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's 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 Nisland Samuij, Group CFO. I also wish to welcome Hendrik de Toit. Hendrik, where are you? My joint CEO. I'm expecting that Kim will be coming through.
Is Kim in the room? Yes. Kim is an Executive Director of the group. We also have the former CEO of Investec, Steven Kosef. He likes to say that he's now sitting at the back of the bus and shouting.
So Steven, no shouting today, but you can sit at the back of the bus. Thank you for coming through and supporting us. So let me just give you a sense of how we will run the day and what we are trying to do today. So during this presentation, I will give a brief recap on the demerger rationale. I will cover what I see as the core strength 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. Nichelin will review our key financial metrics and capital. And finally, Henrik will give some perspectives on the GE measure and also talk about the Bank and Wealth business before we move to Q and A. If there are three things that I would want you to take away from today, they are: number 1, we have a collection of very strong businesses that have good linkages between them and have excellent future prospects for growth. Number 2, there are tangible things that we can do and we plan to do to improve performance and enhance returns.
And as a team, we are resolute in our determination to deliver. Number 3, 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 investment for our clients, for our people, for our shareholders and for the societies in which we operate.
I have Nislin controlling the slides for me. Nishlan, next one. Yes, I want the next one. This is what happens when you have somebody controlling your fate, isn't it? So just to recap on the demerger.
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. So that is the timetable we are following. The focus today is on the high level strategy for the business after the demerger 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 demerged asset management business, the consequent final impact on our capital and key ratios, transaction costs and, of course, the dividend policy of the deemerged asset management business.
But all these details will be in the secular. Post the release of the secular and our annual results, we will present you a detailed picture of the impacts of the demerger. 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 2 weeks or so, we will be holding a trading update.
So today, we will not be commenting on the current operating environment or trading. Henrik and myself look forward to talking to you in 2 weeks' time on our trading. But in summary, the logic and merit of the de measure 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 measure 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, but 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 a 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, I've 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 some most of you have seen the current brand campaign that we run that 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 investing 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 line 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. But very simply, we have market leading positions across our businesses and the areas we choose to focus. Stephen likes saying very often that we do not try to be all things to all people and we hold true to that mantra.
But where we choose to specialize, we try to be top tier, as you can see on the slide that we have. We are in it to win for our clients, either 1st or second or thirdly top tier, in it to win it for our clients. And 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 the merger, 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.
So 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. But after the demerger, as you can see on the slide, we still have 44% of income coming from capital light revenues. And 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 upfront. Since the announcement of the G Major, 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 de merger. As I said earlier, we will publish the secular on the G measure and once published, we will update you on the precise impact. But we do expect that capital ratios in the PLC will improve.
I wish to be quite clear that post firm 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 FERBIN in SA and post a demeasure 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 the slide.
The key message on capital is that all three businesses are 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. So having funded our targeted loan growth, there will be sufficient capital generation to support our new dividend policy of a 30% to 50% payout ratio. And from April 2020, we will buy back shares to offset dilution from share based remuneration.
So for our shareholders who've been worried about dilution from the financial year starting 1 April 20 20, you don't have to worry about that anymore. And 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 3 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, and 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. But 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. So we are a very stable organization at the top. And 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 LSA to answer some of the more specific question 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. Now 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. But I want to be completely direct that we are not satisfied with where the ROE is today.
The ROE for the investor group excluding IAM at H1 twenty nineteen 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% to 16%, so a 3 year journey to 12% to 16%.
Given the work that we have done already and the longer time frame of 3 years to implement our improvement plans, we have upped our ambition from the initially announced targets of 11% to 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, asset management should beat the loss of asset management takes ROE targets down or achievements down by 2.5%. So we're saying that we expect significant improvements over the next 3 years to go back to the original target of 12% to 16%. So 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% to 18% in rands. We take the cost of equity in South Africa to be around 14%. For Investec Plc, the new target is 11% to 15%. These targets fully reflect all costs, including DLC Group costs. So these are fully costed targets.
