Investec bleeds R220m on Steinhoff exposure

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Investec Bank losses R210m as a result of credit exposure to Steinhoff
Investec Bank losses R210m as a result of credit exposure to Steinhoff

Johannesburg – Investec Bank [JSE:INP] lost R220m as a result of credit exposure to Steinhoff, the company said on Thursday, as it released financial results for the year ended March 31.

The company said the trading and investment losses were lower than earlier estimates.

Investec said the credit exposures, through Steinhoff Africa Retail, "represent a small portion [of] the group’s balance sheet".

In December, Investec said in a statement that its loans to Steinhoff represented less than 0.25% of its total R464.8bn credit exposure as at September 30.

Steinhoff shares have plunged more than 95% since it reported irregularities in its accounts in December, valuing the business at about R8.85bn.

The firm is facing various investigations in South Africa and abroad, as regulatory bodies and investors demand accountability from its directors.

"Based on the information currently available to the group, Investec is not expecting to suffer any losses on these exposures," Investec said in a statement.

Investec reported a 44.9% jump in headline earnings from R3.069bn in 2017 to R4.4bn.

Investment income increased 12.3% to R530m, boosted by a "strong performance from the bank’s client-driven private equity portfolio".

The specialist banking group said trading income arising from customer flow decreased by 26.7% to R365m, due to losses incurred on Steinhoff, while foreign currency exchange also impacted income from other trading activities.

Impairments on loans and advances went up from R657m to R720m, while the credit loss remained at the lower end of its long-term average trend at 0.28%, down from 0.29%.

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