A human conversation.
Ladies and gentlemen, good morning. May we please take our seats. We are about to start the presentation. Stephen, I know you want to be at the back of the bus. You can sit over here. Good morning, everyone, and welcome to our Capital Markets Day. Following the Capital Markets Day for Investec Asset Management in November, today, we will be focusing on Investec specialist banking and wealth management businesses. I will be joined on the podium today by a number of my colleagues. I have Dave van der Walt, who heads the bank in the U.K., Richard Wainwright, CEO of the bank in South Africa, Nishlan Samujh, Group CFO. I also wish to welcome Hendrik du Toit. Hendrik, where are you? My joint CEO. I am expecting that Kim will be coming through. Is Kim in the room? Kim is an Executive Director of the Group.
We also have the former CEO of Investec, Stephen Koseff. He likes to say that he is now sitting at the back of the bus and shouting. Stephen, no shouting today, but you can sit at the back of the bus. Thank you for coming through and supporting us. Let me just give you a sense of how we will run the day and what we are trying to do today. During this presentation, I will give a brief recap on the de-merger rationale. I will cover what I see as the core strengths of the Investec business, our strategy and plans, and how these will drive clear financial targets. David, Richard, and Steve will then provide a deeper dive into their respective businesses, including their strategic positioning and priorities. Nishlan will review our key financial metrics and capital.
Finally, Hendrik will give some perspective on the de-merger and also talk about the bank and wealth business before we move to Q&A. If there are three things that I would want you to take away from today, they are: number one, we have a collection of very strong businesses that have good linkages between them and have excellent future prospects for growth. Number two, there are tangible things that we can do, and we plan to do, to improve performance and enhance returns. As a team, we are resolute in our determination to deliver. Number three, we have a strong capital position today, and we generate sufficient capital to fund both our growth and distributions to shareholders. If we execute well, we will deliver against our targets. These targets are stretching, but I believe they are within our grasp.
My colleagues and I are motivated to achieve these targets, building a stronger Investec for our clients, for our people, for our shareholders, and for the societies in which we operate. I have Nishlan controlling the slides for me. Nishlan, next one. Yeah, I want the next one. This is what happens when you have somebody controlling your fate, isn't it? Just to recap on the de-merger, we are making good progress. The regulatory filings required have been made, and we continue to work towards publishing the circular ahead of our annual results announcement in May. That is the timetable we are following. The focus today is on the high-level strategy for the business after the de-merger and our long-term plans.
I hope you will understand that while regulatory approvals are in process, we cannot comment on the final transaction structure details, such as our ultimate shareholding in the de-merged asset management business, the consequent final impact on our capital and key ratios, transaction costs, and of course, the dividend policy of the de-merged asset management business. All these details will be in the circular. Post the release of the circular and our annual results, we will present to you a more detailed picture of the impacts of the de-merger. We will also present to you a detailed, numbers-driven view of the business and its strategic positioning. Today, as I said, is about a high-level view of our strategic journey ahead. Most of you will know that in the next two weeks or so, we will be holding a trading update.
Today, we will not be commenting on the current operating environment or trading. Hendrik and myself look forward to talking to you in two weeks' time on our trading. In summary, the logic and merits of the de-merger remain unchanged. It is all about simplification and focus to enhance the businesses and also to enhance their long-term growth prospects. We all know what Investec stands for. This is a firm with 40 years of heritage, a phenomenal client franchise, deep specialist expertise, exceptional people, and entrepreneurial culture. The charts that you see on this slide tell a story not just of business building and growth, but a story of sustainability and resilience through a number of cycles. As can be seen from the bottom graph, Hendrik and his team have built a great business, and the de-merger will position it for the next stage of its development.
It is very much the right time for the asset management business to embark on this path. As we go through the presentation, you will see that it is also the right time for the bank and wealth business. The group is in a much, much stronger position today, having largely dealt with its legacy challenges. There is more to do, and further simplification and focus will enable us to drive the performance of the business as we move forward. This was the conclusion that Hendrik and I reached after careful consideration, backed unanimously by the board, and one that we firmly believe is right for our clients, for our businesses, for our people, and importantly, for our shareholders.
I've been with the group for over 15 years, and in the 5 months since assuming the role of joint CEO, have been around the businesses, have been around our offices, have met our people and our clients. What I'm struck by, time and time again, is the strength of our core values and culture and how deep it is held by everybody. The quality of our people, the talent, the passion, and their dedication. Our relentless focus on our client, our ability to be nimble and to innovate. What sets us apart from our competitors is this absolute dedication to putting clients at the core of everything that we do. The determination to find bespoke solutions to meet the needs of our clients, all the time offering highest levels of service in a refreshingly human way.
I hope most of you have seen the current brand campaign that we run. In a world that is dominated by data, we continue to be human in our interactions. Every day, we partner our clients as they strive to create wealth, and we partner them to manage their wealth. Every day, we strive to be an out-of-the-ordinary partner to them. Our clients love us, and most of them stay with us throughout their lives. The slide looks a bit busy, but let me go through it. The key message here is that Investec today is much simpler than it ever has been as a business. We've exited from businesses and geographies, and now we are focused primarily on 2 home geographies, the U.K. and South Africa, and the businesses attached to them. We have 2 core businesses, and we have clearly defined target client segments.
We have a very strong and distinctive brand and heritage in private banking, wealth management, corporate and investment banking. As I said, all these capabilities are supported by phenomenal client franchises. We're also very connected between these businesses, and we'll cover later the opportunities for us to do more in between and among the businesses. A phrase you will hear from me and my colleagues today, as we go through the presentation, is that we are domestically relevant and internationally connected. The underlying strength of our business often gets overlooked. Very simply, we have market-leading positions across our businesses and the areas we choose to focus. Stephen Koseff likes saying very often that we do not try to be all things to all people, and we hold true to that mantra.
Where we choose to specialize, we try to be top tier, as you can see on the slide that we have. Either first or second or certainly top tier, in it to win it for our clients. We do so by being very differentiated and innovative. To corporate clients and private clients alike, we bring a highly individualized solutions and service-oriented approach. Individualized, solutions-focused, and high levels of service. Post demerger, we will still have a balanced mix of income and profit across geographies, across business lines, and across income streams. Just on geographies, if you look at the slide, you can see that we already make the majority of our income from our non-SA businesses.
The opportunity exists for us to focus and leverage our non-SA businesses to generate more profits as we go forward, given that we already have this level of income from them. On capital-light revenues, this ratio has been going up in recent years and was certainly helped by the growth in asset management. After the demerger, as you can see on the slide, we still have 44% of income coming from capital-light revenues. As we go forward, we would like this to increase. As we go through this presentation. Hopefully, you will see that we will grow as we go forward, but with a higher degree of lighter capital intensity and efficiency. Let me tackle capital up front. Since the announcement of the demerger, there has been a lot of interest in this area.
Firstly, we have good capital ratios as we stand, and these will move a little higher in South Africa on the adoption of FIRB and on the PLC post the demerger. As I said earlier, we will publish the circular on the demerger, and once published, we will update you on the precise impact. We do expect that capital ratios in the PLC will improve. I wish to be quite clear that post-FIRB adoption and the demerger, we would like to operate with core Tier 1 equity capital ratios in excess of 11% for both Limited and PLC. As you can see on the slide, CET1 ratios are just above 10%. Going forward, both post-FIRB in SA and post the demerger in the U.K., we want to operate with a slightly higher cushion of capital.
The point is we have healthy capital ratios, very strong liquidity, and a lowly levered balance sheet as you can see on this slide. The key message on capital is that all three businesses are capital sufficient. The organic capital generated in each bank can support our targeted loan book and RWA growth. David will talk about his growth ambitions in the U.K. and Rich will talk about SA. Having funded our targeted loan growth, there will be sufficient capital generation to support our new dividend policy of a 30%-50% payout ratio. From April 2020, we will buy back shares to offset dilution from share-based remuneration. For our shareholders who've been worried about dilution, from the financial year starting on April 2020, you don't have to worry about that anymore. In all this time, we will maintain good capital ratios.
Lastly, on dividends, Investec Limited has historically covered dividends to PLC shareholders on the SA register. This is expected to continue for the next three years or so as the U.K. private bank grows to scale. The transition from the founders to the next generation of leadership has been very smooth. As you can see, Stephen is sitting at the back there, and he hasn't shouted yet. I have known the senior management at Investec for a long while. Over the last 11 months, as we started looking at the business plans and looking at the businesses quite fundamentally, one gets to confirm one's view that we have a fantastic senior management team in the business. This team has been together at Investec for quite a long time, on average, 20 years. We are a very stable organization at the top.
It is not just the people that you will see here today presenting, but all the teams below them as well have been around the business for a long time. You will see later when we get into question and answers, that there will be an opportunity for some of the leadership, both from the U.K. and S.A., to answer some of the more specific questions as we would like to showcase the talent that we have. I'm pleased to affirm that as we go forward, the entrepreneurial and client-centric culture of Investec not only will survive but will thrive because this is what makes us different. Moving to ROE, which I'm sure is a subject of great interest in the room. We've been working in recent years to improve return on equity, and there has been some progress.
I want to be completely direct that we are not satisfied with where the ROE is today. The ROE for the Investec Group, excluding IAM, at H1 2019, was 10.9%. We can, and we must go much further to drive the returns in the businesses to above the cost of equity. That is our commitment as we go forward. We have to earn, in each business, returns that are above the cost of equity. After some more in-depth work, we have revised our group ROE targets from the financial year ending March 2022 to 12%-16%. A 3-year journey to 12%-16%. Given the work that we have done already and the longer timeframe of 3 years to implement our improvement plans, we have upped our ambition from the initially announced targets of 11%-15%.
We are a lot more ambitious, a lot more confident of the ability of the business to produce at these ROE levels despite the loss of asset management. Just as a general concept, the loss of asset management takes our ROE targets down or achievements down by 2.5%. We're saying that we expect significant improvements over the next 3 years to go back to the original targets of 12%-16%. These targets are highly stretched, but as a management team, we have done enough work to have a higher degree of confidence that we can deliver into these targets. The corresponding ROE target for Investec Limited is 15%-18% in ZAR. We take the cost of equity in South Africa to be around 14%. For Investec PLC, the new target is 11%-15%. These targets fully reflect all costs, including DLC group costs.
