Thursday March 20, 10:56 AM
Investec takes big write-down on Kensington
LONDON (ShareCast) - South African bank Investec (LSE: INVP.L - news) is to take up to a £60m write-down on mortgage lender Kensington
just ten months after it bought it for £273m.Investec said it had made good progress integrating Kensington, but as a result of deliberately reduced new business and limited activity in the securitisation markets it will take a goodwill impairment charge of between £50m and £60m. Elsewhere, the bank said operating fundamentals across the group have been impacted by the global credit and capital market crisis and volatile equity markets. Trading conditions have steadily weakened in the five months since the half year and most notably in the first quarter of 2008.
"This has resulted in a decline in activity levels particularly within our UK and Australian operations," it said, though it still expects the second half operating profit to be higher than the first six months due to a strong performance in South Africa and lower capital market write downs in the UK. Impairments and defaults are expected to rise in the in light of weak economic conditions, particularly in Private Bank (UK and South Africa) and Capital Markets (South Africa). There will also be a £10m hit on its US structured products portfolio though it will also book an £85m gain on the sale of the South African property management and administration business. Since 31 March 2007 core loans and advances have grown by 28.4% to £12.8bn, customer deposits grew by 18.2% to £11.1bn and third party assets under management increased by 2.8% to £55.8bn.
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