficiency and reduce human error •Key business processes are regularly reviewed and the relevant risks assessed through the risk and control self-assessment process •Material change is managed through dedicated projects with formalised project governance. | ||||||||
Further information | |||||||||
Operational risk – Regulatory compliance risk | The risk associated with changing legislation, regulation, policies, voluntary codes of practice and their interpretation in the markets in which we operate | ||||||||
Link to strategy and opportunities | Monitoring and mitigation activities •The Group remains focused on achieving the highest levels of compliance with professional standards and integrity in each of our jurisdictions •Our culture is a major component of our compliance framework and is supported by robust policies, processes and talented professionals who ensure that the interests of our stakeholders remain at the forefront of everything we do •An independent integrity (whistleblowing) line is in place to ensure that staff can report regulatory breaches, allegations of fraud, bribery and corruption, and non-compliance with policies •There are independent compliance, legal and risk management functions in each of our core operating jurisdictions, which ensure that the Group implements the required processes, practices and policies to adhere to applicable regulations and legislation. | ||||||||
Further information | |||||||||
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
PRINCIPAL RISKS CONTINUED | |||||
Connected client ecosystems | Growth initiatives | Optimisation of returns | Entrepreneurial culture | Digitalisation | Strategic use of data | |||||||
Operational risk – Tax risk | The risk associated with inadequate tax planning, transaction execution, tax compliance and reporting failures | ||||||||
Link to strategy and opportunities | Monitoring and mitigation activities •The Group’s control environment for the management and mitigation of tax risk includes a formalised tax strategy, policy and framework •The Group ensures that all transactions and financial products and services are commercially motivated •All advisory and tax planning work is conducted in accordance with the relevant tax laws, regulations and intentions of legislators of the country in which the Group operates. | ||||||||
Further information | |||||||||
Operational risk – Technology risk | The risk associated with disruption to or malfunction of critical IT infrastructure, systems or applications that support key business processes and client services | ||||||||
Link to strategy and opportunities | Risk management and key mitigating actions •The technology environment is proactively monitored for continuous visibility of operational performance and availability •Mature incident management processes and continuity plans support a resilient technology environment that is able to withstand failure and minimise service disruption •Strategic roadmaps direct implementation of new technologies to enhance capacity, scalability and reduce reliance on legacy components within the technology environment •Cloud computing is leveraged in a risk appropriate manner, to accelerate value delivery while ensuring that required safeguards are in place •Internal controls are automated where possible and augmented with monitoring to reduce human error and enhance efficiency •Technology governance structures review IT projects and provide oversight of new investments in infrastructure and software •Systems are aligned to approved standards and sound architectural principles to reduce technical complexity and leverage common functions and services •The risk of errors in production systems is reduced through design reviews, secure development practices and robust testing. | ||||||||
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
PRINCIPAL RISKS CONTINUED | |||||
Connected client ecosystems | Growth initiatives | Optimisation of returns | Entrepreneurial culture | Digitalisation | Strategic use of data | |||||||
Operational risk – Third party risk | The risk associated with the reliance on and use of external providers of services to the Group | ||||||||
Link to strategy and opportunities | Risk management and key mitigating actions •Third party policies and practices govern the assessment, selection, approval and oversight of third party services •A global third party management team has been established to coordinate, streamline and enhance consistency of third party processes •Robust due diligence processes are in place to evaluate third party suitability, resilience and controls with the appropriate level of rigour based on the scale, complexity and service materiality •Service disruption or security risks that third parties may introduce are identified and managed •Ongoing monitoring ensures that contractual obligations are met and required service levels are maintained •Appropriate supplier business contingency plans, including exit strategies for key/critical vendors, are established and managed to minimise client impact following any disruption in service •Regular monitoring is conducted to maintain an understanding of our strategic partnerships with cloud providers and that of their fourth party providers. | ||||||||
Further information | |||||||||
These emerging risks are briefly highlighted on page 23 and 24 of the Investec Group's 2023 risk and governance report and should be read in the context of our approach to risk management and our overall Group risk appetite framework. |
Additional risks and uncertainties not presently known to us or that we currently deem immaterial may in the future also negatively impact our business operations. Emerging and other risks are factored into the Board’s viability assessment. Read |
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
PRINCIPAL RISKS CONTINUED | |||||
Robust challenge, integrity and effective governance are the pillars of a successful organisation. | ||||
Zarina Bassa Chair of Investec plc Audit Committee | ||||
The Committee’s terms of reference can be found at www.investec.com. |
Further details of the experience of the members can be found in their biographies on pages 127 to 131 of the Investec Group’s 2023 integrated and strategic report. |
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
INVESTEC PLC AUDIT COMMITTEE REPORT | |||||
Members | Meetings attended / Eligible to attend | ||
Zarina Bassa (Chair) | 7/7 | ||
David Friedland1 | 2/2 | ||
Vanessa Olver2 | 5/5 | ||
Philisiwe Sibiya | 7/7 | ||
DLC Audit Committee | ||||||||||||||||||||||
á | ||||||||||||||||||||||
Investec plc Audit Committee | Investec Limited Audit Committee | DLC IT Risk and Governance Committee | ||||||||||||||||||||
á | á | á | á | á | á | |||||||||||||||||
Investec Bank plc Audit Committee | Investec Bank Limited Audit Committee | Investec Wealth & Investments International Audit & Risk Committee | Investec Life Audit & Risk Committee | Investec Property Fund Audit Committee | ||||||||||||||||||
á | ||||||||||||||||||||||
Investec Wealth & Investments Audit Committee | Investec Bank Mauritius Audit Committee | |||||||||||||||||||||
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
INVESTEC PLC AUDIT COMMITTEE REPORT CONTINUED | |||||
Key audit matters | What we did | |||
Expected credit losses (ECL) assessment •The appropriateness of the allowance for ECL is highly subjective and judgemental. | •Challenged the level of ECL, model methodology and assumptions applied to calculate the ECL provisions held by the Group •Reviewed the appropriateness of the ECL models and approved the forward-looking macro-economic scenarios applied •Evaluated the impact of ECL on the interim and annual results •Reviewed and monitored the Group’s calculation of ECLs, trends in staging changes, model changes, scenario updates, post-model adjustments, Significant Increase in Credit Risk (SICR), and volatility •Reviewed and satisfied ourselves on in-model adjustments •Assessed the appropriateness of the ECL model overlays maintained for emerging risks for which there was insufficient data available to model the existing credit risk. Specific consideration was given to the methodology and assumptions applied to calculate the overlay. We further evaluated the appropriateness of the releases of the ECL model overlays •Reviewed and satisfied ourselves on staging of key exposures •Assessed the appropriateness of the ECL provision raised by the Group for large exposures in entities publicly perceived to be in financial distress •Assessed ECL experienced against forecasts and considered whether the level of ECL was appropriate •Evaluated the IFRS 9 disclosures for relevance and compliance with IFRS •Reviewed for reasonableness the benchmarking of macro-economic scenarios, ECLs, Credit Loss Ratio (CLR) and coverage ratios against relevant UK peers. | |||
Fair value of level 3 instruments and the resulting IFRS 13 fair value measurement (IFRS 13) disclosure •For level 3 instruments such as unlisted investments in private equity businesses, investment properties, fair value loans and large bespoke derivative structures, there is a large degree of subjectivity surrounding the inputs to the valuations and valuations methodology. With the lack of observable liquid market inputs, determining appropriate valuations continues to be highly judgemental. | •Received presentations on the material investments across the Group, including an analysis of the key judgements and assumptions applied, valuation methodology applied and approved the valuation adjustments proposed by management for the year ended 31 March 2023 •Challenged and debated significant subjective exposures and assumptions including: –The valuation principles applied for the valuation of level 3 investments (unlisted and private equity investments) and fair value loans –The appropriateness of the IFRS 13 disclosures regarding fair value. |
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
INVESTEC PLC AUDIT COMMITTEE REPORT CONTINUED | |||||
Key audit matters | What we did | |||
Uncertain tax and other legal matters | •Considered potential legal and uncertain tax matters with a view to ensuring appropriate accounting treatment in the financial statements •Evaluated the appropriateness of the accounting and disclosures regarding the investigation by the Office of the Public Prosecutor in Cologne, claims by the German Federal Tax Office in Bonn, and the potential related civil claims. This was done by having closed sessions with executive management and external audit. At these meetings considered the feedback as received from external and internal legal counsel and the probability of the outcomes including a commercial settlement. Refer to note 53 of the annual financial statements •Received regular updates from the Group Executive, Group Tax, Group Finance and Group Legal Counsel on uncertain tax and legal matters to enable the Audit Committee to probe and consider the matters and evaluate the basis and appropriateness of the accounting treatment •Analysed the judgements and estimates made and discussed the potential range of outcomes that might arise to determine the liability, if any, for uncertain tax positions as required by the International Financial Reporting Interpretations Committee (IFRIC) 23 •Concluded on the appropriateness of the International Accounting Standards (IAS) 37 accounting treatment, the scenarios and sensitivities, and any overall disclosure in the financial statements. Refer to note 49 of the annual financial statements. | |||
Investments in associates | •Evaluated the appropriateness of the accounting treatment of the investment in Ninety One and the resulting gain recognised in the income statement at an Investec plc level, that was previously accounted for as an associate prior to the distribution of the Ninety One shares and an investment measured at fair value through Other Comprehensive Income (OCI) post this distribution •Reviewed the technical accounting memoranda prepared by Group Finance regarding the accounting treatment of Ninety One. The memoranda addressed the appropriate accounting treatment of the distribution of the Ninety One shares that resulted in the derecognition of the investment as an associate •Evaluated the appropriateness of the accounting and disclosure relating to significant judgements and estimates, impairment, valuation methods and assumptions applied. | |||
Going concern and the viability statement | •Considered reports on the Group’s budgets, forecasts, profitability, capital, liquidity and solvency and the impact of legal proceedings, if any, on both going concern and the three-year Viability Statement •Considered the results of various stress testing analyses based on different economic scenarios and the possible impact on the ability of the Group to continue as a going concern •Considered the reports issued by an independent external party post a regulator required liquidity simulation of Investec DLC •Considered the impact of strategic corporate actions on the capital plans and the three year viability statement •Recommended the approval of the going concern assumption and the Group Viability Statement to the Investec plc Board for approval •Noted the Investec Bank plc Viability Statement as recommended for approval by the IBP Audit Committee to the IBP Board. | |||
Information technology systems, cyber security and controls impacting financial reporting | •Received and reviewed reports in respect of IT systems, cyber security and controls impacting financial reporting •Received regular reports from internal audit on the effectiveness of IT controls tested as part of the internal audit process •Considered broader IT and Governance matters, including security, IT strategy and operations through attendance by the Audit Committee and BRCC Chairs at the DLC IT Risk and Governance Committee. |
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
INVESTEC PLC AUDIT COMMITTEE REPORT CONTINUED | |||||
Key audit matters | What we did | |||
Information technology systems, cyber security and controls impacting financial reporting (continue) | •Focused on IT and cyber security throughout the year. Since 2015, Investec has been using Targeted Attack Simulations (TAS) to understand our cyber risk exposure and adequacy of our security controls. Received a presentation on the results of the 2022/23 TAS •Met with IT external auditors to discuss the results of the external audit of IT systems. | |||
External audit and audit quality | •Managed the relationship with the external auditor Ernst & Young LLP •Considered the external auditors report on the progress of the review engagement being performed on the interim results. Reviewed the results announcements for both interim and final results •Met with key members of Ernst & Young LLP prior to every Audit Committee meeting to discuss the 2022/23 audit plan, key areas of focus, findings, scope and conclusions •Approved the external audit plan, audit fee and the main areas of focus •Obtained feedback from the cross-reviews performed by the DLC team across a DLC level •Pre-approved all non-audit services provided by External Audit and confirmed the services to be within the approved non-audit services policy •Discussed external audit feedback on the Group’s critical accounting estimates and judgements •Assessed the independence and objectivity of the external auditors •Received updates from the external auditors on the audit of the Annual Financial Statements (AFS) of the Group including the Summary of Audit Differences for the year ended 31 March 2023. The Audit Committee ensured that it was comfortable that the level of unadjusted audit differences were within tolerable error for both actual and judgemental differences and that there was no bias towards over or understatement •Met separately with the leadership of Ernst & Young LLP to discuss auditor accreditation, firm ratings and accreditations, independence, firm quality control, results of internal and external regulator inspections of the firm and individual partners •Monitored audit quality and audit partner accreditation.The Investec plc Audit Committee confirms its satisfaction with the performance and quality of external audit, the external auditor and lead partner •Noted the unqualified independent auditor’s report in relation to the Group •Recommended to the Board the re-appointment of Ernst & Young LLP as the External Auditors of Investec plc and Investec Bank plc for the year ending 31 March 2024. | |||
Audit firm rotation | •Concluded a comprehensive independent tender process in respect of the rotation of the external auditors of Investec plc. Deloitte LLP was nominated as the new external auditor for the financial year starting 1 April 2024. A one year shadow period will commence, subject to shareholders approval at the AGM to be held in August 2023 •Oversaw the allocation of non-audit work to the audit firm to ensure that there were no independence breaches. |
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
INVESTEC PLC AUDIT COMMITTEE REPORT CONTINUED | |||||
Other matters | What we did | |||
Regulatory compliance and reporting | •Received regular reports from the Regulatory Compliance function and reviewed the adequacy of the scope and the effectiveness of the regulatory compliance processes applied. This included the evaluation of the quality of regulatory reporting, the regulatory compliance universe, the scope and the integrity of the regulatory compliance process, the adequacy of internal regulatory compliance systems and processes, and the consideration and remediation of any findings of the internal and external auditors or regulators •Requested specific updates or presentations from management on areas considered high risk or where exceptions had been identified •Received regular updates from the compliance function in respect of Regulatory Interactions, Risk Ratings and High-Risk exposures, Conduct, Financial Crime, Compliance Monitoring, Training, Anti-Money Laundering (AML) and Combating of Financing of Terrorism (CFT) reviews conducted in respect of Group subsidiaries •Considered regulatory developments and the potential impact on the UK, following the addition of South Africa to the FATF Grey List in February 2023 •Reviewed the reporting obligations in line with the listing rules requirements in respect of the Investec Limited share buy-back of Investec plc shares and the distribution of the Ninety One shares. | |||
Post balance sheet disclosure | •Considered any post balance sheet events that may require the AFS to be adjusted or require additional disclosure including in respect of regulatory matters and the proposed combination of Investec Wealth & Investment UK and Rathbones Group. Refer to note 57 of the annual financial statements •Reviewed and approved the publication of a no-change statement. | |||
Climate, nature and biodiversity and environmental, social and governance (ESG) | •Reviewed ESG reporting and disclosures •Considered the level of external assurance obtained on ESG reporting and disclosures •Considered the Task Force for Climate Related Disclosures (TFCD) reporting requirements. | |||
Internal controls •The effectiveness of the overall control environment, the status of any material control issues with emphasis on the progress of specific remediation plans. | •Attended regular meetings of the DLC BRCC. Based on reports presented at those meetings, evaluated the impact of an evolving risk environment, including operational risk, on the internal control environment •Evaluated and tracked the status of the most material control issues identified by internal and external audit and tracked the progress of the associated remediation plans against agreed time frames •Reviewed reports from the independent audit committees of the Group’s subsidiaries •Evaluated the impact of working from home on the overall control environment and operational risk •Evaluated reports on the internal control environment from the internal and external auditors with specific emphasis on culture and conduct elements in the internal audit reports. Noted internal audit reports and conclusions on internal controls, internal financial controls and the risk management framework for the year under review •Attended and received regular reports from the DLC IT Risk and Governance Committee regarding the monitoring and effectiveness of the Group’s IT controls. Considered updates on key internal and external audit findings with respect to the IT control environment. |
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
INVESTEC PLC AUDIT COMMITTEE REPORT CONTINUED | |||||
Other matters | What we did | |||
Internal controls (continued) | •Reviewed and approved the combined assurance model, ensuring completeness of risks and adequacy and effectiveness of assurance coverage •Evaluated reports on cyber security within the Group and received a presentation on the outcome of the 2022/23 TAS. | |||
Combined assurance matrix | •Confirmed our satisfaction with the appropriateness of the design and effectiveness of the combined assurance model applied, which incorporates the various disciplines of Risk Management, including Operational Risk, Legal, Regulatory Compliance, internal audit, external audit and other assurance providers •Confirmed our satisfaction with the levels of assurance and mitigants so that, taken as a whole, there is sufficient and appropriate assurance regarding mitigants for the key risks •Reviewed the results of the Combined Assurance Matrix (CAM) coverage plan at the year-end to assess the results of actual coverage and conclusions relative to planned coverage for the year. Concluded that the CAM formed an appropriate basis for assurance coverage and outcomes •Reviewed the year-end conclusions from internal audit on internal controls, the risk management framework and internal financial controls based on their planned and actual audit coverage for the year. | |||
Fair, balanced and understandable reporting •The Group is required by the UK Corporate Governance Code to assess and confirm that its external reporting is fair, balanced and understandable, and consider whether it provides the information necessary for stakeholders to assess the Group’s position and performance, business model and strategy. | •Undertook an assessment on behalf of the Board, to provide the Board with assurance that it can make the statement •Met with senior management to gain assurance that the processes underlying the compilation of the annual financial statements were appropriate •Conducted an in-depth critical review of the annual financial statements and, where necessary, requested amendments to disclosure •Reviewed the accounting treatment of key judgements and the quality of earnings assessment •Assessed disclosure controls and procedures •Confirmed that management had reported on and evidenced the basis on which representations to the external auditors were made •Obtained input and assurance from the external auditors and considered the level of and conclusion on the summary of audit differences •Considered feedback from Group Finance in respect of a project launched to refine the annual integrated report in order to improve disclosures, improve financial control and reporting processes •Concluded that the processes underlying the preparation of the annual report and financial statements for the financial year ended 31 March 2023 were appropriate in ensuring that those statements were fair, balanced and understandable •Reviewed feedback received from analysts in respect of the annual report as provided by Investor Relations and incorporated the feedback into the annual report •Reviewed the outcomes of the combined assurance coverage model as discussed above. |
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
INVESTEC PLC AUDIT COMMITTEE REPORT CONTINUED | |||||
Other matters | What we did | |||
Business control environment •The effectiveness of the control environment in each individual business, including the status of any material control issues and the progress of specific remediation plans. | •Received regular reports from the subsidiary audit committees •Attended the audit committees of all significant subsidiaries •Assessed reports on individual businesses and their control environments, scrutinised any identified control failures and closely monitored the status of remediation plans •Received updates from senior management and scrutinised action plans following internal audit findings •Reviewed the process for reporting to the DLC Audit Committee by key subsidiaries and associates and considered regular reports from such entities. | |||
Finance function | •Considered the financial reporting as prepared by Group Finance regarding the interim results for the period ended 30 September 2022 and final results for the 31 March 2023 year end •In a closed session, discussed and concluded that the finance functions of Investec plc and its subsidiaries were adequately skilled, resourced and experienced to perform the financial reporting for the Group and that appropriate succession was in place for key roles •Concluded that the Group FD, Nishlan Samujh, had the appropriate expertise and experience to meet the responsibilities of the position. | |||
IFRS | •Reviewed various accounting papers prepared by Group Finance addressing subjective accounting treatments and significant accounting judgements, including the appropriateness of the accounting for the Ninety One share distribution •The Audit Committee chair discussed the key judgements and complex accounting treatments with both external audit and management in the weekly meetings leading up to the year-end sign off •Concluded on the reasonableness of the significant accounting judgements •The 2022 AFS of Investec plc were subject to a review by the Financial Reporting Council (FRC) in the current year. The outcome of the review confirmed compliance with IFRS and regulatory disclosure requirements. | |||
