ANNUAL REPORT Investec Bank Limited group and company annual financial statements

200 Pages·2016·3.28 MB·English

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ANNUAL REPORT
Investec Bank Limited
group and company
annual financial statements
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Specialist Banking

Corporate information
SECRETARY AND REGISTERED TRANSFER SECRETARIES
OFFICE
Computershare Investor Services (Pty) Ltd
Niki van Wyk 70 Marshall Street
100 Grayston Drive Johannesburg 2001
Sandown Sandton 2196 PO Box 61051
PO Box 785700 Sandton 2146 Marshalltown 2107
Telephone [phone] Telephone [phone]
Facsimile (27 11) 286 7966
DIRECTORATE
INTERNET ADDRESS
Refer to page 90
www.investec.com
For contact details for Investec
REGISTRATION NUMBER offices refer to page 195.

Reg. No. 1969/004763/06
AUDITORS
KPMG Inc.
Ernst & Young Inc.
For queries regarding information in this document
INVESTOR RELATIONS
Telephone [phone]
e-mail: [email protected]
Internet address:
www.investec.com/en_za/#home/investor_relations.html
Investec Bank Limited group and company annual financial statements 2016 1
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CROSS REFERENCE TOOLS
1. Audited information 2. Page references 3. Website 4. Sustainability 5. Reporting standard
Denotes information in Refers readers to information Indicates that additional Refers readers to further Denotes our consideration of
the risk and remuneration elsewhere in this report information is available on information in our a reporting standard
reports that forms part of our website: sustainability report available
the group’s audited financial www.investec.com on our website:
statements www.investec.com
2 Investec Bank Limited group and company annual financial statements 2016
Contents
1
Investec Bank Limited in perspective
Overview of the Investec group’s and Investec Bank Limited’s organisational structure 5
Overview of the activities of Investec Bank Limited 6
Our operational footprint 7
Highlights 8
2
Financial review
Financial review 12
3
Risk management and corporate governance
Risk management 22
Credit ratings 82
Internal Audit 83
Compliance 84
Corporate governance 85
Directorate 90
4
Remuneration report
Remuneration report 92
5
Annual financial statements
Directors’ responsibility statement 105
Declaration by the company secretary 105
Directors’ report 106
Independent auditors’ report 108
Income statements 109
Statements of comprehensive income 110
Balance sheets 111
Statements of changes in equity 112
Cash flow statements 116
Accounting policies 117
Notes to the financial statements 126
Contact details 195
Investec Bank Limited group and company annual financial statements 2016 3
One
Investec Bank Limited
in perspective
Overview of the Investec group’s and Investec
ONE
Bank Limited’s organisational structure
Operating structure
Investec Limited, which
During July 2002 Investec Group Limited (since renamed Investec Limited) implemented
houses our Southern a dual listed companies (DLC) structure and listed its offshore business on the London IN
Stock Exchange. VE
African and Mauritius S
T
A circular on the establishment of our DLC structure was issued on EC
operations, has been 20 June 2002 and is available on our website. BAN
K
listed in South Africa In terms of the DLC structure, Investec Limited is the controlling company of our L
IM
businesses in Southern Africa and Mauritius and Investec plc is the controlling company of IT
since 1986 E
our non-Southern African businesses. Investec Limited is listed on the JSE Limited South Africa D
and Investec plc is listed on the London Stock Exchange. Investec Bank Limited (referred IN P
to in this report as the bank) is a subsidiary of Investec Limited. ER
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OUR DLC STRUCTURE AND MAIN OPERATING SUBSIDIARIES AS AT 31 MARCH 2016
Investec Limited
Investec plc
JSE primary listing
LSE primary listing Sharing agreement
NSX secondary listing
JSE secondary listing
BSE secondary listing
Non-Southern African Southern African
operations operations
Investec Asset
Investec Asset Investec
Management Investec
Investec Management Investec Bank Property Group
Holdings Securities
Bank plc Limited Limited Holdings
(Pty) Ltd (Pty) Ltd
85%* (Pty) Ltd
85%*
Investec Investec Investec Equity Investec
Investec Wealth Reichmans
Holdings Bank Partners Import
& Investment Holdings
(Australia) (Mauritius) (Pty) Ltd Solutions
Limited (Pty) Ltd
Limited Limited 45%** (Pty) Ltd^
All shareholdings in the ordinary share capital of the
subsidiaries are 100%, unless otherwise stated.
* 15% held by senior management in the company.
** 55% held by third party investors in the company together with senior
management of the business.
^ Previously Blue Strata Trading (Pty) Ltd.
Salient features of the DLC structure
• Investec plc and Investec Limited are separate legal entities and listings, but are bound
together by contractual agreements and mechanisms
• Investec operates as if it is a single unified economic enterprise
• Shareholders have common economic and voting interests as if Investec plc and
Investec Limited were a single company
• Creditors, however, are ring-fenced to either Investec plc or Investec Limited as there
are no cross-guarantees between the companies.
Investec Bank Limited group and company annual financial statements 2016 5
Overview of the activities of
ONE
Investec Bank Limited
What we do SPECIALIST BANKING
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B Investec Bank Limited operates as a specialist bank within Southern Africa. The
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N bank is operationally managed as a single banking entity within Investec Limited.
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PE High-income and high net
R Corporates/government/institutional clients
S worth private clients
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Investment activities Corporate and Private
Institutional Banking activities Banking activities
Principal Investments Treasury and trading services Transactional banking and
foreign exchange
Specialised lending, funds and debt
capital markets Lending
Advisory and equity capital markets Deposits
Investments
Our Principal Investments division Corporate and Institutional Banking activities Private Banking activities positions
seeks to invest largely in unlisted provides a wide range of specialist products, itself as the ‘investment bank for
companies. Investments are services and solutions to select corporate private clients’, offering both credit
selected based on the track record clients, public sector bodies and institutions. and investment services to our
of management, the attractiveness The division undertakes the bulk of Investec’s select clientele.
of the industry and the ability to wholesale debt, structuring, proprietary
Through strong partnerships,
build value for the existing business trading, capital markets, advisory, trade
we have created a community
by implementing an agreed strategy. finance, import solutions and derivatives
of clients who thrive on being
business.
A material portion of the bank’s part of an entrepreneurial and
principal investments have been Our institutional stockbroking activities are innovative environment. Our target
transferred to a new vehicle, conducted outside of the bank in Investec market includes ultra high net
Investec Equity Partners (IEP). Securities (Pty) Ltd. worth individuals, active wealthy
The bank holds a 45% stake in IEP entrepreneurs, high-income
alongside other strategic investors professionals, self-employed
who hold the remaining 55% in IEP. entrepreneurs, owner managers
in mid-market companies and
Furthermore, our Central Funding
sophisticated investors.
division is the custodian of certain
equity and property investments.
Integrated systems and infrastructure
6 Investec Bank Limited group and company annual financial statements 2016
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Our operational footprint
Specialist expertise
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delivered with dedication EC
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and energy LIM
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Business leader OUR IN P
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Richard Wainwright S
value PE
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proposition
Further information on the Specialist Banking management
structure is available on our website.

