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Investec Group surprised with a dividend in the first half, even as regulators urged banks to conserve cash amid the coronavirus pandemic and after a larger rival from South Africa warned shareholders not to expect anything for 2020.
Investec, which is listed in London and Johannesburg for two months, said it does not plan to declare a dividend during the six months until September after regulators in South Africa and the United Kingdom asked lenders to postpone payments.
Absa Group Ltd. said earlier Thursday that it is unlikely to report anything for the year until December after withholding its provisional payment.
Investec is pleased to have enough capital to weather any new financial shocks, CEO Fani Titi said in a call.
It hired regulators in paying 5.5 cents a share, most of which will be funded by dividends from its 25% stake in money manager Ninety One and its wealth management businesses, it said.
South Africa’s largest banks withheld first-half payments to comply with guidance from the nation’s watchdog, which is tracking its peers in the northern hemisphere that lenders pause payments to investors until at least January.
Standard Bank Group Ltd. and FirstRand Ltd., Africa’s largest banks, have indicated that they have surplus capital that could be distributed to investors, but that they will only consider their positions early next year.
Absa, South Africa’s third-largest bank, ruled out the possibility of an ordinary final dividend despite having strong capital reserves, which are expected to be further strengthened during the second half of this year.
Earnings before extraordinary items and accounting adjustments will likely decline more than 40% from a year earlier, Johannesburg-based Absa said in a statement Thursday.
Absa shares fell 0.1% in Johannesburg, while Investec fell 1.7% at 10:52 am in the city. The six-member South African Bank Index fell 1%, while the Bloomberg Europe Bank and Financial Services Index fell 1.6%.
Investec, which did not declare dividends during the 12 months to March, expects an improvement in the second half of the year as client activity levels increase and provisions improve, the company said in a statement.
Adjusted first-half earnings fell to 104.4 million pounds ($ 138 million) from 212.3 million pounds a year earlier. Investec has no immediate plans to reduce its stake in Ninety One, Titi said.
“We remain confident in the fundamentals of our business,” Investec said. “We continue to advance toward our strategic objectives, positioning the business for long-term growth, and we expect to substantially complete our simplification process by the end of the financial year.
Read: Absa sees moderate recovery for South Africa in 2021
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