Related party disclosures | •Considered and reviewed related party disclosures for the Group •DLC Nomdac reviewed key related party transactions during the year and ensured compliance with Investec related party policies. |
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
INVESTEC PLC AUDIT COMMITTEE REPORT CONTINUED | |||||
Other matters | What we did | |||
Internal audit •The performance of Internal Audit and delivery of the Internal Audit plan, including scope of work performed, the level of resources, the risk assessment methodology and coverage of the internal audit plan •The Committee is responsible for assessing audit quality and the effectiveness of the internal audit function. | •Scrutinised and reviewed internal audit plans, risk assessments, methodology and staffing, and approved the annual plan •Deliberated on and approved the revised Group internal audit charter •Monitored delivery of the agreed audit plans, including assessing Internal Audit resources, Continued Professional Development (CPD), succession, core skills development and automation of audit processes •Monitored and followed up internal audit control findings, including IT, and ensured appropriate mitigation and timeous close-out by management •Tracked high and moderate risk findings, and monitored related remediation plans •Met with the heads of internal audit prior to each Audit Committee meeting, without management being present, to discuss the remit of and reports of internal audit and any issues arising from the internal audits conducted •Monitored audit quality in relation to internal audit. The methodology, process and skills were presented to a separately convened Audit Committee to consider audit quality •Discussed and considered the internal audit quality assurance programme. The internal audit quality assurance programme is designed in line with the Institute of Internal Auditors (IIA) International Professional Practices Framework (which includes the International Standards for the Professional Practice of Internal Auditing and the Code of Professional Conduct, including the Code of Ethics) •Confirmed our satisfaction with the performance of the internal audit function •Reviewed the Investec plc written assessment of the overall effectiveness of the organisation’s governance, risk, and control framework, including an assessment of internal financial controls, the risk management framework, adherence to the risk appetite and the effectiveness of the overall assurance achieved relative to that planned for the year through the CAM •Discussed and considered the quality assurance programme. The quality assurance programme is multi-faceted, and includes the attraction, development and retention of adequately skilled staff that exercise proficiency and due professional care, adherence to the Global internal audit governance framework and audit methodology, oversight and detailed review of every audit engagement and a quarterly post- engagement quality assurance programme •Reviewed the results of the post-engagement quality assurance programme which inform any training interventions required within the team. The results are consolidated and presented to the Audit Committee on an annual basis •IT Audit and Data Analysis - Internal audit developed automated test scripts, allowing for more comprehensive testing of controls covering the full population. This full population testing provides greater coverage than the traditional audit methodology which calls for a sample testing approach. Reviewed and considered the implications of the approach on the audit for the Group. |
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
INVESTEC PLC AUDIT COMMITTEE REPORT CONTINUED | |||||
Other matters | What we did | |||
Internal audit (continued) | •Held a closed session regarding internal audit where the capacity, appropriate skills, independence and quality of the internal audit function was assessed •Considered succession and the skills matrix for internal audit •Assessed the effectiveness of the internal audit function through completion of a questionnaire which is based on the Internal Audit Financial Code of Practice. The results of the exercise were shared with the Committee, together with action plans to address any concerns raised, which will be tracked to completion. |
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
INVESTEC PLC AUDIT COMMITTEE REPORT CONTINUED | |||||
Total Audit Fees |
Year | Auditors | Shadow Auditors |
2022/23 | EY LLP | |
2023/24 | EY LLP | Deloitte LLP |
2024/25 | Deloitte LLP |
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
INVESTEC PLC AUDIT COMMITTEE REPORT CONTINUED | |||||
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
INVESTEC PLC AUDIT COMMITTEE REPORT CONTINUED | |||||
The membership of the Board and biographical details of the directors are provided on pages 127 to 131 of the Investec Group’s 2023 integrated and strategic report. |
Role | Effective date of departure/ appointment | |
Departures | ||
David Friedland | Non-Executive Director | 4 August 2022 |
Appointments | ||
Vanessa Olver | Non-Executive Director | 18 May 2022 |
Details of the directors’ shareholdings and options to acquire shares are detailed in the Investec Group’s 2023 remuneration report. |
02 | Risk management and governance | CORPORATE GOVERNANCE | Investec plc Annual Financial Statements 2023 | ||
DIRECTORS’ REPORT | |||||
Details of contracts with directors can be found on pages 21 and 22 of the Investec Group's 2023 remuneration report. |
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
DIRECTORS’ REPORT CONTINUED | |||||
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
DIRECTORS’ REPORT CONTINUED | |||||
Further details of the role, responsibilities, membership and activities of the DLC SEC are set out on pages 97 to 100 of the Investec Group’s 2023 risk and governance report. |
For information on our approach to social, environmental and ethical matters, please refer to the Investec Group’s 2023 sustainability report which is published and made available on our website www.investec.com |
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
DIRECTORS’ REPORT CONTINUED | |||||
2022/23 | 2021/22 | ||||||
Metric | Unit | UK and offshore1 | Global (excluding UK and offshore) | Total Investec plc | UK and offshore | Global (excluding UK and offshore) | Total Investec plc |
Emissions from activities for which the company own or control including combustion of fuel & operation of facilities (Scope 1) | tC02e | 44 | — | 44 | 43 | — | 43 |
Emissions from purchase of electricity (Scope 2 location based) | tC02e | 807 | 164 | 971 | 783 | 249 | 1 032 |
Total gross Scope 1 & Scope 2 emissions (location based) | tC02e | 851 | 164 | 1 015 | 826 | 249 | 1 075 |
Energy consumption used to calculate above emissions2 | kWh | 4 420 786 | 441 222 | 4 862 008 | 4 013 719 | 566 017 | 4 579 736 |
Intensity ratio: Location based gross Scope 1 + 2 emissions per employee3 | tC02e/ Headcount | 0.25 | 0.92 | 0.29 | 0.25 | 1.46 | 0.31 |
Total gross Scope 3 operational emissions | tC02e | 4 873 | 30 | 4 903 | 1 502 | 8 | 1 510 |
Total gross Scope 1, Scope 2 & Scope 3 operational emissions (location based) | tC02e | 5 724 | 194 | 5 918 | 2 328 | 257 | 2 585 |
Intensity ratio: Location based gross Scope 1, 2 + 3 operational emissions per employee3 | tC02e/ Headcount | 1.71 | 1.09 | 1.69 | 0.71 | 1.50 | 0.75 |
Scope 2 market based4 | tC02e | — | — | — | — | — | — |
Carbon offsets5 | tC02e | 4 917 | 30 | 4 947 | 1 545 | 8 | 1 553 |
Total annual net emissions (market based) | tC02e | — | — | — | — | — | — |
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
DIRECTORS’ REPORT CONTINUED | |||||
Refer to the Investec Group’s 2023 climate and nature-related financial disclosures report for our progress on the Task Force on Climate-related Financial Disclosures (TFCD) recommendations. |
Further details of the role, responsibilities, membership and activities of the DLC Nomdac are set out on pages 94 to 96 of the Investec Group’s 2023 risk and governance report. |
Further details of the role, responsibilities, membership and activities of the DLC Remuneration Committee are set out on pages 4 to 7 of the Investec Group’s 2023 remuneration report. |
Further details on the role and responsibility of the Audit Committee are set out on |
The largest shareholders of Investec plc are shown on page 164 of the Investec Group’s 2023 integrated and strategic annual report. |
Further information is provided in the Investec Group’s 2023 sustainability report. |
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
DIRECTORS’ REPORT CONTINUED | |||||
Further information is provided in the Investec Group’s 2023 sustainability report. |
Details of principal subsidiary and associated companies are reflected on pages 189 to 193 |
Refer to Note 57 of the Annual Financial statements. |
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
DIRECTORS’ REPORT CONTINUED | |||||
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
SCHEDULE A TO THE DIRECTORS’ REPORT | |||||
02 | Risk management and governance | Investec plc Annual Financial Statements 2023 | |||
SCHEDULE A TO THE DIRECTORS’ REPORT CONTINUED | |||||
03 | Annual financial statements | Investec plc Annual Financial Statements 2023 | |||
Directors’ responsibilities | |
Independent auditor’s report to the members of Investec plc | |
Consolidated income statement | |
Consolidated statement of comprehensive income | |
Consolidated balance sheet | |
Consolidated cash flow statement | |
Consolidated statement of changes in equity | |
Accounting policies | |
Notes to the financial statements | |
Notes to risk management (including capital management) | |
Parent company annual financial statements | |
03 | Annual financial statements | Investec plc Annual Financial Statements 2023 | |||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
DIRECTORS’ RESPONSIBILITIES | |||||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF INVESTEC PLC | |||||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF INVESTEC PLC CONTINUED | |||||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF INVESTEC PLC CONTINUED | |||||
For the year to 31 March | ||||||
£’000 | Notes | 2023 | 2022 | |||
Interest income | 2 | |||||
Interest income calculated using effective interest method | ||||||
Other interest income | ||||||
Interest expense | 2 | ( | ( | |||
Net interest income | ||||||
Fee and commission income | 3 | |||||
Fee and commission expense | 3 | ( | ( | |||
Investment income | 4 | |||||
Share of post-taxation profit of associates and joint venture holdings | 29 | |||||
Trading income/(loss) arising from | ||||||
–customer flow | ||||||
–balance sheet management and other trading activities | ( | |||||
Other operating income | 5 | |||||
Total operating income before expected credit loss impairment charges | ||||||
Expected credit loss impairment charges | 6 | ( | ( | |||
Operating income | ||||||
Operating costs | 7 | ( | ( | |||
Operating profit before goodwill, acquired intangibles and strategic actions | ||||||
Impairment of goodwill | 33 | ( | ||||
Amortisation of acquired intangibles | 34 | ( | ( | |||
Closure and rundown of the Hong Kong direct investments business | 12 | ( | ( | |||
Operating profit | ||||||
Financial impact of Group restructures | 12 | ( | ( | |||
Profit before taxation | ||||||
Taxation on operating profit before goodwill, acquired intangibles and strategic actions | 10 | ( | ( | |||
Taxation on goodwill, acquired intangibles and strategic actions | 10 | |||||
Profit after taxation | ||||||
Loss attributable to other non-controlling interests | ||||||
Earnings attributable to shareholders |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
CONSOLIDATED INCOME STATEMENT | |||||
For the year to 31 March | ||||||
£’000 | Notes | 2023 | 2022 | |||
Profit after taxation | ||||||
Other comprehensive income/(loss): | ||||||
Items that may be reclassified to the income statement: | ||||||
Fair value movements on cash flow hedges taken directly to other comprehensive income | ||||||
Gains on realisation of debt instruments at FVOCI recycled through the income statement* | 10 | ( | ( | |||
Fair value movements on debt instruments at FVOCI taken directly to other comprehensive income* | 10 | ( | ||||
Foreign currency adjustments on translating foreign operations | ||||||
Effect of rate change on deferred taxation relating to adjustment for IFRS 9 | 10 | ( | ||||
Items that will not be reclassified to the income statement: | ||||||
Fair value movements on equity instruments at FVOCI taken directly to other comprehensive income | 10 | ( | ||||
Gains attributable to own credit risk* | ||||||
Movement in post-retirement benefit liabilities | ||||||
Total comprehensive income | ||||||
Total comprehensive loss attributable to non-controlling interests | ||||||
Total comprehensive income attributable to ordinary shareholders | ||||||
Total comprehensive income attributable to perpetual preference securities and Other Additional Tier 1 securities | ||||||
Total comprehensive income |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | |||||
At 31 March | ||||||
£’000 | Notes | 2023 | 2022 | |||
Assets | ||||||
Cash and balances at central banks | 18 | |||||
Loans and advances to banks | 19 | |||||
Reverse repurchase agreements and cash collateral on securities borrowed | 20 | |||||
Sovereign debt securities | 21 | |||||
Bank debt securities | 22 | |||||
Other debt securities | 23 | |||||
Derivative financial instruments | 24 | |||||
Securities arising from trading activities | 25 | |||||
Investment portfolio | 26 | |||||
Loans and advances to customers | 27 | |||||
Other loans and advances | 27 | |||||
Other securitised assets | 28 | |||||
Interests in associated undertakings and joint venture holdings | 29 | |||||
Deferred taxation assets | 30 | |||||
Current taxation assets | ||||||
Other assets | 31 | |||||
Property and equipment | 32 | |||||
Goodwill | 33 | |||||
Software | 34 | |||||
Other acquired intangible assets | 34 | |||||
Liabilities | ||||||
Deposits by banks | ||||||
Derivative financial instruments | 24 | |||||
Other trading liabilities | 36 | |||||
Repurchase agreements and cash collateral on securities lent | 20 | |||||
Customer accounts (deposits) | ||||||
Debt securities in issue | 37 | |||||
Liabilities arising on securitisation of other assets | 28 | |||||
Current taxation liabilities | ||||||
Other liabilities | 38 | |||||
Subordinated liabilities | 39 | |||||
Equity | ||||||
Ordinary share capital | 40 | |||||
Ordinary share premium | 42 | |||||
Treasury shares | 43 | ( | ( | |||
Other reserves | ( | ( | ||||
Retained income | ||||||
Ordinary shareholders’ equity | ||||||
Perpetual preference share capital and premium | 41 | |||||
Shareholders’ equity excluding non-controlling interests | ||||||
Other Additional Tier 1 securities in issue | 44 | |||||
Non-controlling interests in partially held subsidiaries | 45 | |||||
Total equity | ||||||
Total liabilities and equity |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
CONSOLIDATED BALANCE SHEET | |||||
For the year to 31 March £’000 | Notes | 2023 | 2022 | |||
Profit before taxation adjusted for non-cash items | 47 | |||||
Taxation paid | ( | ( | ||||
Increase in operating assets | 47 | ( | ( | |||
Increase in operating liabilities | 47 | |||||
Net cash (outflow)/inflow from operating activities | ( | |||||
Cash flow on acquisition of Group operations, net of cash acquired | ( | |||||
Cash flow on disposal of Group operations and subsidiaries | ||||||
Derecognition of cash on disposal of subsidiaries | ( | |||||
Cash flow on net disposal of non-controlling interests | ||||||
Cash flow on net disposal/(acquisition) of associates and joint venture holdings | ( | |||||
Cash flow on acquisition of property, equipment, software and other intangible assets | ( | ( | ||||
Cash flow on disposal of property, equipment, software and other intangible assets | ||||||
Net cash inflow from investing activities | ||||||
Dividends paid to ordinary shareholders | ( | ( | ||||
Dividends paid to other equity holders | ( | ( | ||||
Cash flow on acquisition of treasury shares, net of related costs | ( | ( | ||||
Proceeds from issue of subordinated debt | ||||||
Redemption of subordinated debt | ( | ( | ||||
Lease liabilities paid | ( | ( | ||||
Net cash outflow from financing activities | ( | ( | ||||
Effects of exchange rates on cash and cash equivalents | ( | |||||
Net (decrease)/increase in cash and cash equivalents | ( | |||||
Cash and cash equivalents at the beginning of the year | ||||||
Cash and cash equivalents at the end of the year | ||||||
Cash and cash equivalents is defined as including: | ||||||
Cash and balances at central banks | ||||||
On demand loans and advances to banks | ||||||
Cash and cash equivalents at the end of the year |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
CONSOLIDATED CASH FLOW STATEMENT | |||||
£’000 | Ordinary share capital | Ordinary share premium | Treasury shares | |
At 1 April 2021 | ( | |||
Movement in reserves 1 April 2021 – 31 March 2022 | ||||
Profit after taxation | ||||
Effect of rate change on deferred taxation relating to adjustment for IFRS 9 | ||||
Gains on realisation of debt instruments at FVOCI recycled through the income statement | ||||
Fair value movements on debt instruments at FVOCI taken directly to other comprehensive income | ||||
Fair value movements on equity instruments at FVOCI taken directly to other comprehensive income | ||||
Foreign currency adjustments on translating foreign operations | ||||
Gains attributable to own credit risk | ||||
Movement in post-retirement benefit liabilities | ||||
Total comprehensive income for the year | ||||
Share-based payments adjustments | ||||
Dividends paid to ordinary shareholders | ||||
Dividends declared to perpetual preference shareholders | ||||
Dividends paid to perpetual preference shareholders | ||||
Dividends declared to Other Additional Tier 1 security holders | ||||
Dividends paid to Other Additional Tier 1 security holders | ||||
Net equity impact of non-controlling interest movements | ||||
Movement of treasury shares | ( | |||
At 31 March 2022 | ( | |||
Movement in reserves 1 April 2022 – 31 March 2023 | ||||
Profit after taxation | ||||
Effect of rate change on deferred taxation relating to adjustment for IFRS 9 | ||||
Gains on realisation of debt instruments at FVOCI recycled through the income statement | ||||
Fair value movements on cash flow hedges taken directly to other comprehensive income | ||||
Fair value movements on debt instruments at FVOCI taken directly to other comprehensive income | ||||
Fair value movements on equity instruments at FVOCI taken directly to other comprehensive income | ||||
Fair value movements on equity instruments transferred to retained earnings | ||||
Foreign currency adjustments on translating foreign operations | ||||
Gains attributable to own credit risk | ||||
Movement in post-retirement benefit liabilities | ||||
Total comprehensive income for the year | ||||
Share-based payments adjustments | ||||
Employee benefit liability recognised | ||||
Dividends paid to ordinary shareholders | ||||
Dividends declared to perpetual preference shareholders | ||||
Dividends paid to perpetual preference shareholders | ||||
Dividends declared to Other Additional Tier 1 security holders | ||||
Dividends paid to Other Additional Tier 1 security holders | ||||
Transfer from share premium to retained income | ( | |||
Distribution to shareholders | ||||
Net equity impact of non-controlling interest movements | ||||
Movement of treasury shares | ( | |||
At 31 March 2023 | ( |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | |||||
Other reserves | |||||||||||||||||
Capital reserve account | Fair value reserve | Cash flow hedge reserve | Foreign currency reserves | Own credit reserve | Retained income | Ordinary shareholders' equity | Perpetual preference share capital and premium | Shareholders' equity excluding non-controlling interests | Other Additional Tier 1 securities in issue | Non- controlling interests | Total equity | ||||||
( | ( | ||||||||||||||||
( | |||||||||||||||||
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03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONTINUED | |||||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
ACCOUNTING POLICIES | |||||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
ACCOUNTING POLICIES CONTINUED | |||||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
ACCOUNTING POLICIES CONTINUED | |||||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
ACCOUNTING POLICIES CONTINUED | |||||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
ACCOUNTING POLICIES CONTINUED | |||||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
ACCOUNTING POLICIES CONTINUED | |||||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
ACCOUNTING POLICIES CONTINUED | |||||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
ACCOUNTING POLICIES CONTINUED | |||||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
ACCOUNTING POLICIES CONTINUED | |||||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
ACCOUNTING POLICIES CONTINUED | |||||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
ACCOUNTING POLICIES CONTINUED | |||||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
ACCOUNTING POLICIES CONTINUED | |||||
Specialist Banking | |||||||||
Private Client | Corporate, Investment Banking and Other | Group Investments | Group Costs | ||||||
For the year to 31 March 2023 | Wealth & Investment | Private Banking | Total Group | ||||||
£’000 | |||||||||
Net interest income | 28 150 | 128 945 | 579 893 | — | — | 736 988 | |||
Fee and commission income | 333 192 | 2 120 | 121 391 | — | — | 456 703 | |||
Fee and commission expense | (691) | (174) | (14 577) | — | — | (15 442) | |||
Investment income | 7 | 141 | 4 865 | 13 210 | — | 18 223 | |||
Share of post-taxation profit of associates and joint venture holdings | — | — | 4 950 | — | — | 4 950 | |||
Trading income/(loss) arising from | |||||||||
–customer flow | 1 252 | 4 449 | 81 665 | — | — | 87 366 | |||
–balance sheet management and other trading activities | 10 | 13 | 13 111 | — | — | 13 134 | |||
Other operating income | — | — | 6 879 | — | — | 6 879 | |||
Total operating income before expected credit loss impairment charges | 361 920 | 135 494 | 798 177 | 13 210 | — | 1 308 801 | |||
Expected credit loss impairment charges | 2 | (6 344) | (60 410) | — | — | (66 752) | |||
Operating income | 361 922 | 129 150 | 737 767 | 13 210 | — | 1 242 049 | |||
Operating costs | (270 195) | (58 996) | (504 576) | — | (21 108) | (854 875) | |||
Operating profit/(loss) before goodwill, acquired intangibles and strategic actions | 91 727 | 70 154 | 233 191 | 13 210 | (21 108) | 387 174 | |||
Loss attributable to other non- controlling interests | — | — | — | — | — | — | |||
Adjusted operating profit/(loss) after non-controlling interests | 91 727 | 70 154 | 233 191 | 13 210 | (21 108) | 387 174 | |||
Selected returns and key statistics | |||||||||
Cost to income ratio | 74.7% | 43.5% | 63.2% | n/a | n/a | 65.3% | |||
Total assets (£’mn) | 1 061 | 5 202 | 21 951 | 172 | n/a | 28 386 | |||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS | |||||
Specialist Banking | |||||||||
Private Client | Group Investments | Group Costs | |||||||
For the year to 31 March 2022 | Wealth & Investment | Private Banking | Corporate, Investment Banking and Other | Total Group | |||||
£’000 | |||||||||
Net interest income | 2 268 | 70 692 | 409 759 | — | — | 482 719 | |||
Fee and commission income | 344 685 | 1 579 | 163 964 | — | — | 510 228 | |||
Fee and commission expense | (656) | (23) | (14 234) | — | — | (14 913) | |||
Investment income | (2) | 816 | 10 033 | 20 408 | — | 31 255 | |||
Share of post-taxation profit of associates and joint venture holdings | — | — | 13 878 | — | — | 13 878 | |||
Trading income/(loss) arising from | |||||||||
–customer flow | 1 194 | 2 228 | 56 950 | — | — | 60 372 | |||
–balance sheet management and other trading activities | (307) | 2 | (6 798) | — | — | (7 103) | |||
Other operating income | — | — | 11 533 | — | — | 11 533 | |||
Total operating income before expected credit loss impairment charges | 347 182 | 75 294 | 645 085 | 20 408 | — | 1 087 969 | |||
Expected credit loss impairment charges | (5) | (2 432) | (22 722) | — | — | (25 159) | |||
Operating income | 347 177 | 72 862 | 622 363 | 20 408 | — | 1 062 810 | |||
Operating costs | (259 496) | (42 034) | (459 517) | — | (14 819) | (775 866) | |||
Operating profit/(loss) before goodwill, acquired intangibles and strategic actions | 87 681 | 30 828 | 162 846 | 20 408 | (14 819) | 286 944 | |||
Loss attributable to other non- controlling interests | — | — | — | — | — | — | |||
Adjusted operating profit/(loss) after non-controlling interests | 87 681 | 30 828 | 162 846 | 20 408 | (14 819) | 286 944 | |||
Selected returns and key statistics | |||||||||
Cost to income ratio | 74.7% | 55.8% | 71.2% | n/a | n/a | 71.3% | |||
Total assets (£’mn)* | 1 137 | 4 528 | 21 925 | 356 | n/a | 27 946 | |||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
2023 | 2022 | |||||||||
For the year to 31 March | Notes | Average balance sheet value | Interest income | Average yield | Average balance sheet value | Interest income | Average yield | |||
£’000 | ||||||||||
Cash, near cash and bank debt and sovereign debt securities | 1 | 9 323 076 | 213 554 | 2.29% | 8 071 461 | 24 441 | 0.30% | |||
Loans and advances | 2 | 15 268 494 | 915 987 | 6.00% | 13 435 691 | 624 516 | 4.65% | |||
Private client | 5 085 272 | 214 368 | 4.22% | 4 013 304 | 123 740 | 3.08% | ||||
Corporate, institutional and other clients | 10 183 222 | 701 619 | 6.89% | 9 422 387 | 500 776 | 5.31% | ||||
