Ladies and gentlemen, good morning, and welcome to 100 Grayston here in Sandton. Welcome to any of our shareholders, analysts, and colleagues who are joining via the webcast. How wonderful it is that after 18 months of significant struggle with COVID, we can once again get back together in one room. Obviously, we are socially distanced, but it is fantastic to welcome you to 100 Grayston. Before I start, let me just say that we are going to talk about numbers today, which are obviously quite important. This business is not only about numbers. Our business is fundamentally about our clients and about how our people serve our clients. I would like to acknowledge, both for our clients, our people, that COVID-19 has been devastating, a great challenge.
I'm glad that we have survived COVID-19 and that we are now somewhat at the back end of it. Thank you to our clients for your support, and thank you to all our 8,200 colleagues for delivering out of the ordinary to our clients. Our business is obviously about profit, but we are also about impact. At the end of the day, hopefully you will see both profit and impact coming through. At the end of today, I hope that you will appreciate that our business is fundamentally strong after a period where we went through a strategic simplification and refocus of the business. Also that you will agree that we have a set of client franchises that are high quality and very resilient. That resilience will come through in the performance that we will be reporting today.
I'm very, very proud to stand here on behalf of my colleagues and present these fantastic results that we're going to be talking about today. We've made significant progress over the last two years or so, and at the end of the presentation, I hope you will agree with me that we are well-poised to capture the opportunity for growth that we think lies ahead for our business. If we start by focusing for the next few minutes on the journey that we have traveled over the last two years, the journey to simplify and to focus the business.
This journey started with the demerger of asset management in March 2020. The idea was to give each of Investec and Ninety One the freedom to pursue their strategies and growth prospects. What a fantastic story it has been since March 2020.
Ninety One continues to fly, and Investec has flown even higher. We are particularly pleased about the decision to demerge Ninety One. Of course, Hendrik and the team had a fantastic set of results on Tuesday, and we are very happy as a 25% shareholder at those results. We exited as part of this journey to simplify our business a number of subscale businesses. We exited territories also where we thought we couldn't compete. We also exited businesses where we thought the risk profile is no longer appropriate for us as we go forward. Today, I'm particularly pleased that in our journey to simplify the business, the board has now taken the decision to distribute a 15% holding in Ninety One. We can do so because our business continues to generate strong capital.
Our business has the power through its franchises to continue to do well, and we also did commit to you that we will continue to optimize our capital stack. This is an important step. There will be other steps that will come in future. Just to put this in context, we've now distributed 70% of Ninety One. At current market values, that represents a return to our shareholders of 1.7 GBP or approximately ZAR 34 billion. Very proud that we can bring this to the conclusion that we have brought it today. In addition to simplification, we said to you that we will give the business greater focus.
We will be focused largely on two geographies, on bank and wealth, and we will compete only in those niches where we can excel because we don't intend to be a bulge bracket bank, as it were, in our international markets. We have to be excellent where we choose to perform. That focus will be evidenced today by a growth in revenue of 30.5%, which we believe is quite fantastic. We also will be able to demonstrate through the results that we continue to exercise significant cost discipline. Our fixed cost grew by 3.3%, and the rest of the increase of 11.7% obviously reflect variable expenses, in particular variable remuneration in line with the growth of 30.5% in revenues.
Lastly, we are now at a point where we have a platform that is neat and tidy, a people that is motivated, and we look to capture the opportunity that lies ahead of us. Going now to the results. Firstly, it is quite clear that there has been a significant rebound in the economies in which we operate, and this has been quite helpful, although we do have some uncertainty as we look forward. Looking at financial markets, again, we have had supportive financial markets, so this will reflect in some of the growth you will see in our funds under management, and that also will be helpful in certain valuations. If we look forward, global interest rates have been at record lows, but we now are beginning to see the specter of inflation on the horizon.
Going forward, inflation is going to be quite a big item on the agenda with central banks having hoped that the signs of inflation that we saw were transitory. I think there is now a real sense that this inflation may be anchored as we go forward. Therefore, we expect rates to go up as we go. Looking at the results, we are at a point where our adjusted operating profit is now at pre-pandemic levels. The recovery has been swift, showing the resilience of our client franchises. We've seen good growth in the loan books. We've seen significant growth in Funds Under Management, driven both by markets, net inflows, and good investment performance.
At an adjusted earnings per share level, we've seen growth of 135% to 26.3p. Very pleasing performance indeed. Our net asset value has grown at an annualized 9.3% to 479.2p. Relative to a share price of around 360p, there is still a gap that we still need to eliminate over the next little while as we execute on our current strategy. Our return on equity has been printed at 11.2%. We are now coming very close to our medium-term range of 12%-16%. Remember, we've had an interruption that has been caused by the pandemic. Pleasingly, our cost-to-income ratio came in at 64% relative to the prior period of 72%.
Driven by obviously a significant increase in revenue, but also characterized by the fact that our cost control has been excellent. As we go forward, cost discipline remains an important factor in the work that we do. If you look at the credit loss ratio at seven basis points, obviously a historic low driven by low specific impairments. The experience on the ground is that we are not seeing much come through, albeit that we still see that the environment remains particularly uncertain. We also saw significant recoveries in this period. On a net basis, while there was some release in provisions given the improvement in the economic scenario, we did have a net increase in COVID-19 overlays, given as we can see some of the uncertainty in the markets.