These are fully costed targets. I'm confident we'll achieve our targets for 2 simple reasons. Firstly, our franchise businesses already operate at the lower end of these target ranges, and I believe we can move these returns up within these franchise businesses. Secondly, the main drags on the reported ROE come from our principal investment activity in South Africa, and Richard will talk about that more specifically later, and the build-out of the private bank in the U.K., and David will talk more specifically about that at a later stage. We have a clear plan to address these 2 specific drags on our ROE. Nish. There are 5 broad initiatives that we will be pursuing to enhance shareholder returns. Let me take each of these over the next few slides. Firstly, we will be more disciplined in our use of capital.
We've done a lot in recent years selling non-core businesses, running off legacy loan books. As we go forward, we will continue to review our business mix. We've substantially shifted the composition of our loan book as an example, in the U.K., from property development to corporate lending, and David will talk about his loan book later today. The risk profile of the overall loan book is much lower today. We've learned from past crises, but also from past mistakes. We have refined our risk appetite and risk management discipline. One part of our business that does consume quite a lot of our capital is principal investing. Again, I would like to state that over the life of these investments, they have generated attractive returns, but these returns tend to be very volatile one year to another.
Also, the proportion of our capital tied in this activity is higher than we would like it to be. Over the next 2-3 years, we are going to manage this down to a lower proportion of our capital. We've started already looking at specific actions to lower our proportion of capital tied up in this activity. Of course, we'll do this in a way that maximizes value. We are not going to simply exit these activities in a reckless manner. Further, we intend to leverage third-party capital more as we move forward. We should see revenues from this activity outstrip the capital used. The second lever for increasing returns will be growth. We have multiple initiatives in place to drive growth across the business in the long term.
For example, Richard will talk more about extending our offering into the mid-market corporate space, firstly, through Investec for business and our transactional banking capability. We intend to bring to this space Private Bank-like service, which I do not believe that any one of our competitors will be able to match. In the U.K., there is the private banking opportunity, which David will talk about. I wish to state very clearly that as a management team, we have a high degree of conviction on the enormous potential of this initiative. We've moved from platform build to client acquisition. Steve will talk about the strength of our wealth business and its positioning for continuing growth. We aim to consolidate our leading positions and increase our penetration in our market segments. For example, in the Private Bank in South Africa, we are aggressively growing our client base.
We will explore diversification into capability adjacencies, for example, as we are doing with Investec Life and Investec Specialist Investments. We will explore alternative revenue models as, for example, we are doing with My Investments in South Africa and Click & Invest in the U.K. to extend our offering beyond our traditional markets. In short, we have significant opportunities to innovate and grow our client franchise in the long term. The third lever is cost management. We have deliberately chosen to invest in our businesses over the last couple of years, and that can be seen in the absolute cost base and the cost-to-income ratios that are elevated. We recognize it is now incumbent that we as a management team deliver the returns on the investments made and to be more stringent on cost management.
We believe we can reduce the cost-to-income ratio of Investec Group, excluding IAM, from 68.5% reported in H1 2019 to below 63% by the financial year ending March 2022. It's a stretch, but we're confident we can do it. These ratios, of course, exclude the consolidation impact of Investec Property Fund, which we own 27% of. While some of the improvement will be driven by top-line growth, our investment in these businesses will start to moderate, and we will see those positive jaws. There are opportunities above that to take out cost as well. We have already identified savings that can be made in DLC Group costs of approximately GBP 10 million. Looking at technology and digital on an integrated group-wide basis holds definite opportunity. I would be disappointed if we could not take out at least GBP 55 million of cost per annum, approximately ZAR 1 billion, from the cost base by March 2022.
Rest assured, if the revenue growth does not come through as we expect, we will be very focused on addressing the cost base further. The fourth lever is connectivity. We already have well-established connectivity in all areas of the business, but this can be further improved. Most of you will know that we are particularly strong in South Africa in the way we serve our high-net worth clients. We think we can drive that much further through One Place as we go forward. The other area of increasing connection is between the U.K. bank and wealth businesses, and we are already making some progress here. The opportunity, in our view, is significant in the long run. Investec is a bank for wealthy people, entrepreneurs, and mid-size business in the U.K. The potential of working with a leading wealth management business with an exceptional U.K.-wide coverage could be powerful.
We also have very good international connectivity between the U.K. and S.A. arms of our business. This is particularly important for our South African client base. As Steve likes to say, our South African client base is very, very international in mindset. There is much to go for here, and we think we are uniquely positioned relative to our competitors. In short, there are strong synergies between our businesses and there is a lot of potential to drive further growth as we go forward. We've kicked off work on what we call One Investec, and this is to make sure that we bring all of Investec, agnostic of business and geography, to every client interaction. We plan to serve our clients in an integrated way to capture the full value chain and to mitigate pricing and margin pressure.
We recognize that we need to significantly lift our game in our measurement of client engagement and data on integrated offerings. The fifth lever is digitization. Most of you will know that we are a digitally-enabled bank. A high-tech, high-touch client offering is what has characterized Investec over time. We've always invested significantly in technology to deliver enhanced offerings for our clients. Personally, I'm very focused on technology for four reasons. Firstly, technology enables us to enhance the quality of our offering in a personalized manner to our clients. Secondly, it will help us to drive connectivity that I have just talked about to enable us to capture more of the value chain. Thirdly, it will be the way we achieve long-term, sustainably improved efficiency across the group.
Fourthly, our digital platforms have the potential to help us raise liabilities competitively to reduce our cost of funding in the long term. This last one is a much more long-term ambition that we have. Next, Nishlan. To bring it all together, our investment case is an ROE enhancement story, and in the long term, growth through a focused and simplified business. I've explained how we will set about achieving this through five simple drivers. Over the next three years, the target is to take the group ROE from 10.9% at H1-19 into the range of 12%-16% across the cycle. In Investec Limited, the gap between the H1-19 ROE of 13% in ZAR and the bottom of the 15%-18% range is pre-tax profit of ZAR 1 billion.
We have to generate ZAR 1 billion more from the current base of business as we go forward to reach the 15%-18% range. This gap we expect to cover through a combination of cost management, better capital allocation, and revenue growth. In Investec PLC, the gap between the H1-19 ROE of 8.8% and the bottom of the 11%-15% range is pre-tax profit of GBP 45 million. This gap we expect to cover by a combination of cost management, growth in the private bank, revenue growth, and capital allocation benefits. In summary, we believe we have clear plans in place to drive the expected ROE improvement, and we will be highly focused on our execution. Next, Nishlan. This is the broader set of targets that you see on the slide. This is a scorecard that we as a team are signing up to.
There are targets both at group and at business unit level. They are stretching, as I said, ZAR 1 billion more profit in SA and GBP 45 million more pre-tax profit in the U.K. Importantly, we will be very transparent going forward in how we report these metrics. This says my time is up, so I'd better wrap up now. We will look to simplify how we report our overall performance. Senior management compensation will be aligned to these targets and to the strategic objectives that will support the growth of the business going forward. Thank you for your attention. I will now hand over to David to talk about the U.K. Bank. Thereafter, Richard will talk about the SA Bank, and then we will have a short break, after which we will have Steve and Nishlan.
I will wrap up, I will then ask Hendrik to come through to give us his perspectives before we take some questions. David, over to you.
Good morning, everybody. As Fani mentioned, I'll be talking to the U.K. specialist bank. Today we'll be focusing on the evolution of the U.K. bank, our growth strategies, and our financial targets. We'll touch on these in more detail, but before we start, the key takeaways are the following. The U.K. specialist bank is capital self-sufficient. We are generating enough capital to achieve our growth story. Our core franchise businesses, namely our corporate and investment banking business and our private banking business, both have differentiated market positions and clear growth strategies. These growth initiatives and enhanced focus on cost discipline and capital management will deliver ROEs that are in excess of our cost of capital. To contextualize our story, it's important to understand the makeup of the U.K. bank. This comprises a well-established corporate and investment banking business and a growing private banking business.
These are strong U.K. domestic client franchises complemented by international specialist capabilities. We service three clearly identified target markets in the U.K. where we feel we can compete effectively and provide a joined-up offering. To give some context as to where we sit in the group, at March 2018, the U.K. bank contributed 27% of operating profits, 38% of the loan book, and employed around about 2,300 people. We have enjoyed good loan growth post the crisis and have been a beneficiary of the disrupted marketplace in the United Kingdom in a similar way to the challenger banks. I think this story is to some extent missed. This has provided us a great opportunity to build significant franchises. We'll run you through our journey and why we believe we will be successful. We'll talk through each of these in more detail.
Over the last eight years or so, we have materially simplified and de-risked the business. We have built a strongly positioned corporate and investment banking business with considerable scale. We have invested to grow our private banking franchise where we see a clear market opportunity. We are working on enhancing our connectivity. Our revenue is far more client-driven and sustainable. The quality of our revenue is better than it's ever been before. Looking forward, we are focused on executing our growth stories, tightening cost control, being smart around capital allocation and generation, and ultimately showing the right ROEs. The simplification of our business model over the last few years has been achieved by the sale of Kensington, the sale of the Australian private banking business, exiting our principal credit trading and securitization businesses, reducing our legacy significantly.
At the moment, we are in the process of pivoting away from our more volatile pure private equity activities. We have learned from our past mistakes and significantly reduced our property lending exposure, which was 52% of our loan book in 2010, and this is where the majority of the legacy losses resided. This now comprises 16% of our loan book with a far more diversified and balanced lending portfolio. These developments have been recognized by the credit rating agencies, where we progressed since June 2015 from BBB- and Baa3 to BBB+ and A1 for Fitch and Moody's respectively. I'm going to take you through our Corporate Investment Banking business and give you some color on that business. We have structured our businesses in the U.K. into two key areas of activity, our Corporate Banking business and our Investment Banking business.
Each has got its own clearly identified target market, specifically positioned where we feel there is space for us to compete, and we'll go into this in the next two slides. Each have a very client-centric, tailored offering, which have won numerous awards. These two focused areas leverage off the same infrastructure. The corporate banking offering is focused on clients looking to actively grow their business and typically services clients with revenue in the range of GBP 10 million-GBP 100 million. In comparison to other specialist banks, our strength is in the breadth of our personalized offering, whereas other specialized banks typically specialize in one or two products and are unable to provide a full service offering. In comparison to the high street banks, our strength is in our high-quality, client-centric, personalized offering. The high street banks have strength in high volume, low price and relatively homogeneous products.