I'm confident we'll achieve our targets for two 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.
And 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 crisis, but also from past mistakes, and 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 say that over the life of these investments, they have generated attractive returns, but these returns tend to be very volatile 1 year to another. And also, the proportion of our capital tied in this activity is higher than we would like it to be. So over the next 2 to 3 years, we are going to manage this down to a lower proportion of our capital, and 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. So 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. And 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 Strategic Investments. We will explore alternative revenue models as for example we are doing with my investments in South Africa and click and 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 3rd 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 'nineteen 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 Invested property fund, which we own 27 percent 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 DRC Group costs of approximately £10,000,000 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 £55,000,000 of cost per annum, approximately ZAR1 1,000,000,000 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 4th 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 midsize business in the UK.
The potential of working with a leading wealth management business with an exceptional UK wide coverage could be powerful. We also have very good international connectivity between the UK and SA 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 1 Investec and this is to make sure that we bring all of Investec, agnostic of business and geography to every client's 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 first 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. And fourthly, our digital platforms have the potential to help us raise liabilities competitively to reduce our cost of funding in the long term. But this last one is a much more long term ambition that we have. Next, Nish.
So to bring it all together, our investment case is an ROE investment story and in the long term, grow through a focused and simplified business. I've explained how we will set about achieving this through 5 simple drivers. Over the next 3 years, the target is to take the group ROE from 10.9% at H1-nineteen into the range of 12% to 16% across the cycle. In Investec Limited, the gap between the H1-nineteen ROE of 13% in rands and the bottom of the 15% to 18% range is pretax profit of ZAR1 1,000,000,000. So we have to generate ZAR1 1,000,000,000 more from the current base of business as we go forward to reach the 15% to 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 'nineteen ROE of 8.8% and the bottom of the 11% to 15% range is pretax profit of £45,000,000 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, Nish? So 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, €1,000,000,000 more profit in SA and €45,000,000 more pretax 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. And we will look to simplify how we report our overall performance. CDM 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 UK Bank.
Thereafter, Richard will talk about the SA Bank. And then we will have a short break, after which we will have Stephen Nischlin, and I will wrap up and 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 peer 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 franchise franchise, complemented by international specialist capabilities.
We service 3 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, and 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 while we believe we will be successful, we'll talk through each of these in more detail. Over the last 8 years or so, we have materially simplified and derisked 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 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. And 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 20 10 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 2 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 time 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 CHF 10,000,000 to CHF 100,000,000. In comparison to other specialist banks, our strength is in the breadth of our personalized offering, whereas other specialized banks typically specialize in 1 or 2 products and are unable to provide a full service offering.
In comparison to the high strength, our strength is in sorry, in comparison to the high street banks, our strength is in our high quality, client centric street banks have strengthened high volume, low price and relatively homogeneous products. They lack flexibility and are often so 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 in corporate on corporates with revenue in the range of $100,000,000 to $1,000,000,000 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 the attention. Therefore, 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.
Specialist, 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 special associations over a long period of time and we will take a deeper look into the aviation business insights 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% to 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 business is 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.
Now that we had scale in the corporate Investment Banking business, forward loan growth of 0 point 0 $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 a 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 amongst other aspects to enhance returns by recycling capital to generate additional capital light revenue, increase client relevance, maintain loan book diversity, gain valuable gain access to valuable market intelligence and raises our profile amongst 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 $5,000,000,000 generating capital light revenue off the back of our expertise, and 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 franchises, and 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 will expand on further in the next slide. Our high net worth offering is made up of 3 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 3 years, and I'm going to discuss that further in some detail. Our bank accounts and savings business provides transactional and saving capabilities through 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, and 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 like a tongue twister. Quantitatively, we look at clients with a minimum net asset value of £3,000,000 £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 3 years. Why do we believe that there is a gap in the market for this target times? 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 time 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 Investec is typically 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 will introduce them into our wealth management offering.