The interim dividend doubled from 5.5p to 11p to reflect the confidence that we have in the performance that we have seen. I've spoken about the distribution of 15% of our holding in Ninety One. On a per share basis, that adds 35p to the 11p dividend that has been declared. Obviously, there are a number of regulatory and other approvals that we still need to procure, and we do expect that within this financial year, we'll be able to execute on this distribution. Very pleased with, as I said, the return of capital to our shareholders. If we move to the next slide, this is a depiction of the recovery in performance.
Given the news on Ninety One, we've also separated the contribution of Ninety One to our earnings. As you can see, the blue, that is Investec, has performed particularly well in terms of recovery. Our confidence in our business and in our people is at an all-time high. The momentum in the business continues, so we look forward with a lot of confidence. Looking at how this performance has been achieved, it is pleasing that we are firing on all cylinders. Starting off with the specialist banking business in South Africa, adjusted operating profit increased by 69% in rand. Well done, Richard. If you look at the wealth business in SA, 18% up in rand. Henry is on his way flying from. Oh, I think he's in Switzerland actually. He comes back tomorrow. Well done, Henry and team.
Group investments up significantly. If you look at South Africa as the geography, we saw adjusted operating profit up 94% in pounds and 76% in rand. That is a fantastic achievement in an economy that has been struggling because we haven't seen economic reforms that we require to unlock the potential of the economy. We are outdoing the macro. I'm really proud of our team in SA. The ROE in pounds for our South African business is now at 12% versus September 2020 ROE of 8.1%. Significant improvements overall. If you look at our U.K. business, we saw the specialist bank increase its profit massively. In truth, this is just a continuation of the growth momentum that was in the business.
This momentum, as you know, in the prior period, was interrupted by the losses that we experienced in our Finprod business. As we said in this result, the costs associated with both management of that risk and reduction of that risk were immaterial. We can see a resumption of growth in that business. Our wealth business grew adjusted operating profit by 46%. Again, a fantastic achievement by Ciaran and the team. I forgot to acknowledge Ruth and her team for this stellar performance in the bank in the U.K. In this area of our business, we are still very small within the U.K. context. The road forward is really rich with opportunity. In South Africa, we are a big player.
We have a strong brand and a strong presence, so we can fight our way, even in an environment where the economy is not growing, as we would like it to grow. A pleasing performance by all our businesses at the same time. I'm not going to cover the next slide. That goes into the exact details of the performance of each of the businesses. I will leave that to our Group Finance Director, Nishlan, to take us through that. As I prepare to hand the mic to Nishlan to take us through the results, I want to stress again that we manage for profitability, but we also manage for impact.
We've just had COP 26 over the last two weeks, and I'm pleased to see that the path to net zero has become a lot more accepted around the world, even though the transition from a climate perspective will probably be a bit slower and a bit more costly than we may have desired. As that transition occurs, we also have to make sure that that transition is just, and the social impact of the transition on poorer communities is well understood. At Investec, we continue to embed the thinking around climate change around sustainability goals fundamentally into our business. We have a policy on coal. We have disclosed both our exposures on coal, which, as you can see, is quite minimal at 0.11% of our loan book.
We also have disclosed fossil fuels. We are very proud of what we have achieved. We've also committed that going into the next AGM, we will give our Scope 3 targets around the issues relating to climate change. Sustainability is core to us. As United Investec, we've always said, we are committed to creating enduring worth, living in society and not of it. Nishlan, do you want to come up to just unpack the results in more detail? Thanks, Nish.
Well, it's actually amazing just to be up here, hey, and to see so many familiar faces across. Let's hope it's long may it last, and let's head in the right direction. If we get into some of the detail, I think just a reflection. You know, again, as Fani had highlighted, we did have some interruptions over the last financial year. We're not totally through all of those interruptions, and we've got to recognize that the journey ahead is still a journey that one has to navigate through. We're quite proud of the fact that both our geographies have contributed strongly in terms of these results, with South Africa contributing 59% of the operating profit and the U.K. contributing 55% of overall revenue.
I think when we talk about the distribution of 15% of Ninety One, when we look at the divisional contribution, the overall contribution from our group investment portfolio is about 5% of revenue. The actual portion of Ninety One that we will be distributing accounts for about 2.5% of that revenue. we strongly are of the view that we will grow into that, as we move through time. I think through this period, both our wealth businesses and our specialist banking business, which I know we said we represent as a single bar on this, which has multiple diversified business streams and revenue streams within it. You know, with the business contributing 72% of revenue and 75% of operating profit, and our wealth business, 23% of revenue and 17% of operating profit.
If we dig a little deeper, let's start off with our wealth and investment business in South Africa. I think the first point is to note is a net ZAR 10.1 billion of discretionary funds under management inflow in the period, which has really underpinned the growth in operating income of 22.6% in the period, representing higher average annuity income and discretionary funds under management and the contribution from that particular base. In the period, we did experience increased brokerage as trading activity on the markets picked up over the period. Overall adjusted operating profit increased by 17.8% to ZAR 311 million, with the operating margin being achieved at 31.5%. Which, yes, it did come in a little, and that's really driven by investments in terms of the platform and people.
Still a relatively strong and respectable operating margin across the industry. I think it's also worthwhile noting that we continue to have sustained inflows into our offshore offerings. From the Wealth Investments UK perspective, Funds Under Management grew to GBP 24.7 billion over the period, with net inflows of GBP 627 million. We saw the operating margin improve for our UK domestic business from 20.5%-26% over this period. That's notwithstanding increased discretionary spend as well as continued investment in terms of platforms and variable costs, obviously, following the improvement in profitability.