They lack flexibility and are often slow and sometimes impersonal in their dealings, and this is where we can compete. Our agile, personalized service and holistic offering differentiates us, allows us to build and grow long-term relationships in the market. On our investment banking business, this business is uniquely positioned in the U.K. mid-market. We are focused on corporates with revenue in the ranges of GBP 100 million-GBP 1 billion, and financial sponsors, mainly private equity houses that operate in this space. We are currently the only U.K. mid-market institution with both the ability and the desire to provide a full service offering in this space. We compete against the global investment banks on execution. However, the target market is often too small to attract their attention.
While they have the ability to lend and transact in this space, they tend to focus more on complex international transactions for the large multinationals. Compared to the U.K. domestic specialist and high street banks, we are the only bank that provides a full service offering in this space, giving us a unique advantage. Our international specialist businesses, being aviation, power and infrastructure finance, fund finance, and resource finance, are differentiated by deep expertise and the ability to innovate alongside our clients. We have built these specializations over a long period of time, and we will take a deeper look into the aviation business in slides to come. When we look at the corporate investment banking business, we have achieved considerable scale and strong finance franchises in this business.
This business has consistently contributed 35%-40% of the global bank revenue, and to give you some context, has been significantly bigger than the South African corporate business for a number of years. I don't think that story is properly understood. The charts demonstrate our significant success in constantly growing the number of clients we service and talks to the strength of our offering. The businesses are focused around our client franchise now, and as a consequence, 97% of our income is client-driven, compared to 81% in 2011. We have achieved significant loan growth in this business, which has facilitated leveraging the infrastructure. That we have scale in the corporate investment banking business, forward loan growth of 8% per annum is anticipated while we scale the private banking business. The corporate loan book is well diversified across our risk categories, as you can see there.
It is important to draw your attention to the highly successful origination and distribution capability and growing fund management capability, which the corporate investment bank has strategically built over time. Our ability to attract and retain good quality clients means that we often win mandates that are larger than our risk appetite. We have therefore developed a very successful distribution and fundraising capability to further service our client needs and provide interesting opportunities to institutional investors. This strategy allows us, among other aspects, to enhance returns by recycling capital, to generate additional capital-like revenue, increase client relevance, maintain loan book diversity, gain access to valuable market intelligence, and raises our profile among institutional investors. We are gaining significant momentum in this space. A typical example of the strategy would be our aviation franchise, where we have deep sector expertise and client relationships.
We have, over the years, innovated and launched and managed a number of successful funds, both in the aircraft leasing and in the senior debt space, as you can see in this graph. We now have a 10-year fund management track record and manage over $5 billion, generating capital-like revenue off the back of our expertise. We're going to continue to focus on growing this revenue stream. We have very similar opportunities in our fund finance business and power and infrastructure finance franchises. We've recently raised significantly additional money in that space. Moving to our private banking business. We have a distinctive offering in our private bank, and our ambition is to build an aspirational high-net-worth private bank which facilitates wealth creation and is integrated with our Wealth and Investment business. We have a clear high-net-worth target, which we'll expand on further in the next slide.
Our high-net-worth offering is made up of three businesses: private capital, structured property finance, and banking, which consists of onshore and offshore transactional banking, mortgages, personal finance, and foreign exchange. The banking business in the U.K. is where we've heavily invested over the last three years. I'm going to discuss that further in some detail. Our bank accounts and savings business provides transactional and saving capabilities to South African Investec clients and retail saving clients in the U.K. It is important to note that without a fully functioning banking platform, we would not be able to service our South African clients in the same way as we do at the moment. In South Africa, we are unique in having this capability. It's a strategic differentiator for us.
In terms of the private banking target market, the high-net-worth target market has been selected very purposefully, with clearly defined qualitative and quantitative criteria. It's like a tongue twister. Quantitatively, we look at clients with a minimum net asset value of GBP 3 million and GBP 300,000 worth of annual earnings. Qualitatively, we look at clients that are active, entrepreneurial, and time poor, requiring high levels of service and expertise. The quantitative criteria allows us to deal direct with the clients rather than through the IFA network. This would be if we were to drop the quantitative criteria from a U.K. point of view, we'd have to deal through the IFA networks. This allows us to build a direct and meaningful client relationship with our clients and leverage our high service levels as a differentiator.
We believe there are about 90,000 clients in the U.K. that meet both criteria, and we currently have 3,500 target market clients, and we're aiming for 7%-10% market share over the next three years. Why do we believe that there's a gap in the market for these target clients? Well, the traditional private banks are wealth-focused, not debt-focused, and have a high level of minimum investable assets. In other words, they will not provide you lending facilities unless you've invested in their wealth and investment platform. On the other side, the high street banks are standard product focused and not set up to achieve any flexibility. The typical example of where we would fill this gap would be an entrepreneur who owns their own business, earning irregular income, and who wants a mortgage. This client falls outside of the tick box salary exercise of the high street banks.
The traditional private banks typically require the client to invest with them before offering a mortgage. The client, however, typically does not want to invest with a wealth manager, but would rather reinvest in their own business. Investec is typically able to provide the mortgage quickly and professionally and subsequently work with the client to grow their business, and once they exit, we'll introduce them into our wealth management offering. Over the last three years, we have invested substantially in our new banking platform within the private bank. This platform offers a full client service capability around mortgages, transactional banking, forex, and personal loans. We provide the same level of service as our highly successful South African private bank and leverage their client service center. We believe we are unique in the U.K. market in terms of client service.
We are showing good success growing client numbers. Our focus has shifted from investment to client acquisition. The banking platform is currently subscale and loses just over GBP 30 million a year. To break even broadly requires writing an additional GBP 3 billion of mortgages at around 1% margin in just over a three-year time period. To put that in context, our average mortgage is around about GBP 2 million, and that equates to 1,500 mortgages, which in the context of the U.K. market, is very achievable, and we have got a lot of confidence in achieving the strategy. At an average risk rate of 37%, we have the capital to support this ambition. Looking forward at our connectivity, we now have a fully developed offering. We need to establish greater connectivity.
We are driving greater connectivity through cross-referrals from the private bank to our wealth and investment business for high net worth and family offices, and vice versa. Cross-referrals from the corporate banking business to wealth and investment and private bank for directors and shareholders, and we share the same brand and looking at sharing infrastructure and digital costs. We have there some year-to-date stats on cross-referrals, and while these themselves are not groundbreaking, we are tracking these. It is early days, and we'll be looking to actually target this actively in order to grow. Here we've highlighted a case study just to talk about how some of this works, which shows how we develop deep client relationships and are able to provide the client a broad offering across our businesses. This is a leading FTSE company in the consumer brand market.
If any of you enjoy a gin and tonic, you might recognize them. We first developed a relationship with them, advising the clients in 2013, then listing them for GBP 154 million market cap in 2014. We've continued to provide ongoing strategic and corporate broking advice to this client. Their market cap now is just over GBP 3 billion. Along the way, we've also provided them FX hedging and asset finance. We've introduced them to our Private Bank as clients, and we have also now introduced them to our Wealth and Investment business where we manage some of their money. Another example is how we are able to leverage across our broader connectivity and interbusiness collaboration. This is a South African high net worth client who moved to the U.K. The client had a long-term sole relationship with another South African bank.
We commenced the relationship in Guernsey offering offshore banking, then provided them a primary residential mortgage in the U.K. We were in a unique position to be able to assess their income streams because they were ex-South Africa, and again, the high street and other Private Banks couldn't provide this service. As a result of our unique offering and high service levels, the client has subsequently moved all their U.K. and South African banking and wealth management business to Investec. Turning to the sustainability of our revenue, okay, we have seen a consistent growing level of sustainable revenue, and our annuity revenue has grown from 31% in 2011 to now 56%. Our revenue is generated in three broad activities. Lending, which generates net interest income. Advisory and structuring services, which generate capital fee income. We provide treasury and risk management solutions, which generate client flow trading income.
The growth in our franchises over the last 10 years or so, particularly in the Corporate and Investment Bank, has driven a material improvement in the sustainability and the quality of these revenue streams. We have a number of strategies to continue to grow this revenue base, which we will discuss in the next slide. In the Corporate and Investment Banking space, we are focused on driving a more cohesive, joined up client approach, which will be aided by our internal restructure. We've now got dedicated management teams focusing on our two target market client sectors and helping them integrate. We are growing our distribution and fund management capability, driving increased capital-light revenue. We have a greater focus on cross-border opportunities with the South African specialist bank. In the Private Bank, we have turned our focus from build phase to client acquisition and retention.
We are going to leverage our mortgage platform as a primary client acquisition tool. We pass on those clients to our Private Capital and our Structured Property Finance business as their needs require. We are growing independently of this, our Private Capital business as well. As a holistic approach growth strategy, we are focusing on bringing the full proposition to all our clients across Corporate Investment Banking, Private Banking and Wealth and Investments. We are not only focusing on growing revenue, we are also very focused on managing and achieving our less than 65% cost-to-income ratio target within 3 years, if not sooner. We have a clear path for achieving this. Our Private Bank expenditure has been fully expensed and we are now fully invested in this initiative. This year we have come to the end of our double premises charges.
We have dealt with our expensive sub-debt that has been restructured and there are savings around that. We are leveraging technology and we are also conducting a strategic review of the business model for cost inefficiencies. Our anticipation is that next year we should see a decrease in overall cost in the specialist bank with normalized growth in the following two years. In all three years, we should start seeing strong positive jaws coming from the U.K. specialist bank. Talking to capital. Our capital plans are sufficient to sustain our growth and achieve our targeted ROE. We can sustain risk-weighted growth of 7%-8% per annum based on our capital plans. Our intention is to pay up all dividends received from the wealth and investment business to our shareholders. In other words, the bank is not retaining any of that.
We are facilitated in the short term, as Fani has mentioned, by this S.A. dividend being contributed to cover plc shareholders on the South African register. In addition to this, we have got strict plans for capital management allocation and as I've said before, making a strategic shift away from some of the capital intensive pure private equity business. Looking at our ROE. Our strong growth initiatives, cost control and capital targets are all set and managed in the context of achieving our targeted ROE, which is to be within the range of 10%-13% over the next three years. The ROE of the ongoing business, excluding the new banking proposition, is within our target range as we demonstrated on the side there, and has been for the last number of years.