Other debt securities and other loans and advances | 731 317 | 38 862 | 5.31% | 609 114 | 18 047 | 2.96% | ||||
Other# | 3 | 225 900 | 266 811 | n/a | 233 801 | 51 442 | n/a | |||
Total interest-earning assets | 25 548 787 | 1 435 214 | 5.62% | 22 350 067 | 718 446 | 3.21% | ||||
2023 | 2022 | |||||||||
For the year to 31 March | Notes | Average balance sheet value | Interest expense | Average yield | Average balance sheet value | Interest expense | Average yield | |||
£’000 | ||||||||||
Deposits by banks and other debt-related securities | 4 | 3 788 578 | 50 716 | 1.34% | 3 308 178 | 32 971 | 1.00% | |||
Customer accounts (deposits) | 19 010 904 | 383 198 | 2.02% | 16 761 883 | 93 235 | 0.56% | ||||
Subordinated liabilities | 737 888 | 33 615 | 4.56% | 870 954 | 49 497 | 5.68% | ||||
Other# | 5 | 352 681 | 230 697 | n/a | 363 193 | 60 024 | n/a | |||
Total interest-bearing liabilities | 23 890 051 | 698 226 | 2.92% | 21 304 208 | 235 727 | 1.11% | ||||
Net interest income | 736 988 | 482 719 | ||||||||
Net interest margin | 2.88% | 2.16% | ||||||||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
For the year to 31 March | 2023 | 2022 | ||
£’000 | ||||
Wealth & Investment businesses net fee and commission income | 332 501 | 344 029 | ||
Fund management fees/fees for assets under management | 294 468 | 301 950 | ||
Private client transactional fees | 38 724 | 42 735 | ||
Fee and commission expense | (691) | (656) | ||
Specialist Banking net fee and commission income | 108 760 | 151 286 | ||
Specialist Banking fee and commission income | 123 511 | 165 543 | ||
Specialist Banking fee and commission expense | (14 751) | (14 257) | ||
Net fee and commission income | 441 261 | 495 315 | ||
Annuity fees (net of fees payable) | 310 176 | 318 389 | ||
Deal fees | 131 085 | 176 926 | ||
For the year to 31 March | 2023 | 2022 | ||
£’000 | ||||
Realised | 13 159 | 28 988 | ||
Unrealised* | (15 557) | (26 726) | ||
Dividend income | 19 756 | 27 325 | ||
Funding and other net related income | 865 | 1 668 | ||
18 223 | 31 255 |
For the year to 31 March | Listed equities | Unlisted equities | Warrants and profit shares | Total investment portfolio | Debt securities (sovereign, bank and other) | Investment and trading properties | Other asset categories | Total | ||||
£’000 | ||||||||||||
2023 | ||||||||||||
Realised | (994) | 53 495 | 1 062 | 53 563 | (528) | (1 118) | (38 758) | 13 159 | ||||
Unrealised* | 1 147 | (51 323) | (1 281) | (51 457) | (5 649) | (2 325) | 43 874 | (15 557) | ||||
Dividend income | 13 210 | 6 313 | — | 19 523 | — | — | 233 | 19 756 | ||||
Funding and other net related income | — | — | — | — | — | 865 | — | 865 | ||||
13 363 | 8 485 | (219) | 21 629 | (6 177) | (2 578) | 5 349 | 18 223 | |||||
2022 | ||||||||||||
Realised | 2 414 | 18 028 | 552 | 20 994 | 512 | (4 383) | 11 865 | 28 988 | ||||
Unrealised* | (4 169) | 2 350 | 1 176 | (643) | (457) | 4 274 | (29 900) | (26 726) | ||||
Dividend income | 20 445 | 6 667 | — | 27 112 | — | — | 213 | 27 325 | ||||
Funding and other net related income | — | — | — | — | — | 1 668 | — | 1 668 | ||||
18 690 | 27 045 | 1 728 | 47 463 | 55 | 1 559 | (17 822) | 31 255 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
For the year to 31 March | 2023 | 2022 | ||
£’000 | ||||
Unrealised (losses)/gains on other investments | (3 773) | 2 161 | ||
Income from operating leases | 4 468 | 1 539 | ||
Income from government grants* | 6 184 | 7 833 | ||
6 879 | 11 533 |
For the year to 31 March | 2023 | 2022 | ||
£’000 | ||||
Expected credit losses have arisen on the following items: | ||||
Loans and advances to customers | 54 396 | 21 815 | ||
Other loans and advances | 69 | 19 | ||
Other balance sheet assets | 3 648 | 3 824 | ||
Undrawn commitments and guarantees | 8 639 | (499) | ||
66 752 | 25 159 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
For the year to 31 March | 2023 | 2022 | ||
£’000 | ||||
Staff compensation costs | 597 158 | 551 999 | ||
Salaries and wages (including directors’ remuneration)** | 486 700 | 448 874 | ||
Share-based payment expense | 22 304 | 23 664 | ||
Social security costs | 56 324 | 51 099 | ||
Pensions and provident fund contributions | 31 830 | 28 362 | ||
Training and other costs | 14 296 | 12 565 | ||
Staff costs | 611 454 | 564 564 | ||
Premises expenses | 40 565 | 41 071 | ||
Premises expenses (excluding depreciation and impairments) | 20 119 | 16 933 | ||
Premises depreciation and impairments | 20 446 | 24 138 | ||
Equipment expenses (excluding depreciation) | 64 817 | 54 499 | ||
Business expenses* | 114 362 | 94 041 | ||
Marketing expenses | 17 299 | 13 686 | ||
Depreciation, amortisation and impairment on equipment, software and intangibles | 6 378 | 8 005 | ||
854 875 | 775 866 | |||
The following amounts were paid by the Group to the auditors in respect of the audit of the financial statements and for other services provided to the Group: | ||||
Ernst & Young fees | ||||
Total audit fees | 6 188 | 5 560 | ||
Audit of the Group’s accounts | 438 | 404 | ||
Audit of the Group’s subsidiaries | 5 750 | 5 156 | ||
Total non-audit fees | 2 419 | 1 445 | ||
Audit related assurance services1 | 1 326 | 671 | ||
Other assurance services2 | 640 | 512 | ||
Services related to corporate finance transactions3 | 87 | 128 | ||
Other non-audit services | 366 | 134 | ||
Total auditor’s remuneration | 8 607 | 7 005 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
For the year to 31 March | 2023 | 2022 | ||
£’000 | ||||
Share-based payment expense | ||||
Equity-settled | 22 304 | 23 664 |
For the year to 31 March | 2023 | 2022 | ||
£’000 | ||||
Weighted average fair value of awards granted in the year | ||||
UK schemes | 25 576 | 42 990 |
UK schemes | ||||||
2023 | 2022 | |||||
Details of awards outstanding during the year | Number of share awards | Weighted average exercise price £ | Number of share awards | Weighted average exercise price £ | ||
Outstanding at the beginning of the year | 29 590 241 | 0.00 | 22 431 650 | 0.01 | ||
Sale of business | — | 0.00 | (94 076) | 0.00 | ||
Granted during the year | 5 542 176 | 0.00 | 14 657 836 | 0.00 | ||
Exercised during the year^ | (4 788 744) | 0.01 | (5 595 039) | 0.00 | ||
Awards forfeited during the year | (1 558 256) | 0.00 | (1 810 130) | 0.04 | ||
Outstanding at the end of the year | 28 785 417 | 0.00 | 29 590 241 | 0.00 | ||
Exercisable at the end of the year | 932 470 | — | 487 445 | — | ||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
Additional information relating to awards: | 2023 | 2022 | ||
Options with strike prices | ||||
Exercise price range | n/a | £3.58 – £4.18 | ||
Weighted average remaining contractual life | n/a | 0.22 years | ||
Long-term incentive grants with no strike price | ||||
Exercise price range | £nil | £nil | ||
Weighted average remaining contractual life | 1.99 years | 2.26 years | ||
Weighted average fair value of awards and long-term grants at measurement date | £4.61 | £2.93 | ||
The fair values of awards granted were calculated using a Black-Scholes option pricing model and shares granted were calculated at market price. For awards granted during the year, the inputs into the model were as follows: | ||||
–Share price at date of grant | £4.70 – £4.81 | £3.06 – £3.80 | ||
–Exercise price | £nil | £nil | ||
–Expected volatility | n/a | n/a | ||
–Award life | 3.66 – 7.01 years | 3 – 7.01 years | ||
–Expected dividend yields | n/a | n/a | ||
–Risk-free rate | n/a | n/a |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
2023 | 2022 | |||||
Details of awards outstanding during the year | Number of Ninety One awards | Weighted average exercise price £ | Number of Ninety One awards | Weighted average exercise price £ | ||
Outstanding at the beginning of the year | 4 312 508 | 0.01 | 6 655 601 | 0.01 | ||
Sale of business | — | 0.00 | (30 412) | 0.00 | ||
Grant linked to Ninety One Distribution | 4 316 708 | 0.00 | — | 0.00 | ||
Granted during the year^ | 1 120 | 0.00 | 3 961 | 0.00 | ||
Exercised during the year | (5 706 136) | 0.00 | (2 058 445) | 0.00 | ||
Lapsed during the year | (189 052) | 0.17 | (258 197) | 0.12 | ||
Outstanding at the end of the year | 2 735 148 | 0.00 | 4 312 508 | 0.01 | ||
Exercisable at the end of the year | 1 054 811 | — | 237 106 | — | ||
Additional information relating to awards: | 2023 | 2022 | ||
Options with strike price | ||||
Exercise price range | n/a | £2.90 – £3.39 | ||
Weighted average remaining contractual life | n/a | 0.25 years | ||
Long-term awards with no strike price | ||||
Exercise price range | £nil | £nil | ||
Weighted average remaining contractual life | 1.51 years | 1.05 years |
Additional information relating to awards: | 2023 | 2022 | ||
The fair value of the liability was calculated by using the Black-Scholes option pricing model. | ||||
–Listed share price at 31 March | £1.85 | £2.55 | ||
–Exercise price | Nil | Nil, £2.90 – £3.39 | ||
–Expected volatility | 37.7% | 35.0% | ||
–Award life | 0 – 5.41 years | 0 – 4.42 years | ||
–Expected dividend yields | 0% – 9.82% | 0% – 7.41% | ||
–Risk-free rate | 3.67% – 4.45% | 0.69% – 2.03% |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
For the year to 31 March £’000 | 2023 | 2022 | ||
Income statement taxation charge | ||||
Current taxation | ||||
UK | ||||
Current taxation on income for the year | 85 920 | 53 932 | ||
Adjustments in respect of prior years | (7 769) | 1 170 | ||
Corporation tax before double tax relief | 78 151 | 55 102 | ||
Double tax relief | (335) | (436) | ||
77 816 | 54 666 | |||
Europe | 5 478 | 1 505 | ||
Australia | 438 | 329 | ||
Other* | 638 | 3 056 | ||
6 554 | 4 890 | |||
Total current taxation | 84 370 | 59 556 | ||
Deferred taxation | ||||
UK | (9 674) | (21 407) | ||
Europe | 102 | (2 447) | ||
Australia | — | 1 008 | ||
Other | (5) | (776) | ||
Total deferred taxation | (9 577) | (23 622) | ||
Total taxation charge for the year | 74 793 | 35 934 | ||
Total taxation charge for the year comprises: | ||||
Taxation on operating profit before goodwill | 76 824 | 37 612 | ||
Taxation on acquired intangibles, goodwill and disposal of subsidiaries | (2 031) | (1 678) | ||
74 793 | 35 934 | |||
Deferred taxation comprises: | ||||
Origination and reversal of temporary differences | (1 956) | (8 488) | ||
Changes in taxation rates | (6 914) | (12 823) | ||
Adjustment in respect of prior years | (707) | (2 311) | ||
(9 577) | (23 622) | |||
The deferred taxation (credit)/charge in the income statement arose from: | ||||
Deferred capital allowances | (11 616) | (8 371) | ||
Income and expenditure accruals | (4 190) | (2 644) | ||
Asset in respect of unexpired options | (2 025) | (12 485) | ||
Unrealised fair value adjustment on financial instruments | 220 | (2 987) | ||
Movement in deferred tax assets related to assessed losses | 6 087 | 4 120 | ||
Liability/(asset) in respect of pension surplus | 11 | (68) | ||
Deferred tax on acquired intangibles | 1 805 | (1 317) | ||
Other temporary differences | 131 | 130 | ||
(9 577) | (23 622) | |||
The deferred taxation charge in OCI/equity arose from: | ||||
Asset in respect of unexpired options | (491) | (4 538) | ||
Unrealised fair value adjustment on financial instruments | 5 229 | 8 215 | ||
4 738 | 3 677 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
For the year to 31 March | 2023 | 2022 | ||
£’000 | ||||
The rates of corporation tax for the relevant years are: | % | % | ||
UK | 19 | 19 | ||
Europe (average) | 10 | 10 | ||
Australia | 30 | 30 | ||
Profit before taxation | 367 924 | 271 788 | ||
Taxation on profit before taxation | 74 793 | 35 934 | ||
Effective tax rate | 20.3% | 13.2% | ||
The taxation charge on activities for the year is different from the standard rate as detailed below: | ||||
Taxation on profit on ordinary activities before taxation at UK rate of 19% (2022: 19%) | 69 906 | 51 640 | ||
Taxation adjustments relating to foreign earnings | (3 607) | (1 723) | ||
Taxation relating to prior years | (8 476) | (1 141) | ||
Impairment of goodwill and non-operating items | 1 239 | (6) | ||
Share options accounting expense/(income) | 980 | (2 658) | ||
Non-taxable income | (1 956) | (4 507) | ||
Net other permanent differences | (142) | (199) | ||
Bank surcharge* | 17 068 | 10 481 | ||
Capital gains – non-taxable/covered by losses | 1 361 | (4 426) | ||
Movement in unrecognised trading losses | 5 335 | 1 299 | ||
Change in tax rate | (6 915) | (12 826) | ||
Total taxation charge as per income statement | 74 793 | 35 934 | ||
Other comprehensive income taxation effects | ||||
Gains on realisation of debt instruments at FVOCI recycled through the income statement | (314) | (307) | ||
Pre-taxation | (431) | (429) | ||
Taxation effect | 117 | 122 | ||
Fair value movements on debt and equity instruments at FVOCI taken directly to other comprehensive income | (76 182) | 20 588 | ||
Pre-taxation | (75 913) | 20 207 | ||
Taxation effect | (269) | 381 | ||
Own credit risk | — | 11 059 | ||
Pre-taxation | — | 15 792 | ||
Taxation effect** | — | (4 733) | ||
Statement of changes in equity taxation effects | ||||
Additional Tier 1 capital | (16 880) | (16 875) | ||
Pre-taxation | (16 880) | (16 875) | ||
Taxation effect | — | — | ||
Share-based payment adjustment | 491 | 4 538 | ||
Pre-taxation | — | — | ||
Taxation effect | 491 | 4 538 | ||
IFRS 9 transitional adjustments | (7) | 617 | ||
Pre-taxation | — | — | ||
Taxation effect | (7) | 617 | ||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
2023 | 2022 | |||||
For the year to 31 March £’000 | Pence per share | Total | Pence per share | Total | ||
Ordinary dividend | ||||||
Final dividend for prior year | 14.0 | 44 049 | 7.5 | 24 264 | ||
Interim dividend for current year | 13.5 | 44 414 | 11.0 | 39 052 | ||
Total dividend attributable to ordinary shareholders | 27.5 | 88 463 | 18.5 | 63 316 | ||
2023 | 2022 | |||||||
For the year to 31 March £’000 | Pence per share | Cents per share | Total | Pence per share | Cents per share | Total | ||
Perpetual preference dividend | ||||||||
Final dividend for prior year | 21.58 | 490.94 | 200 | 5.48 | 331.59 | 174 | ||
Interim dividend for current year | 11.44 | 329.08 | 340 | 5.52 | 333.41 | 173 | ||
Total dividend attributable to perpetual preference shareholders recognised in current financial year | 33.02 | 820.02 | 540 | 11.00 | 665.00 | 347 | ||
For the year to 31 March | 2023 | 2022 | ||
£’000 | ||||
Dividend attributable to Other Additional Tier 1 securities | 16 880 | 16 880 |
For the year to 31 March £’000 | 2023 | 2022 | ||
Closure and rundown of the Hong Kong direct investments business* | (480) | (1 203) | ||
Financial impact of Group restructures | (5 340) | (1 017) | ||
Implementation costs on distribution of investment to shareholders | (402) | (1 017) | ||
New transaction costs | (4 938) | — | ||
Financial impact of strategic actions | (5 820) | (2 220) | ||
Taxation on financial impact of strategic actions | — | 633 | ||
Net financial impact of strategic actions | (5 820) | (1 587) |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
At fair value through profit or loss | ||||
IFRS 9 mandatory | ||||
For the year to 31 March | Trading** | Non-trading** | Designated at inception | |
£’000 | ||||
2023 | ||||
Net interest income | 7 620 | 70 562 | — | |
Fee and commission income | 15 457 | 1 054 | — | |
Fee and commission expense | — | — | — | |
Investment income | (8 096) | 18 575 | (396) | |
Share of post-taxation profit of associates and joint venture holdings | — | — | — | |
Trading income/(loss) arising from | ||||
–customer flow | 87 721 | (1 573) | 1 218 | |
–balance sheet management and other trading activities | 624 | 20 981 | (6 116) | |
Other operating income | — | — | — | |
Total operating income/(expense) before expected credit loss | 103 326 | 109 599 | (5 294) | |
Expected credit loss impairments charges* | — | — | — | |
Operating income/(expense) | 103 326 | 109 599 | (5 294) | |
For the year to 31 March | Trading** | Non-trading** | Designated at inception | |
£’000 | ||||
2022 | ||||
Net interest income | (17 200) | 54 104 | (26 472) | |
Fee and commission income | 16 822 | 1 382 | — | |
Fee and commission expense | — | — | — | |
Investment income | 1 728 | 25 950 | 584 | |
Share of post-taxation profit of associates and joint venture holdings | — | — | — | |
Trading income/(loss) arising from | ||||
–customer flow | 34 630 | 30 413 | (4 671) | |
–balance sheet management and other trading activities | (102) | (6 611) | 1 576 | |
Other operating income | — | — | — | |
Total operating income/(expense) before expected credit loss | 35 878 | 105 238 | (28 983) | |
Expected credit loss impairments charges* | — | — | — | |
Operating income/(expense) | 35 878 | 105 238 | (28 983) |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
At fair value through comprehensive income | |||||||
Debt instruments with a dual business model | Equity instruments | Amortised cost | Non-financial instruments | Other fee income and expenses | Total | ||
83 370 | — | 555 400 | (63) | 20 099 | 736 988 | ||
— | — | 68 381 | — | 371 811 | 456 703 | ||
— | — | (2 594) | — | (12 848) | (15 442) | ||
1 001 | 13 210 | 484 | (6 555) | — | 18 223 | ||
— | — | — | 4 950 | — | 4 950 | ||
— | — | — | — | — | 87 366 | ||
— | — | (2 355) | — | — | 13 134 | ||
— | — | 4 468 | — | 2 411 | 6 879 | ||
84 371 | 13 210 | 623 784 | (1 668) | 381 473 | 1 308 801 | ||
— | — | (66 752) | — | — | (66 752) | ||
84 371 | 13 210 | 557 032 | (1 668) | 381 473 | 1 242 049 | ||
Debt instruments with a dual business model | Equity instruments | Amortised cost | Non-financial instruments | Other fee income and expenses | Total | ||
36 558 | — | 432 466 | 1 538 | 1 725 | 482 719 | ||
— | — | 69 311 | — | 422 713 | 510 228 | ||
— | — | (2 162) | — | (12 751) | (14 913) | ||
1 134 | 20 408 | 1 214 | (19 763) | — | 31 255 | ||
— | — | — | 13 878 | — | 13 878 | ||
— | — | — | — | — | 60 372 | ||
— | — | (1 966) | — | — | (7 103) | ||
— | — | 1 539 | — | 9 994 | 11 533 | ||
37 692 | 20 408 | 500 402 | (4 347) | 421 681 | 1 087 969 | ||
— | — | (25 159) | — | — | (25 159) | ||
37 692 | 20 408 | 475 243 | (4 347) | 421 681 | 1 062 810 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
At fair value through profit or loss | ||||
IFRS 9 mandatory | ||||
At 31 March 2023 | Trading* | Non-trading* | Designated at initial recognition | |
£’000 | ||||
Assets | ||||
Cash and balances at central banks | — | — | — | |
Loans and advances to banks | — | — | — | |
Reverse repurchase agreements and cash collateral on securities borrowed | — | 345 869 | — | |
Sovereign debt securities | — | 24 077 | — | |
Bank debt securities | — | — | — | |
Other debt securities | — | 93 992 | — | |
Derivative financial instruments | 634 123 | — | — | |
Securities arising from trading activities | 110 619 | 4 002 | 12 916 | |
Investment portfolio | — | 316 919 | — | |
Loans and advances to customers | — | 550 515 | — | |
Other loans and advances | — | — | — | |
Other securitised assets | — | — | 78 231 | |
Interests in associated undertakings and joint venture holdings | — | — | — | |
Deferred taxation assets | — | — | — | |
Current taxation assets | — | — | — | |
Other assets | 10 327 | 9 213 | — | |
Property and equipment | — | — | — | |
Goodwill | — | — | — | |
Software | — | — | — | |
Other acquired intangible assets | — | — | — | |
755 069 | 1 344 587 | 91 147 | ||
Liabilities | ||||
Deposits by banks | — | — | — | |
Derivative financial instruments | 704 816 | — | — | |
Other trading liabilities | 28 184 | — | — | |
Repurchase agreements and cash collateral on securities lent | — | — | — | |
Customer accounts (deposits) | — | — | — | |
Debt securities in issue | — | — | 21 554 | |
Liabilities arising on securitisation of other assets | — | — | 81 609 | |
Current taxation liabilities | — | — | — | |
Other liabilities | — | 6 324 | — | |
733 000 | 6 324 | 103 163 | ||
Subordinated liabilities | — | — | — | |
733 000 | 6 324 | 103 163 | ||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
At fair value through comprehensive income | |||||||
Debt instrument with dual business model | Equity instruments | Total instruments at fair value | Amortised cost | Non-financial instruments or scoped out of IFRS 9 | Total | ||
— | — | — | 5 400 401 | — | 5 400 401 | ||
— | — | — | 893 297 | — | 893 297 | ||
— | — | 345 869 | 992 830 | — | 1 338 699 | ||
1 141 745 | — | 1 165 822 | 55 922 | — | 1 221 744 | ||
199 737 | — | 199 737 | 4 954 | — | 204 691 | ||
— | — | 93 992 | 603 283 | — | 697 275 | ||
— | — | 634 123 | — | — | 634 123 | ||
— | — | 127 537 | — | — | 127 537 | ||
— | 172 285 | 489 204 | — | — | 489 204 | ||
843 428 | — | 1 393 943 | 14 173 866 | — | 15 567 809 | ||
— | — | — | 142 626 | — | 142 626 | ||
— | — | 78 231 | — | — | 78 231 | ||
— | — | — | — | 52 320 | 52 320 | ||
— | — | — | — | 112 347 | 112 347 | ||
— | — | — | — | 34 324 | 34 324 | ||
— | — | 19 540 | 612 778 | 333 131 | 965 449 | ||
— | — | — | — | 121 014 | 121 014 | ||
— | — | — | — | 255 267 | 255 267 | ||
— | — | — | — | 9 415 | 9 415 | ||
— | — | — | — | 40 550 | 40 550 | ||
2 184 910 | 172 285 | 4 547 998 | 22 879 957 | 958 368 | 28 386 323 | ||
— | — | — | 2 172 171 | — | 2 172 171 | ||
— | — | 704 816 | — | — | 704 816 | ||
— | — | 28 184 | — | — | 28 184 | ||
— | — | — | 139 529 | — | 139 529 | ||
— | — | — | 19 121 921 | — | 19 121 921 | ||
— | — | 21 554 | 1 427 991 | — | 1 449 545 | ||
— | — | 81 609 | — | — | 81 609 | ||
— | — | — | — | 5 370 | 5 370 | ||
— | — | 6 324 | 645 612 | 580 793 | 1 232 729 | ||
— | — | 842 487 | 23 507 224 | 586 163 | 24 935 874 | ||
— | — | — | 731 483 | — | 731 483 | ||
— | — | 842 487 | 24 238 707 | 586 163 | 25 667 357 | ||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
At fair value through profit or loss | ||||
IFRS 9 mandatory | ||||
At 31 March 2022 | Trading* | Non-trading* | Designated at initial recognition | |
£’000 | ||||
Assets | ||||
Cash and balances at central banks | — | — | — | |
Loans and advances to banks | — | — | — | |
Reverse repurchase agreements and cash collateral on securities borrowed | 89 889 | 540 570 | 38 649 | |
Sovereign debt securities | — | 33 658 | — | |
Bank debt securities | — | — | — | |
Other debt securities | — | 144 048 | — | |
Derivative financial instruments | 693 133 | — | — | |
Securities arising from trading activities | 138 032 | 4 780 | 20 353 | |
Investment portfolio | — | 338 523 | — | |
Loans and advances to customers | — | 609 083 | — | |
Other loans and advances | — | — | — | |
Other securitised assets | — | — | 93 087 | |
Interests in associated undertakings and joint venture holdings | — | — | — | |
Deferred taxation assets | — | — | — | |
Current taxation assets | — | — | — | |
Other assets | 9 606 | 17 478 | — | |
Property and equipment | — | — | — | |
Goodwill | — | — | — | |
Software | — | — | — | |
Other acquired intangible assets | — | — | — | |
930 660 | 1 688 140 | 152 089 | ||
Liabilities | ||||
Deposits by banks | — | — | — | |
Derivative financial instruments | 863 295 | — | — | |
Other trading liabilities | 42 944 | — | — | |
Repurchase agreements and cash collateral on securities lent | — | — | — | |
Customer accounts (deposits) | — | — | — | |
Debt securities in issue | — | — | 46 192 | |
Liabilities arising on securitisation of other assets | — | — | 95 885 | |
Current taxation liabilities | — | — | — | |
Other liabilities | — | — | — | |
906 239 | — | 142 077 | ||
Subordinated liabilities | — | — | — | |
906 239 | — | 142 077 | ||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
At fair value through comprehensive income | |||||||
Debt instrument with dual business model | Equity instruments | Total instruments at fair value | Amortised cost | Non-financial instruments or scoped out of IFRS 9 | Total | ||
— | — | — | 5 379 994 | — | 5 379 994 | ||
— | — | — | 1 467 770 | — | 1 467 770 | ||
— | — | 669 108 | 778 365 | — | 1 447 473 | ||
1 132 119 | — | 1 165 777 | — | — | 1 165 777 | ||
61 714 | — | 61 714 | — | — | 61 714 | ||
— | — | 144 048 | 283 713 | — | 427 761 | ||
— | — | 693 133 | — | — | 693 133 | ||
— | — | 163 165 | — | — | 163 165 | ||
— | 355 801 | 694 324 | — | — | 694 324 | ||
685 386 | — | 1 294 469 | 13 132 006 | — | 14 426 475 | ||
— | — | — | 122 717 | — | 122 717 | ||
— | — | 93 087 | — | — | 93 087 | ||
— | — | — | — | 66 895 | 66 895 | ||
— | — | — | — | 110 377 | 110 377 | ||
— | — | — | — | 33 448 | 33 448 | ||
— | — | 27 084 | 823 227 | 289 128 | 1 139 439 | ||
— | — | — | — | 155 055 | 155 055 | ||
— | — | — | — | 249 836 | 249 836 | ||
— | — | — | — | 7 066 | 7 066 | ||
— | — | — | 40 807 | 40 807 | |||
1 879 219 | 355 801 | 5 005 909 | 21 987 792 | 952 612 | 27 946 313 | ||
— | — | — | 2 026 601 | — | 2 026 601 | ||
— | — | 863 295 | — | — | 863 295 | ||
— | — | 42 944 | — | — | 42 944 | ||
— | — | — | 154 828 | — | 154 828 | ||
— | — | — | 18 293 891 | — | 18 293 891 | ||
— | — | 46 192 | 1 601 985 | — | 1 648 177 | ||
— | — | 95 885 | — | — | 95 885 | ||
— | — | — | — | 2 460 | 2 460 | ||
— | — | — | 813 958 | 565 369 | 1 379 327 | ||
— | — | 1 048 316 | 22 891 263 | 567 829 | 24 507 408 | ||
— | — | — | 758 739 | — | 758 739 | ||
— | — | 1 048 316 | 23 650 002 | 567 829 | 25 266 147 | ||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
Fair value category | ||||||
At 31 March 2023 | Total instruments at fair value | Level 1 | Level 2 | Level 3 | ||
£’000 | ||||||
Assets | ||||||
Reverse repurchase agreements and cash collateral on securities borrowed | 345 869 | — | 345 869 | — | ||
Sovereign debt securities | 1 165 822 | 1 165 822 | — | — | ||
Bank debt securities | 199 737 | 199 737 | — | — | ||
Other debt securities | 93 992 | — | 60 | 93 932 | ||
Derivative financial instruments | 634 123 | — | 580 939 | 53 184 | ||
Securities arising from trading activities | 127 537 | 123 475 | 60 | 4 002 | ||
Investment portfolio | 489 204 | 173 952 | 884 | 314 368 | ||
