Group Strategy
This distinction lies in our entrepreneurial culture, which is balanced by our strong risk management discipline, client-centric approach and ability to be nimble, flexible and innovative.
We don’t try to be all things to all people. Instead, we aim to build well-defined, value-added businesses that serve the needs of market niches where we can compete effectively.
"We will continue to build business depth in our attempt to enhance existing client relationships."
Financial Objectives
Financial objectives have been readjusted for changing landscape.
| Target in £ | 31 March 2012 | 31 March 2011 | ||
| ROE** |
12% - 16% over a rolling 5-year period |
7.80% | 11.20% | |
| Cost to income ratio |
< 65% | 64.70% | 61.70% | |
| Adjusted EPS* growth |
10% > UK RPI | -26.40% | -4.20% | |
| Dividend cover range |
1.7 - 3.5x | 1.9x | 2.5x | |
| Capital adequacy ratio range^ |
15% - 18% | plc: 17.5% Ltd: 16.1% |
plc: 16.8% Ltd: 15.9% |
|
| Tier 1 capital adequacy ratio range | 11% - 12% | plc: 11.6% Ltd: 11.6% |
plc: 11.6% Ltd: 11.9% |
|
* Before goodwill and non-operating items, acquired intangibles, non-operating items and after non-controlling interests
** Previous target was greater than 20% over the medium to long term
^ Previous target range was 14% - 17%.
Client-focused approach
- Clients are at the core of our business
- We strive to build business depth by deepening existing client relationships
- Distinction lies in our ability to be nimble, flexible and innovative, and to give clients a high level of service.
Specialised and focused strategy
- We don’t try to be all things to all people
- We serve select markets as a provider of tailored, structured solutions
- We aim to enhance our position in our principal niches and geographies
Sustainable business model
- Build a sustainable business model by balancing operational risk activities with financial risk activities
- Organic growth and select bolt-on acquisitions
- Contain costs and strictly manage risk, capital and liquidity
- Committed to creating value for shareholders.
Depth of leadership and entrepreneurial environment
- Passionate people are key to ensuring distinction
- Integrated international business platform with an effective global management structure demonstrating our depth of leadership
- Focus on developing and empowering people who are committed to the organisation
- Entrepreneurial environment that attracts talented people and encourages creativity and innovation.
Risk awareness entrenched in our culture
- Intimate involvement of senior management underpins effective risk management which is critical to our success
- Culture of risk awareness is embedded into our reward programmes, values and day-today activities
- Shareholder and employee interests are aligned, with executives and employees owning approximately 10% of our issued share capital.
Doing the right thing
- Doing the right thing for clients, employees and communities is integral to our way of doing business
- Focus on projects that are educational, entrepreneurial and sustainable.
Outlook
- In the face of challenging global market conditions, we continued to pursue our strategy of realigning the business model towards less capital intensive activities and concentrating on reducing legacy issues
- Our competitive position is strong with all platforms in place and our client franchise is robust
- We have the right people and skills to take advantage of opportunities in our identified niches, focusing on winning new clients and servicing existing clients in the best possible way
- The operating environment remains unpredictable and we continue to build on the solid foundation, driving organic growth in our chosen businesses whilst maintaining strong cost and capital discipline.
Our current strategic focus is to
- Build low capital intensive revenue
- Tightly manage costs while still investing for the future
- Maintain appropriate levels of capital and liquidity
- Continue the path of implementing our single bank strategy to create additional operational efficiencies and better service our clients
- Maintain momentum in Asset Management
- Complete integration in Wealth & Investment and continue internationalising the offering
- Capture trade and investment opportunities between developed and emerging economies.
Our long-term strategy
- Since inception we have expanded through a combination of organic growth and strategic acquisitions
- The internationalisation of Investec is based on the following strategy:
- following our customer base
- gaining domestic competence and critical mass in our chosen geographies
- facilitating cross-border transactions and flow - Our strategy for the past 20 years has been to build a diversified portfolio of businesses and geographies to support clients (institutional, corporate and private individuals) through varying markets and economic cycles
- In order to create a meaningful and balanced portfolio we need proper foundations in place which gain traction over time.
Our diversified business model
- Broadly defined, we operate in three distinct spaces: specialist banking, wealth and investment and asset management
- We live in a world where the market requires a high degree of transparency and the appropriate management of conflicts of interest
- Within specialist banking, we offer a broad range of services from advisory, structuring, lending, transactional banking, treasury and trading, and investment activities. These services are aimed at government, institutional, corporate and high net worth and high income clients in our selected geographies
- We have a global Wealth & Investment unit which provides investment management services and independent financial planning advice to private clients, charities and trusts
- Operating completely independently from these structures is Investec Asset Management. Its sole focus is the provision of investment management services to its predominantly global institutional client base
- We seek to maintain an appropriate balance between revenue earned from our operational risk activities and revenue earned from financial risk activities
- This ensures that we are not over reliant on any one part of our businesses to sustain our activities and that we have a large recurring revenue base that enables us to navigate
