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INVESTEC BANK LIMITED - Interim condensed consolidated financial results for the six months ended 30 September 2018

Release Date: 15/11/2018 08:59
Code(s): INLP     PDF:  
 
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Interim condensed consolidated financial results for the six months ended 30 September 2018

Investec Bank Limited
(Registration number 1969/004763/06)
Share code: INLP
ISIN: ZAE000048393

Interim condensed consolidated financial results for the six months ended 30 September 2018

2018
Condensed consolidated income statement
                                                                                                     Reviewed         Reviewed       Audited
                                                                                                   Six months       Six months       Year to
                                                                                                   to 30 Sept       to 30 Sept      31 March
R'million                                                                                                2018             2017          2018

Interest income                                                                                        15 936           15 619        31 687
Interest expense                                                                                     (11 917)         (11 956)      (24 125)
Net interest income                                                                                     4 019            3 663         7 562
Fee and commission income                                                                               1 182            1 216         2 458
Fee and commission expense                                                                              (106)            (132)         (213)
Investment income                                                                                         253              597           530
Share of post taxation profit of associates                                                               369              382           777
Trading income/(loss) arising from
- customer flow                                                                                           204              196           356
- balance sheet management and other trading liabilities                                                  227               42          (26)
Other operating income                                                                                      1                1             2
Total operating income before expected credit losses/impairment losses                                  6 149            5 965        11 446
Expected credit loss impairment charges*                                                                (376)                -             -
Impairment losses on loans and advances*                                                                    -            (373)         (720)
Operating income                                                                                        5 773            5 592        10 726
Operating costs                                                                                       (3 217)          (3 121)       (6 100)
Operating profit before acquired intangibles                                                            2 556            2 471         4 626
Amortisation of acquired intangibles                                                                     (26)             (26)          (51)
Operating profit                                                                                        2 530            2 445         4 575
Additional costs on acquisition of subsidiary                                                               -                -         (100)
Gain on acquisition of subsidiary                                                                           6                -             -
Profit before taxation                                                                                  2 536            2 445         4 475
Taxation on operating profit before acquired intangibles                                                (411)            (143)           184
Taxation on acquired intangibles                                                                            7                7            14
Profit after taxation                                                                                   2 132            2 309         4 673

* On adoption of IFRS 9, there is a move from an incurred loss model to an expected credit loss methodology.

Calculation of headline earnings
                                                                                                     Reviewed         Reviewed       Audited
                                                                                                   Six months       Six months       Year to
                                                                                                   to 30 Sept       to 30 Sept      31 March
R'million                                                                                                2018             2017          2018

Profit after taxation                                                                                   2 132            2 309         4 673
Dividend paid to perpetual preference shareholders and other Additional Tier 1 security holders          (88)             (67)         (133)
Earnings attributable to ordinary shareholders                                                          2 044            2 242         4 540
Headline adjustments, net of taxation**                                                                   (6)             (46)          (94)
Gain on realisation of available-for-sale assets recycled to the income statement                           -             (46)          (94)
Gain on acquisition of subsidiary                                                                         (6)                -             -

Headline earnings attributable to ordinary shareholders                                                 2 038            2 196         4 446

** Net of taxation of Rnil [Six months to 30 September 2017: R18.0 million; year to 31 March 2018: R36.6 million].

Condensed consolidated statement of total comprehensive income
                                                                                                     Reviewed         Reviewed       Audited
                                                                                                   Six months       Six months       Year to
                                                                                                   to 30 Sept       to 30 Sept      31 March
R'million                                                                                                2018             2017          2018