I think, again, net organic growth in funds under management of 3% really supported by higher market levels over the period, organic growth in funds under management and favorable investment performance across the portfolio. Moving on to the bank in South Africa. Core loans and advances grew by 3.4% or close to 7% on an annualized basis. That experience is across our private banking business as well as our corporate business over this period. The private banking business obviously benefiting from the lower interest rate environment and the opportunistic nature of the client base. Again, continued good growth in terms of client acquisition, which bodes well for the future.
In terms of our corporate and lending book, which grew by close to a 7% annualized rate over this period, that is within an environment in which we continue to see higher repayments as corporates continue to manage their excess liquidity on balance sheet. Deposits growing by 6.6% in the period. I think some of the defensiveness that has been on the balance sheet through the COVID period, we will continue to grow into some of that defensiveness. It's very pleasing to report a 22% growth in overall revenue from ZAR 5.8 billion to ZAR 7.1 billion over the period.
I think if we look at where that growth has come from, net interest income is a key driver in terms of the growth, with net interest margin really improving and us getting through the sharp decreases in interest rates that we saw impact the first three months of the prior year. That coupled with book growth and continued effort in terms of managing the cost of funds and obviously a favorable environment that continue to assist around that. Fees and commissions as well, and that's a split between annuity and deal fees and commissions, saw healthy growth. That's really a return of activity and a drive through in terms of particularly around our private clients businesses. Investment income in this period actually had a slightly negative return.
That's really on the fact that we did not have any significant realizations in this particular period. The cost-to-income ratio has improved from 55.4% to 49.7%, and that's off the back of continued management of fixed costs, which increased by 3.7%, and operating costs overall increasing by 9.1%, well offset by a 21.6% growth in revenue. When we look at our UK bank, we are particularly proud of the growth in core loans that we've experienced over the period. Yes, there have been some tailwinds that have assisted that, but the client acquisition remains constant and contributing to the underlying platform.
Core loans and advances increasing to GBP 13.7 billion or around about a 12.4% growth if you adjust for the fact that we had disposed of our Australian book back in March 2021, actually. Our private client lending activity and book is actually up 19.6%, and that's largely driven by client acquisitions. Demand for corporate credit was strong over the period, and that's really tantamount to the economic recovery that we have seen in the market and in particular in the client spaces that we operate in. Around about 9.5%, again, adjusting for Australia.
From a customer deposits perspective, you've seen that customer deposits haven't necessarily kept up with the growth in loans and advances, and that's really intentional, dealing with some of the conservatism that we built into the liquidity base to navigate the choppy markets that we've obviously operated through. Looking at revenue, overall revenue increasing by 20% from GBP 273 million to GBP 328 million. As Fani Titi had alluded to if we factor in that our Structured Products cost of last year in terms of hedging and managing that particular portfolio of GBP 53 million, it was relatively immaterial at just over GBP 1 million in this period.
Looking forward we continue to expect that portfolio now, which has significantly reduced because of positive markets and active management, will continue to be immaterial as we look through the full year. The cost-to-income ratio has improved from 80.7% to 72.8%, with overall operating costs increasing by 8.1%. Now, if you unpack the operating cost increases, and I will do so a little later, you will see that fixed personnel costs has actually reduced as we have gone through quite a significant restructuring of the business and we continue to see the benefits of the steps taken earlier. Operating, the cost-to-income ratio, I've spoken through. I think if we just unpack a bit of the revenue aspects.
Net interest income increasing by 24.6% over the period is fundamentally driven by growth in the book, as well as net reduction in the cost of funds in that business as well. I think, again, one has to adjust for the fact that we have exited our Australian business, so there will be an impact on revenue and costs. Really adjusting for that, you see a stellar performance in terms of the underlying business. Our group investments portfolio, in terms of an overall carrying value of GBP 834 million, generated income yield in the period of about 8%. Ninety One, which represents about 25%, is in our books at around about £1.60, which represents the equity accounted value of that investment relative to market value.
Therefore, you do see that the current market value of our overall investment portfolio sits well above the book carrying value. From a distribution perspective, if we use the relative value that is on here from an accounting perspective, that's GBP 240 million, much more significantly when you factor in the fact that it has a market value of just over GBP 2.60 per share. Again, a pleasing recovery in terms of the return, with return on equity for the overall investment portfolio at 10.1%, with us seeing an improvement in profitability in the underlying portfolio as anticipated in IPF, as well as Investec Property Fund also generating reasonable returns in this period with reduced momentum in terms of property write-offs that we had experienced before.
Coming back to the overall picture. We look at revenue growing from GBP 729 million to GBP 951 million over the period. You can see the drivers coming from three key areas, and that is our net interest income growing by 30%, really underpinned by the performance in our specialist banking businesses. Net fees and commissions improving by 19%. There are elements of moving parts in this, but the underlying momentum coming back into the business. Investments and associate income growing by 36%, and that's really the contributions coming from our investments in our associates. Trading income really represents the recovery of a non-repeat of the Structured Products costs that we carried in the prior period. Our overall annuity income closing at about 78.1%.
If I go back to the graph, obviously we have demerged our asset management business, which brings in capital-light businesses, capital-light revenue. Within the specialist banking business, as well as with the wealth business, there is still a healthy element of capital-light revenue in the platform. To the extent that we seek to utilize our excess capital, I think the focus will continue to be on capital-light. Overall cost-to-income ratio for the group really driven by two factors, improving to 64%, and that's an improvement in revenue. Fixed costs increasing by 3.3%, and an element of variable costs ticking up, which has driven operating costs increasing by 11.7%. The breakdown of our costs. Premises has cost a bit more in the period.