It has been the new banking business, as Fani mentioned, that has pulled us below our cost of capital. As we scale this should help us achieve this. To achieve our target overall, we have a clear plan, as we've talked to and summarize it as we are looking to target 7%-8% per annum risk-weighted growth, which equates to 10%-12% loan growth. We are reaching scale in the private bank, growing our client base in both the corporate institutional banking and private banking business by providing a more cohesive offering and leveraging connectivity across the whole group. We're enhancing our cost discipline, optimizing our capital allocation, and increasing capital light revenue, in particular through growing our fund management capability. In summary, we are very well aligned to the group's five key initiatives to improve returns.
We're going to have a more disciplined approach to capital allocation. Our target market client acquisition will be through deepening current client relationships and increasing capital light revenue. We are fully invested, focused on cost control and anticipate an improving jaws ratio. The key focus is greater collaboration across our businesses and geographies. We're going to continue to drive high tech, high touch offering, which is core to what we do. Thank you very much.
Everyone's got to have the conclusion. I will. Thanks. I love music. Good morning, ladies and gentlemen. It's indeed an honor and a privilege for me this morning to represent the 4,000 people that make up the South African Specialist Bank here in South Africa. Just on reflection this morning, I thought back, this is really where it all started for Investec. This was 40 years ago that Fani spoke about, where eight people sat around a desk rumored to have only seven chairs and one telephone and started this business. It was in the banking business that it all started. When you think back, it was Madiba that said, "It's impossible until it's done." We, in South Africa, and the 4,000 people in our executive team are extremely proud of what has been achieved here in South Africa in this business. We're well known.
We occupy a top-tier positioning, as Fani was saying, across many of our franchises. Our clients love us. They deal with us on multiple occasions across multiple products. Some of them like us. Most of them like us. We are very proud of what we've achieved in this business. We still have a long way to go. To get to the point right up front, yes, our clients may like us, and we're proud of what we've achieved, and we have a great business. We still have a long way to go. For those of you that are shareholders listening and in this room, we are not happy with the returns that we've delivered to you. I will discuss that in the 20 minutes that I've got.
What I'd like to do is spend a few minutes talking about our positioning in the various product areas. We have the four pillars that we have in our business, the corporate bank, the private bank, the newly established Investec for business, and our investment bank and principal activities. You can see that through a tough economic time under the previous president's regime, we managed to grow our loan advances books at a compound rate of 11% and quite a significant slowdown in this financial year. Speaking to some of you this morning, I think we're all acutely aware of the headwinds that we face in this economy and how difficult it is out there. I can say that each one of us and our executive management team are here today.
All of them, including all the 4,000 people that we represent, are very acutely aware of the need to improve our return on equity and to achieve the targets that Fani spoke about earlier. The journey that we've been on is we have built a sustainable business, and we continue to invest in our client franchise and grow our client base. I'll talk a little bit more about that in terms I'll give you some color on the client numbers that we have. We have invested in growth initiatives. I think it's important to point out that we have no capitalized costs, that many of these initiatives are expensive to undertake. We've done that in our cost base. At the same time, we've maintained what we believe to be a competitive cost-to-income ratio.
We're highly liquid, we're well capitalized, and we generate our own capital to sustain our growth. We believe we're very well positioned. It's moving to our corporate institutional banking business in South Africa, which is where Dave and I both started. It's close to our hearts. This business has been built over a period in excess of 25 years, we are not all things to all people. Where we do compete, we want to be recognized and be seen as top tier. We split this business into two major broad product offerings. We are a global markets business, which is the terminology that's used in our industry, covering trading, investment products, treasury solutions, equities, equity capital markets, debt capital markets. We've built that business sustainably with our own capital generation.
That is complemented by our specialized lending activities, where our positioning is to have long-term, deep relationships with clients in the select markets in which we operate. Part of our differentiation is our international positioning. Many of our domestic peers no longer have an international offering to the extent that we do, Dave has spoken a lot about his product offerings that he has. On this slide, you'll see some of the areas where we can compete and be seen as an international bank. Whether it be power and infrastructure finance, fund finance, aviation finance, which Dave went through, export and agency finance, which is a key product offering for us on the African continent. We think we do differentiate there.
In terms of our client numbers and the size of this business, I think I'm correct in saying that this corporate institutional business over the last 18 years has probably only had two years where it's had a decline in earnings. This has been a massive stabilizing effect for the group, having gone through the crisis a few years ago. We have approximately 5,000 clients that we deal with. We have a loan book of about 80 billion ZAR. The number of clients that we deal with from very large, both listed and unlisted companies of about 150 to medium-sized companies of 200 to small to mid corporates. I'll talk further about our Investec for business offering. We cover about 4,600 companies in South Africa. In terms of our specialist lending activities, just to give you a feel, in fund finance, our number of clients is only 25.
Most of those will be South African or African. The average transaction size about 180 million ZAR, we have a book of 5 billion ZAR. In our power and infrastructure finance, where we operate across the globe, we have teams in Sydney, London, New York, and Johannesburg. Gives us a real differentiator when we're dealing with both domestic and international clients. We probably have about 20 clients. The average deal size is about 500 million ZAR, we have a 10 billion ZAR book. You may want to ask why we haven't leveraged up into the renewable space, where some of our competitors would have a book substantially bigger than ours. I can deal with that under Q&A, maybe my colleague Lawrence can answer that.
Something that is probably less understood is our size of our retail structured product business, which has been built over a number of years. We are currently at about ZAR 18 billion in funds under management. Moving on to our private banking business, I guess this is where Stephen Koseff and Bernard Kantor and Larry Nestadt and Errol Grolman and Ian Kantor started. The banking of doctors, lawyers, young accountants, professionals, and entrepreneurs. This business has been around for over 40 years. This is the crown jewel that Investec has. This is where we are well-known. This is where our brand is incredibly strong. This is where we have built a unique offering that is very difficult to replicate. We are seen as both domestic and internationally networked and have an international offering, which we do not believe anybody at the moment currently offers to their South African clients.
The slide gives you more details around how we are positioned. It is very similar to what David van der Walt is building in London. We have a banking business. We have a private capital business which services entrepreneurs and their businesses, where we offer an investment banking type offering to them. We have a structured property finance business where we are ranked number 2 in South Africa. This business really differentiates us as well because our offering there is to offer those clients, as David van der Walt was telling you earlier, an international offering, even for those property clients. We have about 75,000 clients. I think what is also probably less known is that 8 years ago, this business was at break even. Post the crisis, we had to restructure this business quite significantly.
James Kieran Whelan and some of my colleagues, Stuart Spencer, Ryan Thole, Cumesh Moodliar, who is here, went into this business and embarked on a massive turnaround strategy. Over the last 8 years, this business has been growing at in excess of 20% per annum. We currently have 75,000 clients. We have a loan book of ZAR 180 billion. Of those 75,000 clients, they have about 113 accounts with us. Of those, about 9,000 are wealth accounts. In the property space, we have about 900 clients, and in the private capital, about 200 companies. You can see the growth in the private banking number of clients at 6% compounded over this period of time while we were restructuring and reorganizing this business. We believe that that growth rate can accelerate.
I know Cumesh Moodliar and his team is dedicated to achieve that because we fully understand the knock-on effects of more clients and the leverage effect that that gives us into our returns. Moving on to Investec for business. This is a relatively new initiative for us. We took a number of disparate businesses that were sitting inside the Investec Group and put it under a new leadership team, where we brought the old Reichmans Capital business together. Basically, what this team offers is working capital solutions for small and mid-size companies. Our objective is to position this very similarly to the private bank, where they are positioned as high tech, high touch. We are investing substantially. David Lawrence and his team are building a corporate banking transactional platform, which we in roll out as we speak. That will be the glue that holds this together. We are offering specialized services.
Similarly to how we recognize in the Private Bank being exceptionally high touch with deep relationships and with a leading technology offering, we plan to do that in this world as well. Coming off a relatively low base, this will be the fastest-growing area for us in the medium term. On the Investment Banking side, we've always been in Investment Banking, and we have a leading position. Mergers and DealMakers, this has come out recently, where we occupy a top-tier position again. This is where we do advisory services to very large companies. We've combined that with a debt team and an equity capital markets team. We have a new leadership here under Nick, and we've brought together a management team that can look after the bank's entire principal investment activities, which I'll talk about in a few slides. It's what Fani has been referring to.
Basically, what we have here is we brought all our property, our private equity, our advisory businesses under one team to give it the dedicated focus we know that it needs, because this is the one area that can move the dial in terms of getting our ROE back to where it needs to be. I've spoken about our digital positioning in the Private Bank, which we said is unique. It's relatively easy to replicate a digital offering. It's very difficult to replicate deep relationships and a high touch offering together with that digital. Just to show you here the growth in our online transactions. Remember that our client base is growing at 6%. The growth in online transactions has been 13%, and you can see the number of logins, growth in our app logins, that has taken place over the last four years.
On average, I worked it out, each client logs in through the app 18 times a month. This is where we've built a secondary brand for ourselves, being Investec One Place, where we bring together both onshore, offshore banking and wealth into one place on an app, single sign-on, which we thought competitors would replicate by this point in time. None seem to have done that so far. This is a unique offering and a unique positioning for us. What are some of our growth initiatives and deepening our client relationships in the various areas? The Corporate & Institutional Banking, as you know, we've launched Investec Life. That's a front to back 100% digital offering built in less than 12 months. We've launched Investec Specialist Investments, which is a Cat 2 hedge fund licensed business.
We are creating a one place for intermediaries, creating a digital offering that intermediaries, which is a very key client base for us here in South Africa, in particular for our retail funding. Where clients will be able to transact their savings, not their investments, but their savings, cash savings, FX, with both a local and an international account. Private Banking, a number of offerings and growth initiatives around My Investments, a fiduciary offering, working together with our wealth colleagues, and they want to leverage their young professional strategy. If you see the advert that we're going to put up during the break or the ad, not the advert, that was very specifically aimed at the young professional market.
On the investment banking and principal activities, I will talk a little bit later about it, but we have a strategic shift there, moving away from taking on-balance sheet large private equity investments and rather changing our risk appetite to using our equity capability to support our clients. Our fund management business with respect to our property funds, Nick is here. He was the CEO of Investec Property Fund until quite recently. We are continuing to grow that. Investec for business, I have spoken about already. We have a very high level of annuity income. In 2011, it was at 64%. We are currently at 77%. The rate of growth in our annuity income relative to the rate of growth of our other income is a factor of 21% premium to that. Our net interest margins are stable at 2%. We often get asked, how do we improve that?
