InvestecInvestecNov-Dec 2010

1

Review of globalReview of global environment

2

Looking back

13 SEP 2008“You are about to experience the most unbelievable week in America ever andunbelievable week in America ever, and we have to prepare for the absolutely worst case …We have to protect the firm. This is about our SURVIVAL”This is about our SURVIVAL- JAMIE DIMON, CEO JPMorgan Chase

3

Financial crisis …Collapse ofCollapse ofCollapse ofCollapse of

3.2

3.6

Collapse of Collapse of Lehman’sLehman’sCollapse of Collapse of Lehman’sLehman’sLIBOR-OIS spread

2.4

2.8

Bear StearnsBear StearnsBear StearnsBear Stearns

1.6

2

(%)

Closure of Closure of money funds / money funds / Northern RockNorthern Rock

Closure of Closure of money funds / money funds / Northern RockNorthern Rock

0 4

0.8

1.2

-0.4

0

0.4

Oct

05

Apr

06

Oct

06

Apr

07

Oct

07

Apr

08

Oct

08

Apr

09

Oct

09

Apr

10

Oct

10

Source: Bloombergs and Datastream

O A O A O A O A O A O

UK Eurozone US

4

… leading to a potential global debt crisis

45%

Country % risk of bankruptcy

35%

40%

20%

25%

30%

5%

10%

15%

0%

Source: Market Oracle, March 2010

5

Resulting in the age of austerity

Australia

“We have entered the Age of Austerity. It’s l d i d i E d i d ti d f thalready arrived in Europe and is destined for the

United States. Governments throughout Europe are cutting social spending and raising taxes —or contemplating doing so.

Even rich countries find the costs too high, but the sudden austerity could perversely trigger a new financial crisis.”

Robert J Samuelson Washington post 11 OctoberRobert J. Samuelson, Washington post, 11 October 2010

6

Hence, the world is in ‘stop-start’ mode

7(President Herbert Hoover (August 10, 1874 – October 20, 1964)

With global growth slowly recovering

GDP Growth Forecasts for 2010-2017Forecasts for 2010 2017

8

Source: Standard and Poors

Interest rates at historic lowsExcept for South Africa and Australia

18

12

14

16

8

10

%

2

4

6

0Nov-99 Nov-00 Nov-01 Nov-02 Nov-03 Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10

JIBAR (3M) UKINT (3M) AUINT (3M) USINT (3M) JPN (3M) EURIBOR (3M)

Source: Datastream

JIBAR (3M) UKINT (3M) AUINT (3M) USINT (3M) JPN (3M) EURIBOR (3M)

9

Credit markets have recovered

100

80

90

00

60

70

Reb

ased

to 1

0

40

50

30Sep 08 Dec 08 Mar 09 Jun 09 Sep 09 Dec 09 Mar 10 Jun 10 Sep 10

ABX 06-1 AAA ABX 06-2 AAA ABX 07-1 AAA ABX 07-2 AAA

Source: Datastream

ABX 06 1 AAA ABX 06 2 AAA ABX 07 1 AAA ABX 07 2 AAA

10

Equity markets volatile but moving up

140

125

95

110

ased

to 1

00

65

80 Reb

a

50 Dec 08 Feb 09 Apr 09 Jun 09 Aug 09 Oct 09 Dec 09 Feb 10 Apr 10 Jun 10 Aug 10 Oct 10

JSE FTSE ASX Dow JonesJSE FTSE ASX Dow Jones

11

Source: Datastream

With SA on a much firmer long-term growth path

• SA never had a banking crisis but rather a traditional recession brought about by high interest rates and the collapse of global demand.

p

• SA’s banking sector was recently ranked 6th in the world in global competitiveness report and first on its strength of regulatory and reporting standards.

• The stimulus led recovery in the US, along with Asia's rapid rebound in growth, has caused SA’s recovery to proceed better than initially expected.

G t d t t l fi d i t t ti t i• Government and parastatal fixed investment continues to improve, although infrastructure challenges will likely constrain growth at 6-7%.

• The private sector is becoming financially healthier, spending on the back of i i l i t dit d th iddl l i i t lrising real incomes, not credit, and the middle class is growing strongly.

• The current weak activity a temporary blip in the country’s long-term path to stronger growth and improved job creation.

12

Investec through theInvestec through the crisis

13

Maintained a strong balance sheet• Current capital structure and capital ratios exceed the minimum requirements for

2013

Capital adequacy ratios Capital

2013

IBAL 19 2%18.5%

16 2

18

Investec plc

IBAL

15.9%

19.2%

16 2%

16.7% Sep-10Mar-10

16.2 15.8

1414.8 14.6

12.113.1

11.7 11.5 11.812

14

16

Tier 1 ratios

0% 5% 10% 15% 20%

Investec Ltd 15.5%16.2% 5

8.57.6

8.5

7.1 7.28

10

12

%

Tier 1 ratios

Investec

IBAL 16.6%

12.1%

15.4%

S 10 2

4

6

Investec Ltd

Investec plc

12.1%

11.3%

12.1%

12.1% Sep-10Mar-10 0

Investec Limited

ABSA FirstRand Banking

Nedbank Standard Bank

T t l it l d ti Ti 1 ti C it l A t *0% 10% 20%

*A capital adequacy ratio reflects capital as a percentage of risk-weighted assets. A permanent equity ratio is more conservative as it expresses equity as a percentage of total assets, ignoring any risk weightings applied to those assets^Expected capital adequacy ratios at 30 September 2010