The specialist teams are well positioned • High-quality specialist
to provide services for both personal banking solution to
and business needs right across Private corporate and private clients
Banking, Corporate and Institutional with leading positions in
Banking and Investment activities. selected areas
• Provide high touch
personalised service – ability
to execute quickly
• Ability to leverage
international, cross-border
platforms
• Well positioned to capture
opportunities between the
developed and the emerging
world – internationally mobile
• Balanced business model
with good business depth
and breadth.
WHERE we operate
South Africa Mauritius
Strong brand and positioning Established 1997
Fifth largest bank One of the leading international banks
in Mauritius
Leading in corporate institutional and
private client banking activities
Investec Bank Limited group and company annual financial statements 2016 7
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Highlights
A DIVERSIFIED BUSINESS
MODEL continues to support FINANCIAL
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VE PERFORMANCE
ST a large recurring revenue
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AN base, totalling 74.1% of
K Investec Bank Limited recorded
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IM a 16.9% increase in profit before
ITE operating income taxation
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IN 2016 2015
P
ER R4 295mn R3 673mn
SP We have a strong franchise that
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E supports a solid revenue base Improving cost to income ratio
2016 2015
53.3% 53.9%
Total operating income increased
16.1% to R10 388 million Improving credit loss ratio
2016 2015
(2015: R8 946 million)
0.26% 0.29%
Other financial features Cash and near cash balances
increased 40.8%
31 March 31 March 2016 2015
R’million 2016 2015 % change R124.9bn R88.7bn
Headline earnings 3 449 3 014 14.4%
Total capital resources
Core loans and advances
(including subordinated liabilities) 42 597 39 348 8.3%
increased 21.2%
Total equity 31 865 28 899 10.3%
Total assets 405 629 332 706 21.9% 2016 2015
R215.2bn R177.5bn
TOTAL OPERATING AND ANNUITY INCOME^
Customer deposits
increased 26.4%
R’million Percentage
12 000 90 2016 2015
80 R279.7bn R221.4bn
10 000
70
8 000 60
50 Ratio of loans and advances to
6 000
40 deposits remains strong
4 000 30
2016 2015
20
2 000
10 74.1% 78.1%
0 0
07 08 09 10 11 12 13 14 15 16
Trading income Low gearing ratios
Investment income
Other fees and other operating income
2016 2015
Annuity fees and commissions
Net interest income 12.6 times 11.4 times
Annuity incomeˆ as a % of total income
^ Where annuity income is net interest income and annuity fees.
8 Investec Bank Limited group and company annual financial statements 2016