With some of our restructures, we have about GBP 3 million of excess costs that will not repeat as we move forward. Personnel cost is really driven by variable remuneration. If we had to split that between fixed and variable, the fixed personnel cost has reduced over the period, and variable following the revenue improvement. Business and marketing costs, obviously following the path that we are following post-COVID environment. From an earnings drivers perspective, I think we are very encouraged in both funds under management growth as well as our core loans and advances, with funds under management growing by 8.5% to GBP 63.4 billion over the period, with net inflows of GBP 1.5 billion. That again driven by favorable markets, investment performances in both our geographies.
Core loans and advances has increased by 7.2% to ZAR 28.3 billion, with customer accounts following closely. Breaking down our loan book. In South Africa, our core loans and advances has seen growth of 3.4% to 6.8% on an annualized basis. One will have to unpack the detail between these various components, but the corporate book really experiencing growth of around about 7% in this particular period.
Our high net worth book, on an annualized basis, our high net worth and private client book continuing with elements of growth as we had seen in the H2 of financial year. From a UK perspective, again, the growth in terms of core loans and advances being experienced across the portfolio, strongly supported by 17% growth in the mortgage book, 6% growth in our high net and specialized lending book. Again, good experience of our corporate lending portfolios across the portfolios, including our asset finance and corporate and acquisition finance, as well as power and infrastructure finance books. Coming to expected credit loss ratios. Yes, we do have quite a low credit loss ratio in this period of 7 basis points that hasn't been primarily driven by releases of impairments.
It's really driven by the fact that we don't have momentum in the current period on new impairments being raised. That's two factors. Number one is the level of specific impairments remained low, and that's reflective of the performance of our underlying client portfolios, and the strength of you know, the underlying portfolios themselves. The second is we did have some heightened recoveries over the period, and that recovery is really driven post write-offs over the last couple of years and continued effort in terms of recovery of assets has paid off during this current period. Again, with some clients recovering as markets opened up.
We also have from a macroeconomic perspective, the pressure of raising impairments as we saw in the H2 of 2020 has completely disappeared. That's as the forward look in terms of the macroeconomic environment has turned from negative, significantly negative to positive. Now, like anything in life, I think we're still in a period in which trying to measure what the outcome is and to try to get to specifics on different portfolios is, it's not a simple task of simply modeling. We've continued to maintain post-model adjustment overlays, and in certain instances, we've increased some of our post-model adjustment overlays to take account of risks that are still prevalent.
You know, if one has to understand that there has been interventions in markets, and as those interventions work out the system, there may be elements of risk. The pleasing aspect to report on is we don't see any evidence of that yet. You know, we continue to experience a good overall outcome in terms of asset quality. From a South African perspective, our credit loss ratio was 4 basis points, with ZAR 108 million worth of charge, impairment charges, relatively low over the period. I think if we go back to a pre-COVID environment, our credit loss ratio was about 18 basis points. That, again, was significantly driven up as we provided for risk on the balance sheet on a forward-looking basis.
In South Africa, again, we have, to some degree, retained protection on the balance sheet. We will continue to do that as long as there are levels of uncertainty which are not necessarily easily modeled. From a U.K. perspective, our overall credit loss ratio at 9 basis points. In this book, we did raise some of our post-model overlays to account for economic uncertainty. There have been model releases over the period, and I think that's a consistent experience across the book. When we get to asset quality, you will see a continued strong momentum in terms of overall quality. The annualized credit loss ratio coming down from 60 basis points in the prior period. Both in South Africa and the U.K., the material positive impact on the income statement over this period.
From a balance sheet perspective, it's never easy to give you a simple analysis of the balance sheet because of the moving parts, particularly around certain write-offs that we post. For example, in the PLC balance sheet, the decrease of GBP 101 million to GBP 73 million of Stage 3 provisions is really driven by write-offs over the period of about GBP 40 million. Overall, the level of impairments raised on balance sheets remaining relatively intact. From a South African perspective, again, some migration between Stage 2 and Stage 3 influences the analysis. You can see from our overall coverage ratios there are movements in terms of coverage ratios, particularly for Stage 3, and that's really driven by specific assets and the relationship with collateral.
From an ROE perspective, we report an overall ROE of 11.2%, with South Africa producing a 12% ROE and plc to 10.5%, with both balance sheets utilizing around about GBP 2.1 billion to GBP 2.2 billion of capital. The return on tangible equity at 12.1%, representing really the return from our wealth businesses that provide quite a kicker into the ROE analysis. Coming to the balance sheet and to our capital positions, I think both Investec plc and Investec Limited reporting robust capital positions.
I think let's just take a note that Investec plc reports under a standardized basis, and the 11.1% CET1 ratio is measured on a relatively conservative basis if one has to look at the density of risk weights to overall asset positions. Total capital ratio for plc at 14.8% with a leverage ratio of 7.8%. From a South African perspective, we did see the CET1 ratio improve from 12.8% to 13.9%. Part of that is a continued completion of our journey to AIRB. We still have one material element which we refer to as our capital required on our income producing real estate, which is not in this measure yet.