Profit after taxation                                                                                   2 132            2 309         4 673
Other comprehensive income:
Items that may be reclassified to the income statement
Fair value movements on cash flow hedges taken directly to other comprehensive income***                 (20)             (36)          (99)
Fair value movements on available-for-sale assets taken directly to other
comprehensive income***^                                                                                    -              113           494
Gain on realisation of available-for-sale assets recycled to the income statement***^                       -             (46)          (94)
Fair value movements on debt instruments at FVOCI taken directly to other
comprehensive income***^                                                                                 (68)                -             -
Gain on realisation of debt instruments at FVOCI recycled to the income statement***^                    (38)                -             -
Foreign currency adjustments on translating foreign operations                                            779               39         (637)
Items that will never be reclassified to the income statement
Fair value movements on equity instruments at FVOCI taken directly to other
comprehensive income***                                                                                 (452)                -             -
Total comprehensive income                                                                              2 333            2 379         4 337

Total comprehensive income attributable to ordinary shareholders                                        2 245            2 312         4 204
Total comprehensive income attributable to perpetual preference shareholders and
other Additional Tier 1 security holders                                                                   88               67           133
Total comprehensive income                                                                              2 333            2 379         4 337

^ On adoption of IFRS 9 on 1 April 2018, the fair value reserve was introduced replacing the available-for-sale reserve.
*** Net of taxation of (R141.3 million) [Six months to 30 September 2017: (R12.2 million); year to 31 March 2018: (R266.1 million)].

Condensed consolidated statement of changes in equity
                                                                                                     Reviewed        Reviewed        Audited
                                                                                                   Six months      Six months        Year to
                                                                                                   to 30 Sept      to 30 Sept       31 March
R'million                                                                                                2018            2017           2018

Balance at the beginning of the period                                                                 38 415          35 165         35 165
Adoption of IFRS 9                                                                                      (894)               -              -
Total comprehensive income                                                                              2 333           2 379          4 337
Dividends paid to ordinary shareholders                                                                     -           (654)        (1 304)
Dividends paid to perpetual preference shareholders and other Additional Tier 1 security holders         (88)            (67)          (133)
Net equity movements of interest in associated undertaking                                              (109)               -              -
Issue of other Additional Tier 1 securities in issue                                                        -               -            350
Other equity movements                                                                                      2               -              -
Balance at the end of the period                                                                       39 659          36 823         38 415

Condensed consolidated cash flow statement
                                                                                                     Reviewed        Reviewed        Audited
                                                                                                Six months to   Six months to        Year to
                                                                                                 30 September    30 September       31 March
R'million                                                                                                2018            2017           2018

Cash inflows from operations                                                                            2 203           2 064          4 185
Increase in operating assets                                                                          (3 478)         (2 807)       (21 277)
Increase in operating liabilities                                                                       1 601             241         15 244
Net cash inflow/(outflow) from operating activities                                                       326           (502)        (1 848)
Net cash outflow from investing activities                                                              (309)            (86)          (267)
Net cash outflow from financing activities�                                                           (1 298)           (429)        (1 019)
Effects of exchange rate changes on cash and cash equivalents                                             950              10          (864)
Net decrease in cash and cash equivalents                                                               (331)         (1 007)        (3 998)
Cash and cash equivalents at the beginning of the period                                               26 026          30 024         30 024
Cash and cash equivalents at the end of the period                                                     25 695          29 017         26 026

Cash and cash equivalents is defined as including: cash and balances at central banks, on demand loans and advances to banks and non-sovereign 
and non-bank cash placements (all of which have a maturity profile of less than three months).

� The net cash outflow from financing activities is detailed as below:
                                                                                                     Reviewed        Reviewed        Audited
                                                                                                Six months to   Six months to        Year to
                                                                                                 30 September    30 September       31 March
R'million                                                                                                2018            2017           2018

Net (outflow)/inflow of subordinated liabilities                                                      (1 210)             292             68
Dividends paid                                                                                           (88)           (721)        (1 437)
Issue of other Additional Tier 1 securities                                                                 -               -            350
Net cash outflow from financing activities                                                            (1 298)           (429)        (1 019)

Condensed consolidated balance sheet
                                                                                                Reviewed   Audited     Audited      Reviewed
At                                                                                          30 September   1 April    31 March  30 September
R'million                                                                                           2018     2018#       2018#          2017

