JOHANNESBURG, May 23 (Reuters) - South African lender Investec has raised its medium-term targets, including return on equity and dividend ratio, thanks to structural improvement in group performance, it said on Thursday after reporting a 9.1% rise in full-year profit.
The bank, which also operates in Britain and is listed in London, has increased targeted group return on equity (RoE) - a measure of how much profit is generated from each rand of shareholder investment - over the next three years to 13-17% from 12-16%.
It also lifted its dividend payout ratio slightly to 35-50% from 30-50% and is targeting a cost-to-income ratio - a key measure of efficiency - of less than 57%, up from less than 55%, partly reflecting the merger of its UK wealth business with Rathbones.
Group Chief Executive Fani Titi told reporters that strategic moves over the past five years, including the Rathbones merger, have helped to drive significant growth in earnings, prompting the revised guidance.
Investec reported headline earnings per share of 72.9 pence for the year to March 31, up from 66.8 pence the previous year. It set a final dividend of 19 pence per share.
Group revenue rose by 5% to 2.1 billion pounds ($2.7 billion), with growth boosted by strong performance from corporate client franchises and by Investec Wealth & Investment in South Africa, while its group loan book increased by 1.7% to 30.9 billion pounds. In April British lenders were told by the Financial Conduct Authority (FCA) to ensure they are adequately prepared to meet the potential costs of customer complaints arising from its review into the motor finance industry.
Accordingly, Investec recognised a provision of 30 million pounds, including estimates for operational and legal costs.
"The Group has to date received a small number of complaints in respect of motor finance commissions and is actively engaging with the Financial Ombudsman Service in its assessment of these complaints," the lender said. ($1 = 0.7860 pounds) (Reporting by Nqobile Dludla Editing by Muralikumar Anantharaman and David Goodman)
Investec (INVP)
Rathbone (RAT)