Over the last 3 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 leveraging 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 acquisition. The banking platform is currently subscale and loses just over £30,000,000 a year. To breakeven broadly requires writing an additional £3,000,000,000 of mortgages at around 1% margin in just over a 3 year time period. To put that in context, our average mortgage is around about £2,000,000 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 and 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 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 in private bank for directors and shareholders, and we share the same brand 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 will be looking to actually target this actively for 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 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. But we first developed the relationship with him advising the clients in 2013 and then listing them for GBP 154,000,000 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 3,000,000,000 Along the way, we've also provided an 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 border connectivity and inter business 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 and then provide them a primary residential mortgage in the U. K. We were in a unique position to be able to assess the income streams because they were ex South Africa and again the high streets and other private banks couldn't provide the service. As a result of our unique offering and high service levels, the clients have subsequently moved all the 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 revenues generated in 3 broad activities: lending, which generates net interest income advisory and structuring services, which generate capital fee income and we provide treasury and risk management solutions, which generate time 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 and we've now got dedicated management teams focusing on our 2 target market client sectors and helping them integrate. We are growing our distribution and fund management capability, driving increased capital like 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 and then 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. And as a holistic approach growth strategy, we are focusing on bringing the full proposition to all our clients across Corporate and 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 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 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 2 years. And in all three years, we should start seeing strong positive jaws coming from the U. K. Specialist Bank. Talking to capital, our capital plans, our plans are sufficient to sustain our growth and achieve our targeted ROE.
We can sustain risk weighted growth of 7% to 8% per annum based on our capital plans And our intention is to pay up all dividends received from the Wealth and Investment business 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 SA 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% to 13% over the next 3 years.
The ROE of the ongoing business excluding the new banking position 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. And as we scale this, this should help us achieve this. So to achieve our target overall, we've clear plan as we've talked to. And summarizes this, we are looking to target 7% to 8% per annum risk weighted growth, which equates to 10% to 12% loan growth.
We are reaching scale in the private bank, growing our client base in both the corporate and social banking and private banking business by providing a more cohesive offering leveraging connectivity across the whole group, enhancing our cost discipline, optimizing our capital allocation and increasing capital light revenue in particular through growing our fund management capability. So in summary, we are very well aligned to the group's 5 key initiatives to improve returns.
We are going to
have a more disciplined approach to capital allocation. Our target market client acquisition will be through deepening current client relationships 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, and we're going to continue to drive high-tech, high touch offering, which is continue which is core to what we do. Thank you very much.
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. And 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 8 people sat around a desk, rumored to have only 7 chairs and one telephone and started this business and it was in the banking business that it all started. And when you think back, it was Madiba that said it's impossible until it's done.
And 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 and some of them like us, most of them like us.
So we are very proud of what we've achieved in this business. We still have a long way to go. And to get to the point right upfront, yes, our clients may like us and we're proud of what we've achieved and we have a great business, but we still have a long way to go. And 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. So I will discuss that in the 20 minutes that I've got.
And what I'd like to do is spend a few minutes talking about our positioning in the various product areas. We have the 4 pillars that we have in our business: the corporate bank, the private bank, the newly established Investec for Business and our Investment Banking Principal activities. You can see that through a tough economic time under the previous president's regime, we managed to grow our loan advances booked 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. But 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. So 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. And 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. So we believe we're very well positioned. Just 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 and we are not all things to all people, but where we do compete, we want to be recognized and be seen as top tier. So we split this business into 2 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 and 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.
So many of our domestic peers no longer have an international offering to the extent that we do and Dave has spoken a lot about his product offerings that he has. And on this slide, you'll see some of the areas where we can compete. Ampicene is an international bank. So 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 2 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. So we have approximately 5,000 clients that we deal with. We have a loan book of about ZAR80 1,000,000,000. 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, and I'll talk further about our Invested 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 and the average transaction size is about R180 1,000,000. We have a book of R5 1,000,000,000.