Maybe we can deal with that under our Q&A session. We are very pleased with the level of annuity income and the sustainability that we have created. Our cost to income ratio, this has not been a big issue, I do not think, in terms of the investors in South Africa. We are very much in the competitive space and slightly below our peers. At around 51%, we are setting a stretch target of 49%. We will have some volatility in this ratio, and that is purely a function of our investment income line, which is reasonably volatile. We do have a big focus similar to Dave in terms of trying to address certain costs in the center and look for ways of maintaining the cost growth at inflation plus two and ensuring that we have a positive jaws outlook.
It is also important to point out, I am saying that it is telling me my time is up. I think I have got three slides left. I am going as fast as I can. I apologize. I think it is important to point out we do not have capitalized costs. All the investments we have made on our digital franchises, we expense as we incur them. We have immaterial amounts capitalized on our balance sheet. Probably one of the most important slides, forgive me if I am slightly over time, is our South African investment portfolio. What we have highlighted here, this has been reported in our annual accounts before, is an investment portfolio of ZAR 12.8 billion, which has capital allocated to it of ZAR 6.7 out of about ZAR 36 billion. A significant portion of our capital only producing 6.9% ROE after tax. This is out of a total investment portfolio of ZAR 25 billion.
That is on our balance sheet at the end of September. I think it is important to point out we are, Nick and his team, we have appointed Nick specifically to focus on this. We do want to get this portfolio down. We will be responsible shareholders. You can see our investment in IEP, maybe you can ask us under Q&A what our plans are with that. Over the next two to three years, we would want to get this total portfolio at around about ZAR 15 billion. In terms of capital generation and our capital view, we generate sufficient capital in South Africa. Over the last 25 years, we have not needed any capital. We have generated our own to sustain our growth. Our risk-weighted assets can grow between 8% and 10%. When we adopt FIRB, which hopefully should be in the next month or two, we can accelerate that.
We anticipate about 12% growth in risk-weighted assets with our dividend policy and still be able to maintain our capital ratios. The ROE, we've set ourselves a target of 14%-16%. We are acutely aware that our cost of capital in South Africa is approximately 14%. At the half year, we were at 12.4%. We are not happy with that. There's the history. It's been consistently below, other than in two years when we revalued our private equity portfolio. We have very clear plans, and we are completely committed to achieve at least the lower range of this target in the next two to three years. To summarize along Fani's five key principles, we do have capital discipline and the allocation of capital away from our investment portfolio into our client franchises, which generate a significantly higher return.
Although we will argue that through the cycles, the investment portfolio can match that, but you've got to live with the volatility. We have a number of growth initiatives. I've spoken about Investec Life and Investec for business and transactional banking. We are focused on cost, and we've already identified some costs that we can take out of the system. The connectivity for us is extremely important. We are connected both locally and internationally across the wealth business and the specialist bank in the U.K. Digitization, I think Fani pointed out, we've always considered ourselves a digital bank. We've built this business with no branches. Clients used to transact with us in the old-style digital way, which was with a telephone when they used to phone in. We still have that, and it's a key differentiator for us.
Kieran pointed out to our staff the other day how proud he was of that particular service offering. It is a differentiator for us. We are a digital bank, and I think I'll end at that point. Thank you very much.
Thanks, Rich. I see that your time was up as well. You did well. We're going to take a five-minute break just to have a leg stretch. We were supposed to have taken an hour. We've taken an hour, 17 minutes. When we come back, we will have Steve Elliott to present on the wealth business. Nishlan will go into our numbers. Hendrik will give us a perspective on the demerger from an asset management perspective, but also from a joint CEO perspective. He will also cover his perspective on the wealth and specialist bank business. Five minutes. It's 12:17. If we could be back by 22. It's 17, back by 22 for us to continue. Thank you so much. Hello, ladies and gentlemen, shall we restart? Ladies and gentlemen, shall we restart, please? Thank you, everybody. Shall we restart, please?
I know there was a risk we took by giving a break in the middle of the presentation. It is 24 now.
Minutes. Oh.
Oh, goodness me. Please let's take our seats. Sounds like I messed up on the timing. We have some big returns to generate, so time is of the essence. Do you mind just closing the doors behind us so that we can get going? Thank you. Chris, do you mind closing the door behind you so that we can restart? Sorry, Hendrik. There's a new sheriff in town, eh? Thank you very much. I was remiss not to recognize some of our non-executive directors who are in the audience. Thank you for your interest and for your attendance. We are now going to go into the next set of presentations, which we know will be a lot more interesting and a lot shorter because the first three were a lot more bank-focused.
Steve Elliott, the Global Head of our Wealth and Investment business, after which we will have Nishlan to run through the numbers, and then I'll wrap up. Hendrik will come up and give a perspective, and we will be delighted to take your questions. Seppi, over to you.
Thank you, Fani. I think it's good afternoon in South Africa and good morning in the U.K. I hope I got that right. I hope you've had some good refreshments. Just to support my colleagues, our business is a lot simpler, and hopefully, I can do it a bit easier. Well done to Richard and David, because there's a lot of moving parts in banking, as you all know. In our business, it's somewhat different. I thought the best way to approach the wealth business, that people might see it as regional. I want to start in looking at it as one business and then breaking it into its component parts as we move forward. Our proposition focuses mainly on just wealth management and discretionary management. Our clients are mainly private clients, high net worth investors, and ultra-high net worth customers, specifically in South Africa.
Our distribution is well diversified, and we have grown our assets. In fact, doubled our assets over the last seven years from where we are, GBP 20 odd billion to GBP 57 billion. When we look at the key differentiations in our business, and I think it's important that you can read the slide, but I think I want to just pick up on a few points that make this business what it is. First of all, it's around our investment process. We have a single investment process that we share right across our platforms, and we've made, even though a lot of our competitors would say exactly the same, we think we have a unique offering that comes out of that. Our size is our strength, and we remain agile. Our approach to our relationship to our clients is always front of mind.
Finally, I would like to also place where we are from consolidation. These industries, as you know, have gone through different cycles as they have gone through consolidation, and we feel in certain parts of our business, we are now sitting in that space. When you look at our growth story, I think you can see by that slide that we have done that organically and inorganically. Rensburg Sheppards and Williams de Broë were big transactions that we did in 2010 and 2012. We continue to grow our organic growth because that is important for this business, and I think this slide demonstrates what we have done. 40% of our asset growth has come from organic growth. If I look at our investment process, and I mentioned that right in the beginning, it is core because that is what we do.
We have to look after clients' money, and we want to do it in the right way. It is about the suitability to client. Sorry, I just need to get the slide right. It is about the suitability to client and to ensure that we get the risk profiles correct, and we have invested a lot of effort, a lot of time in this area. You will notice that we have built this up over time and broken it down to a top-down process. We look at asset allocation, and we move that down into its sectors. Hopefully, it is a busy slide, but hopefully, this demonstrates what we set out to do. I think what is also important, with Hendrik and the team sitting here, we do not depend on Investec Asset Management for this.
We are standalone in our investment process, and we have approximately 32 individuals involved in this process right across our platforms. We have noted as well from that point of view that the investment types that we get involved in, even though some of them are quite diverse, if we cannot do it ourselves, we ensure that we get the right people to support us in this world. I would like to now just break down into the big regions. It would be amiss for me not to mention our other regions. We are really going to speak about the U.K. and South Africa. We have got Switzerland, we have got the Channel Islands, we have got Mauritius, we have got Ireland. I would like to just concentrate on the two big drivers of our business, supported by our other branches and businesses. In the U.K., we have GBP 39 billion of funds under management.
That includes U.K. and other, which is Switzerland and Ireland. We have a leading position in the U.K. Sometimes very difficult to say exactly where we sit. If we would like to use the word leading, we are seen as one of the key players in our area. We have 15 offices in the U.K., which are spread from the north, right from Scotland, right down to the south and east to west. I always say the U.K. in land mass is small, but if you look at it from an economics point of view, being the fifth, sixth largest GDP in the world, this is a substantial place to operate in.
We are confident about our continuous historic growth, even though we are, and I think I'm speaking to people who are involved in the investment world, there are clouds in front of us, very, very dark clouds, but also equally, those will go away and the opportunity is there. Even though that growth in our AUM might have flattened out somewhat, we continue to be positive about our asset growth over the next few years. There's been a lot happening in this market, specifically around regulation.
Starting off with the pension freedom in 2006 to where we are today, GDPR, the General Data Protection Regulation, which both South Africa and the U.K. have gone through, then ending off a very, very big project around MiFID II, which is Markets in Financial Instruments Directive, which in my working career is being or is one of the most substantial regulation changes and work that's been put into that. One consequence of the current environment is that we have to look at how we approach the client. Normally, how we do it is we went in as investment-led businesses, but today we can see that we have to go in with a more holistic approach. We've seen that financial planning and fiduciary support is vitally important, both in South Africa and the U.K.
There's been quite a substantial amount of investment in this space and will continue to be that. The word wealth management is most probably becoming the more extended word that we use in our world because we don't only look after investment, we look after the succession of money as well. If I look at South Africa. South Africa's got ZAR 320 billion of funds under management. Once again, a leading position. It's also difficult to put us exactly where we fit, but definitely in South Africa, we remain in a very top quartile. This business has grown with a compounded growth over the last eight years in a very progressive way. If you took the funds under management in 2011, 10%-15% was discretion. Today, we're at 40% and going up even further.
Organic growth remains a key factor in South Africa. We believe taking our client set, and I always say this, I think Fani mentioned it earlier on, is I think that the South African client set is the most internationally minded of all our client sets for all the reasons that I think in South Africa we're fully aware of. We've also looked at building up the South African business by looking if we can twin certain of our offerings and platforms with Switzerland. We're in a deep discussion and process at the moment to achieve that. As I said, the fiduciary and high net worth servicing for our clients is important, that we do that in a very sensible way.
The competition in this area is both domestic and from offshore. We're seeing some big multinational wealth and investment businesses coming into South Africa of late. The connectivity is one of the key factors. You can see where Fani started off and where Rich and Dave went. There's elements of this, and we can spend almost probably a whole day speaking about these opportunities. Let me just try and get to the point where I think it's important. First of all, the collaboration between wealth and the specialized bank, and specifically the private bank, is vitally important. We see big opportunities there. Sometimes it's hard to measure that, but in South Africa, we have seen the success of One Place.