Assets
Cash and balances at central banks                                                                 9 586     9 180       9 187         9 200
Loans and advances to banks                                                                       18 458    17 263      17 265        18 723
Non-sovereign and non-bank cash placements                                                        10 441     9 972       9 993        10 399
Reverse repurchase agreements and cash collateral on securities borrowed                          14 033    20 480      20 480        17 933
Sovereign debt securities                                                                         58 923    62 363      62 403        50 722
Bank debt securities                                                                              10 358     8 033       8 051         8 156
Other debt securities                                                                             13 861    10 357      10 342        12 056
Derivative financial instruments                                                                   9 506    12 564      12 586        11 244
Securities arising from trading activities                                                         1 366       875         875         1 463
Investment portfolio                                                                               7 890     9 124       7 943         8 414
Loans and advances to customers                                                                  250 806   245 162     247 474       241 093
Own originated loans and advances to customers securitised                                         8 341     6 826       6 830         7 231
Other loans and advances                                                                             359       265         265           291
Other securitised assets                                                                             250       241         241           274
Interest in associated undertakings                                                                6 541     6 288       6 288         5 898
Deferred taxation assets                                                                             750       933         586           292
Other assets                                                                                       8 429     6 673       6 686         6 817
Property and equipment                                                                             2 626     2 494       2 494           289
Investment properties                                                                                  1         1           1             1
Goodwill                                                                                             171       171         171           171
Intangible assets                                                                                    461       412         412           460
Loans to group companies                                                                          15 148    13 499      13 499        16 449
                                                                                                 448 305   443 176     444 072       427 576
Liabilities
Deposits by banks                                                                                 25 801    24 607      24 607        25 181
Derivative financial instruments                                                                  14 531    15 907      15 907        13 457
Other trading liabilities                                                                          2 468     2 305       2 305         1 708
Repurchase agreements and cash collateral on securities lent                                       6 500     8 395       8 395         9 906
Customer accounts (deposits)                                                                     331 732   321 861     321 893       309 996
Debt securities in issue                                                                           4 131     3 473       3 473         2 770
Liabilities arising on securitisation of own originated loans and advances                         2 216     1 551       1 551         1 652
Current taxation liabilities                                                                           -       202         202           577
Deferred taxation liabilities                                                                         92        99          99           104
Other liabilities                                                                                  5 272     6 874       6 844         5 725
Loans from group companies                                                                         3 150     7 007       7 007         6 153
                                                                                                 395 893   392 281     392 283       377 229
Subordinated liabilities                                                                          12 753    13 374      13 374        13 524
                                                                                                 408 646   405 655     405 657       390 753
Equity
Ordinary share capital                                                                                32        32          32            32
Share premium                                                                                     14 885    14 885      14 885        14 885
Other reserves                                                                                     1 628     1 353       1 293         1 713
Retained income                                                                                   22 764    20 901      21 855        20 193
Shareholders' equity excluding non-controlling interests                                          39 309    37 171      38 065        36 823
Other Additional Tier 1 securities in issue                                                          350       350         350             -
Total equity                                                                                      39 659    37 521      38 415        36 823

Total liabilities and equity                                                                     448 305   443 176     444 072       427 576

# The 1 April 2018 balance sheet has been presented on an IFRS 9 basis and the comparative as at 31 March 2018 on an IAS 39 basis.

Liquidity coverage ratio disclosure

The objective of the liquidity coverage ratio (LCR) is to promote the short-term resilience of the liquidity risk profile of banks by ensuring 
that they have sufficient high quality liquid assets to survive a significant stress scenario lasting 30 calendar days.

In accordance with the provisions of section 6(6) of the South African Banks Act 1990 (Act No. 94 of 1990), banks are directed to comply with 
the relevant LCR disclosure requirements. This disclosure Template LIQ1 is in accordance with Pillar 3 of the Basel III liquidity accord, as 
specified by BCBS d400 (2017) and Directive 01/2018.