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 R500 1,000,000 and we have a R10 1,000,000,000 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 and I can deal with that under Q and A and 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 currently had about SEK 18,000,000,000 in funds under management. Moving on to our private banking business and I guess this is where Stephen and Bernard and Larry and Errol and Ian Cantor 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 and 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 don't believe anybody at the moment currently offers to their South African clients. This slide gives you more details around how we're positioned. It's very similar to what Dave 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 and we have a structured property finance business where we are ranked number 2 in South Africa and this business really differentiates us as well because our offering there is to offer those clients, as Dave 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 breakeven. Post the crisis, we had to restructure this business quite significantly. Kieran and some of my colleagues, Stuart Spencer, Ryan Foley, Khomesh who is here, went into this business and embarked on a massive turnaround strategy.
And 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 JPY 180,000,000,000. 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 and I know Khmers 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 bought the old Reifmans Capital business together. Basically, what this team offers is working capital solutions for small and midsized companies. Our objective is to position us very similarly to the private bank where they are positioned as high-tech, high touch. We are investing substantially. Lawrence and his team are building a corporate banking transactional platform, which we enroll out as we speak.
That will be the glue that holds this together and we're offering specialized services. So similarly to how we recognize in the private bank being exceptionally high touch with deep relationships and with the leading technology offering, we plan to do that in this world as well. And 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. And basically what we have here is we bought all our property, our private equity 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. So I've spoken about our digital positioning in the private bank, which we said is unique. It's difficult to it's relatively easy to replicate a digital offering. It's very difficult to replicate deep relationships in a high-tech a high touch offering together with that digital. Just to show you here the growth in our online transactions, remember that our client base was 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 4 years. On average, I worked it out each client who logs in through the app 18 times a month. And this is where we've built a secondary band for ourselves being Investec 1 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, but none seem to have done that so far. So this is a unique offering and a unique position for us. What are some of our growth initiatives and deepening our client relationships in the various areas?
So 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 have launched Invest Expensives Investments, which is a CAT II 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.
We've 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'll 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. And our
was the CEO
of Investec Property Fund until quite recently. Was the CEO of Investec Property Fund until quite recently. We continue to grow that. Investec for business, I've spoken about already. So we have a very high level of annuity income.
In 2011, it was at 64%. We're currently at 77%. So 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 questions and answers Q and A session. But we're very pleased with the level of annuity income the sustainability that we've created. Our cost to income ratio, this has not been a big issue, I don't think, in terms of the investors in South Africa. We're very much in the competitive space and slightly below our peers at around 51%. We're setting a stretch target of 49%.
We will have some volatility in this ratio and that's purely a function of our investment income line, which is reasonably volatile. But 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 2 and ensuring that we have a positive jaws outlook. It's also important to point out and I'm saying that it's telling me my time is up, I think I've got 3 slides left. I'm going as fast as I can, I apologize? I think it's important to point out we do not have capitalized costs.
So all the investments we've made on our digital important slides and forgive me if I'm slightly over time is our South African investment portfolio. What we've highlighted here and this has been reported in our annual accounts before is an investment portfolio of SEK12.8 billion, which has capital allocated to SEK6.7 billion out of about SEK 36 billion, so a significant portion of our capital only producing 6.9% ROE after tax. This is out of a total investment portfolio of SEK25 1,000,000,000 that's on our balance sheet at the end of September. I think it's important to point out we are and Nick and his team 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 and maybe you can ask us under Q and A what our plans are with that. But over the next 2 to 3 years, we would want to get this total portfolio at around about ZAR15 1,000,000,000. In terms of capital generation and our capital view, we generate sufficient capital in South Africa. Over the last 25 years, we've not needed any capital.
We've generated our own to sustain our growth. Our risk weighted assets can grow at between 8% 10% and when we adopt FIRB, which hopefully should be in the next month or 2, we can accelerate that we anticipate to about 12% in risk weighted assets with our dividend policy and still be able to maintain our capital ratios. The ROE, we set ourselves a target of 14% to 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 2 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 2 to 3 years. To summarize along Fani's 5 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. And 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.