This has worked well. I know that we can do that even better. A lot of efforts will be put into that, both from the bank and from wealth and investment. Can we achieve Sorry. Thank you, Connie. Even though it's on the South African side, I just want to pick up on the U.K. connectivity. A One Place scenario, if it's possible to do it in the U.K., will take a lot longer. Partly it's around how we deal with the client set. In South Africa, in the U.K., we have a high net worth client set coming out of the private bank, which David indicated where we take it. It's a GBP 300,000 income and GBP 3 million worth of investible assets, where the U.K. Heartland clients must probably sit in about half a million GBP.
However, we do see that advantage. We've created a private office to connect between ourselves, and that's important. We'll look where we can connect, and if that can expand, we will obviously do as much as we possibly can. Coming back to South Africa, the One Place is obviously a key driver for our clients, both from the private bank and wealth. That, as I said, we'll continue to push that. Just to give you some stats around that might be worth noting. We have 27,000 clients in Wealth and Investment in South Africa. 25% of those have accessed the One Place platform. We have 11,000 clients from the private bank that have already taken up on our wealth trading account, and that continues to grow as we move forward.
As I just want to end off, the connectivity between private banking and wealth in the U.K. is starting. It's in its embryonic stages. It's starting. We're working pretty hard on that with Ryan and his team. We also talk about how we create the wealth. If you take the example that Dave put on his slide, is that you start off with a banking relationship. If it's entrepreneurial client, of course, they're going to cash in or look for an event where they can monetize their asset. That, obviously, moves into the private bank, and we continue to ensure that we can look after them in a wealth space as well. I want to speak about Click & Invest because it has an impact on the operating margin, specifically in the U.K. A lot of time and effort and strategy went into this.
Just to step back for one minute, is that the wealth businesses generally across the world have most probably been far slower than banking in the digital world. We felt the way to approach this was to ensure that we could use some of our technology, our IP, within our physical business and move it into the digital space. This was for a totally new client set. We've won numerous awards in a very short period of time. This started off in 2017. We've just gone through the second cycle of the big events in the U.K., which is the ISA season. That's what happens just before the tax end, that people will then place their money into a wrap. This time of the year is a big savings period. We're in our second cycle of that.
We believe strongly that not only does digital bring an opportunity, but it also changes the mindset in an industry where we have to ensure that efficiencies come through. We feel this is our Formula 1 in our business because as you know from I use the analogy of motor car racing, Formula 1s are way ahead of the commercial market, but everything from Formula 1 comes back into your business, and we believe that this will expand this. In addition to that, we think from a group point of view, there's big opportunities because we're all looking at the digitalization of our offerings or our services or our distribution channels and how can we enhance this even further. This is obviously part of the big discussion as we put the bank and wealth closer together.
The key factor around Click & Invest is a word called simplified advice. Simplified advice means that we're still giving you advice in a simple format, and the client has to still go through a whole lot of questions to get to invest, but it does make life easier. It also enhances and gives support to our smaller portfolios because we feel that the client will still get a high-quality service. My Investments in South Africa, for example, is an internally driven solution for the private bank out of wealth into private banking, and that has worked pretty well. I'm happy to have a discussion. I'm sure Henry and John and Javier will support me around any Q&A. As I said, our business is simple, relative to banking. There's two key factors. It's around revenue and around costs.
We have to ensure the one factor that we can control mainly is cost. We cannot control our revenues totally because we are linked to markets. As we know, markets in themselves behave in certain ways, and we've seen some massive overlays in markets over the last two years, specifically the geopolitical overlays both in the U.K. and South Africa, and equally the uncertainty of markets. Well, I said to someone in the crowd as we started off, "I'd rather be starting from the bottom moving up than from the top coming down." I'll leave that as a positive for our industry. We will continue to invest in technology. We have to support and ensure that we meet all the regulatory requirements, and that development will continue. Including in that is that the technology, not only around digital but platforming, is vitally important.
As we know, this has started to move pretty rapidly. We will continue to invest but be sensible and hopefully get the right leverages for this and make sure that our operating margins remain right. Cost discipline. Any business, new, old, cost, as I said, is something that we have to control and ensure that we do that. We must not be too short-sighted about this because investing is part of growing a business, but it's how we invest, where we invest, and ensure that we get the right efficiencies out of that. As you can see, we've put our ratios out, in South Africa to be below 70%, and in the U.K. between 73%-77% over the next 3 years.
If you look at our strategic focus going forward, starting from one right up to six, is that we need to step this and ensure that we follow through, and we believe we can. We believe strongly we can, and we're very confident about the opportunities that we can see ahead. That includes just looking at strategic alignments between the bank and wealth investment and how we take that forward in all areas that we operate. I think what is important, and I know it's a word we use a lot within the investing world, but we mean and we try and follow that really strongly through our value systems, is how do we collaborate. Not how we collaborate amongst each other, but how we collaborate with our investors, with our suppliers, and most importantly, with our clients.
We come to Fani's five objectives that he set out, and we believe in strongly. Just to recap, we are a capital-light business. We're conduct heavy because we look after clients' money. We also have a great track record of growth and ensuring that the initiatives that we set out in our technology follow through strongly. We will continue to build on our businesses in a very disciplined way, ensuring that we increase our AUM organically, take advantage of anything that might come in a cyclical event in a consolidating market. Ensure, as I said before, that we work and get the relationship with our client in a very correct way between the bank and ourselves. We believe we're in a premium position both in South Africa and the U.K., and hopefully supported by other branches that I mentioned before. I thank you for your time.
Well, good afternoon to everyone, once again, a real privilege to stand up here and to bring the picture together for you all. I think hopefully what you will see as we bring the picture together is that you've actually seen most of it, as this is really bringing together the three businesses, as presented today. Just as we step into the numbers, I think let's look at what supports the underlying base. The net core loans and advances, and I've picked a period from 2014, has grown at a compounded growth rate of 12% across both the South African and the U.K. platform. This has been fundamentally supported by strong balance sheet management across these bases, with customer deposits fully supporting this growth.
The loan-to-deposit ratio in U.K. and other is at about 80% at the end of September, in South Africa at about 76% at the end of September. We've also maintained high levels of cash and near-cash on the balance sheet. At September at around about GBP 12.5 billion, of which GBP 6.5 billion was in the U.K. and 110 billion ZAR in South Africa. The FUM numbers that we report of just over 57.3 billion, you will see is almost holistically the numbers from the wealth and investment business, as we have not incorporated some of the additional FUM numbers that are within the specialist bank businesses at this stage. In short, we have seen fundamental growth in our key earnings drivers, whether that be core loans or FUM, supported by effectively a strong and tightly managed balance sheet. The revenue base has grown, supported by these particular factors.
To reiterate a point that Dave has made, the U.K. has contributed around about 54% of the underlying revenue base for the group. You have seen our cost-to-income ratio tick up over the period. In fact, we report the ratio at about 68, just over 68.5% at September. I think I'm going to reiterate a point that you probably heard time and time again today, which is that our investment is reflected in that particular cost base. There is very little carried on the balance sheet and very little capitalized. The investment in Click & Invest, the investment in the private banking platform, the majority of those costs are effectively within the cost-to-income ratios that you see across the base. Over the period, during the period that we've dealt with the legacy portfolio, our loan loss ratios were elevated.
Those have come down to around about 34 basis points, 41 basis points in the U.K., and 30 basis points in South Africa. We have noted that those are at the lower end, but they are effectively within a range. With the adoption of IFRS 9, I think you're going to see a higher level of transparency in terms of the quality of the book. We report our stage 1, which is effectively assets that have got no concerns around them, at around about between the 96% and 97% of the underlying book. The stage 3 book, we've reported net of impairments at around about 1.7%, which is at 2.5% on a gross basis. We present to you a chart on our impairments, the block that you can barely see is the historical legacy write-offs that we have processed through the book.
Our H1 2019 numbers have been annualized in this particular graph, you can effectively see the normalization of the impairment charge now in the system. With the presentations delivered for the two specialist banks, you would have noted that there is a fairly diversified loan book across the portfolio. In particular, we split our portfolio into three areas. That's lending collateralized by property, which comprises 16% of the portfolio, with the biggest element being commercial investment property at 11% in the portfolio. The second area is high net worth and other private client lending, which makes up about 39% of the book. If we unpack that, it's effectively high net worth and mortgage lending of about 22% of the book and high net worth and specialized lending at 16%.
Dave and Richard have presented the detail around the corporate book, and in this slide you see a diversification across that entire corporate book. As we come back to looking at our revenue base, again, I think to reiterate that on whichever metric you look at it is relatively well-balanced. We have around about 54% of the revenue base generated from the U.K. geography. The capital light businesses, having stripped out asset management, so I will reiterate that this is the group that representing bank and wealth as it stands today, is at around about 44% of the revenue base. With annuity income, which is effectively net interest income and annuity fees, at 71% of the overall revenue base.
Looking at costs, I think you have heard the words cost discipline a few times today, and I think that is a mantra that is existent through the organization, and in particular, in the time periods that we are in. The overall cost base that we reported at the end of March was GBP 1.27 billion, and depreciation and equipment expenses comprised around about 7% of that base, with the vast majority associated with the people across the businesses. Now, a subset of that cost base is £50 million of costs that we have highlighted in our accounts as group costs. In other words, costs that are not allocated to either the bank or the wealth businesses. We anticipate that the vast majority of these costs will remain in the system because asset management has operated fairly independently over the period.
But if you look at the makeup of these costs, which is effectively personnel and marketing costs, there are very clear initiatives to ensure that we manage this down with around about £10 million having already been identified at this point in time. I think what I would like to reiterate is where the target ratios are set for each of the businesses. We have been very specific around the target ratios for the U.K. bank, which is at below 65%. The U.K. and wealth business at 73%-77%, the South African bank business at 49%-52%, and the SA wealth at 70%. Coming to ROE, I think Richard has highlighted that in the current period, we have had lower returns on our investment portfolio, and that has produced a drag on the ROE in the current period for the group.