Loans and advances to customers* | 1 393 943 | — | 90 297 | 1 303 646 | ||
Other securitised assets | 78 231 | — | — | 78 231 | ||
Other assets | 19 540 | 19 540 | — | — | ||
4 547 998 | 1 682 526 | 1 018 109 | 1 847 363 | |||
Liabilities | ||||||
Derivative financial instruments | 704 816 | — | 645 358 | 59 458 | ||
Other trading liabilities | 28 184 | 28 184 | — | — | ||
Debt securities in issue | 21 554 | — | 21 554 | — | ||
Liabilities arising on securitisation of other assets | 81 609 | — | — | 81 609 | ||
Other liabilities | 6 324 | — | — | 6 324 | ||
842 487 | 28 184 | 666 912 | 147 391 | |||
Net assets at fair value | 3 705 511 | 1 654 342 | 351 197 | 1 699 972 | ||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
Fair value category | ||||||
At 31 March 2022 | Total instruments at fair value | Level 1 | Level 2 | Level 3 | ||
£’000 | ||||||
Assets | ||||||
Reverse repurchase agreements and cash collateral on securities borrowed | 669 108 | — | 669 108 | — | ||
Sovereign debt securities | 1 165 777 | 1 165 777 | — | — | ||
Bank debt securities | 61 714 | 61 714 | — | — | ||
Other debt securities | 144 048 | — | 39 017 | 105 031 | ||
Derivative financial instruments | 693 133 | 19 | 649 164 | 43 950 | ||
Securities arising from trading activities | 163 165 | 158 213 | 172 | 4 780 | ||
Investment portfolio | 694 324 | 357 836 | 6 552 | 329 936 | ||
Loans and advances to customers* | 1 294 469 | — | 82 621 | 1 211 848 | ||
Other securitised assets | 93 087 | — | — | 93 087 | ||
Other assets | 27 084 | 27 084 | — | — | ||
5 005 909 | 1 770 643 | 1 446 634 | 1 788 632 | |||
Liabilities | ||||||
Derivative financial instruments | 863 295 | — | 817 526 | 45 769 | ||
Other trading liabilities | 42 944 | 42 944 | — | — | ||
Debt securities in issue | 46 192 | — | 46 192 | — | ||
Liabilities arising on securitisation of other assets | 95 885 | — | — | 95 885 | ||
1 048 316 | 42 944 | 863 718 | 141 654 | |||
Net assets at fair value | 3 957 593 | 1 727 699 | 582 916 | 1 646 978 | ||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
For the year to | Investment portfolio | Loans and advances to customers | Other securitised assets | Other balance sheet assets1 | |||
£’000 | Total | ||||||
Assets | |||||||
Balance as at 1 April 2021 | 341 984 | 1 045 663 | 107 259 | 135 369 | 1 630 275 | ||
Total gains or (losses) | 22 945 | 63 202 | (657) | 19 577 | 105 067 | ||
In the income statement | 22 945 | 63 768 | (657) | 19 577 | 105 633 | ||
In the statement of comprehensive income | — | (566) | — | — | (566) | ||
Purchases | 33 602 | 1 845 044 | — | 59 165 | 1 937 811 | ||
Sales | (66 682) | (1 079 005) | — | (19 783) | (1 165 470) | ||
Settlements | (8 498) | (695 450) | (13 515) | (49 392) | (766 855) | ||
Transfers into level 3 | 621 | — | — | — | 621 | ||
Foreign exchange adjustments | 5 964 | 32 394 | — | 8 825 | 47 183 | ||
Balance as at 31 March 2022 | 329 936 | 1 211 848 | 93 087 | 153 761 | 1 788 632 | ||
Total gains or (losses) | 6 228 | 100 832 | 1 000 | 5 252 | 113 312 | ||
In the income statement | 6 228 | 101 088 | 1 000 | 5 252 | 113 568 | ||
In the statement of comprehensive income | — | (256) | — | — | (256) | ||
Purchases | 23 416 | 1 692 584 | — | 26 056 | 1 742 056 | ||
Sales | (43 653) | (762 668) | — | (12 565) | (818 886) | ||
Settlements | (13 648) | (981 996) | (15 856) | (31 148) | (1 042 648) | ||
Transfers into level 3 | 6 304 | — | — | 4 746 | 11 050 | ||
Foreign exchange adjustments | 5 785 | 43 046 | — | 5 016 | 53 847 | ||
Balance as at 31 March 2023 | 314 368 | 1 303 646 | 78 231 | 151 118 | 1 847 363 | ||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
For the year to | Liabilities arising on securitisation of other assets | Other balance sheet liabilities2 | Total | ||
£’000 | |||||
Liabilities | |||||
Balance as at 1 April 2021 | 108 281 | 28 034 | 136 315 | ||
Total (gains) or losses | (2 094) | 16 148 | 14 054 | ||
In the income statement | (2 094) | 16 148 | 14 054 | ||
Settlements | (10 303) | (270) | (10 573) | ||
Foreign exchange adjustments | 1 | 1 857 | 1 858 | ||
Balance as at 31 March 2022 | 95 885 | 45 769 | 141 654 | ||
Total losses | 1 384 | 11 770 | 13 154 | ||
In the income statement | 1 384 | 11 770 | 13 154 | ||
Purchases | — | 6 324 | 6 324 | ||
Settlements | (15 660) | — | (15 660) | ||
Transfers out of level 3 | — | (8) | (8) | ||
Foreign exchange adjustments | — | 1 927 | 1 927 | ||
Balance as at 31 March 2023 | 81 609 | 65 782 | 147 391 | ||
For the year to 31 March | Total | Realised | Unrealised | ||
£’000 | |||||
2023 | |||||
Total gains or (losses) included in the income statement for the year | |||||
Net interest income | 98 169 | 86 175 | 11 994 | ||
Investment income* | 2 085 | 2 502 | (417) | ||
Trading income arising from customer flow | 160 | 1 | 159 | ||
100 414 | 88 678 | 11 736 | |||
Total gains or (losses) included in other comprehensive income for the year | |||||
Gains on realisation on debt instruments at FVOCI recycled through the income statement | 433 | 433 | — | ||
Fair value movements on debt instruments at FVOCI taken directly to other comprehensive income | (256) | — | (256) | ||
177 | 433 | (256) | |||
2022 | |||||
Total gains or (losses) included in the income statement for the year | |||||
Net interest income | 66 069 | 58 038 | 8 031 | ||
Investment income* | 27 830 | 52 666 | (24 836) | ||
Trading loss arising from customer flow | (2 320) | (491) | (1 829) | ||
91 579 | 110 213 | (18 634) | |||
Total gains or (losses) included in other comprehensive income for the year | |||||
Gains on realisation on debt instruments at FVOCI recycled through the income statement | 440 | 440 | — | ||
Fair value movements on debt instruments at FVOCI taken directly to other comprehensive income | (566) | — | (566) | ||
(126) | 440 | (566) |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
VALUATION BASIS/TECHNIQUES | MAIN INPUTS | |||
Assets | ||||
Reverse repurchase agreements and cash collateral on securities borrowed | Discounted cash flow model | Discount rates | ||
Other debt securities | Discounted cash flow model | Discount rates, swap curves and negotiable certificate of deposit curves, external prices and broker quotes | ||
Derivative financial instruments | Discounted cash flow model, Hermite interpolation and industry standard derivative pricing models including Black- Scholes and Local Volatility | Discount rate, risk-free rate, volatilities, forex forward points and spot rates, interest rate swap curves and credit curves | ||
Securities arising from trading activities | Discounted cash flow model, Hermite interpolation and industry standard derivative pricing models including Local Volatility | Discount rate, risk-free rate, volatilities, forex forward points and spot rates, interest rate swap curves and credit curves | ||
Investment portfolio | Discounted cash flow model and net asset value model | Discount rate and net assets | ||
Comparable quoted inputs | Discount rate and fund unit price | |||
Loans and advances to customers | Discounted cash flow model | Yield curves | ||
Liabilities | ||||
Derivative financial instruments | Discounted cash flow model, Hermite interpolation and industry standard derivative pricing models including Black- Scholes and Local Volatility | Discount rate, risk-free rate, volatilities, forex forward points and spot rates, interest rate swap curves and credit curves | ||
Other trading liabilities | Discounted cash flow model, Hermite interpolation and industry standard derivative pricing models including Local Volatility | Discount rate, risk-free rate, volatilities, forex forward points and spot rates, interest rate swap curves and credit curves | ||
Debt securities in issue | Discounted cash flow model, Hermite interpolation and industry standard derivative pricing models including Local Volatility | Discount rate, risk-free rate, volatilities, forex forward points and spot rates, interest rate swap curves and credit curves | ||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
At 31 March 2023 | Balance sheet value £’000 | Significant unobservable input | Range of unobservable input used | Favourable changes £’000 | Unfavourable changes £’000 | ||
Assets | |||||||
Other debt securities | 93 932 | Potential impact on income statement | 2 702 | (5 253) | |||
Credit spreads | 1.05%–1.87% | 108 | (254) | ||||
Cash flow adjustments | CPR 14.81% | 10 | (10) | ||||
Other | ^ | 2 584 | (4 989) | ||||
Derivative financial instruments | 53 184 | Potential impact on income statement | 5 260 | (5 136) | |||
Volatilities | 7.5%–8.9% | 13 | (25) | ||||
Cash flow adjustments | CPR 14.81% | 6 | (5) | ||||
Underlying asset value | ^^ | 3 999 | (4 100) | ||||
Other | ^ | 1 242 | (1 006) | ||||
Securities arising from trading activities | 4 002 | Potential impact on income statement | |||||
Cash flow adjustments | CPR 14.17% | 206 | (235) | ||||
Investment portfolio | 314 368 | Potential impact on income statement | 33 129 | (66 354) | |||
Price earnings multiple | 5.5x–11.2x | 11 718 | (21 695) | ||||
Underlying asset value | ^^ | 9 378 | (20 883) | ||||
Other | ^ | 12 033 | (23 776) | ||||
Loans and advances to customers | 1 303 646 | Potential impact on income statement | 21 222 | (40 572) | |||
Credit spreads | 0.28%–5.2% | 10 994 | (22 971) | ||||
Price earnings multiple | 3.5x–4x | 4 276 | (7 083) | ||||
Underlying asset value | ^^ | 1 564 | (1 742) | ||||
Other | ^ | 4 388 | (8 776) | ||||
Potential impact on other comprehensive income | 15 756 | (31 758) | |||||
Credit spreads | 0.29%–5.5% | 15 753 | (31 751) | ||||
Other | ^ | 3 | (7) | ||||
Other securitised assets | 78 231 | Potential impact on income statement | |||||
Cash flow adjustments | CPR 14.81% | 701 | (669) | ||||
Total level 3 assets | 1 847 363 | 78 976 | (149 977) | ||||
Liabilities | |||||||
Derivative financial instruments | 59 458 | Potential impact on income statement | (4 098) | 4 099 | |||
Volatilities | 9%–18.9% | (1) | 2 | ||||
Underlying asset value | ^^ | (4 097) | 4 097 | ||||
Liabilities arising on securitisation of other assets* | 81 609 | Potential impact on income statement | |||||
Cash flow adjustments | CPR 14.81% | (351) | 363 | ||||
Other liabilities | 6 324 | Potential impact on income statement | |||||
Other | ^ | (632) | 632 | ||||
Total level 3 liabilities | 147 391 | (5 081) | 5 094 | ||||
Net level 3 assets | 1 699 972 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
At 31 March 2022 | Balance sheet value £’000 | Significant unobservable input | Range of unobservable input used | Favourable changes £’000 | Unfavourable changes £’000 | |||
Assets | ||||||||
Other debt securities | 105 031 | Potential impact on income statement | 3 199 | (5 851) | ||||
Credit spreads | 0.74%–2.75% | 141 | (286) | |||||
Cash flow adjustments | CPR 8.4% | 6 | (8) | |||||
Other | ^ | 3 052 | (5 557) | |||||
Derivative financial instruments | 43 950 | Potential impact on income statement | 4 643 | (5 266) | ||||
Volatilities | 5%–18.9% | 15 | (29) | |||||
Cash flow adjustments | CPR 8.4% | — | (6) | |||||
Underlying asset value | ^^ | 4 026 | (4 028) | |||||
Other | ^ | 602 | (1 203) | |||||
Securities arising from trading activities | 4 780 | Potential impact on income statement | ||||||
Cash flow adjustments | CPR 11% | 481 | (635) | |||||
Investment portfolio | 329 936 | Potential impact on income statement | 34 755 | (69 302) | ||||
Price earnings multiple | 5.5x–15x | 9 505 | (18 206) | |||||
Underlying asset value | ^^ | 9 636 | (20 897) | |||||
Other | ^ | 15 614 | (30 199) | |||||
Loans and advances to customers | 1 211 848 | Potential impact on income statement | 24 838 | (40 047) | ||||
Credit spreads | 0.15%–34.3% | 10 656 | (27 586) | |||||
Price earnings multiple | 3.5x–4.2x | 7 824 | (1 136) | |||||
Underlying asset value | ^^ | 3 528 | (5 665) | |||||
Other | ^ | 2 830 | (5 660) | |||||
Potential impact on other comprehensive income | ||||||||
Credit spreads | 0.14%–6.17% | 8 440 | (15 725) | |||||
Other securitised assets | 93 087 | Potential impact on income statement | ||||||
Cash flow adjustments | CPR 8.4% | 988 | (1 057) | |||||
Total level 3 assets | 1 788 632 | 77 344 | (137 883) | |||||
Liabilities | ||||||||
Derivative financial instruments | 45 769 | Potential impact on income statement | (4 046) | 4 060 | ||||
Volatilities | 5%–18.9% | (21) | 35 | |||||
Underlying asset value | ^^ | (4 025) | 4 025 | |||||
Liabilities arising on securitisation of other assets* | 95 885 | Potential impact on income statement | ||||||
Cash flow adjustments | CPR 8.4% | (292) | 299 | |||||
Total level 3 liabilities | 141 654 | (4 338) | 4 359 | |||||
Net level 3 assets | 1 646 978 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
Level within the fair value hierarchy | |||||||||
At 31 March 2023 | Carrying amount | Fair value approximates carrying amount | Balances where fair values do not approximate carrying amounts | Fair value of balances that do not approximate carrying amounts | Level 1 | Level 2 | Level 3 | ||
£’000 | |||||||||
Assets | |||||||||
Cash and balances at central banks | 5 400 401 | 5 400 401 | — | — | — | — | — | ||
Loans and advances to banks | 893 297 | 893 297 | — | — | — | — | — | ||
Reverse repurchase agreements and cash collateral on securities borrowed | 992 830 | 807 046 | 185 784 | 185 503 | — | 185 503 | — | ||
Sovereign debt securities | 55 922 | 4 370 | 51 552 | 51 494 | 51 494 | — | — | ||
Bank debt securities | 4 954 | — | 4 954 | 4 952 | 4 952 | — | — | ||
Other debt securities | 603 283 | 42 611 | 560 672 | 554 892 | — | 554 892 | — | ||
Loans and advances to customers | 14 173 866 | 611 611 | 13 562 255 | 13 426 192 | — | 1 016 299 | 12 409 893 | ||
Other loans and advances | 142 626 | 69 727 | 72 899 | 72 976 | — | 72 976 | — | ||
Other assets | 612 778 | 612 778 | — | — | — | — | — | ||
22 879 957 | 8 441 841 | 14 438 116 | 14 296 009 | ||||||
Liabilities | |||||||||
Deposits by banks | 2 172 171 | 373 944 | 1 798 227 | 1 804 116 | — | 1 804 116 | — | ||
Repurchase agreements and cash collateral on securities lent | 139 529 | 85 070 | 54 459 | 52 486 | — | 52 486 | — | ||
Customer accounts (deposits) | 19 121 921 | 10 426 685 | 8 695 236 | 8 654 686 | — | 8 654 686 | — | ||
Debt securities in issue | 1 427 991 | 1 183 | 1 426 808 | 1 383 613 | 911 763 | 471 850 | — | ||
Other liabilities | 645 612 | 642 983 | 2 629 | 1 572 | — | — | 1 572 | ||
Subordinated liabilities | 731 483 | — | 731 483 | 713 119 | 713 119 | — | — | ||
24 238 707 | 11 529 865 | 12 708 842 | 12 609 592 | ||||||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
Level within the fair value hierarchy | |||||||||
At 31 March 2022 | Carrying amount | Fair value approximates carrying amount | Balances where fair values do not approximate carrying amounts | Fair value of balances that do not approximate carrying amounts | Level 1 | Level 2 | Level 3 | ||
£’000 | |||||||||
Assets | |||||||||
Cash and balances at central banks | 5 379 994 | 5 379 994 | — | — | — | — | — | ||
Loans and advances to banks | 1 467 770 | 1 467 770 | — | — | — | — | — | ||
Reverse repurchase agreements and cash collateral on securities borrowed | 778 365 | 662 151 | 116 214 | 115 088 | — | 115 088 | — | ||
Other debt securities | 283 713 | 7 601 | 276 112 | 275 937 | 3 058 | 272 879 | — | ||
Loans and advances to customers | 13 132 006 | 521 321 | 12 610 685 | 12 593 362 | — | 1 022 302 | 11 571 060 | ||
Other loans and advances | 122 717 | 61 473 | 61 244 | 61 253 | — | 61 253 | — | ||
Other assets | 823 227 | 823 227 | — | — | — | — | — | ||
21 987 792 | 8 923 537 | 13 064 255 | 13 045 640 | ||||||
Liabilities | |||||||||
Deposits by banks | 2 026 601 | 280 414 | 1 746 187 | 1 654 635 | — | 1 654 635 | — | ||
Repurchase agreements and cash collateral on securities lent | 154 828 | 103 729 | 51 099 | 49 243 | — | 49 243 | — | ||
Customer accounts (deposits) | 18 293 891 | 11 678 823 | 6 615 068 | 6 616 337 | — | 6 616 337 | — | ||
Debt securities in issue | 1 601 985 | 1 183 | 1 600 802 | 1 599 831 | 1 006 663 | 593 168 | — | ||
Other liabilities | 813 958 | 810 824 | 3 134 | 2 419 | — | — | 2 419 | ||
Subordinated liabilities | 758 739 | — | 758 739 | 767 436 | 767 436 | — | — | ||
23 650 002 | 12 874 973 | 10 775 029 | 10 689 901 | ||||||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
Loans and advances to banks | Calculation of the present value of future cash flows, discounted as appropriate. | |
Other debt securities | Priced with reference to similar trades in an observable market. | |
Reverse repurchase agreements and cash collateral on securities borrowed | Calculation of the present value of future cash flows, discounted as appropriate. | |
Loans and advances to customers | Calculation of the present value of future cash flows, discounted as appropriate. | |
Other loans and advances | Calculation of the present value of future cash flows, discounted as appropriate. | |
Other assets | Calculation of the present value of future cash flows, discounted as appropriate. | |
Deposits by banks | Calculation of fair value using appropriate funding rates. | |
Repurchase agreements and cash collateral on securities lent | Calculation of the present value of future cash flows, discounted as appropriate. | |
Customer accounts (deposits) | Where the deposits are short-term in nature, carrying amounts are assumed to approximate fair value. Where deposits are of longer-term maturities, they are valued using a cash flow model discounted as appropriate. | |
Debt securities in issue | Where the debt securities are fully collateralised, fair value is equal to the carrying value. Other debt securities are valued using a cash flow model discounted as appropriate to the securities for funding and interest rates. | |
Other liabilities | Where the other liabilities are short term in nature, carrying amounts are assumed to approximate fair value. |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
Fair value adjustment | Change in fair value attributable to credit risk* | ||||||
At 31 March | Carrying value | Current | Cumulative | Current | Cumulative | Maximum exposure to credit risk | |
£’000 | |||||||
Assets | |||||||
2023 | |||||||
Securities arising from trading activities | 12 916 | 930 | (638) | (120) | (57) | 12 916 | |
Other securitised assets | 78 231 | (2 352) | (7 459) | (2 352) | (7 459) | 78 927 | |
91 147 | (1 422) | (8 097) | (2 472) | (7 516) | 91 843 | ||
2022 | |||||||
Reverse repurchase agreements and cash collateral on securities borrowed | 38 649 | 89 | 284 | — | — | — | |
Securities arising from trading activities | 20 353 | 379 | 50 | 6 | 95 | 20 353 | |
Other securitised assets | 93 087 | (4 106) | (6 382) | (4 106) | (6 382) | 93 087 | |
152 089 | (3 638) | (6 048) | (4 100) | (6 287) | 113 440 | ||
Fair value adjustment | Change in fair value attributable to credit risk* | ||||||
At 31 March | Carrying value | Remaining contractual amount to be repaid at maturity | Current | Cumulative | Current | Cumulative | |
£’000 | |||||||
Liabilities | |||||||
2023 | |||||||
Debt securities in issue | 21 554 | 20 097 | (274) | 5 146 | (85) | (67) | |
Liabilities arising on securitisation of other assets | 81 609 | 86 985 | 250 | (5 441) | 250 | (5 441) | |
103 163 | 107 082 | (24) | (295) | 165 | (5 508) | ||
2022 | |||||||
Debt securities in issue | 46 192 | 41 266 | 5 139 | 9 452 | 7 | (43) | |
Liabilities arising on securitisation of other assets | 95 885 | 102 712 | (2 286) | (6 854) | (2 286) | (6 854) | |
142 077 | 143 978 | 2 853 | 2 598 | (2 279) | (6 897) | ||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
At 31 March | 2023 | 2022 | ||
£’000 | ||||
Gross cash and balances at central banks | 5 400 401 | 5 379 994 | ||
Expected credit loss | — | — | ||
Net cash and balances at central banks | 5 400 401 | 5 379 994 | ||
The country risk of cash and bank balances at central banks lies in the following geographies: | ||||
United Kingdom | 5 380 357 | 5 326 540 | ||
Europe (excluding UK) | 20 044 | 53 454 | ||
5 400 401 | 5 379 994 |
At 31 March | 2023 | 2022 | ||
£’000 | ||||
Gross loans and advances to banks | 893 368 | 1 467 863 | ||
Expected credit loss | (71) | (93) | ||
Net loans and advances to banks | 893 297 | 1 467 770 | ||
The country risk of loans and advances to banks lies in the following geographies: | ||||
South Africa | 7 265 | 10 543 | ||
United Kingdom | 511 777 | 555 881 | ||
Europe (excluding UK) | 287 673 | 706 940 | ||
Australia | 14 313 | 41 096 | ||
North America | 62 609 | 143 856 | ||
Asia | 8 446 | 9 086 | ||
Other | 1 214 | 368 | ||
893 297 | 1 467 770 |
At 31 March | 2023 | 2022 | ||
£’000 | ||||
Assets | ||||
Gross reverse repurchase agreements and cash collateral on securities borrowed | 1 338 711 | 1 447 485 | ||
Expected credit loss | (12) | (12) | ||
Net reverse repurchase agreements and cash collateral on securities borrowed | 1 338 699 | 1 447 473 | ||
Reverse repurchase agreements | 1 328 235 | 1 408 503 | ||
Cash collateral on securities borrowed | 10 464 | 38 970 | ||
1 338 699 | 1 447 473 | |||
As part of the reverse repurchase and securities borrowing agreements the Group has received securities that it is allowed to sell or repledge. £90 million (2022: £76 million) has been resold or repledged to third parties in connection with financing activities or to comply with commitments under short sale transactions. | ||||
Liabilities | ||||
Repurchase agreements | 118 373 | 129 092 | ||
Cash collateral on securities lent | 21 156 | 25 736 | ||
139 529 | 154 828 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
At 31 March | 2023 | 2022 | ||
£’000 | ||||
Gross sovereign debt securities | 1 221 744 | 1 165 777 | ||
Expected credit loss | — | — | ||
Net sovereign debt securities | 1 221 744 | 1 165 777 | ||
The country risk of sovereign debt securities lies in the following geographies: | ||||
United Kingdom | 348 827 | 378 941 | ||
Europe (excluding UK)* | 190 232 | 93 004 | ||
North America | 682 685 | 693 832 | ||
1 221 744 | 1 165 777 |
At 31 March | 2023 | 2022 | ||
£’000 | ||||
Gross bank debt securities | 204 691 | 61 714 | ||
Expected credit loss | — | — | ||
Net bank debt securities | 204 691 | 61 714 | ||
Bonds | 200 590 | 57 844 | ||
Floating rate notes | 4 101 | 3 870 | ||
204 691 | 61 714 | |||
The country risk of bank debt securities lies in the following geographies: | ||||
United Kingdom | 122 690 | 46 622 | ||
Europe (excluding UK) | 71 873 | 15 092 | ||
Australia | 10 128 | — | ||
204 691 | 61 714 |
At 31 March | 2023 | 2022 | ||
£’000 | ||||
Gross other debt securities | 697 837 | 432 980 | ||
Expected credit loss | (562) | (5 219) | ||
Net other debt securities | 697 275 | 427 761 | ||
Bonds | 120 510 | 119 766 | ||
Asset-backed securities | 576 765 | 307 995 | ||
697 275 | 427 761 | |||
The country risk of other debt securities lies in the following geographies: | ||||
United Kingdom | 108 175 | 104 452 | ||
Europe (excluding UK) | 140 937 | 67 666 | ||
North America | 400 496 | 207 392 | ||
Asia | 47 667 | 48 251 | ||
697 275 | 427 761 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
2023 | 2022 | ||||||
At 31 March | Notional principal amounts | Positive fair value | Negative fair value | Notional principal amounts | Positive fair value | Negative fair value | |
£’000 | |||||||
Foreign exchange derivatives | |||||||
Forward foreign exchange contracts | 15 680 009 | 186 867 | 142 523 | 16 862 873 | 157 697 | 137 754 | |
Currency swaps | 678 329 | 9 484 | 8 724 | 1 117 700 | 12 176 | 10 113 | |
OTC options bought and sold | 1 877 070 | 24 153 | 22 865 | 2 212 297 | 11 820 | 18 665 | |
18 235 408 | 220 504 | 174 112 | 20 192 870 | 181 693 | 166 532 | ||
Interest rate derivatives | |||||||
Caps and floors | 10 576 158 | 155 330 | 150 118 | 9 424 942 | 65 094 | 57 797 | |
Swaps | 46 254 022 | 28 842 | 160 283 | 40 601 552 | 28 534 | 81 495 | |
OTC derivatives | 56 830 180 | 184 172 | 310 401 | 50 026 494 | 93 628 | 139 292 | |
Exchange traded futures | — | — | — | — | — | — | |
56 830 180 | 184 172 | 310 401 | 50 026 494 | 93 628 | 139 292 | ||
Equity and stock index derivatives | |||||||
OTC options bought and sold | 1 604 247 | 63 258 | 120 243 | 2 920 599 | 101 194 | 212 995 | |
Equity swaps and forwards | 6 343 | 173 | — | 392 379 | 2 875 | 11 138 | |
OTC derivatives | 1 610 590 | 63 431 | 120 243 | 3 312 978 | 104 069 | 224 133 | |
Exchange traded futures | 225 212 | — | — | 169 227 | — | — | |
Exchange traded options | 11 453 984 | 55 231 | 45 | 15 492 162 | — | 25 831 | |
Warrants | — | — | — | — | 19 | — | |
13 289 786 | 118 662 | 120 288 | 18 974 367 | 104 088 | 249 964 | ||
Commodity derivatives | |||||||
OTC options bought and sold | 251 899 | 39 853 | 59 145 | 235 387 | 40 978 | 51 206 | |
Commodity swaps and forwards | 721 125 | 45 219 | 38 152 | 1 236 254 | 255 652 | 253 713 | |
973 024 | 85 072 | 97 297 | 1 471 641 | 296 630 | 304 919 | ||
Credit derivatives | 138 862 | 20 670 | 2 718 | 218 806 | 11 065 | 2 588 | |
Other derivatives | 5 043 | 6 029 | |||||
Derivatives per balance sheet | 634 123 | 704 816 | 693 133 | 863 295 | |||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
At 31 March | 2023 | 2022 | ||
£’000 | ||||
Asset-backed securities | 4 002 | 4 780 | ||
Bonds | 24 106 | 17 936 | ||
Government securities | — | 2 811 | ||
Listed equities | 99 429 | 137 638 | ||
127 537 | 163 165 |
At 31 March | 2023 | 2022 | ||
£’000 | ||||
Listed equities* | 173 949 | 357 838 | ||
Unlisted equities** | 315 255 | 336 486 | ||
489 204 | 694 324 |
At 31 March | 2023 | 2022 | ||
£’000 | ||||
Gross loans and advances to customers at amortised cost | 14 314 591 | 13 262 811 | ||
Gross loans and advances to customers at FVOCI^ | 843 428 | 685 386 | ||
Gross loans and advances to customers subject to expected credit losses | 15 158 019 | 13 948 197 | ||
Expected credit losses on loans and advances to customers at amortised cost and FVOCI^ | (140 725) | (130 805) | ||