The following table sets out the LCR for the group and bank:
                                                                                              Investec Bank Limited    Investec Bank Limited
                                                                                                             Solo -     Consolidated Group -
R'million                                                                                      Total weighted value     Total weighted value

High quality liquid assets (HQLA)                                                                            77 194                   78 202
Net cash outflows                                                                                            56 325                   54 795
Actual LCR (%)                                                                                                137.4                    143.3
Required LCR (%)                                                                                               90.0                     90.0

The values in the table are calculated as the simple average of 92 calendar daily values over the period 1 July 2018 to 30 September 2018 for 
Investec Bank Limited (IBL) bank solo. Investec Bank Limited consolidated group use daily values for IBL bank solo, while those for other group 
entities use the average of July, August, September 2018 month-end values.

Net stable funding ratio
The objective of the net stable funding ratio (NSFR) is to promote the resilience in the banking sector by requiring banks to maintain a stable 
funding profile in relation to the composition of their assets and off-balance sheet activities on an ongoing structural basis.

In accordance with the provisions of section 6(6) of the South African Banks Act 1990 (Act No. 94 of 1990), banks are directed to comply with 
the relevant NSFR disclosure requirements. This disclosure Template LIQ2 is in accordance with Pillar 3 of the Basel III liquidity accord, as 
specified by Directive 11/2015 and Directive 01/2018.

The following table sets out the NSFR for the group and bank:
                                                                                              Investec Bank Limited    Investec Bank Limited
                                                                                                             Solo -     Consolidated Group -
R'million                                                                                      Total weighted value     Total weighted value

Available stable funding (ASF)                                                                              283 067                  294 934
Required stable funding (RSF)                                                                               254 271                  259 998
Actual NSFR (%)                                                                                               111.3                    113.4
Required NSFR (%)                                                                                             100.0                    100.0

Commentary

These reviewed interim condensed consolidated financial results are published to provide information to holders of Investec Bank Limited's 
listed non-redeemable, non-cumulative, non-participating preference shares.

Overview of results

Investec Bank Limited, a subsidiary of Investec Limited, posted a decrease in headline earnings attributable to ordinary shareholders of 
7.2% to R2 038 million (2017: R2 196 million). An increase in profit before tax of 3.7%, was offset by a higher tax charge off a low base in 
the prior period.

The balance sheet remains sound with a capital adequacy ratio of 15.2% (1 April 2018: 15.4%). For full information on the Investec Group results, 
refer to the combined results of Investec plc and Investec Limited on the group's website https://www.investec.com.

Financial review

Unless the context indicates otherwise, all comparatives referred to in the financial review relate to the six months ended 30 September 2017.

Salient operational features for the period under review include:

Total operating income before expected credit loss impairment charges increased by 3.1% to R6 149 million (2017: R5 965 million). The components 
of operating income are analysed further below:

- Net interest income increased by 9.7% to R4 019 million (2017: R3 663 million) supported by higher net margins and continued activity from our 
  private client base
- Net fee and commission income decreased 0.7% to R1 076 million (2017: R1 084 million) as a result of lower investment banking and corporate 
  client activity levels
- Investment income amounted to R253 million (2017: R597 million) impacted by a weaker performance from the listed and unlisted investment portfolios
- Share of post taxation profit of associates of R369 million (2017: R382 million) primarily reflects earnings in relation to the group's investment 
  in the IEP Group
- Total trading income increased significantly amounting to R431 million (2017: R238 million), reflecting translation gains on foreign currency equity 
  investments (partially offsetting the related weaker investment income performance).

Expected credit loss (ECL) impairment charges amounted to R376 million (2017: R373 million under the IAS 39 incurred loss model), however, the 
credit loss ratio remained at the lower end of its long term average trend at 0.29% (2017: 0.31%). Stage 3 assets (net of ECL impairment charges) 
as a percentage of net core loans subject to ECL was 0.8% (1 April 2018: 0.7%).