The SA Specialist Bank ROE, excluding this particular portfolio, is at 14% with the portfolio that we identify utilizing 18% of the capital base, producing an ROE of 6.9%. If we bring that to SA Inc, which has reported an ROE of 13% at the end of September, separating the investment portfolio, that ROE was about 15.4% in the current period. From the U.K. Specialist Bank, we have identified the investment in the new banking proposition, as well as the fact that there is a lag in terms of the grow-out of that particular business to the incurrence of effectively putting the platform into play. That business currently utilizes around about 4% of the capital base in London and produces a staggering negative 47.8% ROE. These are relatively smaller numbers, and therefore, it shows up as a relatively big number.
What Dave had highlighted is that there was just over GBP 65 million of investment over a period of time on that particular platform. From a U.K. perspective, we report an ROE of 11.6% having separated this particular platform. From a U.K. Inc., in other words, including the wealth businesses, the 9.1% that's reported for PLC is 11% if we had to separate the drag from the historical investment in the banking proposition. The overall group ROE, having included the wealth business, which is at 26.4%, and we do make a minor adjustment in our calculation of the wealth business because there were times when we effectively grossed up equity, and recognized gains as we disposed of a part of the business and repurchased it later on. To reiterate some of the key points around ROE, because this is a key focal area for us.
Right-sizing the investment portfolio in South Africa is key, that will effectively help us to recognize a consistent ROE level rather than the level of volatility that we've seen over a period of time. I do use the words right-sizing because this is still very much part of the DNA of Investec. Right now it is too large an element of the underlying capital base. Optimizing capital allocation in South Africa, as well as implementing a program to ensure that we purchase shares to meet staff share schemes and variable remuneration requirements, will effectively ensure that we optimize the underlying capital base. The rollout of the U.K. private bank and cost management are the two remaining elements that we have highlighted across the presentations today.
Just to wrap up on the balance sheet, I think it's worth noting that we have spent a lot of time in not only building but maintaining a stable retail deposit franchise. Customer deposits comprises around about 81% of our deposit base. There's a very low reliance on interbank funding from a group perspective. We maintain high levels of liquid assets across the balance sheets, we will continue to seek funding sources to enhance net interest margin across the businesses. From a capital generation perspective, this is for both balance sheets, in other words, U.K. and South Africa, we have highlighted that we target a return on equity of 12%-16%.
We have highlighted that we believe that the underlying generation of capital, including distribution to shareholders, can support risk-weighted growth of 8%-10% given the current environment, that we have set a dividend payout ratio of between 30% and 50% for the bank and wealth businesses. If I summarize our key targets, ROE at 12%-16%, on the right-hand side, we identify specific targets for each of the key businesses as well as the key geographies. With the cost-to-income ratio at less than 63%, particularly with the U.K. bank targeting a cost-to-income ratio of less than 65%, that will help you understand the material change from where we are today. The capital ratios, we will continue to target a total capital ratio between 14% and 17%.
There is positive momentum in terms of lifting these capital ratios as we move to FIRB in South Africa and on the implementation of the demerger. As Fani has highlighted, at a point, we will push up the capital targets from around about 10%-11% on successful implementation of FIRB, which is subject to regulatory approval at this stage. The dividend payout ratio at 30%-50%. I think that's pretty much the financial area. Hopefully, there was no new information because the group is pretty much simplified and represents the summation of the three key businesses that were represented today. Thank you.
We are joint CEOs, so we're coming in at the same time.
I don't have a thing on my face. I need this one.
You want to wrap up before I do? Okay.
Yeah. No, I just
Why don't we do that?
You asked me a perspective, and the reason you asked is to again underline the fact that Fani and I are extremely committed or we feel vindicated. I feel vindicated after this presentation, the asset management capital market day, that the demerger choice was the right one. Why? Because it simplifies what you own, simplifies what our people have to do, and it provides the focus in the individual businesses to achieve the kind of growth that our shareholders deserve and needed for a long time. Now, many of you, when you build your spreadsheets, you look at numbers, and you work out, and Nishlan gives you the answers.
When you sit in a boardroom and you only have so many hours to go through a board meeting to make key strategic decisions, and your agenda is too long, you're gonna miss things, and you're not gonna necessarily concentrate on what everyone wants to do. What we've tried to do here, and that with the support of Stephen and Bernard and the outgoing management, is to say, "How can we make most of the Investec we inherited?" That started with the message of simplification, focus, and then releasing the energy for growth. I hope today you've seen a great deal of energy and a great deal of focus and a great deal of commitment in the bank and wealth business to do that. You saw that in the asset management business a few months ago. You'll get a more detailed CMD coming to you just after results.
You'll talk to Fani and I at the pre-results and at the results update. My sense is and my conclusion here is, I feel absolutely vindicated that we've made the right decision to clarify the group, put those targets up there and go for them and deliver for shareholders. Fani, that's my perspective. You asked me.
Thanks, Hendrik. Very succinctly put by one of the best asset managers that the country has produced. As we indicated in the numbers, over 27 years, Hendrik and the team have built a fantastic business that is globalizing at a rate that is impressive. Have over GBP 100 billion of AUM started right here in Cape Town. Very proud of the business that Hendrik and the team have built and that Investec supported that growth, that we are at a point where both businesses are strong enough, firstly, to increase their returns, secondly, to pursue their own growth trajectories. Just to conclude from our side before we go to take questions. We have confirmed the current strategic positioning of Investec, we do commit to make the changes that are necessary to substantially improve our performance. The improvements required are substantial. What do we need?
Do I need to click? I thought, Nishlan, you were the person who you were the one to click for me. You did. Okay. Let me recap the takeaways that I spoke about in the beginning. I spoke about three takeaways from today. Firstly, that we have a collection of very strong businesses that have good linkages between them and that have excellent future prospects for growth, as Hendrik reiterated a few minutes ago. We have a strong and distinctive brand and heritage in private banking, wealth management, the corporate and investment bank. Ours, as Hendrik again said, is a simpler and more focused business-serving clients in an integrated way. The second takeaway I wanted you to have from today was that we have tangible things that we plan to do to improve performance and returns.
These are to allocate capital better and specifically to address the performance of the South African investment portfolio. Secondly, we want to execute on our growth initiatives and, in particular, bring the U.K. private bank to scale. Thirdly, cost discipline, and we've talked about the reductions in cost in terms of cost-to-income ratios, including addressing the DLC group costs. Fourthly, we want to expand the connectivity in our businesses for more value. We are doing this through what we have now dubbed One Investec. Fifthly, to leverage digitalization, using it as an enabler, for instance, around cost. Using it as an accelerator, for instance, around distribution channels. Using it as a differentiator around client experience and possibly using technology as a disruptor. I know that the new banks coming in talk about disruption.
Whether you talk about time, you talk about Discovery, we are inherently, in our DNA, digital in our approach. The third takeaway was that we have a strong capital base and generate sufficient capital to fund both our growth and distributions to shareholders. Nishlan has captured that very neatly. I would like to make one additional point with respect to this. It is this that on day one post demerger, we would expect the aggregate dividend to shareholders between Investec Bank and Wealth and the demerged IAM not to be worse for the simple reason that the dividend generation capacity of both businesses remain the same. As David indicated, the bank in the U.K. is capital sufficient, so whatever dividend came from asset management was being passed through to our shareholders. Similarly, whatever dividend comes from the wealth business is being passed through to our shareholders.
Post demerger, that dividend generation capability remains the same. We have outlined the three-year journey. I call it a journey because this is not a one-day event, a revolution overnight, that we move our returns from what we have indicated them to be to the 12%-16% in case of the group, to the 15%-18% in case of Limited, and to the 11%-15% in case of PLC. There's a significant effort required from every one of the leaders that you saw here today and from the 8,500 Investec employees. We've set demanding targets. They're clear and stretching, but we believe they're realistic. I indicated why we believe so. Importantly, executive remuneration will be aligned to the achievement of these targets. We are not just looking at achieving targets in the short term.
We continue to be committed to building a distinctive specialist bank and wealth manager, characterized by our core values and philosophies. Returns in the short term and incredibly strong business in the long term, placing clients at the heart of everything that we do. Each of the presenters have indicated a strong focus and commitment to executing on the plans that we have talked about. In the businesses, there are significant plans and commitments to deliver on the commitments we have made. At the center, we have Nishlan, myself, and Kieran. Kieran will bring a particular focus to drive the work that is needed to support the businesses to achieve their goals. For those who don't know Kieran much, you may know that we had a particular messy situation around Fedsure. Stephen got Kieran to help in cleaning that particular mess out.
Richard talked about the fact that the private bank eight years ago was breaking even. Kieran led the efforts to restructure and revitalize the private bank. We've talked about the redirection of strategy three years ago in the private bank in the U.K. onto the path that we are in now. Kieran led those efforts. We substantially reduced our presence in Australia a few years ago. Kieran was at the lead of that particular exercise. At the center, Nishlan, myself, and Kieran will support the businesses with their management teams to deliver on what we have committed to do. This effort is not only about the 10 of us at the group in terms of an executive leadership. It's not about the executive teams in each of the business units that comprise Investec. This is an effort that our people are energized about.
It's a journey that the 8,500 members of Investec Bank and Wealth are energized about. As I said, our entrepreneurial culture is intact despite the founders moving on and despite the changes that we have announced that we will need to make. Clients will continue to be at the center of what we do on a day-to-day basis. We are absolutely determined to realize the potential of the strong platform and heritage that Investec represents. Very proud of the platform, but we're going to get the platform to perform at a higher level. This is a journey to build a stronger and a higher performing Investec for the benefit of our clients and employees and shareholders in the societies that we operate in. It is really based on that.
We have clients at the center, we have our shareholders, we have our employees, we have the societies that we live in. If we can deliver the plan, all those stakeholders should be better for it. Thank you for your attention. I'd like to thank my colleagues who presented, and there are many others in the room who will have the opportunity to take some questions. I'd like to thank the teams that supported the work that led to this CMD, in particular Ursula and the team. I know you guys have bust your guts and you've had impossible demands being made on you. Thank you for your patience and thank you for the work that you have done. We are ready to take questions. Thank you. Any questions?
Hey, Fani. Thanks very much to you and the team for putting the presentation together today. Very interesting. Just a very high-level question. Wanted to ask you around the rationale from Investec around splitting the group geographically and keeping the current form that you have now and why you didn't possibly carve out more pure-play assets in terms of U.K. and SA businesses.