South Africa continues to operate at quite a significantly heightened CET1 ratio, and that, to some degree, does have a challenge on ROE. From an overall position perspective, strong capital ratios and strong position looking forward in terms of both supporting growth and potential acquisitions. At the end of the day, the distribution of Ninety One in our view will have an immaterial impact on the overall capital position of the group. This slide just effectively takes stock of where we are against our medium-term targets, and I think I'm not gonna repeat through all of it. Just to note that our distribution, or the 11p dividend amounts to about a 41.8% payout ratio.
Now to look forward, and again, I think we sort of recognize that we're looking forward in November to a March year-end. The macroeconomic environment is improving and we've seen that on all fronts, whether it's in the geographies that we operate in or the businesses that we operate in. However, that recovery remains uneven. Will we continue to be tested? I think in South Africa, the risk of a fourth wave related to COVID-19, the level of vaccine rollout and the general socioeconomic challenges remain concerns. In the U.K., as we see the effects of Brexit and the continued play out in terms of the repositioning of the United Kingdom relative to Europe, we may see some impact across some of our portfolios.
From an earnings perspective, I think we are very pleased to report that we have increased our expected reported EPS targets or projections from 41p at the upper end that we have delivered as some guidance into the market to 48-53p for the full year. That guidance has taken into consideration the low impairments that you've seen in this particular H2 , but generally a continuation of the momentum of the business as we have seen in the H1 . The group remains committed to the targets that we have raised. That's the finance section. Fani, back to you to wrap it up for us.
Thank you, Nishlan. I'm sure as finance director in charge, this must have been the easiest set of results to present. The results are fantastic, representing an incredible business. That's why Nishlan can today revise upwards the guidance for the year, in terms of adjusted EPS to 48p-53p. Well done, Nish. Just in closing, it is important to note that we have strategic clarity about the business. We are an international banking and wealth management group with two home geographies of the U.K. and South Africa. We are fundamentally committed to supporting our clients in their journey of growth. That growth over time is transformational. We have a rich history and heritage in private banking, in wealth management, in corporate banking, in investment banking.
We are a niche player. We excel in what we do, and we continue in our two geographies to see significant opportunity. In South Africa, we operate at a large scale in all the businesses that we operate, and we are a standard setter in terms of the businesses that we operate in. In the U.K., we have refined our business and the niches we operate in, and we continue to see significant scale build up. As I said earlier, during the day, we have significant opportunity for growth. Three years ago, we committed to investing in the private banking offering in the U.K. You have now seen the level of growth that we have achieved, in that business.
When Ruth presented in May, she went through those areas of that market where we have chosen to compete, and the path to growth is particularly significant. On the wealth side in the U.K., as I said, both bolt-ons at the lower end and consolidation-type opportunities remain. We have our people who are empowered by a culture that gives them the freedom to operate, high levels of trust for our people, and our people have a spirit of enterprise. They act like owners of the business and deliver innovative, nimble solutions to our clients. As I say, we offer out of the ordinary, both in terms of service, in terms of product, and innovation. As we move forward, we have strategic clarity. We have a focused business resulting out of that.
We are confident as a people, and we have a level of ambition that drives our outlook. The next slide I'm not going to cover. It goes over the same factors. Over the last two years, we have looked at a framework to drive improved business performance. Despite the fact that we were interrupted by COVID, we have been able to show significant traction in our identified growth initiatives. We have made significant progress with respect to a cost discipline. Nishlan spoke about what we have done there in terms of these results, and that journey continues. We've also have been significantly making progress around capital discipline. The distribution initially of 55% of Ninety One.
Today, the 15% as announced, and the path towards AIRB, which will see us have even higher levels of capital in South Africa, the reduction in the investment portfolio in SA. We're excited about our ability to grow, and as I said earlier on, we can distribute the 15% because we have an engine that generates strong capital, and we are allocating that capital in the best way we know how. As we go forward, we have to continue to invest in our operating platform. The idea of investing more in both our technology and digitalization to make sure that we can provide continued high tech and supported at the same time by high touch that Investec is known for is really important.
We're going to be investing in the business, and we will deliver, as we do so, a connected ecosystem from a client perspective, but also a leveraged operating platform as we move forward. We're excited about the work we have done, and you can begin to see the results. Just taking stock of what we have been doing. When we started in FY 2019 in March, we recorded 48.7p of adjusted earnings per share. Of course, we had for 11 months IAM, now Ninety One. We are now guiding to 48p-53p in terms of adjusted EPS. Significant progress as we go forward. Obviously, in the 48p-53p, we've made some assumptions about when we will distribute the 15% of Ninety One. Our total operating income is now at 92.
Again, you can see that progression. Total costs at just under GBP 600 million now. You can see that if you double that, you will actually be better than you were in FY 2019. If you look at our weighted average number of shares, we committed in 2019 at our market day that we will rein in any issues of shares, that overall the direction of travel will be to maintain, if not reduce, the number of shares out in the market. We've grown our ordinary shareholders' equity, as you can see, and we haven't made as much progress in terms of reducing the investment portfolio given the environment, but Nishlan indicated to you what distributing Ninety One means to that. Our capital levels are strong in South Africa.
Once we get the remaining portfolio onto advanced, Richard will not cease to complain about the drag of excess capital on returns in the business. That's a good problem to have, Rich, I will say. In the U.K., we're on standardized. We are now setting our sights as we go forward on looking to go on advanced. As Nishlan says, if you look at our risk density, you will see that we have a capital base that is particularly conservative. Both liquidity and capital are very strong to support our growth going forward. In conclusion, we see the business in position to capture opportunity as we go forward.
