Group Chief Executive, Investec Group
Fani Titi on 2022 Year-End Results | Sky News Interview | Investec
Investec earnings per share ahead of pre-pandemic 2019 figures, despite market volatility. Chief Executive Fani Titi speaks to Ian King Live on Sky News about some of the key takeouts for the groups year-end results for 2022.
For the full 2022 results, visit: https://invest.ec/3yT9c1s.
About Fani Titi
Fani Titi, Group Chief Executive of Investec, has spoken about the need for stability and economic growth in South Africa as the country prepared for a new administration. In a June 2024 interview, he argued that the first 15 years of democracy were successful in growing the economy, but that the subsequent 15 years were not, and that the country needs a policy framework that engenders confidence and investment. He stated that if the economy grew at 1% more than the current trend, the fiscus could collect approximately 100 billion rand more per annum, and that a government choosing an anti-business policy framework could lead to higher inflation and make life harder for the most vulnerable. In earlier interviews, Titi discussed the structural challenges facing the South African economy, including electricity supply, logistics, and crime and corruption. He said that business is trying to help government address these issues. Titi has also spoken about his personal background, describing his life as "highly improbable" after growing up on a farm in the Free State. He has emphasized the importance of education, stating that if the education system continues to be irrelevant to the economy, the country will still be dealing with inequality and unemployment in 25 years. He has also described Investec's culture as having an "attitude and a sense of belief," and said he prefers people to make decisions and take responsibility rather than waiting for authorization.
Transcript (14 segments)
I
Interviewer0:00
Now the South African bank and wealth management firm Investec has reported a sharp rise in annual profits thanks to strong loan growth and a rise in funds under management. The lender, which also has a significant presence here in the city, reported an adjusted operating profit of 687.4 million pounds for the year to the end of March, up 82% on the previous 12 months. Well, joining me now is Fani Titi, he is the group chief executive of Investec. Fani, welcome to you. Nice to see you again. Which sectors are seeing the strongest loan growth right now?
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Fani Titi0:31
Hello Ian, good to be here. We have a number of sectors. For instance, we saw a lot of significant growth in our mortgage business to high net worth individuals. In certain corporate sectors, we were able to see significant growth. For instance, we do have a big business that supports private equity players as an example. We have an invoice finance business here in the UK that also saw significant growth. So we have a level of diversification and a number of specialist sectors that we support, and we are pleased with the business here in the UK. And similarly, we are pleased with the performance of the South African business, both on the wealth management side and on the banking side, in particular private clients.
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Interviewer1:18
Now your credit losses have been going in the right direction. Do you worry about the overall deterioration in the macro environment?
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Fani Titi1:27
We have to be concerned about the dark clouds that are on the horizon. We reported a very low credit loss ratio. We have though guided that there will be a level of normalization as we go forward, so we see that ticking up a little bit. The reason it is so low this time around, in addition to the asset quality that we have, is that we had recoveries in South Africa and we saw low impairments in both the UK and South Africa. But looking out a year and more, we do see that impairments will increase, although we do expect them to be moderate, into the 25 to 35 credit loss ratio range in terms of basis points.
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Interviewer2:12
Now we're obviously in a rate tightening environment. In fact, you may even get another rate increase in South Africa today. I mean, that is really on the whole pretty good news for lenders like you because it helps you widen your net interest margins.
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Fani Titi2:24
Yes it does, but I think the bigger impact in the long term is the impact on clients, the impact on consumers. And if rates remain high for a long period of time, you would expect that impact on consumers ultimately to impact businesses and to impact banks in the long term. But in the shorter term, you get better margins on your lending, you get better interest return on the capital that you hold with the central banks.
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Interviewer2:59
Now talk to me about the South African economy for a moment. If you were pleased, I mean obviously you're pretty unaffected by the war in Ukraine, but obviously commodity prices have moved. I mean South Africa is a big exporter of platinum, of gold, of coal, all commodities that Russia can no longer sell to the outside world. But you're also a big importer in South Africa of oil. I just wonder net net, how does the economy respond to the Russia situation?
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Fani Titi3:26
Look, the economy hasn't grown at a significant rate over a period of 10 years because there are a number of structural reforms that need to be implemented. We have been lucky over the last 12 months or so, even before the conflict in Ukraine occasioned by the Russian invasion, that receipts of taxes from the corporate side, in particular mining companies, were so significant that we have begun to make a dent on the finances of the country. So we have been a net beneficiary, albeit that we do pay more for the oil that we import. We do have a level of reliance on that, but net net the economy has benefited and the finances of the country have improved, and clearly the country will be better for it.
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Interviewer4:21
And I mentioned coal sector. Now we should point out of course that as a bank, you've been reducing your exposure to the coal sector.
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Fani Titi4:29
We are fundamentally committed to sustainability, both of the communities we operate in, of the environment, and we want to make a positive impact on our clients. So we have been reducing our support for coal. In the UK, we have indicated that in the next three to five years our exposure will drop to zero. In South Africa, we do support coal that goes into Eskom, which produces 95% of the electricity of the country at the moment. We have unstable electricity supply, so from a social impact perspective, we obviously have to continue to support Eskom. But the overall trajectory of our investment is for sustainable investment and for sustainable lending and for reduction in emissions overall.
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Interviewer5:22
Now the US dollar has been on a tear lately. Traditionally that is not terribly good news for currencies like the rand. How worried are you about that?
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Fani Titi5:30
Look, the rand has been particularly resilient over the last little while, partly as a consequence of what we spoke about, that commodity prices have been high. Second, we are a very deep and liquid market. With what's happening in the emerging markets, for instance the impact of the Russian invasion, South Africa is still regarded as a stable emerging market with deep liquidity as I said. So there has been net net some level of gain and stability. But as interest rates go up in the US and the UK, that over time will place a little bit of pressure on the rand as the carry trade will be less attractive as it were. So we would expect in the medium term the rand to continue to weaken.
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Interviewer6:24
All right, finally I know it's a really busy day for the results today. We have to leave it there. Thank you very much indeed for sparing the time to talk to us.
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Fani Titi6:30
Thank you. Thanks Ian, lovely talking to you.