Net loans and advances to customers at amortised cost and FVOCI^ | 15 017 294 | 13 817 392 | ||
Loans and advances to customers at fair value through profit and loss | 550 515 | 609 083 | ||
Net loans and advances to customers | 15 567 809 | 14 426 475 | ||
Gross other loans and advances | 142 702 | 122 736 | ||
Expected credit losses on other loans and advances | (76) | (19) | ||
Net other loans and advances | 142 626 | 122 717 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
At 31 March | 2023 | |
£’000 | ||
Expected credit losses on loans and advances to customers at amortised cost and FVOCI^ | ||
Balance as at 1 April 2021 | 164 373 | |
Charge to the income statement | 24 204 | |
Reversals and recoveries recognised in the income statement | (369) | |
Write-offs | (58 647) | |
Exchange adjustments | 1 244 | |
Balance as at 31 March 2022 | 130 805 | |
Charge to the income statement | 53 592 | |
Reversals and recoveries recognised in the income statement | (1 094) | |
Write-offs | (45 684) | |
Exchange adjustments | 3 106 | |
Balance as at 31 March 2023 | 140 725 | |
Expected credit loss of other loans and advances | ||
Balance as at 1 April 2021 | 44 | |
Charge to the income statement | 19 | |
Exchange adjustments | (44) | |
Balance as at 31 March 2022 | 19 | |
Charge to the income statement | 69 | |
Exchange adjustments | (12) | |
Balance as at 31 March 2023 | 76 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
At 31 March | 2023 | 2022 | ||
£’000 | ||||
Other securitised assets are made up of the following categories of assets: | ||||
Loans and advances to customers | 74 226 | 88 004 | ||
Other debt securities | 4 005 | 5 083 | ||
Total other securitised assets | 78 231 | 93 087 | ||
The associated liabilities are recorded on-balance sheet in the following line items: | ||||
Liabilities arising on securitisation of other assets | 81 609 | 95 885 |
At 31 March | 2023 | 2022 | ||
£’000 | ||||
Interests in associated undertakings and joint venture holdings consist of: | ||||
Net asset value | 46 480 | 61 140 | ||
Goodwill | 5 840 | 5 755 | ||
Investment in associated undertakings and joint venture holdings | 52 320 | 66 895 | ||
Associated undertakings and joint venture holdings comprise unlisted investments | ||||
Analysis of the movement in our share of net assets: | ||||
At the beginning of the year | 61 140 | 58 519 | ||
Exchange adjustments | 228 | 135 | ||
Acquisitions | — | 3 493 | ||
Disposals | (565) | — | ||
Impairment | (282) | — | ||
Share of post-taxation profits of associates and joint venture holdings^ | 5 371 | 14 164 | ||
Dividends received | (19 412) | (15 171) | ||
At the end of the year | 46 480 | 61 140 | ||
Analysis of the movement in goodwill: | ||||
At the beginning of the year | 5 755 | 139 | ||
Exchange adjustments | 224 | (104) | ||
Acquisitions | — | 5 720 | ||
Impairment | (139) | — | ||
At the end of the year | 5 840 | 5 755 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
At 31 March | 2023 | 2022 | ||
£’000 | ||||
Deferred taxation assets | 112 347 | 110 377 | ||
Deferred taxation liabilities | — | — | ||
Net deferred taxation assets | 112 347 | 110 377 | ||
The net deferred taxation assets arise from: | ||||
Deferred capital allowances | 60 249 | 48 634 | ||
Income and expenditure accruals | 3 404 | 2 212 | ||
Asset in respect of unexpired options | 30 859 | 28 342 | ||
Unrealised fair value adjustments on financial instruments | 25 584 | 31 033 | ||
Losses carried forward | 2 079 | 8 166 | ||
Asset in respect of pension deficit | 372 | 383 | ||
Deferred tax on acquired intangibles | (10 200) | (8 393) | ||
Net deferred taxation assets | 112 347 | 110 377 | ||
Reconciliation of net deferred taxation assets | ||||
At the beginning of the year | 110 377 | 90 766 | ||
Release to income statement – current year taxation | 9 577 | 23 622 | ||
Movement directly in other comprehensive income | (4 738) | (3 677) | ||
Arising on acquisitions/disposals | (2 998) | (463) | ||
Exchange adjustments | 129 | 129 | ||
At the end of the year | 112 347 | 110 377 |
At 31 March | 2023 | 2022 | ||
£’000 | ||||
Gross other assets | 965 449 | 1 139 439 | ||
Expected credit loss | — | — | ||
Net other assets | 965 449 | 1 139 439 | ||
Settlement debtors | 500 959 | 736 688 | ||
Trading properties | 75 000 | 4 287 | ||
Prepayments and accruals | 54 765 | 55 635 | ||
Trading initial margin | 10 327 | 9 606 | ||
Finance lease receivables | 207 203 | 223 902 | ||
Indirect taxation assets receivable | 1 043 | 1 109 | ||
Other | 116 152 | 108 212 | ||
965 449 | 1 139 439 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
At 31 March | Freehold properties | Right-of-use assets^ | Leasehold improvements | Furniture and vehicles | Equipment | Operating leases* | Total | ||
£’000 | |||||||||
2023 | |||||||||
Cost | |||||||||
At the beginning of the year | 36 | 139 730 | 77 402 | 7 062 | 23 507 | 3 466 | 251 203 | ||
Exchange adjustments | — | 557 | 2 789 | 22 | 35 | — | 3 403 | ||
Acquisition of subsidiaries | — | — | — | — | 183 | — | 183 | ||
Additions | — | 7 165 | 2 222 | 72 | 3 318 | — | 12 777 | ||
Disposals | — | (5 622) | (24 045) | — | (252) | (2 035) | (31 954) | ||
At the end of the year | 36 | 141 830 | 58 368 | 7 156 | 26 791 | 1 431 | 235 612 | ||
Accumulated depreciation | |||||||||
At the beginning of the year | (36) | (45 209) | (26 287) | (3 639) | (17 756) | (3 221) | (96 148) | ||
Exchange adjustments | — | (228) | (50) | (18) | (29) | — | (325) | ||
Acquisition of subsidiaries | — | — | — | — | (167) | — | (167) | ||
Disposals | — | 4 076 | 119 | — | 246 | 1 992 | 6 433 | ||
Depreciation and impairment charge for the year | — | (14 500) | (5 946) | (540) | (3 349) | (56) | (24 391) | ||
At the end of the year | (36) | (55 861) | (32 164) | (4 197) | (21 055) | (1 285) | (114 598) | ||
Net carrying value | — | 85 969 | 26 204 | 2 959 | 5 736 | 146 | 121 014 | ||
2022 | |||||||||
Cost | |||||||||
At the beginning of the year | 36 | 141 376 | 81 830 | 7 421 | 26 158 | 5 721 | 262 542 | ||
Exchange adjustments | — | 215 | 632 | 8 | (1) | — | 854 | ||
Additions | — | 4 653 | 930 | 32 | 1 434 | 5 | 7 054 | ||
Disposals | — | (6 514) | (5 990) | (399) | (4 084) | (2 260) | (19 247) | ||
At the end of the year | 36 | 139 730 | 77 402 | 7 062 | 23 507 | 3 466 | 251 203 | ||
Accumulated depreciation | |||||||||
At the beginning of the year | (36) | (29 319) | (22 022) | (3 354) | (17 114) | (5 195) | (77 040) | ||
Exchange adjustments | — | (109) | (9) | (8) | (4) | — | (130) | ||
Disposals | — | 1 869 | 2 233 | 289 | 3 785 | 2 178 | 10 354 | ||
Depreciation and impairment charge for the year | — | (17 650) | (6 489) | (566) | (4 423) | (204) | (29 332) | ||
At the end of the year | (36) | (45 209) | (26 287) | (3 639) | (17 756) | (3 221) | (96 148) | ||
Net carrying value | — | 94 521 | 51 115 | 3 423 | 5 751 | 245 | 155 055 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
At 31 March | 2023 | 2022 | ||
£’000 | ||||
Cost | ||||
At the beginning of the year | 280 194 | 289 969 | ||
Acquisition of subsidiaries | 6 236 | — | ||
Disposal of subsidiaries | — | (9 775) | ||
At the end of the year | 286 430 | 280 194 | ||
Accumulated impairments | ||||
At the beginning of the year | (30 358) | (40 133) | ||
Impairments | (805) | — | ||
Disposal of subsidiaries | — | 9 775 | ||
At the end of the year | (31 163) | (30 358) | ||
Net carrying value | 255 267 | 249 836 | ||
Analysis of goodwill by line of business: | ||||
Wealth & Investment | 242 555 | 236 319 | ||
Specialist Banking | 12 712 | 13 517 | ||
Total Group | 255 267 | 249 836 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
Software | Other acquired intangible assets | |||||||
At 31 March | Acquired software | Internally generated software | Total | Client relationships* | Total | Total | ||
£’000 | ||||||||
2023 | ||||||||
Cost | ||||||||
At the beginning of the year | 28 800 | 3 104 | 31 904 | 186 729 | 186 729 | 218 633 | ||
Exchange adjustments | 230 | — | 230 | — | — | 230 | ||
Acquisition of subsidiaries | — | 194 | 194 | 10 882 | 10 882 | 11 076 | ||
Additions | 4 659 | — | 4 659 | 1 459 | 1 459 | 6 118 | ||
Disposals | (18) | — | (18) | — | — | (18) | ||
At the end of the year | 33 671 | 3 298 | 36 969 | 199 070 | 199 070 | 236 039 | ||
Accumulated amortisation and impairments | ||||||||
At the beginning of the year | (24 321) | (517) | (24 838) | (145 922) | (145 922) | (170 760) | ||
Exchange adjustments | (195) | — | (195) | — | — | (195) | ||
Acquisition of subsidiaries | — | (105) | (105) | 27 | 27 | (78) | ||
Disposals | 18 | — | 18 | — | — | 18 | ||
Amortisation | (1 802) | (632) | (2 434) | (12 625) | (12 625) | (15 059) | ||
At the end of the year | (26 300) | (1 254) | (27 554) | (158 520) | (158 520) | (186 074) | ||
Net carrying value | 7 371 | 2 044 | 9 415 | 40 550 | 40 550 | 49 965 | ||
2022 | ||||||||
Cost | ||||||||
At the beginning of the year | 28 266 | 1 702 | 29 968 | 186 267 | 186 267 | 216 235 | ||
Exchange adjustments | 188 | — | 188 | — | — | 188 | ||
Additions | 669 | 1 402 | 2 071 | 462 | 462 | 2 533 | ||
Disposals | (323) | — | (323) | — | — | (323) | ||
At the end of the year | 28 800 | 3 104 | 31 904 | 186 729 | 186 729 | 218 633 | ||
Accumulated amortisation and impairments | ||||||||
At the beginning of the year | (22 177) | — | (22 177) | (132 986) | (132 986) | (155 163) | ||
Exchange adjustments | (145) | — | (145) | — | — | (145) | ||
Disposals | 298 | — | 298 | — | — | 298 | ||
Amortisation | (2 297) | (517) | (2 814) | (12 936) | (12 936) | (15 750) | ||
At the end of the year | (24 321) | (517) | (24 838) | (145 922) | (145 922) | (170 760) | ||
Net carrying value | 4 479 | 2 587 | 7 066 | 40 807 | 40 807 | 47 873 | ||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
At 31 March | 2023 | 2022 | ||
£’000 | ||||
Short positions | ||||
– Equities | 28 184 | 42 944 | ||
28 184 | 42 944 |
At 31 March | 2023 | 2022 | ||
£’000 | ||||
Repayable in: | ||||
Less than three months | 28 447 | 210 729 | ||
Three months to one year | 138 265 | 71 796 | ||
One to five years | 962 545 | 1 022 555 | ||
Greater than five years | 320 288 | 343 097 | ||
1 449 545 | 1 648 177 |
At 31 March | 2023 | 2022 | ||
£’000 | ||||
Settlement liabilities | 411 824 | 612 767 | ||
Other creditors and accruals | 356 993 | 303 703 | ||
Lease liabilities | 322 767 | 344 802 | ||
Other non-interest-bearing liabilities | 115 074 | 101 326 | ||
Indirect taxation liabilities payable | 10 412 | 8 350 | ||
Expected credit losses on undrawn commitments and guarantees | 15 659 | 8 379 | ||
1 232 729 | 1 379 327 |
2023 | 2022 | |||||
At 31 March | Undiscounted lease payments | Present value | Undiscounted lease payments | Present value | ||
£’000 | ||||||
Lease liabilities included in other liabilities | ||||||
Lease liabilities payable in: | ||||||
Less than one year | 60 631 | 57 770 | 54 032 | 51 272 | ||
One to five years | 269 789 | 245 286 | 290 977 | 259 482 | ||
Later than five years | 20 919 | 19 711 | 34 998 | 34 048 | ||
351 339 | 322 767 | 380 007 | 344 802 | |||
At 31 March | 2023 | |
£’000 | ||
Balance as at 1 April 2021 | 387 165 | |
Interest on lease liabilities | 11 120 | |
New leases | 2 665 | |
Disposals | (11 812) | |
Repayment of lease liabilities | (54 374) | |
Remeasurement of lease liabilities | (281) | |
Exchange adjustments | 10 319 | |
Balance as at 31 March 2022 | 344 802 | |
Interest on lease liabilities | 13 235 | |
New leases | 3 009 | |
Repayment of lease liabilities | (57 324) | |
Remeasurement of lease liabilities | 4 114 | |
Exchange adjustments | 14 931 | |
Balance as at 31 March 2023 | 322 767 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
At 31 March | 2023 | 2022 | ||
£’000 | ||||
Issued by Investec Bank plc | ||||
Subordinated fixed rate reset callable medium-term notes – amortised cost | 71 060 | 427 019 | ||
Issued by Investec plc | ||||
Subordinated fixed rate reset callable medium-term notes – amortised cost | 660 422 | 331 720 | ||
731 483 | 758 739 | |||
Remaining maturities: | ||||
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 | 731 483 | 758 739 | ||
731 483 | 758 739 | |||
Reconciliation from opening balance to closing balance | ||||
At the beginning of the year | 758 739 | 771 481 | ||
New issue | 345 590 | 347 536 | ||
Redemption | (347 926) | (307 962) | ||
Fair value movement | — | (23 269) | ||
Accrual of interest | 32 501 | 48 505 | ||
Repayment of interest | (40 455) | (49 807) | ||
Hedge accounting/amortisation of discount | (16 967) | (27 745) | ||
At the end of the year | 731 482 | 758 739 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
At 31 March | 2023 | 2022 | ||
£’000 | ||||
Issued, allotted and fully paid | ||||
Number of ordinary shares | Number | Number | ||
At the beginning of the year | 696 082 618 | 696 082 618 | ||
Issued during the year | — | — | ||
At the end of the year | 696 082 618 | 696 082 618 | ||
Nominal value of ordinary shares | £’000 | £’000 | ||
At the beginning of the year | 138 | 138 | ||
Issued during the year | — | — | ||
At the end of the year | 138 | 138 | ||
Number of special converting shares | Number | Number | ||
At the beginning of the year | 318 904 709 | 318 904 709 | ||
Issued during the year | — | — | ||
At the end of the year | 318 904 709 | 318 904 709 | ||
Nominal value of special converting shares | £’000 | £’000 | ||
At the beginning of the year | 64 | 64 | ||
Issued during the year | — | — | ||
At the end of the year | 64 | 64 | ||
Number of UK DAN shares | Number | Number | ||
At the beginning and end of the year | 1 | 1 | ||
Nominal value of UK DAN share | £’000 | £’000 | ||
At the beginning and end of the year | * | * | ||
Number of UK DAS shares | Number | Number | ||
At the beginning and end of the year | 1 | 1 | ||
Nominal value of UK DAS share | £’000 | £’000 | ||
At the beginning and end of the year | * | * | ||
Number of special voting shares | Number | Number | ||
At the beginning and end of the year | 1 | 1 | ||
Nominal value of special voting shares | £’000 | £’000 | ||
At the beginning and end of the year | * | * |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
At 31 March | 2023 | 2022 | ||
Number of shares | ||||
Opening balance | 29 590 241 | 22 431 650 | ||
Sale of business | — | (94 076) | ||
Granted during the year | 5 542 176 | 14 657 836 | ||
Exercised | (4 788 744) | (5 595 039) | ||
Lapsed | (1 558 256) | (1 810 130) | ||
Closing balance | 28 785 417 | 29 590 241 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
At 31 March | 2023 | 2022 | ||
£’000 | ||||
Perpetual preference share capital | 29 | 29 | ||
Perpetual preference share premium | 24 765 | 24 765 | ||
24 794 | 24 794 | |||
Issued by Investec plc | ||||
2 754 587 (2022: 2 754 587) non-redeemable, non-cumulative, non-participating preference shares of £0.01 each, issued at a premium of £8.58 per share. | ||||
–Perpetual preference share capital | 29 | 29 | ||
–Perpetual preference share premium | 23 607 | 23 607 | ||
Perpetual preference shareholders will receive an annual dividend if declared based on the coupon rate (being equivalent to the base rate plus 1%) multiplied by the deemed value on a daily basis and payable in two semi-annual instalments. | ||||
An ordinary dividend will not be declared by Investec plc unless the perpetual preference dividend has been declared. | ||||
If declared, perpetual preference dividends are payable semi-annually at least seven business days prior to the date on which Investec plc pays its ordinary dividends, if any, but shall be payable no later than 120 business days after 31 March and 30 September respectively. | ||||
Issued by Investec plc – Rand-denominated | ||||
131 447 (2022: 131 447) non-redeemable, non-cumulative, non-participating perpetual preference shares of ZAR0.001 each, issued at an average premium of ZAR99.999 per share. | ||||
–Perpetual preference share capital | * | * | ||
–Perpetual preference share premium | 1 158 | 1 158 | ||
Rand-denominated perpetual preference shareholders will receive a dividend if declared, based on the coupon rate (being equivalent to South African prime rate multiplied by 95%), multiplied by the deemed value on a daily basis and payable in two semi-annual instalments. | ||||
An ordinary dividend will not be declared by Investec plc unless the Rand-denominated perpetual preference dividend has been declared. | ||||
If declared, perpetual preference dividends are payable semi-annually at least seven business days prior to the date on which Investec plc pays its ordinary dividends, if any, but shall be payable no later than 120 business days after 31 March and 30 September respectively. |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
At 31 March | 2023 | 2022 | ||
£’000 | ||||
Share premium account | 555 812 | 806 812 |
At 31 March | 2023 | 2022 | ||
£’000 | ||||
Treasury shares held by subsidiaries of Investec plc | 181 797 | 161 522 | ||
Number | Number | |||
Investec plc ordinary shares held by subsidiaries | 49 720 148 | 48 997 877 | ||
Reconciliation of treasury shares | Number | Number | ||
At the beginning of the year | 48 997 877 | 41 576 257 | ||
Purchase of own shares by subsidiary companies | 7 823 716 | 15 730 542 | ||
Shares disposed of by subsidiaries | (7 101 445) | (8 308 922) | ||
At the end of the year | 49 720 148 | 48 997 877 | ||
Market value of treasury shares | £'000 | £'000 | ||
Investec plc | 223 542 | 246 753 | ||
223 542 | 246 753 |
At 31 March | 2023 | 2022 | ||
£’000 | ||||
Fixed Rate Reset Perpetual Additional Tier 1 Write Down Capital Securities | 250 000 | 250 000 |
At 31 March | 2023 | 2022 | ||
£’000 | ||||
Non-controlling interests in partially held subsidiaries | 951 | 833 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
2023 | 2022 | |||||
At 31 March | Total future minimum payments | Present value | Total future minimum payments | Present value | ||
£’000 | ||||||
Finance lease receivables included in loans and advances to customers | ||||||
Lease receivables due in: | ||||||
Less than one year | 234 669 | 194 458 | 230 003 | 193 281 | ||
One to five years | 362 984 | 317 007 | 341 698 | 303 439 | ||
Later than five years | 7 102 | 6 367 | 6 349 | 5 886 | ||
604 755 | 517 832 | 578 050 | 502 606 | |||
Unearned finance income | (86 923) | (75 444) | ||||
Net investment in the lease | 517 832 | 502 606 | ||||
2023 | 2022 | |||||
At 31 March | Total future minimum payments | Present value | Total future minimum payments | Present value | ||
£’000 | ||||||
Finance lease receivables included in other assets | ||||||
Lease receivables due in: | ||||||
Less than one year | 40 746 | 37 282 | 38 401 | 37 647 | ||
One to five years | 194 893 | 169 921 | 220 606 | 185 509 | ||
Later than five years | — | — | 748 | 746 | ||
235 639 | 207 203 | 259 755 | 223 902 | |||
Unearned finance income | (28 436) | (35 853) | ||||
Net investment in the lease | 207 203 | 223 902 | ||||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
At 31 March | 2023 | 2022 | ||
£’000 | ||||
Profit before taxation adjusted for non-cash items and other required adjustments is derived as follows: | ||||
Profit before taxation | 367 924 | 271 788 | ||
Adjustment for non-cash items included in net income before taxation: | ||||
Impairment of goodwill | 805 | — | ||
Amortisation of acquired intangibles | 12 625 | 12 936 | ||
Net (gain)/loss on disposal of subsidiaries | (30) | 632 | ||
Depreciation of operating lease assets | 56 | 204 | ||
Depreciation and impairment of property, equipment, software and other intangibles | 26 768 | 31 939 | ||
Expected credit loss impairment charges | 66 752 | 25 159 | ||
Share of post-taxation profit of associates and joint venture holdings | (4 950) | (13 878) | ||
Dividends received from associates and joint venture holdings | 19 413 | 15 171 | ||
Share-based payments and employee benefit liability recognised | 22 304 | 23 664 | ||
Profit before taxation adjusted for non-cash items | 511 667 | 367 615 | ||
(Increase)/decrease in operating assets | ||||
Loans and advances to banks | 530 | 53 095 | ||
Reverse repurchase agreements and cash collateral on securities borrowed | 108 774 | 617 764 | ||
Sovereign debt securities | (55 967) | (57 522) | ||
Bank debt securities | (143 007) | (13 675) | ||
Other debt securities | (273 114) | 267 341 | ||
Derivative financial instruments | 86 645 | 80 312 | ||
Securities arising from trading activities | 35 628 | 118 480 | ||
Investment portfolio | 37 007 | 40 489 | ||
Loans and advances to customers | (1 195 731) | (2 088 959) | ||
Other loans and advances | (19 978) | 800 | ||
Securitised assets | 14 856 | 14 172 | ||
Other assets | 174 360 | 217 997 | ||
(1 229 997) | (749 706) | |||
Increase/(decrease) in operating liabilities | ||||
Deposits by banks | 145 570 | 674 020 | ||
Derivative financial instruments | (158 479) | (51 568) | ||
Other trading liabilities | (14 760) | (6 111) | ||
Repurchase agreements and cash collateral on securities lent | (15 299) | (2 529) | ||
Customer accounts | 828 030 | 2 216 220 | ||
Debt securities in issue | (198 632) | 45 593 | ||
Securitised liabilities | (14 276) | (12 396) | ||
Other liabilities | (147 145) | 171 988 | ||
425 009 | 3 035 217 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
At 31 March | 2023 | 2022 | ||
£’000 | ||||
Undrawn facilities | 2 345 034 | 1 956 967 | ||
Other commitments | 44 628 | 45 528 | ||
2 389 662 | 2 002 495 |
Carrying amount of pledged assets | Related liability | |||||||
At 31 March | 2023 | 2022 | 2023 | 2022 | ||||
£’000 | ||||||||
Pledged assets | ||||||||
Loans and advances to banks | 44 670 | 48 273 | 39 810 | 40 589 | ||||
Reverse repurchase agreements and cash collateral on securities borrowed | 115 421 | 188 428 | 103 278 | 184 548 | ||||
Sovereign debt securities | 224 019 | 43 138 | 164 287 | 41 914 | ||||
Bank debt securities | 28 432 | 8 168 | 21 721 | 7 937 | ||||
Securities arising from trading activities | 35 139 | 47 957 | 34 031 | 46 114 | ||||
Loans and advances to customers | 708 860 | 612 670 | 494 892 | 595 290 | ||||
Other loans and advances | 8 121 | 7 998 | 7 160 | 6 724 | ||||
1 164 662 | 956 632 | 865 179 | 923 116 | |||||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
At 31 March | 2023 | 2022 | ||
£’000 | ||||
Guarantees and assets pledged as collateral security: | ||||
Guarantees and irrevocable letters of credit | 502 251 | 464 110 | ||
502 251 | 464 110 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
At 31 March | 2023 | 2022 | ||
£’000 | ||||
Compensation of key management personnel and directors | ||||
Details of directors’ remuneration and interest in shares, including the disclosures required by IAS 24 | ||||
Related party transactions for the compensation of key management personnel and directors have been included in the section marked as audited in the Investec remuneration report 2023. | ||||
Transactions, arrangements and agreements involving directors and others: | ||||
Transactions, arrangements and agreements involving directors and with directors and connected persons and companies controlled by them, and with officers of the Company, were as follows: | ||||
Directors, key management and connected persons and companies controlled by them | ||||
Loans | ||||
At the beginning of the year | 14 443 | 8 946 | ||
Increase in loans | 6 217 | 6 728 | ||
Decrease in loans* | (4 636) | (1 231) | ||
At the end of the year | 16 024 | 14 443 | ||
Guarantees | ||||
At the beginning of the year | 78 | 1 951 | ||
Additional guarantees granted | 32 | 4 | ||
Decrease in guarantees* | — | (1 877) | ||
Exchange adjustments | (10) | — | ||
At the end of the year | 100 | 78 | ||
Deposits | ||||
At the beginning of the year | (12 902) | (14 231) | ||
Increase in deposits | (2 207) | (3 906) | ||
Decrease in deposits* | 4 192 | 5 235 | ||
At the end of the year | (10 917) | (12 902) |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
Investec Limited and subsidiaries | ||||
At 31 March | 2023 | 2022 | ||
£’000 | ||||
Balances with other related parties | ||||
Assets | ||||
Loans and advances to banks | 4 263 | 8 179 | ||
Derivative financial instruments | 473 | 158 | ||
Other assets | 6 086 | 7 694 | ||
Liabilities | ||||
Deposits by banks | 3 375 | 3 921 | ||
Derivative financial instruments | 3 534 | 3 373 | ||
Customer accounts (deposits) | 6 366 | 7 848 | ||
Repurchase agreements and cash collateral on securities lent | 20 208 | 16 331 | ||
Other liabilities | 309 | 10 458 | ||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
At 31 March | Description of financial instrument designated as hedging instrument (All included within derivative financial instruments on the balance sheet) | Notional value of hedging instrument | Fair value of hedging instrument | Cumulative fair value gains or (losses) on hedging instrument | Current year fair value gains or (losses) on hedging instrument | Cumulative fair value gains or (losses) on hedged item* | Current year fair value gains or (losses) on hedged item | |
£’000 | ||||||||
2023 | ||||||||
Assets | Interest rate swap | 2 486 101 | 181 173 | 187 307 | 108 415 | (158 293) | (96 153) | |
Liabilities | Interest rate swap | 5 591 029 | (97 127) | (97 240) | (57 321) | 95 899 | 56 206 | |
8 077 130 | 84 046 | 90 067 | 51 094 | (62 394) | (39 947) | |||
2022 | ||||||||
Assets | Interest rate swap | 3 439 311 | 93 874 | 99 731 | 119 195 | (97 852) | (118 836) | |
Liabilities | Interest rate swap | 2 455 015 | (66 619) | (66 619) | (66 952) | 66 460 | 66 764 | |
5 894 326 | 27 255 | 33 112 | 52 243 | (31 392) | (52 072) |
Carrying amount of hedged item | ||||
At 31 March | 2023 | 2022 | ||
£’000 | ||||
Hedged items | ||||
Assets | ||||
Sovereign debt securities | 61 468 | 64 816 | ||
Other debt securities | 15 363 | 2 977 | ||
Loans and advances to customers | 2 152 411 | 3 250 658 | ||
Other assets* | 91 662 | 116 704 | ||
Liabilities | ||||
Debt securities in issue | 679 656 | 1 094 388 | ||
