Investec, the niche private banking and wealth management group, has identified Switzerland as a key opportunity for its wealthy clients in SA and other jurisdictions to grow their wealth, as part of its international strategy.
Cumesh Moodliar, head of Investec’s SA business, said Switzerland offered a lot of benefits to its deep-pocketed clients.
“Switzerland is more of an investment destination than a banking business for us. Our target market criteria for that destination is clients with $3m or more of investable assets. The appeal that Switzerland has is twofold.”
From an SA estate planning perspective “you only need one will ... Many other jurisdictions require that you have a will in-country,” Moodliar told Business Day on Thursday.
“The second key part for us is the perceived neutrality of Switzerland. For clients, not just South Africans, the perceived neutrality of the Swiss government is an important part for them in deciding where to diversify their asset base and allocating it to a jurisdiction that will offer that level of neutrality and stability.”
Switzerland has long been one of the most glamorous places for affluent families and offers the privacy they yearn for.
SA’s richest person, Johann Rupert, spends most of his time in the European country, where his luxury goods major, Richemont, is based. One on SA’s wealthiest people and erstwhile Glencore CEO Ivan Glasenberg also calls Switzerland home, having taken citizenship in 2011. The country is estimated to have more than 100 billionaires.
According to a new index by advisory firm Henley & Partners, Switzerland is the world’s best country to build multigenerational wealth. The US came in second while Singapore was third.
Investec grew adjusted earnings 13% in the year to end-March.
Adjusted earnings per share (EPS) were up 13.4% at 78.1p, while adjusted operating profit grew 8% to £884.5m. In rand terms, growth in adjusted EPS was 31% and adjusted operating profit 24.6%.
Revenue increased to £2.09bn from £1.99bn, underpinned by the strong performance from the corporate client franchises in both geographies and Investec Wealth & Investment in SA.
A final dividend of 19p per share has been proposed, resulting in a total dividend of 34.5p for the year, up from 31p a year ago.
“This performance demonstrates the continued success in our client acquisition strategies which underpinned the increased client activity and loan book growth, supported by the tailwind from the high interest rate environment,” group CEO Fani Titi said.
Net core loans increased 1.7% to £30.9bn and grew 6.1% on a neutral currency basis, primarily driven by corporate lending in both core geographies and private client lending in SA.
Customer deposits remained constant at £39.6bn, while neutral currency growth was 4.4%, driven by strong growth in non- wholesale and retail deposits in both geographies.
Funds under management in Southern Africa increased 5.5% to £20.9bn, driven by discretionary net inflows of R16.6bn, market levels and forex translation gains on dollar-denominated portfolios and partly offset by nondiscretionary net outflows of R6.8bn.
The group took several strategic actions that are reflected in the results. The combination of Investec Wealth & Investment UK with the Rathbones Group is reflected as a discontinued operation in line with applicable accounting standards, notwithstanding the strategic shareholding in Rathbones.
After the successful completion of the combination in September 2023, the investment in Rathbones has been equity accounted for as an associate.
During the period Investec bought back about R6.8bn, or £300m, of shares in line with its strategy to optimise capital in SA.
Net interest income benefited from growth in average lending books and higher average interest rates, while non-interest revenue (NIR) growth reflects diversified revenue streams, it said. NIR growth was underpinned by client acquisition, increased client activity levels and higher trading income. NIR also benefited from the first-time consolidation of Capitalmind as the group seeks to extend its footprint into continental Europe and increase the proportion of capital-light revenues.
The cost to income ratio improved to 53.8% from the previous year’s 54.7% in line with group guidance of less than 55% as revenue grew ahead of costs. The credit loss ratio on core loans was 28 basis points (bps), compared with 23bps in 2023, at the bottom end of the group’s through-the-cycle range of 25bps to 35bps.
Investec expects group return on equity to be about 14% and return on tangible equity to be about 16%.
It expects overall costs to be well managed in the context of inflationary pressures and continued investment in the business, with cost to income ratio expected to be about 54%.
The credit loss ratio is expected to be within the through-the-cycle range of 25bps to 45bps.
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