The ratio of total operating costs to total operating income remained at 52.3%, reflecting cost containment with operating costs up 3.1% to 
R3 217 million (2017: R3 121 million).

As a result of the foregoing factors profit before taxation and acquired intangibles increased by 3.4% to R2 556 million (2017: R2 471 million). 
Profit after taxation decreased by 7.7% to R2 132 million (2017: R2 309 million) impacted by a higher tax charge off a low base in the prior period.

Basis of preparation

The condensed consolidated interim financial statements are prepared in accordance with International Financial Reporting Standard, (IAS) 34 Interim 
Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by 
Financial Reporting Standards Council and the requirements of the Companies Act of South Africa.

The accounting policies applied in the preparation of the results for the six months ended 30 September 2018 are consistent with those adopted in the 
financial statements for the year ended 31 March 2018 except as noted below.

On 1 April 2018 the group adopted IFRS 9 'Financial Instruments' which replaced IAS 39 and sets out the new requirements for the recognition and 
measurement of financial instruments. These requirements focus primarily on the classification and measurement of financial instruments and measurement 
of impairment losses based on an expected credit loss (ECL) model as opposed to an incurred loss methodology under IAS 39. Disclosure related to the 
initial application and the impact of the transition from IAS 39 to IFRS 9 were included in the group's transition disclosures published on 15 June 2018 
which can be accessed via the Investec website at www.investec.com.

Additionally, on 1 April 2018 the group adopted IFRS 15 'Revenue from contracts with customers' which replaced IAS 18 'Revenue'. IFRS 15 provides a 
principles-based approach for revenue recognition and introduces the concept of recognising revenue for obligations as they are satisfied. It applies 
to all contracts with customers except leases, financial instruments and insurance contracts. The group's measurement and recognition principles were 
aligned to the new standard and hence there has been no material impact on measurement and recognition principles or on disclosure requirements from 
the adoption of IFRS 15.

The financial results have been prepared under the supervision of Nishlan Samujh, the Group Chief Financial Officer. The interim financial statements 
for the six months ended 30 September 2018 will be posted to stakeholders on 30 November 2018. These interim financial statements will be available 
on the group's website at the same date.

On behalf of the Board of Investec Bank Limited

Khumo Shuenyane         Richard Wainwright
Chairman                Chief Executive Officer

14 November 2018

Review conclusion
The condensed consolidated interim financial statements for the period ended 30 September 2018 have been reviewed by KPMG Inc. and Ernst & Young Inc., 
who expressed an unmodified review conclusion. A copy of the auditors' review report is available for inspection at the company's registered office 
together with the financial statements identified in the auditors' report.

The auditors' report does not necessarily report on all of the information contained in these financial results. Shareholders are therefore advised 
that in order to obtain a full understanding of the nature of the auditors' engagement, they should obtain a copy of the auditors' report together 
with the accompanying financial information from the issuer's registered office.

Analysis of assets and liabilities by measurement basis
                                                                                                                       Non-
                                                                                    Total       Financial         financial
                                                                                financial     instruments    instruments or
At 30 September 2018                                                          instruments    at amortised     scoped out of
R'million                                                                   at fair value            cost            IFRS 9      Total