Customer accounts (deposits) | 4 501 412 | 951 517 | ||
Subordinated liabilities | 312 872 | 331 753 | ||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
At 31 March | Up to one month | One month to three months | Three months to six months | Six months to one year | One to five years | Greater than five years | Total | |
£’000 | ||||||||
Maturity analysis of hedged items | ||||||||
2023 | ||||||||
Assets – notionals | ||||||||
Sovereign debt securities | — | — | — | — | 65 000 | — | 65 000 | |
Other debt securities | — | — | — | — | 4 490 | 11 234 | 15 724 | |
Loans and advances to customers | 165 | 9 469 | 25 555 | 52 874 | 839 971 | 1 382 532 | 2 310 566 | |
Other assets* | 2 765 | 5 545 | 8 388 | 17 052 | 57 912 | — | 91 662 | |
Liabilities – notionals | ||||||||
Debt securities in issue | — | — | — | — | 526 883 | 200 000 | 726 883 | |
Customer accounts (deposits) | 275 634 | 343 652 | 690 451 | 2 784 016 | 420 393 | — | 4 514 146 | |
Subordinated liabilities | — | — | — | — | — | 350 000 | 350 000 | |
2022 | ||||||||
Assets – notionals | ||||||||
Sovereign debt securities | — | — | — | — | 38 000 | 32 000 | 70 000 | |
Other debt securities | — | — | — | — | 2 992 | — | 2 992 | |
Loans and advances to customers | 386 | 31 147 | 41 597 | 112 067 | 2 591 214 | 474 877 | 3 251 288 | |
Other assets* | 2 496 | 5 001 | 7 564 | 15 383 | 86 260 | — | 116 704 | |
Liabilities – notionals | ||||||||
Debt securities in issue | — | 200 000 | — | 13 857 | 585 623 | 350 000 | 1 149 480 | |
Customer accounts (deposits) | — | — | 230 000 | 723 001 | 2 533 | — | 955 534 | |
Subordinated liabilities | — | — | — | — | 350 000 | — | 350 000 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
At 31 March | Demand | Up to one month | One month to three months | Three months to six months | Six months to one year | One year to five years | Greater than five years | Total | |
£’000 | |||||||||
2023 | |||||||||
Liabilities | |||||||||
Deposits by banks | 348 445 | 14 387 | 6 414 | 26 652 | 44 507 | 1 918 353 | — | 2 358 758 | |
Derivative financial instruments | 175 712 | 31 595 | 78 615 | 74 315 | 126 099 | 229 550 | 19 203 | 735 089 | |
Derivative financial instruments – held for trading | 165 152 | — | — | — | — | — | — | 165 152 | |
Derivative financial instruments – held for hedging risk | 10 560 | 31 595 | 78 615 | 74 315 | 126 099 | 229 550 | 19 203 | 569 937 | |
Other trading liabilities | 28 184 | — | — | — | — | — | — | 28 184 | |
Repurchase agreements and cash collateral on securities lent | 41 194 | 43 875 | — | 54 461 | — | — | — | 139 530 | |
Customer accounts (deposits) | 6 463 001 | 837 966 | 4 417 730 | 3 044 016 | 3 301 016 | 1 246 483 | 34 | 19 310 246 | |
Debt securities in issue | — | 3 348 | 35 179 | 88 916 | 83 172 | 909 991 | 557 979 | 1 678 585 | |
Liabilities arising on securitisation of other assets | — | — | 5 920 | 159 | 9 607 | 49 555 | 34 532 | 99 773 | |
Other liabilities | 40 059 | 488 904 | 14 198 | 34 926 | 37 347 | 29 531 | 6 971 | 651 936 | |
Subordinated liabilities | — | — | 7 963 | 2 975 | 9 188 | 246 400 | 855 312 | 1 121 838 | |
Total on-balance sheet liabilities | 7 096 595 | 1 420 075 | 4 566 019 | 3 326 420 | 3 610 936 | 4 629 863 | 1 474 031 | 26 123 939 | |
Contingent liabilities | — | 91 | 90 777 | 2 794 | 10 024 | 320 301 | 78 264 | 502 251 | |
Commitments | 167 414 | 72 597 | 55 524 | 167 819 | 218 945 | 1 382 284 | 400 955 | 2 465 538 | |
Total liabilities | 7 264 009 | 1 492 763 | 4 712 320 | 3 497 033 | 3 839 905 | 6 332 448 | 1 953 250 | 29 091 728 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
At 31 March | Demand | Up to one month | One month to three months | Three months to six months | Six months to one year | One year to five years | Greater than five years | Total | |
£’000 | |||||||||
2022 | |||||||||
Liabilities | |||||||||
Deposits by banks | 368 416 | 2 413 | — | 4 858 | 16 686 | 1 734 261 | — | 2 126 634 | |
Derivative financial instruments | 170 207 | 37 722 | 138 148 | 83 427 | 203 310 | 228 740 | 1 945 | 863 499 | |
Derivative financial instruments – held for trading | 129 465 | — | — | — | — | — | — | 129 465 | |
Derivative financial instruments – held for hedging risk | 40 742 | 37 722 | 138 148 | 83 427 | 203 310 | 228 740 | 1 945 | 734 034 | |
Other trading liabilities | 42 944 | — | — | — | — | — | — | 42 944 | |
Repurchase agreements and cash collateral on securities lent | 42 092 | 61 637 | — | — | — | 51 099 | — | 154 828 | |
Customer accounts (deposits) | 7 940 372 | 614 090 | 3 506 209 | 3 303 112 | 1 991 948 | 970 828 | 18 146 | 18 344 705 | |
Debt securities in issue | — | 9 092 | 224 871 | 62 234 | 61 870 | 1 062 749 | 365 229 | 1 786 045 | |
Liabilities arising on securitisation of other assets | — | — | 3 459 | 3 322 | 6 632 | 43 125 | 62 856 | 119 394 | |
Other liabilities* | 77 822 | 641 466 | 18 073 | 10 737 | 49 861 | 6 735 | 9 396 | 814 090 | |
Subordinated liabilities | — | — | — | 17 850 | 9 188 | 108 150 | 851 638 | 986 826 | |
Total on-balance sheet liabilities | 8 641 853 | 1 366 420 | 3 890 760 | 3 485 540 | 2 339 495 | 4 205 687 | 1 309 210 | 25 238 965 | |
Contingent liabilities | 928 | 620 | 63 985 | 4 038 | 78 428 | 222 312 | 93 799 | 464 110 | |
Commitments | 170 177 | 116 393 | 73 050 | 108 002 | 202 980 | 1 084 019 | 378 336 | 2 132 957 | |
Total liabilities | 8 812 958 | 1 483 433 | 4 027 795 | 3 597 580 | 2 620 903 | 5 512 018 | 1 781 345 | 27 836 032 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
Interest | ||||||
Principal activity | Country of incorporation | 2023 | 2022 | |||
At 31 March | ||||||
Direct subsidiaries of Investec plc | ||||||
Investec 1 Limited | Investment holding | England and Wales | 100% | 100% | ||
Indirect subsidiaries of Investec plc | ||||||
Investec Asset Finance PLC | Leasing | England and Wales | 100% | 100% | ||
Investec Bank plc | Investment holding | England and Wales | 100% | 100% | ||
Investec Bank (Channel Islands) Limited | Banking institution | Guernsey | 100% | 100% | ||
Investec Bank (Switzerland) AG | Banking institution and wealth manager | Switzerland | 100% | 100% | ||
Investec Group Investments (UK) Limited | Investment holding | England and Wales | 100% | 100% | ||
Investec Holdings Australia Pty Limited | Holding company | Australia | 100% | 100% | ||
Investec Investments (UK) Limited | Investment holding | England and Wales | 100% | 100% | ||
Investec Europe Limited | MiFiD Firm | Ireland | 100% | 100% | ||
Investec Securities (US) LLC | Financial services | USA | 100% | 100% | ||
Investec Wealth & Investment Limited | Investment management services | England and Wales | 100% | 100% | ||
Name of principal structured entity | Type of structured entity |
Cavern Funding 2020 plc | Securitised auto receivables |
Landmark Mortgage Securities No. 2 plc | Securitised residential mortgages |
Tamarin Securities Limited | Structured debt and loan portfolios |
Temese Funding 2 plc | Securitised receivables |
Yorker Trust | Structured debt and loan portfolios |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
Type of structured entity | Nature and purpose | Interest held by the Group/income earned | |
Aircraft investment funds | To generate fees from managing assets on behalf of third party investors | Investments in units issued by the fund | |
These vehicles are financed through the issue of units to investors | Management fees |
At 31 March 2023 | Line on the balance sheet | Carrying value £'000 | Maximum exposure to loss | Income earned from structured entity | £'000 | ||
£’000 | |||||||
Aircraft investment funds | Investment portfolio | 21 164 | Limited to the carrying value | Investment income | 2 832 |
At 31 March 2022 | Line on the balance sheet | Carrying value £'000 | Maximum exposure to loss | Income earned from structured entity | £'000 | ||
£’000 | |||||||
Aircraft investment funds | Investment portfolio | 15 297 | Limited to the carrying value | Investment income | 1 782 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
Type of structured entity | Nature and purpose | Interest held by the Group/income earned | |
Investment funds | To generate fees from managing assets on behalf of third party investors | Investments in units issued by the fund | |
These vehicles are financed through the issue of units to investors | Management fees | ||
Residential mortgage securitisations | To generate a return for investors by providing exposure to residential mortgage risk | Investments in notes | |
These vehicles are financed through the issue of notes to investors |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
Amounts subject to enforceable netting arrangements | ||||||||||
Effects of offsetting on-balance sheet | Related amounts not offset* | |||||||||
At 31 March | Gross amounts | Amounts offset | Net amounts reported on the balance sheet | Financial instruments (including non- cash collateral) | Cash collateral | Net amount | ||||
£’000 | ||||||||||
2023 | ||||||||||
Assets | ||||||||||
Cash and balances at central banks | 5 400 401 | — | 5 400 401 | — | — | 5 400 401 | ||||
Loans and advances to banks | 893 297 | — | 893 297 | — | (42 365) | 850 932 | ||||
Reverse repurchase agreements and cash collateral on securities borrowed | 1 338 699 | — | 1 338 699 | (18 976) | (51 104) | 1 268 619 | ||||
Sovereign debt securities | 1 221 744 | — | 1 221 744 | — | — | 1 221 744 | ||||
Bank debt securities | 204 691 | — | 204 691 | — | — | 204 691 | ||||
Other debt securities | 697 275 | — | 697 275 | — | — | 697 275 | ||||
Derivative financial instruments | 634 123 | — | 634 123 | (202 876) | (265 816) | 165 431 | ||||
Securities arising from trading activities | 127 537 | — | 127 537 | (33 902) | — | 93 635 | ||||
Investment portfolio | 489 204 | — | 489 204 | — | — | 489 204 | ||||
Loans and advances to customers | 15 567 809 | — | 15 567 809 | — | — | 15 567 809 | ||||
Other loans and advances | 142 626 | — | 142 626 | — | (4 959) | 137 667 | ||||
Other securitised assets | 78 231 | — | 78 231 | — | — | 78 231 | ||||
Other assets | 965 449 | — | 965 449 | — | — | 965 449 | ||||
27 761 086 | — | 27 761 086 | (255 754) | (364 244) | 27 141 088 | |||||
Liabilities | ||||||||||
Deposits by banks | 2 172 171 | — | 2 172 171 | — | (315 023) | 1 857 148 | ||||
Derivative financial instruments | 704 816 | — | 704 816 | (202 877) | (41 080) | 460 859 | ||||
Other trading liabilities | 28 184 | — | 28 184 | (10 337) | — | 17 847 | ||||
Repurchase agreements and cash collateral on securities lent | 139 529 | — | 139 529 | (20 986) | (6 244) | 112 299 | ||||
Customer accounts (deposits) | 19 121 921 | — | 19 121 921 | — | (1 897) | 19 120 024 | ||||
Debt securities in issue | 1 449 545 | — | 1 449 545 | (21 554) | — | 1 427 991 | ||||
Liabilities arising on securitisation of other assets | 81 609 | — | 81 609 | — | — | 81 609 | ||||
Other liabilities | 1 232 729 | — | 1 232 729 | — | — | 1 232 729 | ||||
Subordinated liabilities | 731 483 | — | 731 483 | — | — | 731 483 | ||||
25 661 987 | — | 25 661 987 | (255 754) | (364 244) | 25 041 989 | |||||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
Amounts subject to enforceable netting arrangements | ||||||||||
Effects of offsetting on-balance sheet | Related amounts not offset* | |||||||||
At 31 March | Gross amounts | Amounts offset | Net amounts reported on the balance sheet | Financial instruments (including non- cash collateral) | Cash collateral | Net amount | ||||
£’000 | ||||||||||
2022 | ||||||||||
Assets | ||||||||||
Cash and balances at central banks | 5 379 994 | — | 5 379 994 | — | — | 5 379 994 | ||||
Loans and advances to banks | 1 467 770 | — | 1 467 770 | — | (45 950) | 1 421 820 | ||||
Reverse repurchase agreements and cash collateral on securities borrowed | 1 447 473 | — | 1 447 473 | (89 970) | (15 538) | 1 341 965 | ||||
Sovereign debt securities | 1 165 777 | — | 1 165 777 | — | — | 1 165 777 | ||||
Bank debt securities | 61 714 | — | 61 714 | — | — | 61 714 | ||||
Other debt securities | 427 761 | — | 427 761 | — | — | 427 761 | ||||
Derivative financial instruments | 693 133 | — | 693 133 | (272 446) | (209 749) | 210 938 | ||||
Securities arising from trading activities | 163 165 | — | 163 165 | (46 114) | — | 117 051 | ||||
Investment portfolio | 694 324 | — | 694 324 | — | — | 694 324 | ||||
Loans and advances to customers | 14 426 475 | — | 14 426 475 | — | — | 14 426 475 | ||||
Other loans and advances | 122 717 | — | 122 717 | — | (5 930) | 116 787 | ||||
Other securitised assets | 93 087 | — | 93 087 | — | — | 93 087 | ||||
Other assets | 1 139 439 | — | 1 139 439 | — | — | 1 139 439 | ||||
27 282 829 | — | 27 282 829 | (408 530) | (277 167) | 26 597 132 | |||||
Liabilities | ||||||||||
Deposits by banks | 2 026 601 | — | 2 026 601 | — | (215 054) | 1 811 547 | ||||
Derivative financial instruments | 863 295 | — | 863 295 | (298 340) | (47 482) | 517 473 | ||||
Other trading liabilities | 42 944 | — | 42 944 | (38 287) | — | 4 657 | ||||
Repurchase agreements and cash collateral on securities lent | 154 828 | — | 154 828 | (25 761) | (4 348) | 124 719 | ||||
Customer accounts (deposits) | 18 293 891 | — | 18 293 891 | — | (10 233) | 18 283 658 | ||||
Debt securities in issue | 1 648 177 | — | 1 648 177 | (46 142) | (50) | 1 601 985 | ||||
Liabilities arising on securitisation of other assets | 95 885 | — | 95 885 | — | — | 95 885 | ||||
Other liabilities | 1 379 327 | — | 1 379 327 | — | — | 1 379 327 | ||||
Subordinated liabilities | 758 739 | — | 758 739 | — | — | 758 739 | ||||
25 263 687 | — | 25 263 687 | (408 530) | (277 167) | 24 577 990 | |||||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
2023 | 2022 | |||||
No derecognition achieved | Carrying amount of assets that continue to be recognised | Carrying amount of associated liabilities | Carrying amount of assets that continue to be recognised | Carrying amount of associated liabilities | ||
£’000 | ||||||
Loans and advances to customers | 1 613 838 | — | 730 310 | — | ||
Loans and advances to banks | 80 799 | — | 53 192 | — | ||
1 694 637 | — | 783 502 | — | |||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO THE FINANCIAL STATEMENTS CONTINUED | |||||
Credit and counterparty risk governance structure |
Credit and counterparty risk appetite |
Concentration risk |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT | |||||
Country risk |
ESG risk |
detail. |
Climate, nature and biodiversity risk |
Stress testing and portfolio management |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
An analysis of gross core loans, asset quality and ECL |
£’million | 31 March 2023 | 31 March 2022 | ||
Gross core loans | 15 709 | 14 557 | ||
Gross core loans at FVPL | 551 | 609 | ||
Gross core loans subject to ECL* | 15 158 | 13 948 | ||
Stage 1 | 13 494 | 12 665 | ||
Stage 2 | 1 321 | 992 | ||
of which past due greater than 30 days | 35 | 28 | ||
Stage 3 | 343 | 291 | ||
ECL | (146) | (134) | ||
Stage 1 | (39) | (32) | ||
Stage 2 | (32) | (35) | ||
Stage 3 | (75) | (67) | ||
Coverage ratio | ||||
Stage 1 | 0.29% | 0.25% | ||
Stage 2 | 2.4% | 3.5% | ||
Stage 3 | 21.9% | 23.0% | ||
Credit loss ratio | 0.37% | 0.17% | ||
ECL impairment charges on core loans | (54) | (22) | ||
Average gross core loans subject to ECL | 14 553 | 12 969 | ||
An analysis of Stage 3 gross core loans subject to ECL | ||||
Stage 3 net of ECL | 268 | 224 | ||
Aggregate collateral and other credit enhancements on Stage 3 | 280 | 230 | ||
Stage 3 as a % of gross core loans subject to ECL | 2.3% | 2.1% | ||
Stage 3 net of ECL as a % of net core loans subject to ECL | 1.8% | 1.6% |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
An analysis of staging and ECL movements for core loans subject to ECL |
Stage 1 | Stage 2 | Stage 3 | Total | |||||||
£’million | Gross exposure | ECL | Gross exposure | ECL | Gross exposure | ECL | Gross exposure | ECL | ||
At 31 March 2021 | 10 415 | (27) | 1 242 | (42) | 332 | (101) | 11 989 | (170) | ||
Transfer from Stage 1 | (433) | 1 | 379 | (1) | 54 | — | — | — | ||
Transfer from Stage 2 | 397 | (6) | (473) | 8 | 76 | (2) | — | — | ||
Transfer from Stage 3 | 1 | — | 3 | — | (4) | — | — | — | ||
ECL remeasurement arising from transfer of stage | — | 3 | — | (3) | — | (9) | — | (9) | ||
New lending net of repayments (includes assets written off) | 2 253 | (3) | (163) | 5 | (167) | 45 | 1 923 | 47 | ||
Changes to risk parameters and models | — | — | — | (2) | — | — | — | (2) | ||
Foreign exchange and other | 32 | — | 4 | — | — | — | 36 | — | ||
At 31 March 2022 | 12 665 | (32) | 992 | (35) | 291 | (67) | 13 948 | (134) | ||
Transfer from Stage 1 | (774) | 4 | 678 | (4) | 96 | — | — | — | ||
Transfer from Stage 2 | 226 | (2) | (282) | 3 | 56 | (1) | — | — | ||
Transfer from Stage 3 | 3 | — | 4 | — | (7) | — | — | — | ||
ECL remeasurement arising from transfer of stage | — | 2 | — | (7) | — | (16) | — | (21) | ||
New lending net of repayments (includes assets written off) | 1 297 | (12) | (81) | — | (94) | 10 | 1 122 | (2) | ||
Changes to risk parameters and models | — | 1 | — | 11 | — | — | — | 12 | ||
Foreign exchange and other | 77 | — | 10 | — | 1 | (1) | 88 | (1) | ||
At 31 March 2023 | 13 494 | (39) | 1 321 | (32) | 343 | (75) | 15 158 | (146) | ||
An analysis of gross core loans by country of exposure |
31 March 2023 | 31 March 2022 | |
£15 709 million | £14 557 million |
United Kingdom | 83.6% | United Kingdom | 83.3% | |||
Europe (excluding UK) | 8.8% | Europe (excluding UK) | 8.2% | |||
North America | 5.2% | North America | 5.4% | |||
Asia | 1.4% | Asia | 1.5% | |||
Other | 0.6% | Other | 0.7% | |||
Australia | 0.4% | Australia | 0.9% |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
An analysis of credit quality by internal rating grade |
PD range | Investec internal rating scale | Indicative external rating scale | ||
less than 0.538% | IB01 – IB12 | AAA to BBB- | ||
0.538% - 6.089% | IB13 – IB19 | BB+ to B- | ||
greater than 6.089% | IB20 – IB25 | B- and below | ||
Stage 3 | D |
At 31 March 2023 | IB01-IB12 | IB13-IB19 | IB20-IB25 | Stage 3 | Total | ||
£’million | |||||||
Gross core loans subject to ECL | 8 816 | 5 850 | 149 | 343 | 15 158 | ||
Stage 1 | 8 460 | 4 996 | 38 | — | 13 494 | ||
Stage 2 | 356 | 854 | 111 | — | 1 321 | ||
Stage 3 | — | — | — | 343 | 343 | ||
ECL | (12) | (50) | (9) | (75) | (146) | ||
Stage 1 | (10) | (28) | (1) | — | (39) | ||
Stage 2 | (2) | (22) | (8) | — | (32) | ||
Stage 3 | — | — | — | (75) | (75) | ||
Coverage ratio | 0.1% | 0.9% | 6.0% | 21.9% | 1.0% |
At 31 March 2022 | IB01-IB12 | IB13-IB19 | IB20-IB25 | Stage 3 | Total | ||
£’million | |||||||
Gross core loans subject to ECL | 7 925 | 5 542 | 190 | 291 | 13 948 | ||
Stage 1 | 7 643 | 4 934 | 88 | — | 12 665 | ||
Stage 2 | 282 | 608 | 102 | — | 992 | ||
Stage 3 | — | — | — | 291 | 291 | ||
ECL | (9) | (46) | (12) | (67) | (134) | ||
Stage 1 | (6) | (25) | (1) | — | (32) | ||
Stage 2 | (3) | (21) | (11) | — | (35) | ||
Stage 3 | — | — | — | (67) | (67) | ||
Coverage ratio | 0.1% | 0.8% | 6.3% | 23.0% | 1.0% |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
An analysis of core loans by risk category – Lending collateralised by property |
Gross core loans at amortised cost and FVOCI | Gross core loans at FVPL | Gross core loans | |||||||||||
Stage 1 | Stage 2 | Stage 3 | Total | ||||||||||
£’million | Gross exposure | ECL | Gross exposure | ECL | Gross exposure | ECL | Gross exposure | ECL | |||||
At 31 March 2023 | |||||||||||||
Commercial real estate | 1 241 | (6) | 231 | (8) | 76 | (16) | 1 548 | (30) | 43 | 1 591 | |||
Commercial real estate – investment | 920 | (4) | 212 | (8) | 70 | (13) | 1 202 | (25) | 40 | 1 242 | |||
Commercial real estate – development | 308 | (2) | 13 | — | — | — | 321 | (2) | 3 | 324 | |||
Commercial vacant land and planning | 13 | — | 6 | — | 6 | (3) | 25 | (3) | — | 25 | |||
Residential real estate | 611 | (2) | 112 | (4) | 45 | (18) | 768 | (24) | 37 | 805 | |||
Residential real estate – investment | 359 | (1) | 39 | (2) | 11 | (1) | 409 | (4) | 35 | 444 | |||
Residential real estate – development | 244 | (1) | 69 | (1) | 9 | (3) | 322 | (5) | — | 322 | |||
Residential vacant land and planning | 8 | — | 4 | (1) | 25 | (14) | 37 | (15) | 2 | 39 | |||
Total lending collateralised by property | 1 852 | (8) | 343 | (12) | 121 | (34) | 2 316 | (54) | 80 | 2 396 | |||
Coverage ratio | 0.43% | 3.5% | 28.1% | 2.3% | |||||||||
At 31 March 2022 | |||||||||||||
Commercial real estate | 1 334 | (3) | 152 | (6) | 105 | (21) | 1 591 | (30) | 46 | 1 637 | |||
Commercial real estate – investment | 1 104 | (2) | 108 | (4) | 99 | (18) | 1 311 | (24) | 42 | 1 353 | |||
Commercial real estate – development | 222 | (1) | 38 | (1) | — | — | 260 | (2) | 4 | 264 | |||
Commercial vacant land and planning | 8 | — | 6 | (1) | 6 | (3) | 20 | (4) | — | 20 | |||
Residential real estate | 676 | (2) | 3 | — | 34 | (16) | 713 | (18) | 29 | 742 | |||
Residential real estate – investment | 394 | (1) | 3 | — | 4 | (1) | 401 | (2) | 27 | 428 | |||
Residential real estate – development | 276 | (1) | — | — | 6 | (3) | 282 | (4) | — | 282 | |||
Residential vacant land and planning | 6 | — | — | — | 24 | (12) | 30 | (12) | 2 | 32 | |||
Total lending collateralised by property | 2 010 | (5) | 155 | (6) | 139 | (37) | 2 304 | (48) | 75 | 2 379 | |||
Coverage ratio | 0.25% | 3.9% | 26.6% | 2.1% | |||||||||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
An analysis of core loans by risk category – High net worth and other private client lending |
Gross core loans at amortised cost and FVOCI | Gross core loans at FVPL | Gross core loans | |||||||||||
Stage 1 | Stage 2 | Stage 3 | Total | ||||||||||
£’million | Gross exposure | ECL | Gross exposure | ECL | Gross exposure | ECL | Gross exposure | ECL | |||||
At 31 March 2023 | |||||||||||||
Mortgages | 4 480 | (2) | 128 | — | 64 | (7) | 4 672 | (9) | 25 | 4 697 | |||
Other high net worth lending | 863 | (2) | 36 | (1) | 20 | (6) | 919 | (9) | 3 | 922 | |||
Total high net worth and other private client lending | 5 343 | (4) | 164 | (1) | 84 | (13) | 5 591 | (18) | 28 | 5 619 | |||
Coverage ratio | 0.07% | 0.6% | 15.5% | 0.3% | |||||||||
At 31 March 2022 | |||||||||||||
Mortgages | 3 995 | (1) | 86 | — | 57 | (4) | 4 138 | (5) | 25 | 4 163 | |||
Other high net worth lending | 938 | (2) | 42 | (1) | 6 | (2) | 986 | (5) | 3 | 989 | |||
Total high net worth and other private client lending | 4 933 | (3) | 128 | (1) | 63 | (6) | 5 124 | (10) | 28 | 5 152 | |||
Coverage ratio | 0.06% | 0.8% | 9.5% | 0.2% | |||||||||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
An analysis of core loans by risk category – Corporate and other lending |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
Gross core loans at amortised cost and FVOCI | Gross core loans at FVPL | Gross core loans | ||||||||
Stage 1 | Stage 2 | Stage 3 | Total | |||||||
£’million | Gross exposure | ECL | Gross exposure | ECL | Gross exposure | ECL | Gross exposure | ECL | ||
At 31 March 2023 | ||||||||||
Corporate and acquisition finance | 1 794 | (9) | 212 | (5) | 53 | (7) | 2 059 | (21) | 125 | 2 184 |
Asset-based lending | 271 | (1) | 44 | — | — | — | 315 | (1) | — | 315 |
Fund finance | 1 359 | (1) | 33 | — | — | — | 1 392 | (1) | 75 | 1 467 |
Other corporate and financial institutions and governments | 391 | (2) | 70 | (1) | 4 | (1) | 465 | (4) | 32 | 497 |
Small ticket asset finance | 1 142 | (9) | 279 | (6) | 30 | (11) | 1 451 | (26) | — | 1 451 |
Motor finance | 905 | (3) | 46 | (3) | 8 | (3) | 959 | (9) | — | 959 |
Aviation finance | 115 | (1) | 32 | (1) | — | — | 147 | (2) | 176 | 323 |
Power and infrastructure finance | 322 | (1) | 98 | (3) | 43 | (6) | 463 | (10) | 35 | 498 |
Total corporate and other lending | 6 299 | (27) | 814 | (19) | 138 | (28) | 7 251 | (74) | 443 | 7 694 |
Coverage ratio | 0.43% | 2.3% | 20.3% | 1.0% | ||||||
At 31 March 2022 | ||||||||||
Corporate and acquisition finance | 1 528 | (7) | 207 | (13) | 10 | (1) | 1 745 | (21) | 125 | 1 870 |
Asset-based lending | 352 | (1) | 27 | — | — | — | 379 | (1) | 12 | 391 |
Fund finance | 1 194 | (1) | 18 | — | — | — | 1 212 | (1) | 44 | 1 256 |
Other corporate and financial institutions and governments | 379 | (2) | 37 | (2) | 3 | (1) | 419 | (5) | 11 | 430 |
Small ticket asset finance | 1 183 | (8) | 242 | (7) | 29 | (18) | 1 454 | (33) | — | 1 454 |
Motor finance | 628 | (2) | 121 | (3) | 6 | (2) | 755 | (7) | — | 755 |
Aviation finance | 96 | (1) | 10 | (1) | — | — | 106 | (2) | 244 | 350 |
Power and infrastructure finance | 362 | (2) | 47 | (2) | 41 | (2) | 450 | (6) | 70 | 520 |
Total corporate and other lending | 5 722 | (24) | 709 | (28) | 89 | (24) | 6 520 | (76) | 506 | 7 026 |
Coverage ratio | 0.42% | 3.9% | 27.0% | 1.2% | ||||||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
An analysis of gross credit and counterparty exposures |
£’million | 31 March 2023 | 31 March 2022 | ||
Cash and balances at central banks | 5 400 | 5 380 | ||
Loans and advances to banks | 893 | 1 468 | ||
Reverse repurchase agreements and cash collateral on securities borrowed | 1 339 | 1 447 | ||
Sovereign debt securities | 1 222 | 1 166 | ||
Bank debt securities | 205 | 62 | ||
Other debt securities | 698 | 433 | ||
Derivative financial instruments | 528 | 645 | ||
Securities arising from trading activities | 28 | 26 | ||
Loans and advances to customers | 15 709 | 14 557 | ||
Other loans and advances | 143 | 123 | ||
Other securitised assets | 5 | 6 | ||
Other assets | 38 | 116 | ||
Total on-balance sheet exposures | 26 208 | 25 429 | ||
Guarantees | 118 | 138 | ||
Committed facilities related to loans and advances to customers | 2 345 | 1 957 | ||
Contingent liabilities, letters of credit and other | 384 | 326 | ||
Total off-balance sheet exposures | 2 847 | 2 421 | ||
Total gross credit and counterparty exposures | 29 055 | 27 850 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