And Kieran pointed out to our staff the other day how proud he was of that particular service offering. It is a differentiator for us. So 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, When we come back, we will have Stivalia to present on the Wealth business. Neschlin will go into our numbers. Henrik 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.
So 5 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, 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's 24 now. 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, Henrik, there's a new sheriff in town. 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're now going to go into the next set of presentations, which we know will be a lot more interesting and lot shorter because the first three were a lot more bank focused. So Steve Elliott, the Global Head of our Wealth and Investment Business, after which we will have Michelin to run through the numbers. And then I'll wrap up. Henrik will come up and give a perspective, and we will be delighted to take your questions. Sappi, 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 And I hope you've had some good refreshments. Just to support my colleagues, it is 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. Although the best way to approach the Wealth business, the people might see it as regional. But I want to start and looking at it as one business and then breaking it into its component parts as we move forward. Our proposition focuses mainly on wealth management and discretionary management.
Our clients are mainly private clients, high net worth investors and high net worth ultrahighnet customers specifically in South Africa. Our distribution is well diversified and we have grown our assets, in fact, doubled our assets over the last 7 years from where we are, 20 odd 1000000000 to 57,000,000,000. When we look at the key differentiations in our business, 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. And finally, I would like to also place where we are from consolidation. These industries, as you know, have gone through different cycles as they've gone through consolidation. And we feel in certain parts of our business, we're now sitting in that space.
When you look at our growth story, I think you can see by that slide that we've done that organically and inorganically. Rensberg Sheppard and Williams Dubrow were big transactions that we did in 2010 2012, but we continue to grow our organic growth because that's 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's core because that's what we do.
We have to look after clients' money and we want to do it in the right way. So it's about the suitability to client. Sorry, I just need to get the slide right. It's about the suitability to client and to ensure that we get the risk profiles correct. And we've 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. And hopefully, it's a busy slide, but hopefully, this demonstrates what we set out to do. I think what's 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.
And we've noticed as well from that point of view that the investment types that we're getting 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'd like to now just break down into the big regions. It would be a miss for me not to mention our other regions, but we're really going to speak about the U. K. And South Africa.
We've got Switzerland, we've got the Channel Islands, we've got Mauritius, we've got Ireland. And I'd like to just concentrate on the 2 big drivers of our business supported by other branches and businesses. In the U. K, we have €39,000,000,000 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, but we'd 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 is spread from the north right from Scotland right down to the south and east to west. I always say the U. K. In landmass is small, but if you look at it from an economics point of view being the 5th 6th largest GDP in the world, this is a substantial place to operate in.
We are confident about our continued 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. So 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 2,006 to where we are today GDPR, the General Data Protection Review, which both South Africa and the U. K.
Have gone through And then ending off a very, very big project around MiFID, which is markets financial instruments review, 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 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. And we've seen that financial planning and fiduciary support is vitally important both in South Africa and the U.
K. So there's been quite a substantial amount of investment in this space and will continue to be that. So 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 has got €320,000,000,000 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 8 years in a very, very progressive way. And if you took the funds under management in 2011, 10% to 15% was discretion. Today, we're at 40% and going up even further. Organic growth remains a key factor in South Africa. And we believe taking our client set and I always say this and I think Fanny mentioned it earlier on is I think that the South African client set is the most internationally minded of all our client set 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 and we're in a deep discussion and process at the moment to achieve that. And as I said, the fiduciary and high net worth servicing for our clients is important that we do that in a very, very sensible way. The competition in this area is most is both domestic and from offshore and we've seen some big multinational wealth and investment businesses coming to the into South Africa of late. The connectivity is one of the key factors and you can see we finally started off and where Rich and Dave went. And there's elements of this and we can spend most probably a whole day speaking about these opportunities.