Assets
Cash and balances at central banks                                                      -           9 586                 -      9 586
Loans and advances to banks                                                             -          18 458                 -     18 458
Non-sovereign and non-bank cash placements                                            878           9 563                 -     10 441
Reverse repurchase agreements and cash collateral on securities borrowed            9 288           4 745                 -     14 033
Sovereign debt securities                                                          53 702           5 221                 -     58 923
Bank debt securities                                                                4 046           6 312                 -     10 358
Other debt securities                                                               9 267           4 594                 -     13 861
Derivative financial instruments                                                    9 506               -                 -      9 506
Securities arising from trading activities                                          1 366               -                 -      1 366
Investment portfolio                                                                7 890               -                 -      7 890
Loans and advances to customers                                                    18 493         232 313                 -    250 806
Own originated loans and advances to customers securitised                              -           8 341                 -      8 341
Other loans and advances                                                                -             359                 -        359
Other securitised assets                                                                -             250                 -        250
Interests in associated undertakings                                                    -               -             6 541      6 541
Deferred taxation assets                                                                -               -               750        750
Other assets                                                                        2 163           3 369             2 897      8 429
Property and equipment                                                                  -               -             2 626      2 626
Investment properties                                                                   -               -                 1          1
Goodwill                                                                                -               -               171        171
Intangible assets                                                                       -               -               461        461
Loans to group companies                                                               87          15 061                 -     15 148
                                                                                  116 686          318 172           13 447    448 305
Liabilities
Deposits by banks                                                                       -          25 801                 -     25 801
Derivative financial instruments                                                   14 531               -                 -     14 531
Other trading liabilities                                                           2 468               -                 -      2 468
Repurchase agreements and cash collateral on securities lent                        3 230           3 270                 -      6 500
Customer accounts (deposits)                                                       42 426         289 306                 -    331 732
Debt securities in issue                                                                -           4 131                 -      4 131
Liabilities arising on securitisation of own originated loans and advances              -           2 216                 -      2 216
Deferred taxation liabilities                                                           -               -                92         92
Other liabilities                                                                     683           1 234             3 355      5 272
Loans from group companies                                                              -           3 150                 -      3 150
Subordinated liabilities                                                                -          12 753                 -     12 753
                                                                                   63 338         341 861             3 447    408 646
Financial instruments carried at fair value

The table below analyses recurring fair value measurements for financial
assets and financial liabilities.

These fair value measurements are categorised into different levels in the fair
value hierarchy based on the inputs to the valuation technique used. The
different levels are identified as follows:

Level 1 - quoted (unadjusted) prices in active markets for identical assets or
          liabilities

Level 2 - inputs other than quoted prices included within level 1 that are
          observable for the asset or liability, either directly (i.e. as prices) or
          indirectly (i.e. derived from prices)

Level 3 - inputs for the asset or liability that are not based on observable
          market data (unobservable inputs).
                                                                                                          Fair value category
                                                                                  Financial
At 30 September 2018                                                            instruments
R'million                                                                     at fair value    Level 1             Level 2      Level 3

Assets
Non-sovereign and non-bank cash placements                                              878         83                 795            -
Reverse repurchase agreements and cash collateral on securities borrowed              9 288          -               9 288            -
Sovereign debt securities                                                            53 702     53 702                   -            -
Bank debt securities                                                                  4 046      3 902                 144            -
Other debt securities                                                                 9 267      3 592               5 675            -
Derivative financial instruments                                                      9 506          -               9 494           12
Securities arising from trading activities                                            1 366      1 366                   -            -
Investment portfolio                                                                  7 890      4 009                 431        3 450
Loans and advances to customers                                                      18 493          -              17 889          604
Other assets                                                                          2 163      2 163                   -            -
Loans to group companies                                                                 87          -                  87            -
                                                                                    116 686     68 817              43 803        4 066
Liabilities
Derivative financial instruments                                                     14 531          -              14 531            -
Other trading liabilities                                                             2 468        193               2 275            -
Repurchase agreements and cash collateral on securities lent                          3 230          -               3 230            -
Customer accounts (deposits)                                                         42 426          -              42 426            -
Other liabilities                                                                       683          -                 683            -
                                                                                     63 338        193              63 145            -

Net financial assets/(liabilities) at fair value                                     53 348     68 624            (19 342)        4 066

Transfers between level 1 and level 2

There were no significant transfers between level 1 and level 2 in the current period.

Level 3 instruments

The following table shows a reconciliation of the opening balances to the closing balances for financial instruments in level 3 at fair value category.
All instruments are at fair value through profit and loss.