At 31 March 2023 | Total gross credit and counterparty exposure | of which FVPL | of which amortised cost and FVOCI | ECL# | Assets that we deem to have no legal credit exposure | Total assets | ||
£’million | ||||||||
Cash and balances at central banks | 5 400 | — | 5 400 | — | — | 5 400 | ||
Loans and advances to banks | 893 | — | 893 | — | — | 893 | ||
Reverse repurchase agreements and cash collateral on securities borrowed | 1 339 | 346 | 993 | — | — | 1 339 | ||
Sovereign debt securities | 1 222 | 24 | 1 198 | — | — | 1 222 | ||
Bank debt securities | 205 | — | 205 | — | — | 205 | ||
Other debt securities | 698 | 94 | 604 | (1) | — | 697 | ||
Derivative financial instruments | 528 | 528 | — | — | 106 | 634 | ||
Securities arising from trading activities | 28 | 28 | — | — | 100 | 128 | ||
Investment portfolio | — | — | — | — | 489* | 489 | ||
Loans and advances to customers | 15 709 | 551 | 15 158 | (146) | — | 15 563 | ||
Other loans and advances | 143 | — | 143 | — | — | 143 | ||
Other securitised assets | 5 | 5 | — | — | 73ˆ | 78 | ||
Interest in associated undertakings and joint venture holdings | — | — | — | — | 52 | 52 | ||
Deferred taxation assets | — | — | — | — | 112 | 112 | ||
Current taxation assets | — | — | — | — | 34 | 34 | ||
Other assets | 38 | — | 38 | — | 927** | 965 | ||
Property and equipment | — | — | — | — | 121 | 121 | ||
Goodwill | — | — | — | — | 255 | 255 | ||
Software | — | — | — | — | 9 | 9 | ||
Other acquired intangible assets | — | — | — | — | 41 | 41 | ||
Total on-balance sheet exposures | 26 208 | 1 576 | 24 632 | (147) | 2 319 | 28 380 | ||
Guarantees | 118 | — | 118 | — | — | 118 | ||
Committed facilities related to loans and advances to customers | 2 345 | 147 | 2 198 | (13) | — | 2 332 | ||
Contingent liabilities, letters of credit and other | 384 | — | 384 | (2) | 121 | 503 | ||
Total off-balance sheet exposures | 2 847 | 147 | 2 700 | (15) | 121 | 2 953 | ||
Total exposures | 29 055 | 1 723 | 27 332 | (162) | 2 440 | 31 333 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
A further analysis of gross credit and counterparty exposures (continued) |
At 31 March 2022 | Total gross credit and counterparty exposure | of which FVPL | of which amortised cost and FVOCI | ECL# | Assets that we deem to have no legal credit exposure | Total assets |
£’million | ||||||
Cash and balances at central banks | 5 380 | — | 5 380 | — | — | 5 380 |
Loans and advances to banks | 1 468 | — | 1 468 | — | — | 1 468 |
Reverse repurchase agreements and cash collateral on securities borrowed | 1 447 | 669 | 778 | — | — | 1 447 |
Sovereign debt securities | 1 166 | 34 | 1 132 | — | — | 1 166 |
Bank debt securities | 62 | — | 62 | — | — | 62 |
Other debt securities | 433 | 144 | 289 | (5) | — | 428 |
Derivative financial instruments | 645 | 645 | — | — | 48 | 693 |
Securities arising from trading activities | 26 | 26 | — | — | 137 | 163 |
Investment portfolio | — | — | — | — | 694* | 694 |
Loans and advances to customers | 14 557 | 609 | 13 948 | (134) | — | 14 423 |
Other loans and advances | 123 | — | 123 | — | — | 123 |
Other securitised assets | 6 | 6 | — | — | 87ˆ | 93 |
Interest in associated undertakings and joint venture holdings | — | — | — | — | 67 | 67 |
Deferred taxation assets | — | — | — | — | 110 | 110 |
Current taxation assets | — | — | — | — | 33 | 33 |
Other assets | 116 | — | 116 | — | 1 023** | 1 139 |
Property and equipment | — | — | — | — | 155 | 155 |
Goodwill | — | — | — | — | 250 | 250 |
Software | — | — | — | — | 7 | 7 |
Other acquired intangible assets | — | — | — | — | 41 | 41 |
Total on-balance sheet exposures | 25 429 | 2 133 | 23 296 | (139) | 2 652 | 27 942 |
Guarantees | 138 | — | 138 | — | — | 138 |
Committed facilities related to loans and advances to customers | 1 957 | 53 | 1 904 | (7) | — | 1 950 |
Contingent liabilities, letters of credit and other | 326 | — | 326 | (1) | 181 | 506 |
Total off-balance sheet exposures | 2 421 | 53 | 2 368 | (8) | 181 | 2 594 |
Total exposures | 27 850 | 2 186 | 25 664 | (147) | 2 833 | 30 536 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
Gross credit and counterparty exposures by residual contractual maturity |
At 31 March 2023 | Up to three months | Three to six months | Six months to one year | One to five years | Five to 10 years | >10 years | Total | ||
£’million | |||||||||
Cash and balances at central banks | 5 400 | — | — | — | — | — | 5 400 | ||
Loans and advances to banks | 888 | — | — | 5 | — | — | 893 | ||
Reverse repurchase agreements and cash collateral on securities borrowed | 808 | 85 | 120 | 73 | — | 253 | 1 339 | ||
Sovereign debt securities | 488 | 338 | 153 | 196 | 25 | 22 | 1 222 | ||
Bank debt securities | 54 | — | 12 | 132 | 7 | — | 205 | ||
Other debt securities | 7 | 1 | 12 | 54 | 390 | 234 | 698 | ||
Derivative financial instruments | 88 | 58 | 118 | 234 | 25 | 5 | 528 | ||
Securities arising from trading activities | — | — | 1 | — | 11 | 16 | 28 | ||
Loans and advances to customers | 1 570 | 1 148 | 1 799 | 7 941 | 1 880 | 1 371 | 15 709 | ||
Other loans and advances | 8 | — | — | 65 | 58 | 12 | 143 | ||
Other securitised assets | — | — | — | — | — | 5 | 5 | ||
Other assets | 38 | — | — | — | — | — | 38 | ||
Total on-balance sheet exposures | 9 349 | 1 630 | 2 215 | 8 700 | 2 396 | 1 918 | 26 208 | ||
Guarantees | 92 | — | — | 26 | — | — | 118 | ||
Committed facilities related to loans and advances to customers | 63 | 151 | 221 | 1 482 | 410 | 18 | 2 345 | ||
Contingent liabilities, letters of credit and other | 88 | — | 5 | 262 | 29 | — | 384 | ||
Total off-balance sheet exposures | 243 | 151 | 226 | 1 770 | 439 | 18 | 2 847 | ||
Total gross credit and counterparty exposures | 9 592 | 1 781 | 2 441 | 10 470 | 2 835 | 1 936 | 29 055 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
Gross credit and counterparty exposures by industry |
High net worth and other professional individuals | Lending collateralised by property | Agriculture | Electricity, gas and water (utility services) | Public and non-business services | Business services | Finance and insurance | |
£’million | |||||||
At 31 March 2023 | |||||||
Cash and balances at central banks | — | — | — | — | 5 400 | — | — |
Loans and advances to banks | — | — | — | — | — | — | 893 |
Reverse repurchase agreements and cash collateral on securities borrowed | — | — | — | — | 253 | — | 1 086 |
Sovereign debt securities | — | — | — | — | 1 213 | — | 9 |
Bank debt securities | — | — | — | — | — | — | 205 |
Other debt securities | — | — | — | — | 6 | 15 | 561 |
Derivative financial instruments | — | — | 1 | 20 | — | 8 | 427 |
Securities arising from trading activities | — | — | — | — | — | 1 | 23 |
Loans and advances to customers | 5 619 | 2 396 | 17 | 513 | 232 | 1 275 | 2 157 |
Other loans and advances | — | — | — | — | — | — | 130 |
Other securitised assets | — | — | — | — | — | — | — |
Other assets | — | — | — | — | — | — | 29 |
Total on-balance sheet exposures | 5 619 | 2 396 | 18 | 533 | 7 104 | 1 299 | 5 520 |
Guarantees | 6 | — | — | 1 | — | — | 89 |
Committed facilities related to loans and advances to customers | 175 | 427 | — | 393 | 85 | 185 | 722 |
Contingent liabilities, letters of credit and other | — | — | — | 246 | — | 11 | 108 |
Total off-balance sheet exposures | 181 | 427 | — | 640 | 85 | 196 | 919 |
Total gross credit and counterparty exposures | 5 800 | 2 823 | 18 | 1 173 | 7 189 | 1 495 | 6 439 |
At 31 March 2022 | |||||||
Cash and balances at central banks | — | — | — | — | 5 380 | — | — |
Loans and advances to banks | — | — | — | — | — | — | 1 468 |
Reverse repurchase agreements and cash collateral on securities borrowed | — | — | — | — | 485 | — | 962 |
Sovereign debt securities | — | — | — | — | 1 166 | — | — |
Bank debt securities | — | — | — | — | — | — | 62 |
Other debt securities | — | — | — | 9 | 10 | 13 | 239 |
Derivative financial instruments | — | — | — | 32 | — | 2 | 469 |
Securities arising from trading activities | — | — | — | — | 3 | 2 | 16 |
Loans and advances to customers | 5 152 | 2 379 | 14 | 619 | 233 | 1 333 | 1 661 |
Other loans and advances | — | — | — | — | — | — | 112 |
Other securitised assets | — | — | — | — | — | — | — |
Other assets | — | — | — | — | — | — | 39 |
Total on-balance sheet exposures | 5 152 | 2 379 | 14 | 660 | 7 277 | 1 350 | 5 028 |
Guarantees | 7 | — | — | 11 | — | — | 97 |
Committed facilities related to loans and advances to customers | 131 | 436 | — | 262 | 66 | 205 | 596 |
Contingent liabilities, letters of credit and other | 18 | — | — | 191 | — | 8 | 104 |
Total off-balance sheet exposures | 156 | 436 | — | 464 | 66 | 213 | 797 |
Total gross credit and counterparty exposures | 5 308 | 2 815 | 14 | 1 124 | 7 343 | 1 563 | 5 825 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
Retailers and wholesalers | Manufacturing and commerce | Construction | Other residential mortgages | Corporate commercial real estate | Mining and resources | Leisure, entertainment and tourism | Transport | Motor finance | Com- munication | Total |
— | — | — | — | — | — | — | — | — | — | 5 400 |
— | — | — | — | — | — | — | — | — | — | 893 |
— | — | — | — | — | — | — | — | — | — | 1 339 |
— | — | — | — | — | — | — | — | — | — | 1 222 |
— | — | — | — | — | — | — | — | — | — | 205 |
— | — | — | 70 | — | — | — | 46 | — | — | 698 |
18 | 16 | 2 | — | 1 | 6 | — | 27 | — | 2 | 528 |
— | — | — | 4 | — | — | — | — | — | — | 28 |
293 | 803 | 139 | — | 119 | 136 | 76 | 645 | 959 | 330 | 15 709 |
— | 2 | — | 11 | — | — | — | — | — | — | 143 |
— | — | — | 5 | — | — | — | — | — | — | 5 |
— | — | — | — | — | — | — | — | — | 9 | 38 |
311 | 821 | 141 | 90 | 120 | 142 | 76 | 718 | 959 | 341 | 26 208 |
— | — | — | — | 3 | — | — | 19 | — | — | 118 |
12 | 119 | 4 | — | 8 | 4 | 3 | 15 | — | 193 | 2 345 |
— | 17 | — | — | — | — | 1 | 1 | — | — | 384 |
12 | 136 | 4 | — | 11 | 4 | 4 | 35 | — | 193 | 2 847 |
323 | 957 | 145 | 90 | 131 | 146 | 80 | 753 | 959 | 534 | 29 055 |
— | — | — | — | — | — | — | — | — | — | 5 380 |
— | — | — | — | — | — | — | — | — | — | 1 468 |
— | — | — | — | — | — | — | — | — | — | 1 447 |
— | — | — | — | — | — | — | — | — | — | 1 166 |
— | — | — | — | — | — | — | — | — | — | 62 |
— | — | — | 99 | — | — | — | 55 | — | 8 | 433 |
6 | 11 | — | — | — | 111 | 1 | 13 | — | — | 645 |
— | — | — | 5 | — | — | — | — | — | — | 26 |
285 | 797 | 110 | — | 123 | 96 | 85 | 656 | 755 | 259 | 14 557 |
— | — | — | 11 | — | — | — | — | — | — | 123 |
— | — | — | 6 | — | — | — | — | — | — | 6 |
20 | 1 | — | — | — | — | — | 53 | — | 3 | 116 |
311 | 809 | 110 | 121 | 123 | 207 | 86 | 777 | 755 | 270 | 25 429 |
2 | — | — | — | 3 | — | — | 18 | — | — | 138 |
7 | 104 | 7 | — | 40 | 32 | 2 | 9 | — | 60 | 1 957 |
— | — | — | — | — | 4 | — | 1 | — | — | 326 |
9 | 104 | 7 | — | 43 | 36 | 2 | 28 | — | 60 | 2 421 |
320 | 913 | 117 | 121 | 166 | 243 | 88 | 805 | 755 | 330 | 27 850 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
Internal credit rating models and ECL methodology |
Key judgements |
Macro-economic sensitivities |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
Forward-looking macro-economic scenarios |
£’billion |
Upside | Base case | |||
Downside 1 – inflation | Downside 2 – global shock |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
At 31 March 2023 average 2023 – 2028 | At 31 March 2022 average 2022 – 2027 | |||||||
Macro-economic scenarios | Upside | Base case | Downside 1 inflation | Downside 2 global shock | Upside | Base case | Downside 1 L-shape | Downside 2 fiscal crisis |
% | % | % | % | % | % | % | % | |
UK | ||||||||
GDP growth | 1.9 | 1.2 | (0.2) | 0.2 | 2.6 | 1.9 | 0.8 | 0.3 |
Unemployment rate | 3.6 | 4.6 | 5.4 | 6.8 | 3.3 | 3.7 | 5.4 | 6.4 |
CPI inflation | 2.5 | 2.2 | 5.8 | 2.1 | 2.4 | 3.1 | 3.2 | 1.6 |
House price growth | 2.1 | 0.5 | (1.7) | (4.6) | 3.5 | 2.9 | 1.5 | (3.6) |
BoE – Bank rate (end year) | 2.8 | 2.8 | 4.5 | 1.0 | 1.8 | 1.9 | 2.0 | (0.2) |
Euro area | ||||||||
GDP growth | 2.1 | 1.4 | 0.1 | 0.2 | 2.8 | 2.1 | 1.1 | 0.1 |
US | ||||||||
GDP growth | 2.6 | 1.5 | 0.6 | 0.5 | 3.1 | 2.1 | 1.4 | 0.6 |
Scenario weightings | 10 | 50 | 20 | 20 | 10 | 45 | 30 | 15 |
Base case % | Financial years | ||||
2023/2024 | 2024/2025 | 2025/2026 | 2026/2027 | 2027/2028 | |
UK | |||||
GDP growth | (0.3) | 1.4 | 1.8 | 1.6 | 1.6 |
Unemployment rate | 4.7 | 5.0 | 4.6 | 4.4 | 4.3 |
CPI inflation | 3.6 | 1.4 | 1.9 | 2.0 | 2.0 |
House price growth | (5.0) | 0.4 | 2.3 | 2.4 | 2.4 |
BoE – Bank rate (end year) | 3.5 | 2.8 | 2.5 | 2.5 | 2.5 |
Euro area | |||||
GDP growth | 0.3 | 1.5 | 1.8 | 1.6 | 1.6 |
US | |||||
GDP growth | 0.6 | 1.2 | 1.8 | 1.8 | 2.1 |
Five-year extreme points At 31 March 2023 | Upside | Baseline: Base case five-year average | Downside 1 inflation | Downside 2 global shock |
% | % | % | % | |
UK | ||||
GDP growth | 2.5 | 1.2 | (1.8) | (4.3) |
Unemployment rate | 3.5 | 4.6 | 5.8 | 7.8 |
CPI inflation | 2.5 | 2.2 | 9.4 | 0.8 |
House price growth | 5.1 | 0.5 | (6.1) | (20.2) |
BoE – Bank rate (end year) | 2.5 | 2.8 | 4.5 | 0.3 |
Euro area | ||||
GDP growth | 3.2 | 1.4 | (0.9) | (4.3) |
US | ||||
GDP growth | 3.1 | 1.5 | (0.8) | (3.9) |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
60. ESG Risk | ||
61. Climate, nature and biodiversity risk | |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
Governance | Strategy | Risk management | Metrics | |
Achievements in prior years | •Established an Investec Group ESG Executive Committee to align and monitor the Group’s climate action •Assigned Board and senior management responsibility and oversight for climate-related risks and opportunities •Became members of the Net-Zero Banking Alliance (NZBA) •IW&I submitted their first UN PRI report •IW&I joined Climate Action 100+ •The Investec Group tabled a voluntary climate resolution at the August 2021 AGM, receiving 99.9% support. | •Acknowledged the Paris Agreement’s aim of holding the increase in the global average temperature to well below 2°C compared to pre-industrial levels and of pursuing efforts towards limiting it to 1.5°C •Created a sustainable finance framework •Launched a number of ESG and climate-specific products and services. | •Evaluated our lending and investment portfolios for climate-related risks and opportunities •Automated ESG screening incorporated into our risk management process •Assessed climate-related risks within our operations and lending activities. | •Achieved carbon neutrality across our direct operational activities •Joined PCAF and measured our Scope 3 emissions within our lending and investing activities •Assessed net-zero pathways according to SBTi guidance. . |
Achievements for the financial year ended March 2023 | •Reviewed our ESG framework linked to executive KPIs for remuneration •Engaged with stakeholders on our disclosures to get feedback on how we can improve our governance and oversight •Provided some targeted training to board members, executive management, and staff. | •Joined the Partnership for Biodiversity Accounting Financials (PBAF) •Performed a Pro-Climate assessment to identify gaps within our strategy •Increased stakeholder engagement from our IW&I business on climate-related matters •Participated in a £110 million facility for electric vehicle charging company, Instavolt • Incorporated high-level disclosures as recommended by the TNFD. | •Strengthened our climate focus in the Investec plc and IBP risk appetite assessment resulting in a net-zero aligned target set towards zero coal exposure by 31 March 2027 •Reviewed and updated our fossil fuel policy with the primary change being managing our thermal coal exposure in line with our risk appetite assessment •Reviewed the recommendations from the SBTi on financial sector science based target setting. | •Continued to refine our assumptions around Scope 3 emissions •Engaged with SBTi on their recently released recommendations for Financial Institutions with the aim of reporting on verified climate-related targets. |
Looking forward | •Activate a focused learning pathway for management and staff, targeted towards their unique requirements within their respective areas •Stronger focus on ESG and sustainability (including climate and nature-related) matters in the DLC BRCC. . | •Further engagements with our clients to assist them in their net-zero carbon ambitions •Continue providing innovative climate-related product offerings •Review and assess the integration of climate-related matters into business strategy •Monitor the progress in terms of the Group’s net-zero carbon ambition •Continue to strengthen the Group’s climate-related and sustainability disclosures. | •Review developments with regards to climate-related disclosure guidance in specific recommendations by the International Sustainability Standards Board (ISSB) and the Financial Reporting Council (FRC) •Enhanced focus on reporting on biodiversity and nature- related risks according to the TNFD recommendations. | •Engage with stakeholders to get feedback on how we can improve our measurement and methodologies used •Continue to monitor progress on the Group’s net-zero carbon ambitions •Reporting verified SBTi targets. |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
62. Investment risk in the banking book |
An analysis of income and revaluations of these investments can be found in the investment |
£’million | On-balance sheet value of investments 31 March 2023 | On-balance sheet value of investments 31 March 2022 |
Category | ||
Unlisted investments | 315 | 336 |
Listed equities | 2 | 2 |
Ninety One | 172 | 356 |
Total investment portfolio | 489 | 694 |
Trading properties | 75 | 4 |
Warrants and profit shares | 5 | 6 |
Total | 569 | 704 |
31 March 2023 |
£322 million |
Finance and insurance | 47.2% | |
Manufacturing and commerce | 10.8% | |
Retailers and wholesalers | 9.7% | |
Transport | 9.1% | |
Real estate | 6.8% | |
Construction | 5.1% | |
Business services | 5.0% | |
Other | 3.8% | |
Communication | 2.5% |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
63. Securitisation/ structured credit activities exposures |
For accounting methodologies |
In addition, securitisations of Investec own originated assets are assessed in terms of the credit risk management philosophies and principles as set out above. |
Nature of exposure/activity | 31 March 2023 £’million | 31 March 2022 £’million | Balance sheet and credit risk classification | |
Structured credit (gross exposure) | 715 | 429 | Other debt securities and other loans and advances | |
<40% RWA | 709 | 423 | ||
>40% RWA | 6 | 6 | ||
£’million | AAA | AA | A | BBB | BB | B and below | Total rated | Total unrated | Total | ||
US corporate loans | 382 | 53 | 7 | — | — | — | 442 | 61 | 503 | ||
UK RMBS | 58 | 23 | 1 | — | — | — | 82 | 4 | 86 | ||
European corporate loans | 124 | 2 | — | — | — | — | 126 | — | 126 | ||
Total at 31 March 2023 | 564 | 78 | 8 | — | — | — | 650 | 65 | 715 | ||
<40% RWA | 564 | 77 | 7 | — | — | — | 648 | 61 | 709 | ||
>40% RWA | — | 1 | 1 | — | — | — | 2 | 4 | 6 | ||
Total at 31 March 2022 | 282 | 83 | 16 | — | — | — | 381 | 48 | 429 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
Traded market risk profile |
Traded market risk governance structure |
Measurement of traded market risk |
Traded market risk management, monitoring and control |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
Value at Risk |
31 March 2023 | 31 March 2022 | |||||||||||
95% one-day VaR | Year end | Average | High | Low | Year end | Average | High | Low | ||||
£’000 | ||||||||||||
Equities | 295 | 324 | 762 | 124 | 381 | 479 | 742 | 335 | ||||
Foreign exchange | 8 | 13 | 76 | 3 | 5 | 9 | 69 | 1 | ||||
Interest rates | 43 | 33 | 73 | 15 | 21 | 28 | 172 | 8 | ||||
Credit | 64 | 14 | 67 | 1 | 1 | 13 | 89 | 1 | ||||
Consolidated* | 352 | 331 | 770 | 103 | 370 | 469 | 699 | 340 | ||||
Expected shortfall |
95% one-day ES | 31 March 2023 | 31 March 2022 | ||
£’000 | ||||
Equities | 366 | 530 | ||
Foreign exchange | 15 | 7 | ||
Interest rates | 68 | 36 | ||
Credit | 163 | 1 | ||
Consolidated* | 472 | 525 |
Stressed VaR |
£’000 | 31 March 2023 | 31 March 2022 | ||
99% one-day sVaR | 672 | 858 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
Backtesting |
99% one-day VaR backtesting (£) | |
99% one-day VaR | Clean P/L |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
Clean profit and loss histogram |
Clean profit/loss earned per day (£’million) |
Market risk – derivatives |
Information showing our derivative trading portfolio over the reporting period on the basis of the notional principal and the |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
65. Balance sheet risk management |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
Central bank cash placements and guaranteed liquidity | Cash | Near cash (other ‘monetisable’ assets) |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
An analysis of cash and near cash at 31 March 2023 | Customers accounts (deposits) by type at 31 March 2023 | |
£8 550 million | £19 122 million |
Central bank cash placements and guaranteed liquidity | 83.0% | Individuals | 63.6% | |||
Cash | 10.3% | Other financial institutions and corporates | 28.2% | |||
Near cash (other ‘monetisable’ assets) | 6.7% | Small business | 8.2% |
Further information on recovery and resolution planning |
have been received as collateral under reverse repurchase agreements and securities borrowing transactions where the assets are allowed to be resold or pledged. |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
£’million | Demand | Up to one month | One to three months | Three to six months | Six months to one year | One to five years | >Five years | Total | ||
Cash and short-term funds – banks | 6 196 | 93 | — | — | — | 5 | — | 6 294 | ||
Investment/trading assets | 272 | 987 | 489 | 485 | 457 | 807 | 1 269 | 4 766 | ||
Securitised assets | — | — | 1 | — | 1 | 23 | 53 | 78 | ||
Advances | 110 | 686 | 756 | 1 148 | 1 799 | 7 890 | 3 321 | 15 710 | ||
Other assets | 1 | 560 | 59 | 41 | 44 | 466 | 367 | 1 538 | ||
Assets | 6 579 | 2 326 | 1 305 | 1 674 | 2 301 | 9 191 | 5 010 | 28 386 | ||
Deposits – banks | (347) | — | (1) | (5) | — | (1 819) | — | (2 172) | ||
Deposits – non-banks | (6 401) | (682) | (4 534) | (2 970) | (3 127) | (1 404) | (4) | (19 122) | ||
Negotiable paper | (1) | (3) | (26) | (67) | (71) | (796) | (485) | (1 449) | ||
Securitised liabilities | — | (8) | (1) | — | (1) | (23) | (49) | (82) | ||
Investment/trading liabilities | (137) | (589) | (7) | — | (54) | (21) | (65) | (873) | ||
Subordinated liabilities | — | — | — | (70) | — | — | (661) | (731) | ||
Other liabilities | (8) | (471) | (212) | (39) | (107) | (329) | (72) | (1 238) | ||
Liabilities | (6 894) | (1 753) | (4 781) | (3 151) | (3 360) | (4 392) | (1 336) | (25 667) | ||
Total equity | — | — | — | — | — | — | (2 719) | (2 719) | ||
Contractual liquidity gap | (315) | 573 | (3 476) | (1 477) | (1 059) | 4 799 | 955 | — | ||
Cumulative liquidity gap | (315) | 258 | (3 218) | (4 695) | (5 754) | (955) | — |
£’million | Demand | Up to one month | One to three months | Three to six months | Six months to one year | One to five years | >Five years | Total | ||
Behavioural liquidity gap | 5 712 | 419 | (3 586) | (1 815) | (1 941) | 303 | 908 | — | ||
Cumulative | 5 712 | 6 131 | 2 545 | 730 | (1 211) | (908) | — |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
million | All (GBP) |
25bps down | (13.7) |
25bps up | 12.7 |
million | All (GBP) |
200bps down | 16.6 |
200bps up | (13.1) |
Interest rate risk - IBOR reform |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
on credit ratings. |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
66. Operational risk |
Identify and assess | ||
Risk and control assessments | •Risk and control assessments are forward-looking, qualitative assessments of inherent and residual risk that are performed on key business processes using a centrally defined risk framework •These assessments enable business to identify, manage and monitor operational risks, incorporating other elements of the operational risk management framework such as risk events and key indicators •Detailed control evaluations are performed, and action plans developed and implemented where necessary to ensure that risk exposure is managed within acceptable levels. | |
Internal risk events | •Internal risk events provide an objective source of information relating to failures in the control environment •The tracking of internal risk event data provides an opportunity to improve the control environment and to minimise the occurrence of future risk events •In addition, internal risk event data is used as a direct input into the Pillar II capital modelling process. | |
External risk events | •External risk events are operational risk related events originating outside the organisation •The Group is an active member of a global external data service used to benchmark our internal risk event data against other local and international financial service organisations •The external data is analysed to enhance the control environment, inform scenario analysis and provide insight into emerging operational risks. | |
Mitigate/manage | ||
Risk exposures | •Risk exposures are identified through the operational risk management processes, including but not limited to risk assessments, internal risk events, key indicators and audit findings •Residual risk exposure is evaluated in terms of the Group’s risk appetite and mitigated where necessary by improving the control environment, transferring through insurance, terminating the relevant business activity or accepting the risk exposure for a period of time subject to formal approval and monitoring. | |
Monitor | ||
Key risk indicators | •Indicators are metrics used to monitor risk exposures against identified thresholds •The output provides predictive capability in assessing the risk profile of the business. | |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
Please refer to pages 78 to 81 of the Investec Group's 2023 risk and governance report for additional information regarding compliance, reputational risk and legal risk. |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