But 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 and we see big opportunities there. Sometimes it's hard to measure that, but in South Africa we have seen the success of 1 place. This has worked well and I know that we can do that even better and a lot of efforts will be put into that both from the bank and from wealth and investment. Can we achieve sorry, thank you.
I just want to even though it's on the South and South, I just want to pick up on the U. K. Connectivity. A one place scenario is if it's possible to do it in the U. K, will take a lot longer.
And partly, it's around how we deal with the client set. In South Africa in the U. K, we have a high net worth clients that come in out of the private bank, which David indicated where we take it, it's a £300,000 income and £3,000,000 worth of investable income investable assets where the U. K. Heartland clients must probably sit in about £500,000 However, we do see that advantage and we've created a private office to connect between ourselves and that's important.
So we'll look where we can connect. And if that can expand, we will obviously do as much as we possibly can. But coming back to South Africa, the one place is obviously a key driver for our clients both from the private bank and wealth and that as I said we will 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 accounts and that continues to grow as we move forward. And 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, but we're working pretty hard on that with Ryan and his team. We also talk about how we create the wealth. And if you take the examples 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 the asset. From that, obviously, that 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 and 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. So just to step back for 1 minute is that the wealth businesses generally across the world must probably be far slower than banking in the digital world. And 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. And 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 2nd 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 then place their money into a wrap.
And this time of the year is a big savings period. So 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. And we feel this is our Formula 1 in our business because as you know, if I may 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. And this is obviously part of the big discussion as we put the bank and wealth closer together. The key factor around click and invest is a word called simplified advice. And 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. And I'm happy to have a discussion. I'm sure Henry and Jean Pierre will support me around any Q and A. As I said, our business is simple relative to banking.
There's 2 key factors. It's around revenue and around costs. And we have to ensure the one factor that we can control mainly is costs. We cannot control our revenues totally because we are linked to markets. And as we know, markets in themselves behave in certain ways and we've seen some massive overlays in markets over the last 2 years, specifically the geopolitical overlays both in the U.
K. And South Africa and equally the uncertainty of markets. We are 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. So I 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 in development will continue. Included in that is that the technology not only around digital, but platforming is vitally important. And as we know, this has started to move pretty rapidly. So 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.
But we must not be too short sighted about this because investing is in 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. And as you can see, we've put our ratios out in South Africa to be below 70 percent and in the U. K. Between 73% and 77% over the next 3 years. If you look at our strategic focus going forward starting from 1 right up to 6 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. And that includes just looking at strategic alignments between the bank and wealth and investment and how we take that forward in all areas that we operate. But I think what is important and I know it's a word we use a lot within the Investec world, but we mean and we try and follow that very 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 5 objectives that he set out and we believe in strongly.
Just to recap, we are a capital light business. We conduct heavy because we look after clients' money. And 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 and 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.
Okay. Well, it's good afternoon to everyone. And 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 3 businesses as presented today. Just as we step into the numbers, I think let's look at what supports the underlying base.
So the net core loans and advances and I've picked a period from 2014 has grown at a compounded growth rate of 12 percent across both the South African and the UK platform. And this has been fundamentally supported by a strong balance sheet management across these bases with customer deposits fully supporting this growth. The loan to deposit ratio in UK and other is at about 80% at the end of September and 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 12,500,000,000 of which GBP 6,500,000,000 was in the UK and R110 1,000,000,000 in South Africa. The FUM numbers that we report of just over 57 point €57,300,000,000 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.
So 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 this particular fact these particular factors. And 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. And 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 capitalized. So there is very little carried on the balance sheet and very little capitalized investment in Click and 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.
However, 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 and 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% 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 and the block that you can barely see is the historical legacy write offs that we have processed through the book. Our H1 twenty nineteen numbers have been annualized in this particular graph, but you can effectively see the normalization of the impairment charge now in the system. With the presentations delivered for the 2 specialist banks, you would have noted that there is a fairly diversified loan book across the portfolio.