R'million

Balance at 31 March 2018                                                                                                          1 983
Adoption of IFRS 9                                                                                                                1 690
Balance at 1 April 2018                                                                                                           3 673
Total losses included in the income statement                                                                                     (170)
Purchases                                                                                                                           135
Sales                                                                                                                              (89)
Issues                                                                                                                              247
Transfers into level 3                                                                                                              215
Foreign exchange adjustments                                                                                                         55
Balance at 30 September 2018                                                                                                      4 066

For the period ended 30 September 2018, R214.9 million has been transferred from level 2 into level 3 as a result of the inputs to the valuation methods
becoming unobservable in the market.

The following table quantifies the losses included in the income statement recognised on level 3 financial instruments:

For the six months to 30 September 2018
R'million                                                                                                Total   Realised    Unrealised

Total (losses)/gains included in the income statement for the period
Investment income                                                                                        (170)       (208)           38

Sensitivity of fair values to reasonably possible alternative assumptions by level 3 instrument type

The fair value of financial instruments in level 3 are measured using valuation techniques that incorporate assumptions that are not evidenced by prices
from observable market data. The following table shows the sensitivity of these fair values to reasonably possible alternative assumptions, determined at 
a transactional level:
                                                                                                                Potential impact
                                    Level 3                                                                 on the income statement
                                    balance                                                       Range which
                                      sheet                                       Significant    unobservable   Favourable    Unfavourable
                                      value               Valuation              unobservable  input has been      changes         changes
At 30 September 2018              R'million                  method             input changed        stressed    R'million       R'million

Assets

Derivative financial instruments         12          Price earnings                    EBITDA      (5%) - 20%            2              (1)


Investment portfolio                  3 450                                                                            534            (566)
                                                     Price earnings                    EBITDA               *          407            (326)
                                                         Discounted              Precious and
                                                          cash flow  industrial metals prices      (10%) - 6%           21             (35)

                                               Discounted cash flow                 Cash flow      (15%) - 5%           10             (29)
                                                              Other                   Various              **           96            (176)
Loans and advances to customers         604    Discounted cash flow                 Cash flow      (15%) - 5%           30             (91)

Total                                 4 066                                                                            566            (658)

* The EBITDA has been stressed on an investment-by-investment basis in order to obtain favourable and unfavourable valuations.
** The valuation sensitivity for certain equity investments and fair value loans have been assessed by adjusting various inputs such as expected 
   cash flows, discount rates, earnings multiples rather than a single input. It is deemed appropriate to reflect the outcome on a portfolio basis 
  for the purpose of this analysis as the sensitivity of the investment cannot be determined through the adjustment of a single input.

In determining the value of level 3 financial instruments, the following are principal inputs that can require judgement:

Price earnings multiple
The price earnings ratio is an equity valuation multiple. It is a key driver in the valuation of unlisted investments.

EBITDA
The company's earnings before interest, taxes, depreciation and amortisation. This is the main input into a price earnings multiple valuation method.

Precious and industrial metals
The price of property and precious and industrial metals is a key driver of future cash flows on these investments.

Cash flows
Cash flows relate to the future cash flows which can be expected from the instrument and requires judgement.

Measurement of financial assets and liabilities at level 2

The table below sets out information about the valuation techniques used at the end of the reporting period in measuring financial instruments categorised 
as level 2 in the fair value hierarchy:
                                                                           Valuation basis/techniques   Main inputs
Assets
Non-sovereign and non-bank cash placements                                 Discounted cash flow model   Yield curve
Reverse repurchase agreements and cash collateral on securities borrowed   Discounted cash flow model   Yield curve
Bank debt securities                                                       Discounted cash flow model   Yield curve
Other debt securities                                                      Discounted cash flow model   Yield curve
Derivative financial instruments                                           Discounted cash flow model   Yield curve
                                                                           Black-Scholes                Volatilities
Investment portfolio                                                       Adjusted quoted price        Liquidity adjustment
Loans and advances to customers                                            Discounted cash flow model   Yield curve
Loans to group companies                                                   Discounted cash flow model   Yield curve
Liabilities
Derivative financial instruments                                           Discounted cash flow model   Yield curve
                                                                           Black-Scholes                Volatilities
Other trading liabilities                                                  Discounted cash flow model   Yield curve                                                               
Repurchase agreements and cash collateral on securities lent               Discounted cash flow model   Yield curve
Customer accounts (deposits)                                               Discounted cash flow model   Yield curve
Other liabilities                                                          Discounted cash flow model   Yield curve