67. Recovery and resolution planning |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
68. Capital management and allocation |
Investec plc º* | IBP º* | Investec plc º* | IBP º* | |
31 March 2023 | 31 March 2022 | |||
Common Equity Tier 1 ratio** | 11.7% | 12.7% | 11.4% | 12.0% |
Common Equity Tier 1 ratio (fully loaded)*** | 11.4% | 12.4% | 11.0% | 11.6% |
Tier 1 ratio** | 13.1% | 14.1% | 12.8% | 13.6% |
Total Capital ratio** | 17.2% | 18.5% | 16.5% | 18.2% |
Risk-weighted assets (£'million)** | 17 767 | 17 308 | 16 980 | 16 462 |
Leverage exposure measure (£'million)^ | 25 216 | 24 945 | 24 181 | 23 874 |
Leverage ratio^ | 9.2% | 9.8% | 9.0% | 9.3% |
Leverage ratio (fully loaded)^ *** | 9.0% | 9.6% | 8.7% | 9.1% |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
The 31 March 2023 Pillar 3 disclosures for the Investec plc Group are published in a standalone disclosure report and can be found on the Investec Group’s website. |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
Investec plc º* | IBP º* | Investec plc º* | IBP º* | |
£'million | 31 March 2023 | 31 March 2022 | ||
Shareholders' Equity | 2 373 | 2 486 | 2 340 | 2 215 |
Shareholders’ equity excluding non-controlling interests | 2 468 | 2 539 | 2 429 | 2 296 |
Foreseeable charges and dividends | (55) | (36) | (44) | (61) |
Perpetual preference share capital and share premium | (25) | — | (25) | — |
Deconsolidation of special purpose entities | (15) | (17) | (20) | (20) |
Non-controlling interests | — | — | — | — |
Non-controlling interests per balance sheet | 1 | 1 | 1 | 1 |
Non-controlling interests excluded for regulatory purposes | (1) | (1) | (1) | (1) |
Regulatory adjustments to the accounting basis | 16 | 15 | 71 | 71 |
Additional value adjustments | (5) | (5) | (6) | (6) |
Cash flow hedging reserve | (28) | (28) | — | — |
Adjustment under IFRS 9 transitional arrangements | 49 | 48 | 77 | 77 |
Deductions | (318) | (306) | (480) | (304) |
Goodwill and intangible assets net of deferred taxation | (312) | (300) | (303) | (291) |
Investment in capital of financial entities above 10% threshold | — | — | (164) | — |
Deferred taxation assets that rely on future profitability excluding those arising from temporary difference | (2) | (2) | (8) | (8) |
Securitisation positions which can alternatively be subject to a 1 250% risk weight | (4) | (4) | (5) | (5) |
Amount of insufficient coverage for non-performing exposures | — | — | (3) | — |
Common Equity Tier 1 capital** | 2 071 | 2 195 | 1 931 | 1 982 |
Additional Tier 1 instruments | 250 | 250 | 250 | 250 |
Tier 1 capital ** | 2 321 | 2 445 | 2 181 | 2 232 |
Tier 2 capital** | 739 | 764 | 628 | 766 |
Tier 2 instruments | 764 | 764 | 766 | 766 |
Non-qualifying surplus capital attributable to non-controlling interests | (25) | — | (138) | — |
Total regulatory capital** | 3 060 | 3 209 | 2 809 | 2 998 |
Risk-weighted assets** | 17 767 | 17 308 | 16 980 | 16 462 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
Investec plc º | IBP º | Investec plc º* | IBP º* | |
£’million | 31 March 2023 | 31 March 2022 | ||
Risk-weighted assets** | 17 767 | 17 308 | 16 980 | 16 462 |
Credit risk | 14 122 | 14 118 | 13 366 | 13 332 |
Equity risk | 594 | 153 | 562 | 57 |
Counterparty credit risk | 477 | 487 | 555 | 591 |
Credit valuation adjustment risk | 37 | 37 | 103 | 103 |
Market risk | 513 | 511 | 608 | 608 |
Operational risk | 2 024 | 2 002 | 1 786 | 1 771 |
Capital requirements | 1 421 | 1 385 | 1 358 | 1 317 |
Credit risk | 1 130 | 1 129 | 1 069 | 1 066 |
Equity risk | 47 | 13 | 45 | 5 |
Counterparty credit risk | 38 | 39 | 44 | 47 |
Credit valuation adjustment risk | 3 | 3 | 8 | 8 |
Market risk | 41 | 41 | 49 | 49 |
Operational risk | 162 | 160 | 143 | 142 |
£’million | Investec plc º | IBP º | Investec plc º* | IBP º* |
31 March 2023 | 31 March 2022 | |||
Total exposure measure^ | 25 216 | 24 945 | 24 181 | 23 874 |
Tier 1 capital * ** | 2 321 | 2 445 | 2 181 | 2 232 |
Leverage ratio ^ | 9.2% | 9.8% | 9.0% | 9.3% |
Total exposure measure (fully loaded) | 25 168 | 24 896 | 24 104 | 23 797 |
Tier 1 capital (fully loaded)*** | 2 273 | 2 396 | 2 104 | 2 155 |
Leverage ratio (fully loaded)*** ^ | 9.0% | 9.6% | 8.7% | 9.1% |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
Total regulatory capital flow statement | ||||
Investec plc º | IBP º | Investec plc º* | IBP º* | |
£'million | 31 March 2023 | 31 March 2022 | ||
Opening Common Equity Tier 1 capital | 1 931 | 1 982 | 1 796 | 1 868 |
Dividends paid to ordinary shareholders and Additional Tier 1 security holders | (106) | (112) | (81) | (73) |
Profit after taxation | 293 | 314 | 236 | 233 |
Foreseeable charges and dividends | (11) | 25 | (19) | (36) |
Treasury shares | (15) | — | (23) | — |
Distribution to shareholders | (91) | — | 3 | — |
Share-based payment adjustments | 5 | — | — | 4 |
Movement in other comprehensive income | (43) | 34 | 37 | 15 |
Investment in capital of financial entities above 10% threshold | 164 | — | 15 | — |
Cash flow hedging reserve | (28) | (28) | ||
Goodwill and intangible assets (deduction net of related taxation liability) | (9) | (9) | 4 | 7 |
Deferred tax that relies on future profitability (excluding those arising from temporary differences) | 6 | 6 | 4 | 4 |
Deconsolidation of special purpose entities | 5 | 3 | (12) | (12) |
Gains or losses on liabilities at fair value resulting from changes in own credit standing | — | — | (12) | (12) |
IFRS 9 transitional arrangements | (28) | (29) | (16) | (16) |
Other, including regulatory adjustments and other transitional arrangements | (2) | 9 | (1) | — |
Closing Common Equity Tier 1 capital | 2 071 | 2 195 | 1 931 | 1 982 |
Opening Additional Tier 1 capital | 250 | 250 | 274 | 250 |
Grandfathered Additional Tier 1 capital instrument | — | — | (24) | — |
Closing Additional Tier 1 capital | 250 | 250 | 250 | 250 |
Closing Tier 1 capital | 2 321 | 2 445 | 2 181 | 2 232 |
Opening Tier 2 capital | 628 | 766 | 370 | 472 |
Issued capital | 346 | 346 | 348 | 348 |
Redeemed capital | (348) | (348) | — | — |
Other, including regulatory adjustments and other transitional arrangements | 113 | — | (90) | (54) |
Closing Tier 2 capital | 739 | 764 | 628 | 766 |
Closing total regulatory capital | 3 060 | 3 209 | 2 809 | 2 998 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
NOTES TO RISK AND CAPITAL MANAGEMENT CONTINUED | |||||
At 31 March | Notes | 2023 | 2022 | |||
£’000 | ||||||
Assets | ||||||
Fixed assets | ||||||
Investments in subsidiary undertakings | b | 1 701 774 | 1 701 774 | |||
Securities and subordinated liabilities issued by subsidiary undertaking | c | 1 115 737 | 599 967 | |||
2 817 511 | 2 301 741 | |||||
Current assets | ||||||
Investments in listed equities | 172 285 | 355 801 | ||||
Amounts owed by Group undertakings | 541 948 | 523 320 | ||||
Taxation | 17 886 | 15 006 | ||||
Prepayments and accrued income | 2 740 | 1 471 | ||||
Cash at bank and in hand | ||||||
– with subsidiary undertakings | 17 503 | 261 089 | ||||
– balances with other banks | 503 | 578 | ||||
752 865 | 1 157 265 | |||||
Current liabilities | ||||||
Creditors: amounts falling due within one year | ||||||
Other liabilities | 6 189 | 3 748 | ||||
Accruals and deferred income | 12 438 | 10 533 | ||||
Net current assets | 734 238 | 1 142 984 | ||||
Creditors: amounts falling due after one year | ||||||
Debt securities in issue | d | 475 811 | 537 215 | |||
Subordinated liabilities | e | 698 591 | 349 967 | |||
Net assets | 2 377 347 | 2 557 543 | ||||
Capital and reserves | ||||||
Ordinary share capital | h | 202 | 202 | |||
Ordinary share premium | h | 555 812 | 806 812 | |||
Capital reserve | 180 606 | 180 606 | ||||
Fair value reserve | 34 943 | 159 661 | ||||
Retained earnings | 1 330 990 | 1 135 468 | ||||
Ordinary shareholders’ equity | 2 102 553 | 2 282 749 | ||||
Perpetual preference share capital and premium | h | 24 794 | 24 794 | |||
Shareholders’ equity excluding non-controlling interests | 2 127 347 | 2 307 543 | ||||
Other Additional Tier 1 securities in issue | h | 250 000 | 250 000 | |||
Total capital and reserves | 2 377 347 | 2 557 543 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
PARENT COMPANY ANNUAL FINANCIAL STATEMENTS | |||||
£’000 | Ordinary share capital | Ordinary share premium | Capital reserve | Fair value reserve | Retained earnings | Ordinary shareholders’ equity | Perpetual preference share capital and premium | Shareholders’ equity excluding non- controlling interests | Other Additional Tier 1 securities in issue | Total equity | ||||||
At 31 March 2021 | 202 | 806 812 | 180 606 | 136 798 | 1 139 904 | 2 264 322 | 24 794 | 2 289 116 | 250 000 | 2 539 116 | ||||||
Total comprehensive income | — | — | — | 22 863 | 76 107 | 98 970 | — | 98 970 | — | 98 970 | ||||||
Dividends paid to preference shareholders | — | — | — | — | (347) | (347) | — | (347) | — | (347) | ||||||
Dividends paid to ordinary shareholders | — | — | — | — | (63 316) | (63 316) | — | (63 316) | — | (63 316) | ||||||
Dividends declared to Other Additional Tier 1 security holders | — | — | — | — | (16 880) | (16 880) | — | (16 880) | 16 880 | — | ||||||
Dividends paid to Other Additional Tier 1 security holders | — | — | — | — | — | — | — | — | (16 880) | (16 880) | ||||||
At 31 March 2022 | 202 | 806 812 | 180 606 | 159 661 | 1 135 468 | 2 282 749 | 24 794 | 2 307 543 | 250 000 | 2 557 543 | ||||||
Total comprehensive income | — | — | — | (124 718) | 158 556 | 33 838 | — | 33 838 | — | 33 838 | ||||||
Employee benefit liability recognised | — | — | — | — | (1 033) | (1 033) | — | (1 033) | — | (1 033) | ||||||
Dividends paid to preference shareholders | — | — | — | — | (540) | (540) | — | (540) | — | (540) | ||||||
Dividends paid to ordinary shareholders | — | — | — | — | (88 463) | (88 463) | — | (88 463) | — | (88 463) | ||||||
Dividends declared to Other Additional Tier 1 security holders | — | — | — | — | (16 880) | (16 880) | — | (16 880) | 16 880 | — | ||||||
Dividends paid to Other Additional Tier 1 security holders | — | — | — | — | — | — | — | — | (16 880) | (16 880) | ||||||
Transfer from share premium to retained income | — | (251 000) | — | — | 251 000 | — | — | — | — | — | ||||||
Distribution to shareholders | — | — | — | — | (107 118) | (107 118) | — | (107 118) | — | (107 118) | ||||||
At 31 March 2023 | 202 | 555 812 | 180 606 | 34 943 | 1 330 990 | 2 102 553 | 24 794 | 2 127 347 | 250 000 | 2 377 347 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
PARENT COMPANY ANNUAL FINANCIAL STATEMENTS CONTINUED | |||||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
PARENT COMPANY ANNUAL FINANCIAL STATEMENTS CONTINUED | |||||
At 31 March | 2023 | 2022 | ||
£’000 | ||||
At the beginning of the year | 1 701 774 | 1 701 774 | ||
Additions | — | — | ||
Disposals | — | — | ||
At the end of the year | 1 701 774 | 1 701 774 |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
PARENT COMPANY ANNUAL FINANCIAL STATEMENTS CONTINUED | |||||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
PARENT COMPANY ANNUAL FINANCIAL STATEMENTS CONTINUED | |||||
At 31 March 2023 | Principal activity | Interest held | ||
United Kingdom Registered office: 30 Gresham Street, London, EC2V 7QP, UK | ||||
Investec 1 Limited* | Investment holding company | 100% | ||
Investec Holding Company Limited* | Investment holding company | 100% | ||
Investec (UK) Limited | Holding company | 100% | ||
Guinness Mahon Group Limited | Dormant | 100% | ||
Investec Bank plc | Banking institution | 100% | ||
PIF Investments Limited | Dormant | 100% | ||
Beeson Gregory Index Nominees Limited | Dormant | 100% | ||
EVO Nominees Limited | Dormant | 100% | ||
Evolution Securities Nominees Limited | Dormant | 100% | ||
Investec Finance Limited | Dormant | 100% | ||
Investec Group Investments (UK) Limited | Investment holding company | 100% | ||
Investec Capital Solutions Limited | Lending company | 100% | ||
Diagonal Nominees Limited | Nominee | 100% | ||
GFT Holdings Limited | Dormant | 100% | ||
Investec Investment Trust plc | Debt issuer | 100% | ||
Investec Investments (UK) Limited | Investment holding company | 100% | ||
Inv-German Retail Ltd | Property company | 100% | ||
Investec Securities Limited | Dormant | 100% | ||
Technology Nominees Limited | Nominee | 100% | ||
Torteval LM Limited | Investment holding company | 100% | ||
Torteval Funding LLP | Financing company | 100% | ||
Nars Holdings Limited | Property company | 100% | ||
Tudor Tree Properties Limited | Property company | 100% | ||
Willbro Nominees Limited | Nominee | 100% | ||
Evolution Capital Investment Limited | Dormant | 100% | ||
Investec Investments Limited | Investment holding company | 100% | ||
PSV Marine Limited | Shipping holding company | 100% | ||
PSV Anjali Limited | Shipping holding company | 100% | ||
PSV Randeep Limited | Shipping holding company | 100% | ||
Investec India Holdco Limited | Investment holding company | 80.48% | ||
Investec Alternative Investment Management Limited | Fund management activities | 100% | ||
Investec-Capitalmind Investment Limited | Non-trading | 100% | ||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
PARENT COMPANY ANNUAL FINANCIAL STATEMENTS CONTINUED | |||||
At 31 March 2023 | Principal activity | Interest held | ||
Registered office: 30 Gresham Street, London EC2V 7QN, UK | ||||
Investec Wealth & Investment Limited | Investment management services | 100% | ||
Anston Trustees Limited | Non-trading | 100% | ||
Bell Nominees Limited | Non-trading | 100% | ||
Carr Investment Services Nominees Limited | Non-trading | 100% | ||
Carr PEP Nominees Limited | Non-trading | 100% | ||
Click Nominees Limited | Non-trading | 100% | ||
Ferlim Nominees Limited | Nominee | 100% | ||
Investec Wealth & Investment Trustees Limited | Trustee services | 100% | ||
Investment Administration Nominees Limited | Non-trading | 100% | ||
PEP Services (Nominees) Limited | Non-trading | 100% | ||
R & R Nominees Limited | Non-trading | 100% | ||
Rensburg Client Nominees Limited | Nominee | 100% | ||
Scarwood Nominees Limited | Non-trading | 100% | ||
Spring Nominees Limited | Non-trading | 100% | ||
Tudor Nominees Limited | Non-trading | 100% | ||
Murray Asset Management UK Limited | Investment management and financial planning | 100% | ||
Murray Asset Nominees Limited | Nominee | 100% | ||
Murray Asset Nominees UK Limited | Nominee | 100% | ||
Castle Street Nominees UK Limited | Nominee | 100% | ||
Registered office: Reading International Business Park, Reading, RG2 6AA, UK | ||||
Mann Island Finance Limited | Leasing company | 100% | ||
CF Corporate Finance Limited | Leasing company | 100% | ||
MI Vehicle Finance Limited | Leasing company | 100% | ||
Quantum Funding Limited | Leasing company | 100% | ||
Investec Asset Finance plc | Leasing company | 100% | ||
Registered office: Quartermile One, Lauriston Place, Edinburgh, Scotland, EH3 9EN | ||||
Murray Investment Management Limited | Non-trading | 100% | ||
Murray Asset Management Limited | Non-trading | 100% | ||
Castle Street Nominees Limited | Nominee | 100% | ||
Australia Registered office: Boardroom Pty Limited, Level 12, 225 George Street, Sydney NSW 2000, Australia | ||||
Investec Holdings Australia Pty Limited | Holding company | 100% | ||
Investec Australia Finance Pty Limited | Lending company | 100% | ||
Investec Australia Pty Limited | Financial services | 100% | ||
Bowden (Lot 32) Direct Pty Limited | Development company | 100% | ||
IWPE Nominees Pty Limited | Custodian | 100% | ||
British Virgin Islands Registered office: Palm Grove House, PO Box 438, Road Town, Tortola, British Virgin Islands | ||||
Finistere Directors Limited | Corporate director | 100% | ||
GFT Directors Limited | Corporate director | 100% | ||
Registered office: Craigmuir Chambers, Road Town, Tortola, VG 1110, British Virgin Islands | ||||
Fertile Sino Global Development Limited | Holding company | 100% | ||
France Registered office: 27 Rue Maurice Flandin – 69003 Lyon Cedex 03, France | ||||
SCI CAP Philippe | Property company | 100% | ||
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
PARENT COMPANY ANNUAL FINANCIAL STATEMENTS CONTINUED | |||||
At 31 March 2023 | Principal activity | Interest held | ||
Guernsey Registered office: Glategny Court, Glategny Esplanade, St. Peter Port, GY1 1WR, Guernsey, Channel Islands | ||||
Investec Wealth & Investment (Channel Islands) Limited | Investment management services | 100% | ||
Torch Nominees Limited | Nominee | 100% | ||
Registered office: P.O. Box 188, Glategny Court, Glategny Esplanade, St Peter Port, Guernsey, GY1 3LP, Channel Islands | ||||
Investec Bank (Channel Islands) Limited | Banking institution | 100% | ||
Investec Bank (Channel Islands) Nominees Limited | Nominee | 100% | ||
Investec Asset Finance (Channel Islands) Limited | Leasing company | 100% | ||
Registered office: PO Box 290, Glategny Court, Glategny Esplanade, St Peter Port, Guernsey, GY1 3RP, Channel Islands | ||||
Hero Nominees Limited | Nominee | 100% | ||
Bayeux Limited | Corporate director | 100% | ||
Finistere Limited | Corporate nominee | 100% | ||
Finistere Secretaries Limited | Corporate secretary | 100% | ||
ITG Limited | Corporate director | 100% | ||
Registered office: Heritage Hall, Le Marchant Street, St Peter Port, Guernsey, GY1 4JH, Channel Islands | ||||
Investec Captive Insurance Limited | Captive insurance company | 100% | ||
Jersey Registered office: 2nd Floor One The Splanade, St Helier, Channel Islands, Jersey, JE2 3QA | ||||
Appleton Resources (Jersey) Limited | Holding company | 100% | ||
India Registered office: B Wing, 11th floor, Parinee Crescenzo, Bandra Kurla Complex, Bandra East, Mumbai – 400 051, India | ||||
Investec Credit Finance Private Limited | Lending platform | 99% | ||
Investec Global Services (India) Private Limited | ITES Outsourcing | 100% |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
PARENT COMPANY ANNUAL FINANCIAL STATEMENTS CONTINUED | |||||
At 31 March 2023 | Principal activity | Interest held | ||
Ireland Registered office: The Harcourt Building, Harcourt Street, Dublin 2, Ireland | ||||
Aksala Limited | Property company | 100% | ||
Investec Holdings (Ireland) Limited | Holding company | 100% | ||
Investec Ireland Limited | Financial services | 100% | ||
Investec International Limited | Aircraft leasing | 100% | ||
Neontar Limited | Holding company | 100% | ||
Investec Securities Holdings Ireland Limited | Holding company | 100% | ||
Investec Private Finance Ireland Limited | Loan credit servicing | 100% | ||
Investec Ventures Ireland Limited | Investment management services | 100% | ||
Venture Fund Private Principals Limited | Investment services | 100% | ||
Investec Europe Limited | MiFiD firm | 100% | ||
Luxembourg Registered office: 20 Boulevard de Kockelscheuer, L-1821 Luxembourg, Grand Duchy of Luxembourg | ||||
Investec Finance SARL | Dormant | 100% | ||
Luxembourg Registered office: 15 Boulevard Friedrich Wilhelm Raiffeisen L-2411 Luxembourg | ||||
PDF II GP s.a.r.l. | Fund management activities | 100% | ||
Singapore Registered office: 8 Wilkie Road, #03-01 Wilkie Edge, Singapore 228095 | ||||
Investec Singapore Pte Limited | Securities services | 100% | ||
Switzerland Registered office: 23 Avenue de France, CH – 1202, Geneva, Switzerland | ||||
Reichmans Geneva SA | Trading company | 100% | ||
Registered offices: Löwenstrasse 29, CH-8001 Zurich, Switzerland | ||||
Investec Bank (Switzerland) AG | Banking institution and wealth manager | 100% | ||
United States of America Registered office: 10 E. 53rd St., 22nd floor, New York, NY 10022, USA | ||||
US Multifamily GP LLC | Investment holding company | 100% | ||
Investec USA Holdings Corp | Holding company | 100% | ||
Investec Inc | Investment holding company | 100% | ||
Fuel Cell IP 1 LLC Investment | Investment holding company | 100% | ||
Fuel Cell IP 2 LLC Investment | Investment holding company | 100% | ||
Investec Securities (US) LLC | Financial services | 100% | ||
Registered office: One Carbon Center-Suite 501, 13905 McCorkle Ave. SE, Chesapeake, WV 25315 | ||||
Appleton Coal LLC | Investment holding company | 100% | ||
Carbon Resources Development Inc | Mining company | 100% | ||
Maben Coal LLC | Investment holding company | 100% |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
PARENT COMPANY ANNUAL FINANCIAL STATEMENTS CONTINUED | |||||
At 31 March 2023 | Principal activity | Interest held | ||
British Virgin Islands Registered office: Vistra Corporate Service Centre, Wickhams Cay II, Road Town, Tortola VG1110, British Virgin Islands | ||||
imarkets (Holdings) Limited | Online trading platform | 33% | ||
British Virgin Islands Registered office: Wattley Building, 2nd Floor, 160 Main Street, P.O. Box 3410, Road Town, Tortola, British Virgin Islands | ||||
Templewater Holdings Limited | Holding company | 50% | ||
France Registered Office: 151 Boulevard Haussman, 75008 Paris, France | ||||
Capitalmind SAS | Advisory services | 30% | ||
Guernsey Registered office: 1st Floor Tudor House Le Bordage, St Peter Port, Guernsey, GY1 1DB | ||||
Grovepoint Limited | Investment and advisory | 41.9% | ||
Germany Registered Office: Sonnenberger Strabe 16, 65193 Wiesbaden | ||||
Capitalmind GmbH | Advisory services | 30% | ||
India Registered office: 32/1. 14th Cross, 9th Main, 6th Sector H.S.R. Layout, Bangalore, Karnataka 560102, India | ||||
JSM Advisers Private Limited | Fund management | 55.0% | ||
Registered office: B Wing, 11th floor, Parinee Crescenzo, Bandra Kurla Complex, Bandra East, Mumbai-400051 | ||||
Investec Capital Services (India) Private Limited | Merchant banking & Stock broking | 80.3% | ||
Netherlands Registered Office: Reitschweg 49, 5232BX's-Hertogenbosch, the Netherlands | ||||
Capitalmind Partner B.V. | Advisory services | 30% |
03 | Annual Financial Statements | Investec plc Annual Financial Statements 2023 | |||
PARENT COMPANY ANNUAL FINANCIAL STATEMENTS CONTINUED | |||||
We supplement our IFRS figures with alternative performance measures used by management internally and which provide valuable, relevant information to readers. These measures are used to align internal and external reporting, identify items management believes are not representative of the underlying performance of the business and provide insight into how management assesses period-on-period performance. A description of the Group’s alternative performance measures and their calculation, where relevant, is set out below. | |
Alternative performance measures are not measures within the scope of IFRS and are not a substitute for IFRS financial measures. Alternative performance measures constitute pro-forma financial information. The pro-forma financial information is the responsibility of the Board of Directors and is presented for illustrative purposes only and because of its nature may not fairly present the Group’s financial position, changes in equity, and results in operations or cash flows. |
Adjusted operating profit | Refer to the calculation in the table below |
£’000 | 31 March 2023 | 31 March 2022 | ||
Operating profit before goodwill, acquired intangibles and strategic actions | 387 174 | 286 944 | ||
Add: Loss attributable to other non-controlling interests | — | — | ||
Adjusted operating profit | 387 174 | 286 944 |
£’million | 31 March 2023 | 31 March 2022 | ||
Loans and advances to customers per the balance sheet | 15 568 | 14 426 | ||
ECL held against FVOCI loans reported on the balance sheet within reserves | (5) | (3) | ||
Net core loans | 15 563 | 14 423 | ||
of which amortised cost and FVOCI (“subject to ECL”) | 15 012 | 13 814 | ||
of which FVPL | 551 | 609 | ||
Add: ECL | 146 | 134 | ||
Gross core loans | 15 709 | 14 557 | ||
of which amortised cost and FVOCI (“subject to ECL”) | 15 158 | 13 948 | ||
of which FVPL | 551 | 609 |
Cost to income ratio | Refer to calculation in the table below |
£’000 | 31 March 2023 | 31 March 2022 | ||
Operating costs (A) | 854 875 | 775 866 | ||
Total operating income before expected credit loss impairment charges | 1 308 801 | 1 087 969 | ||
Add: Loss attributable to other non-controlling interests | — | — | ||
Total (B) | 1 308 801 | 1 087 969 | ||
Cost to income ratio (A/B) | 65.3% | 71.3% |
Coverage ratio | ECL as a percentage of gross core loans subject to ECL | |
Credit loss ratio | ECL impairment charges on core loans as a percentage of average gross core loans subject to ECL | |
Gearing ratio | Total assets divided by total equity | |
Loans and advances to customers as a % of customer deposits | Loans and advances to customers as a percentage of customer accounts (deposits) | |
Net interest margin | Interest income net of interest expense, divided by average interest-earning assets | |
Return on average assets | Adjusted earnings attributable to ordinary shareholders divided by average total assets excluding assurance assets | |
Return on risk-weighted assets | Adjusted earnings attributable to ordinary shareholders divided by average risk- weighted assets | |
ALTERNATIVE PERFORMANCE MEASURES | Investec plc Annual Financial Statements 2023 | ||||
ALTERNATIVE PERFORMANCE MEASURES | |||||
DEFINITIONS | Investec plc Annual Financial Statements 2023 | ||||
DEFINITIONS | |||||
GLOSSARY | Investec plc Annual Financial Statements 2023 | ||||
GLOSSARY | |||||
GLOSSARY | Investec plc Annual Financial Statements 2023 | ||||
GLOSSARY CONTINUED | |||||
Contact details for all our offices can be found on the group’s website at: www.investec.com |
For queries regarding information in this document | |
Investor Relations | |
Telephone | (44) 20 7597 5546 |
(44) 20 7597 4493 | |
Email | |
Website | www.investec.com/en_gb /welcome-to-investec/about-us/ investor-relations.html |
CORPORATE INFORMATION | Investec plc Annual Financial Statements 2023 | ||||
CORPORATE INFORMATION | |||||
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