There are identified organic growth opportunities that we have talked about before, and Richard can talk about those next time we have the opportunity to showcase our brilliant South African business bank and wealth. I made an example of investment in the U.K. banking business. We can talk about the Investec Life opportunity that we have here in South Africa that we have invested in. We've got executable and scalable growth opportunities within our current business. We obviously are leveraging our client ecosystem, as I indicated, and we also are looking at strategic partnerships where we could work with partners to provide services and products to the relevant parts of their client bases.
There will always be some opportunities for bolt-on acquisitions, and in particular in the U.K. on the wealth side, that particular space will continue to develop and provide opportunity. With the advent of the demerger of asset management in March 2020, we did say that the composition of our revenues shifted significantly more into capital-intensive banking revenues. Strategically, we would like to rebalance that. Both on the banking side and the wealth side, we would look for the opportunities that are capital light, and there are lots of those on banking. For instance, transactional banking services in South Africa that we are ramping up on the business side would be one such example.
The rebalance of the revenue mix is an important strategic driver of the work we do as we go forward. Also, because Ninety One was larger in the U.K. than it was in SA, our geographic mix has also changed somewhat. As we go forward, we will look to drive a better geographic mix. As I said, as we go forward, we've got to invest for growth, and our investment in technology will reflect not only business as usual but more how we support growth. We feel confident given the results, given the momentum in the business, and given what our people are feeling and the level of engagement with our existing clients and our ability to attract new clients. To my colleagues, proud of what you have achieved. Happy to take questions.
Nishlan, do you want to come up, take a seat, and then we can get to questions? Where's Tesh? Where do we start, Tesh? We start in this building, right? Ruby, you are back, so I'm gonna give you the opportunity to go first. As I said earlier today, I really like your new suit. You shoot. Yeah. Thanks, Ruby.
Thanks, Fani Titi. I have one question, please, regarding the page operating cost analysis.
Uh-huh.
It states that costs increased by 11.7%.
Mm-hmm.
The one of the reasons refers to increased discretionary spend. There is a component there called business, which went up ZAR 11 million. Exactly what is business?
Nishlan Samujh tried to explain, but you're impacted a little.
Yeah, I was looking at Malay in the crowd. At the end of the day, business is a combination of cost. It will include travel. It will include some of the spend in managing the buildings and managing the infrastructure that we have across the geography.
Marketing and-
Marketing is a little separate from it. Overall, business expenses-
The business with marketing separate.
Literally represents the supportive expenses and includes to some extent audit fees and other aspects of running the business.
Thank you.
Yeah. Good morning. Hi. Morning. Take this off so I can hear myself. My name is Barry. I'd just like to know on a question of management, you are distributing the Ninety One shares. Could you not use those funds to reduce the shares in PLC because the business in U.K. is much reduced, and there's a fortune of shares outstanding that has basically been fed from South Africa. In the old days, it was meant to be even. That was one. The second question, Investec Wealth and Management is run as a separate company, as I understand. It's not wholly owned by Investec. And then I'd like to know what the net asset value of the last stock trade was of each share. Thank you.
Okay. I'm not sure why you say that Investec Wealth and Investments is run as a separate business. In South Africa, starting off there, we have an integrated platform. Richard is the country head. Henry obviously runs the wealth business. We have the same operating platform as it were. The client-facing part of it obviously will always be separate. In the U.K., which is probably where you may be referring to, the wealth business, we own 100% of it. It used to operate completely independently in terms of infrastructure, marketing, HR, and the like. The client-facing part of it still operates separately. It's an investment business, not a banking business.
What we have done is, the infrastructure side, HR, the buildings, marketing, centralized those because those you can actually centralize. Certain spending on technology around telephone systems and the like. You used to, for instance, have different ones. You used to have essentially if you phoned in from the bank in the U.K. to the wealth business, you would be regarded as an external one. The operational side of it, we have rationalized without closing off the strategic possibility that we could merge that business at another stage with another business. Very happy with the quality of that business as we go forward. Again, on both sides of the scale, we own 100% of it.
If we were to consolidate, obviously we could either buy completely on a bolt-on basis, or we could merge with another party, in which case we could be below a hundred, as we did with Rensburg Sheppards, but we are an owner of the wealth business. It's integral to our strategy. We wouldn't be selling, and we would over time hope to go back to a hundred percent control. With respect to the DLC structure, Nish, do you wanna take that?
Yeah. A couple of quick points is, number one is we've remained active in terms of acquiring shares. For example, our treasury stock has increased from just over 80-odd million to about 90-odd million. I think if we look at the distribution of Ninety One, we've been quite clear that the level of surplus capital in South Africa is much higher. That distribution will have a skewed impact on South Africa, which will be well supported by the underlying capital base. To an extent, we will retain the majority of the remaining stake from a UK balance sheet that gives us optionality as we look forward.
I think there are certain restrictions in terms of the DLC structure that would restrict our ability to use capital generators in SA, in the U.K. As you say, two-thirds of the shares are PLC, being a third, if you think of our total share register, a third limited, two-thirds PLC. In the PLC you would, I mean as you have, those PLC shares owned by South Africans. A third. There are certain restrictions. As you can imagine, as a management team, we continue to apply our minds as to how we could address the fundamental logic behind your question. We generally agree with the fundamental logic behind your question. There are structural and legal impediments to that. Thank you. Any further question? Okay, nothing in the building.
Stephen, I'm not giving you a chance to ask a question. I can see you getting excited a bit. I'm gonna go to the chorus call, I think.
Very soon, yeah.
No questions. No questions. Okay. Shall we go to the webcast?