Fair value of financial assets and liabilities at amortised cost

The following table sets out the fair value of financial instruments held at amortised cost where the carrying value is not a reasonable approximation 
of fair value:

At 30 September 2018                                                       Carrying       Fair
R'million                                                                     value      value

Assets
Loans and advances to banks                                                  18 458     18 467
Reverse repurchase agreements and cash collateral on securities borrowed      4 745      4 743
Sovereign debt securities                                                     5 221      5 055
Bank debt securities                                                          6 312      6 288
Other debt securities                                                         4 594      4 502
Loans and advances to customers                                             232 313    232 376

Liabilities
Deposits by banks                                                            25 801     26 260
Repurchase agreements and cash collateral on securities lent                  3 270      3 205
Customer accounts (deposits)                                                289 306    289 634
Subordinated liabilities                                                     12 753     14 135

Investec Bank Limited
Incorporated in the Republic of South Africa
Registration number: 1969/004763/06
Share code: INLP
ISIN: ZAE000048393

Preference share dividend announcement

Non-redeemable non-cumulative non-participating preference shares
("preference shares")

Declaration of dividend number 31

Notice is hereby given that preference dividend number 31 has been
declared by the Board from income reserves for the period 1 April 2018 to
30 September 2018 amounting to a gross preference dividend of 417.79151
cents per preference share payable to holders of the non-redeemable
non-cumulative non-participating preference shares as recorded in the books
of the company at the close of business on Friday, 14 December 2018.

The relevant dates for the payment of dividend number 31 are as follows:

Last day to trade cum-dividend                 Tuesday, 11 December 2018
Shares commence trading ex-dividend          Wednesday, 12 December 2018
Record date                                     Friday, 14 December 2018
Payment date                                   Tuesday, 18 December 2018

Share certificates may not be dematerialised or rematerialised between
Wednesday, 12 December 2018 and Friday, 14 December 2018, both dates
inclusive.

Additional information to take note of:

- Investec Bank Limited tax reference number: 9675/053/71/5

- The issued preference share capital of Investec Bank Limited is
  15 447 630 preference shares

- The dividend paid by Investec Bank Limited is subject to South African
  Dividend Tax (Dividend Tax) of 20% (subject to any available exemptions
  as legislated)

- The net dividend amounts to 334.23321 cents per preference share for
  shareholders liable to pay the Dividend Tax and 417.79151 cents per
  preference share for preference shareholders exempt from paying the
  Dividend Tax.

By order of the board

N van Wyk
Company Secretary

14 November 2018

Investec Bank Limited
(Registration number 1969/004763/06)
Share code: INLP
ISIN: ZAE000048393

Registered office
100 Grayston Drive
Sandown
Sandton
2196

Transfer secretaries
Computershare Investor Services (Pty) Ltd
Rosebank Towers
15 Biermann Avenue
Rosebank
2196

Company Secretary
N van Wyk

Sponsor: Investec Bank Limited

Directors
KL Shuenyane (Chairman)
DM Lawrence (Deputy Chairman)
RJ Wainwright^ (Chief Executive Officer)
ZBM Bassa, GR Burger^
D Friedland, B Kantor^
S Koseff^, NA Samujh^
PRS Thomas, F Titi^
^ Executive

SE Abrahams retired effective 8 August 2018

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