LONDON (ShareCast) - Specialist banking and asset manager Investec says full year results will show a drop in operating income as volatile markets dented performance in the second half of the year.

In a briefing covering the full year to the end of March the firm says there has been a “substantial” decline in income from principal transactions, resulting in operating income falling between 2% and 3%.

Earnings per share will come in between 22% and 27% lower than 2011. Operating profit is expected to fall by between 12% and 16%.

On a brighter note, Investec has seen its assets under management figure rise 11% to £98.8bn, while the private banking businss returned to profitability.

The investment banking arm is letting the side down, however, particularly in Investec's home market of South Africa, where the institutional stockbroking business has endured low volumes while the Direct Investment portfolio has been hit by write-downs.

Investec’s Australian business is distressed, with the firm noting impairments remain high as the group tries to clear its non-core portfolio “as soon as possible”. Australia will report an operating loss, the UK business is expected to show profits marginally ahead of the prior year, while the South African division will be flat.

Investors were not enamoured by the update, the shares had dropped 1.28% by 11:23. Over the last 12 months the stock has lost 10% of its value.

BS

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