There's one question.
Oh, sorry. Clearly my hearing is not as good as I would like it to be.
We have a question from Julius Poddig from UBS.
Good morning. Hopefully you can hear me. Thanks very much for the presentation and, congratulations on the strong results. I've got a couple of questions. Firstly, just what was the reason for upgrading your earnings guidance quite recently after you've had your pre-close brief? And is it mainly due to lower cost of risk credit losses or were there other drivers of that? That's the first question. Secondly, in terms of your ROE target of 12%-16%, you're currently sitting at 11.2%, but that's on particularly low credit losses or cost of risk. What would be the levers to increase the ROE to within the 12%-16% range?
We'll give it a try.
Yeah, sure. I think our audit committee drilled us on why we were so off our forecast, because we delivered that forecast to you on the eighteenth, I think, of September. It was really a factor of all the businesses. You had certain transactions that closed out ahead of expectation. Credit losses to the extent that we had factored in certain thought processes, the economics actually continued to improve and head in a direction that we had to factor in terms of finalization. The reality was if this happens now and again, but every single business had contributed to the push above our particular guidance. There's nothing specific to pull out as an absolute driver.
If you're looking forward in terms of ROE, yes, I agree with you in terms of the credit loss ratio. But I do think one's got to factor in the nature of Investec's business. At the end of the day, the expectation that we'll continue to operate at whether that's 30-40 basis points or 25-35 basis points, we'll finalize that calibration as we look forward because our asset quality is talking to a lower impairment expectation as we look forward. But what's fundamentally gonna drive us moving forward is, number one, the slide that Fani had highlighted at the very end, which is the organic growth in the business and that's really the funds under management as well as client positions.
There are particular drivers within both our banking businesses and our wealth businesses that are targeting particular growth areas that are spread across the client pools that we operate in. We'll continue to engineer and work in terms of driving those. Number two is we're starting to move out of the pandemic environment. The world is obviously with challenges that we'll anticipate seeing the momentum of the business to continue to tick in. Number three is probably an element of capital efficiency that we are gonna have to bring in. Whether that is a deployment in terms of acquisitions or whether that is, as you alluded to in terms of managing the total number of shares and issue, that's an exercise that we continue to apply ourselves across.
I think what we had said was, with the advent of COVID, we had set a medium-term. I think that was in May. It would have been two-four years. Given the recovery in the economic landscape despite the uncertainty. I think you would be looking at these medium-term targets more to closer to the lower end of the 3-4 range given the introduction of COVID. I think our businesses have proven to be very resilient, a high quality. As I said, in each of the markets, we have executable opportunities for growth. As I said, watch that UK bank as it continues to build scale and relevance with clients. Watch also the improvements that we have seen in the UK wealth business.
As I said, in South Africa, you have standard-setting businesses across the piece. Yeah, we are confident about where we are. Thank you for your congratulations on this set of results. As I said, our people bust their guts to serve clients, and these results are a consequence of what we do for clients. Any further questions from the webcast?
Yes, there's quite a few questions from the webcast.
Okay.
Quite a few questions from the webcast. There's three questions on Ninety One. I'm going to combine them. The first one is from Chris Stewart, Ninety One.
From Ninety One.
Please can you give some insight as to the impact on the capital adequacy ratio of the proposed distribution of the 15% of Ninety One. The next one is from Mark du Toit. Will there be any tax payable by Investec on the distribution of the 15% in Ninety One? The last one is from Jonathan Berry, he's a private investor. Concerning the distribution of 15% of Ninety One quoted as being worth around 35p per share, will this distribution be made in the form of shares or cash?
Are you happy for me to get through it? I think the first point I would make is that we will issue a circular which will detail all of the steps that are to be followed, and whether that's tax consequences or the actual structure. From an overall perspective, given the regulatory treatment of Ninety One in a banking balance sheet, we carry significant deductions against the underlying investment. So particularly in the U.K., we will see virtually no impact in terms of the underlying CET1 ratio. In South africa that will be a number that is well managed within our overall capital base itself.
In terms of the question around the nature of the distribution, well, the way I think of it is we demerge 55%, we're now adding 15% on top of it. When we finalize it will follow through the similar process that we had gone through at that point in time. It's gonna be in shares, and the consequences of how you deal with that as a shareholder is in your hands. There is a path to follow. There are certain things that we have to get right in terms of how it is structured. As I've highlighted, in due course, there will be a circular and a process that will be followed in terms of the distribution.
We did consider whether we should sell the stake to distribute cash. That was not the most beneficial to our shareholders. We did consider that as an option. The option that we're looking at, in our view, having done the work, will be the most beneficial. There's a lot of detail still to be processed for us to get to a point where we can give you chapter and verse in terms of the mechanics of the impact around tax, et cetera, et cetera. We're doing a lot of work with it.
I mean, obviously with a distribution, shares going back into the market, we will work with our colleagues at Ninety One to make sure that if any shareholders have as much as they wanted of Ninety One, we can help in working with them to absorb any overhang that may develop. By the way, we will remain shareholder in Ninety One at 10%. It is in all our interest and the shareholders of Ninety One to make sure that we can manage the distribution as effectively as possible. Nish, capital impact from Chris Stewart.
I thought I'd also that earlier.
Did you?
Actually no impact from a PLC perspective.
Yeah.
well I can mention it. I think we expect around about a 1% impact on the South African capital ratio.
Okay. Thank you.