Source: Annual Company Reports

Total capital adequacy ratio Tier 1 ratio Capital: Assets*

14

Diversified our funding sources

£'mn

Investec LimitedInvestec DLC

R'mn

Average9,000

10,000

11,000

60,000

70,000

g

6,000

7,000

8,000

40,000

50,000

averageaverage

3,000

4,000

5,000

20,000

30,000

1,000

2,000 10,000

-Oct-08 Feb-09 Jun-09 Oct-09 Feb-10 Jun-10 Oct-10

-Oct-08 Feb-09 Jun-09 Oct-09 Feb-10 Jun-10 Oct-10

15

Built our core earnings drivers

Third party assets under management

£'bn

Core loans and advances

£'bn

Investec DLC Investec DLC

45

60

75

90

48.8

74.262.9

80.0

9

12

15

18

2116.2

17.917.3 18.1

0

15

30

2009 2010Mar Sep

0

3

6

9

2009 2010Mar Sepp

400

500

321 4

409.4371.2104

425.7R'bn

Investec Limited Investec Limited

125

150 120.4 118.2119.9 119.4

R'bn

100

200

300

400 321.4

25

50

75

100

02009 2010

Mar Sep

16

02009 2010

Mar Sep

Results of the groupSalient financial features (Investec DLC)

Sep-10 Sep-09%

change Mar-10

Salient financial features (Investec DLC)

Operating profit* excluding debt buy-back 228,157 169,979 34.2% 382,258

Operating profit* before tax (£’000) 228,157 215,979 5.6% 432,258

Attributable earnings* (£’000) 163,202 160,422 1.7% 309,710

Adjusted EPS* (pence) 22.1 24.0 (7.9%) 45.1

DPS (pence) 8.0 8.0 0% 16.0

Net tangible asset value per share (pence) 317.8 296.9 7.0% 324.1

Core loans and advances to customers (£’mn) 18,148 17,342 4.6% 17,891

*Before goodwill and non-operating items and after minorities

17

And for South AfricaSalient financial features (Investec Limited)Salient financial features (Investec Limited)

R'mn Sep-10 Sep-09 % change Mar-10

Operating profit before taxation, headline adjustments 1 947 2 067 5 8% 4 450and impairments 1,947 2,067 -5.8% 4,450

Operating profit before taxation and headline adjustments 1,570 1,652 -5.0% 3,587

Headline earnings attributable to ordinary shareholders 1,026 1,008 1.8% 2,141

Net core loans and advances 119,407 119,935 -0.4% 118,155

Customer accounts (deposits) 150,954 136,498 10.6% 143,121

Capital adequacy ratio 16.2% 14.7% - 15.6%

Tier 1 ratio 12.1% 11.3% - 12.1%

*Before goodwill and non-operating items and after minorities

18

Strong operational performance

Investec LimitedInvestec DLCOperating profit* Operating profit*

250

300 +49.5%

1,400

1,600

1,800

2,000

+23.8%

100

150

200

£’m

n

800

1,000

1,200

1,400

R’m

n-

50

100

-

200

400

600

Sep-06 Sep-07 Sep-08 Sep-09 Sep-10

Capital Markets Investment BankingPrivate Banking PropertyWealth & Investment Asset Management

Sep-06 Sep-07 Sep-08 Sep-09 Sep-10

Capital Markets Investment BankingPrivate Banking PropertyWealth & Investment Asset Management

*Before goodwill, non-operating items, taxation and after minorities and excludes Group Services and Other

19

Supported by strong recurring income base

Investec LimitedInvestec DLC

600

700

800

900

3 500

4,000

4,500

5,000

300

400

500

600

£’m

n

2,000

2,500

3,000

3,500

£’m

n

-

100

200

300

63% 63% 74% 61% 63%

-

500

1,000

1,500

59% 67% 71% 65% 71%

Sep-06 Sep-07 Sep-08 Sep-09 Sep-10

Other incomePrincipal transactions Net deal fees and commissions incomeRecurring income

Sep-06 Sep-07 Sep-08 Sep-09 Sep-10

Other incomePrincipal transactions Net deal fees and commissions incomeRecurring income

20

Strategy and outlookStrategy and outlook

21

2008 – 2009: On the defensiveF th t f 2008 d h f 2009 th ’ f ti d t b• For the rest of 2008 and much of 2009, the group’s focus continued to be on the balance sheet and we remained in defensive mode

22

Past year we’ve moved onto the front foot

23

Focused on realigning the business model

Third party assets and advisory

Proprietary risk capital

£535 mn

600

Net fees and commissions of

£341 mn

advisory £346 mn

(40% of total)

(36% of total)

Net interest income of £321 mn

£535 mn

200

400

£'m

n

£341 mn

Other of

£5 mn

)

(24% of total)

Principal transactions of

£214 mn-

200

S 04 S 05 S 06 S 07 S 08 S 09 S 10Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10

Third party assets and advisory

Net interest income and principal transactions

Net interest income and principal transactions after impairments

Wealth management

Specialist funds

Asset management

Transactional banking

Principal transactions

Structured transactions

Market making

Loans and depositsg

Advisory

p

24

• Strengthen existing client relationships

…and on building our brand• Strengthen existing client relationships• Provide distinctive products and an increased breadth of

services to clients

25

Ready to capture opportunities

• The system has stabilised and activity levels are starting to improve

• We have a solid and resilient franchise and will continue our efforts to build a strong brand

• We are on the front foot and have had a forward-focused approach

• With our strong balance sheet and liquidity position, we are ready to capture opportunities arising from the realignment of the financialcapture opportunities arising from the realignment of the financial services industry

26

Thank YouThank You

27