Needless to say, we did, in our review, look at the option of breaking the group up geographically. I hope during the course of the day, we have clearly indicated that there is significant benefit to be derived from being in both geographies. In South Africa, for instance, both our private banking positioning and our corporate banking positioning rely quite heavily on the fact that we have a U.K. presence, we are connected, and we can take our clients down that journey. I say, Steve Elliott talks about the South African wealth clients as being some of the most internationally minded in the world. We looked at that option of breaking the business up geographically. We still think the plan that we have delivers better value in the long term for our clients and for our stakeholders.
In short, we looked at it did not outdo the current plan in terms of value creation for our shareholders.
Hi, Fani. Thanks very much
Yes.
for the presentation. It's Harry from Avior.
Hi, Harry.
Just two questions, please.
On the South African private banking business, you obviously mentioned you expect to see an acceleration in client growth. Can you give us some detail into where you expect that to come from as it's
a new target, kind of target market of clients? I think you obviously mentioned that you expect cost growth to slow in the U.K. bank. Should we read into it that maybe the product expansion in the U.K. bank will be slower than what we've seen in the last while?
Okay. On the first one, I'd like to invite Cumesh to answer. I said one of the objectives will be to expose a number of our executives. Cumesh, briefly, the growth in the private bank in SA.
Sure. Thanks. Thanks, Harry. I think our focus target market within the Private Bank is in the young professional segment. We're focusing at clients employed at what we determined to be preferred employers under 30 years of age. We've come up with a very bespoke offering for those clients. Still staying true to being a very defined target market within that segment. Young professionals is a key encroachment and acquisition piece for us.
Thank you. Dave, do you want to take the cost growth question from the U.K.?
Just can you repeat it? Sorry.
He thinks he's presented. That's the end of the day. Do you want to repeat the second question.
Yeah.
-cost growth in the U.K.?
Yeah. Thanks. It's just basically, should we expect the product expansion to slow in line with the slower cost growth?
I think for us, yes. We're not expanding product now. We're focused on client acquisition and actually rolling out the platform at the moment. Revenue generation is really what we focus at. We don't need more products. We've got a full suite of products in terms of what we require to service that client base. Really, it's just now about client acquisition.
Thanks, Dave. Any further questions from the floor? Yeah, there's a question over there.
Great. Thanks. It's Matthew from Laurium Capital. Your dividend payout target of 30%-50% may be somewhat of an obvious question, but is it likely to start at the lower end of that and work its way up as ROE improves? Is that ratio or that range given more dependent on growth in a particular year?
I think you are absolutely correct that in the early days, we expect to be at the lower end of that dividend payout ratio. As we go, in particular over the three-year line where we will have a scale in the U.K. private bank and we can get dividend contribution from the U.K. bank, you would expect that you would go a little more into that range. Your assumptions are accurate. Yeah.
Pravasan from Foord Asset Management. Just going back, you mentioned Discovery and Discovery Bank, and the future growth strategies, young professionals. Is there an overlap between Discovery Bank and what they're trying to do in your existing customer base and your future target market as well?
Shall I ask Kieran to take that? Kieran has been the global head of the private bank, and going forward, he's coming into the group as I have indicated. Kieran, do you want to tackle the question?
Sure. I'm sure there is. We're not 100% sure what Discovery's going to come with. They haven't launched yet. There probably will be at the lower end. As I answered this at our results presentation, I would be more nervous if I was in the shoes of some of the big four banks in this country than in our shoes in terms of servicing that type of client base. Yes, there will be, but we've been in the business for a long time. Service is a key, as we have talked about today. We have overcome a lot of the issues to give high quality service. It's very different being a medical aid and investment product provider than being a high net worth individual or professional private banking business.
Thanks, Kieran. They're obviously a great competitor at Discovery, and we respect what they do. Actually, Hendrik and the team manage some of Discovery's money. Really, to summarize it in one sentence, they have 300,000 cards, over 2 million clients. We have 75,000 private clients. Ours is a particular type client, a high degree of service offering to that client, a level of complication to the needs of the client. Thanks, Kieran.
Hi, good afternoon. It's Mohammed Lunat from YENZA Asset Management.
Hi, Mohammed
a very informative presentation. The two key things I picked up from today, if you can just shed a bit more light and hopefully quantify a bit more of the numbers behind that. The one's been that you've been investing for growth. You've been investing in the last number of years. I'm trying to understand how elevated was the investment level and how much would it come down by, and what would the normal level of investment be? Ordinarily, would that investment level be higher than your peers? Would you always be investing higher than the others? The second theme has been preparing for the growth outlook. I'd like to understand at what cost does that growth come? Is it increased marketing? Is it increased risk appetite? Is it higher provisions?
Could you give us some indication of where those kind of things would go?
Okay, let me take the second question first, and I'll ask Nishlan to take the first question. You've got to earn your keep, Nishlan. On the second question, we are pretty aware that the economies in which we operate are particularly challenged. In South Africa, we have had single % growth, if not sub that. It's a tough market. That affects our ability to do business. In the U.K., you've had the uncertainty around Brexit. We are niched in the way that we are positioned. In the U.K., our scale in terms of market share in that market is so small that even in a disrupted market, we still have opportunities to grow. We have clearly indicated that there is a private banking scaling up. That is going on. We have made the investment required for us to get that platform ongoing.
David indicated that over the last three years, we've invested GBP 67 million in the platform. That investment phase has ended. Now we are building the acquisition of clients. It will be much more normalized business expense to go after our clients. Similarly, in the corporate bank there, business as usual. No unusual expenses as we go. In South Africa, we've had investments in Investec Life. We are focusing on Investec for business. We do not expect significant investment behind the growth that we are about to pursue, that we are pursuing rather, in those areas. Nishlan, do you want to take the first question? If any of Richard or any of the other leaders want to add, you're free to do so. Nishlan.
Funny, it sounded like you answered the first question. Just remind me, was that effectively the investment platform? Yeah. I think there's two things that we highlighted today. Number one is the targeted cost-to-income ratio to bring it down to less than 63% from around about 68%. That should give you an indicator. Very specifically in the U.K. bank, where our current cost-to-income ratio is running at around about 77%. There is a combination of revenue and cost in that. I don't think I'm giving you absolutely every GBP of an answer, but I would use the cost-to-income ratios as the key indicators.
Thanks, Nishlan. Any further questions from the floor? Okay, there's a question over there, two, actually. Malcolm, you will have some questions from the webcast, do you? Not yet. Okay, thank you, sir. We can keep batting here.
Good morning, Fani. Thank you for the presentation. Just a couple of questions from myself. It's Banky from Merrill Lynch here. Firstly, is there anything precluding the U.K. bank potentially being taken over by a competitor bank because of the DLC structure? The second is the U.K. going to benefit the most from the sale of asset management? Also, you mentioned your risk-weighted assets in mortgages at about 30% in the U.K. What is the risk-weighted density of the corporate bank in the U.K., and are we going to see that come down over time?
Let's go through the questions. Question number 1 was? I kept on listening to your next question. Let's go with the first one.
Is there anything that will preclude the U.K. bank potentially being consolidated or taking part in consolidation in the U.K. banking market?
We are a management team that will always look at what comes out, if there is any approach for any of our assets. We are quite excited about the prospects of our assets. Whether it be in South Africa, whether it be asset management, whether it be the wealth businesses, similarly, the U.K. business. These are attractive businesses. We think the runway for our U.K. bank is much clearer as we go forward, given the simplification that we have gone through. We will continue to look to simplify that business further. The growth opportunities there are particularly clear. At the moment, we have no significant approach. We like the business. We think the plan that we have is the plan that will generate the most value for our shareholders.
With respect to your second question, is the U.K. bank the greater beneficiary of the demerger? The demerger has, I can't talk about the details, obviously. It has the benefit of freeing the two businesses to pursue their strategic objectives over the long term. With respect to the U.K. business, we have clearly said that we would expect, post the demerger, for the capital ratios to improve slightly. If that is a benefit, yes, it will be a benefit, we can talk about the details once we have posted the circular. As we go forward, while the U.K. bank generates enough capital to support its own growth, as a board and as a management team, we would like to go forward with slightly better levels of capital, as I have indicated.
That's why we said that we would want to have a CET1 ratio of over 11% in the U.K., similarly, in SA, post the adoption of FIRB, over 11%. Sorry, what was the third question?
The third question.
Just waiting in the corporate bank.
Yes. Chris runs the corporate bank in the U.K. I'd like a mic given to him.
Yeah, from a U.K. perspective, we on the standardized approach from a capital perspective. Broadly, our risk weighting, risk density is around 100%, and we don't see any material change in that.
Thank you. Shall we take a few more questions? Still nothing from the webcast. Okay. We'll take two, three more questions and maybe wrap it up. My colleagues will be here to take any specific questions. As an example, we have Ryan, who runs the U.K. bank. To the extent there are specific questions around that, we would be able to avail Ryan for more discussion. Let's take the question from the back.
Stephan here at UBS. Just a question on the ROE for the South African Bank.
You have a target 14%-16%. Is the central cost allocated into that target as well as looking at the historical number there of 12.4%? I assume it's not in there. Also around pref dividends. Have you deducted that in arriving at the ROE?
The pref You go, Nish. I'm now usurping your role.
Okay.
I don't know what's going on. I think someone's trying to silence me. Let's keep it that way. Sorry, just to get to the questions. Yes, we have allocated the cost of pref. In other words, we look at the net return to ordinary shareholders in the calculation. The 14%-16% that is set for the specialist bank is pre the group cost, but the 15%-18% that is set for South Africa is post the group cost.
Similarly, the 11%-15% set for the PLC is after including the DLC group cost. Thank you. Any further questions? Looks like we don't have any further questions. Anything from the webcast? Nothing from the webcast. Amy, are you trying to solicit a question there? No, we don't have any further questions. Let me bring it to a close and indicate that we are excited as a team to embark on this journey. We are hopeful that the demerger will be successful. We hope you, our shareholders, will support the proposal that we will put in front of you, and we look forward over the next three to five years as we look at both businesses. Hendrik and myself have the responsibility to our current set of shareholders. We have a responsibility to support the demerged asset management as we go forward.
Similarly, Hendrik and the team have to support the bank and wealth as we go forward because our responsibility is to both sets of shareholders. We are excited about the plans that we have laid out before you. There are tough things we have to do as we go forward because we've given ourselves as a management team significant stretch, both to meet the needs of our shareholders, but importantly, to build a stronger business for our clients, for our employees, for our shareholders, and for the communities in which we operate. Thank you for your attention. It's been a bit of a long presentation, but I hope you found it useful. Thank you so much.