A few more questions. Kunaal Kalyan from Risk Insights. Investec has taken a number of initiatives towards improving on ESG. However, from a competitive advantage perspective, how do you see yourself using ESG to differentiate from the market? How long will it take for the market to see this differentiation, and where would it be reflected?
I think we are generally in the South African environment seen as a leader in the space. Obviously, there are risks associated with, in particular, climate, which every financial services group, in fact every business, has to understand. Economies and industries have to understand the risks and opportunities that are attendant to climate change and ESG specifically. In our banking business, there are specific opportunities in terms of either raising certain funds or investing in certain renewable assets, and we do have exposure already and, over time, reducing fossil fuels. The way we see it is obviously coal is the highest carbon content.
At the moment, our policy would be to support coal only to the extent in South Africa that we are dealing with Eskom, because without Eskom and electricity, the social side of ESG would be a problem for the country. In fact, the economy would collapse anyway. We're looking there for transition. We would look at gas as a transition fuel. Better than coal, but in the long term, still high carbon. Obviously renewables will be the final solution. There's a lot we can do on the bank side in terms of opportunity. With respect to our investment business, even there we have a number of opportunities in terms of related products.
By the way, on the funding side of the business, there are certain advantages that are beginning to arise depending on your level of ESG progress. We have raised a number of sustainability-linked loans, as an example. This is a big issue for the world in terms of risk, but from a business opportunity, those businesses that do not take this stuff seriously are likely to suffer some disadvantage as we go forward. I'm excited about the activities I said in the presentation. We are looking to embed even further sustainability thinking inside of our business.
Mark du Toit from Oystercatcher. What are the growth opportunities in the Wealth U.K. business? Do you expect the contribution to profit from banking versus wealth to be closer to 50/50 in time from the current 72/28?
Look, it'd be foolhardy of me to try to predict composition of profits in the long term. The strategic intent is to increase capitalized revenues as we go, and we're really focused on that. We had a board meeting yesterday, and some of our directors were saying, "Let's see how we can measure that progress as we go forward." It's something that the board has a significant interest in, but it's progress that we will report as we go. With respect to specific opportunities, I'm sure Mark will know that we couldn't comment on that.
I said specifically there are two types of opportunities in wealth, one being bolt-on, GBP 1 billion-GBP 5 billion pounds of assets under management, and the other being at the larger scale, where obviously consolidation has to happen. That's driven by opportunities of the benefits of scale, driven by certain cost drivers like technology, regulatory, et cetera, et cetera, driven by business model changes. For instance, the need to go more into financial planning as opposed to just investment management. There are industry trends that work in favor of consolidation. We will stay close to those developments. We will always make sure that if we do participate, we will do so on a basis that is strategically and commercially sensible to our business.
Okay. There's two final questions. Chris, again from Ninety One. Any guidance on progress as to the disposal of the IEP equity investment portfolios?
We continue to work on the overall reduction of the investment portfolio. We are not going to dump any assets. These assets are valuable, and as the environment improves, I think the opportunity for us to realize a specific asset for good value will increase. Patient with our high quality assets, but also understanding the need from where we sit to allocate capital much more effectively. I won't talk about a specific asset, but I'm sure Chris will appreciate that.
Last question. Siphelele Mdudu from Matrix Fund Managers. Well done on the great set of results. Given these low credit loss ratios, are you not worried at all about the consumer environment? Which sectors are still much more in your watchlist? How soon do you wish to get to your ROE target? What would it take you to get there sooner? How do you plan to keep these ROEs within your target?
Maybe he wants to come to the board meeting next time. These are just too detailed. We said to get to our targets, we set medium term two-four years while we were still looking at a different scenario around COVID. I said earlier, probably more to the lower end of that range in terms of timing. There are many initiatives that both myself and Nishlan talked about around where we think we can improve performance as such. I mean, questions are a bit too detailed for to address in an announcement of this nature.
One more.
One more. My goodness. We are firing on all cylinders.
Miles Farese, an investor. Congratulations on your very good-
Thank you.
Performance. Why aren't you willing to dispose of your interest in Ninety One? What is the merit of having a minority holding of 10%?
Okay. If I could just remind Miles about the strategic logic behind this. We said that we wanted to sell 10% of Ninety One to bolster our capital stack in the U.K. That is what we said very clearly at the time. When we de-merged, markets were very volatile, and Ninety One was at about, I think traded around 140. We took the view that it was too cheap. As I said about assets in the investment portfolio, we are not into dumping assets or selling assets cheap. We took the view that we will not sell. The strategic intent around the 10% remains that it is part of the capital stack of the U.K. business.
In saying that, I've almost given you too much information on the structure of how we intend to distribute the 15%. I mean, you can do some arithmetic, not even math. Our intent hasn't changed. We are not looking to do anything that we haven't said. We had clearly signaled that 15% is access to our requirements. Now that we are emerging significantly from COVID, we think the timing is right to return that 15% to our shareholders. I hope that makes sense. Okay. I think that's the end of the presentation. Again, just to repeat, we are excited about where we are. I'm very proud of my colleagues for producing this level of results.
As I said, our business is about clients, fundamentally. While we manage for profit, we also manage for impact, and we look forward to the next six months and the next six years, the next 15 years. Although Richard and myself may not be there in that time. Stephen, you have 40 years to run. I don't think we have that much ahead of us. We're looking for a fundamentally strong business that has high levels of profitability and returns, but lives in society, profit, and makes good impact. Thank you so much for your interest and attendance. See you in another six months. Is that it, Nish?
Yep, in March.
Thank you so much.