And in particular, we split our portfolio into 3 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. 2nd area is high net worth and other private client lending, which makes up about 39% of the book. And 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 has presented the detail around the corporate book and in the slide you see a diversification across that entire that on whichever metric you look at it, it's relatively well balanced. We have around about 54% of the revenue base in the generated from the U.
K. Geography and capital light businesses having stripped out asset management. So I'll 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 times in the time periods that we are in.
The overall cost base that we reported at the end of March was RMB1.27 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 £50,000,000 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, they are very, very clear initiatives to ensure that we manage this down with around about £10,000,000 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. So we've been very specific around the target ratios for the U. K. Bank, which is at below 65%. The UK and Wealth Business at 73% to 77%, the South African Bank Business at 49% to 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. So 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 S. A. Inc, which has reported an ROE of 13 percent at the end of September, separating the investment portfolio that ROE was at about 15.4% in the current 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 percent 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 £65,000,000 of investment over a period of time on that particular platform. So from a UK perspective, we report an ROE of 11.6% having separated this particular platform. And from a UK Inc.
So 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 private in the banking proposition. So the overall group ROE having included the wealth business, which is at 26.4 percent 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 off 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, Rightsizing the investment portfolio in South Africa is key and that will effectively help us to effectively to recognize a consistent ROE level rather than the level of volatility that we've seen over a period of time. And I do use the words rightsizing because this is still very much part of the DNA of Investec, but right now it is too large an element of the underlying capital base. Optimizing capital allocation in South Africa and 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 2 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.
So there's a very low reliance on interbank funding from a group perspective. We maintain high levels of liquid assets across the balance sheets and we will continue to seek funding sources to enhance net interest margin across the businesses. From a capital generation perspective, and 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% to 16%.
We have highlighted that we believe that the underlying generation of capital, including distribution to shareholders, can support risk weighted growth of 8% to 10% given the current environment and that we have set a dividend payout ratio of between 30% 50% for the bank and wealth businesses. If I summarize our key targets, ROE at 12% to 16% and on the right hand side, we identify specific targets for each of the key businesses as well as the key geographies with the cost income ratio at less than 63%, particularly with the U. K. Bank targeting a a The capital ratios, we will continue to target a total capital ratio between 14% 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.
And as Fani has highlighted, at a point we will push up the capital targets from around about 10% to 11% on successful implementation of FIRB which is subject to regulatory approval at this stage and the dividend payout ratio at 30% to 50%. So 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 3 key businesses that were represented today. Thank you.
So we are joint CEOs, so we're coming in at the same time.
I don't have a thing on my face, so I need this one.
You want to wrap up before I do? Okay. Yes.
No, no. I just 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 initial and gives you the answers and that. But 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 going to make miss things. You're not going to necessarily concentrate on what everyone wants to do. What we've tried to do here and that with the support of Steve and Bernhard and the outgoing management is how can we make most of the Investec we inherited? And that started with a message of simplification, focus and then releasing the energy for growth.
And 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 asset management business a few months ago. You'll get a more detailed CMD coming to you just after results. You'll talk to Fanny 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. So Fani, that's my perspective.
You ask me.
Thanks, Henrik. Very succinctly put by one of the best asset managers of the country has produced, As we indicated in the numbers over 27 years, Henrik and the team have built a fantastic business that is globalizing at a rate that is impressive, have over £100,000,000,000 of assets under management started right here in Cape Town. So 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. So just to conclude from our side before we go to take questions. We have confirmed the current strategic positioning of Investec, but 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 initially you were the person who you were the one to click for me. You did.
Okay. So let me recap the takeaways that I spoke about in the beginning. I spoke about 3 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 Henrik 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 Henrik 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 gross 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, and we are doing this through what we have now dubbed 1 Investec. 5thly, to leverage digitalization using it as enabler, for instance, around cost using this 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, but we are inherently in our DNA, digital in our approach.
The 3rd takeaway was that we have a strong capital base and generate sufficient capital to fund both our growth and distribution to shareholders. Michelin has captured that very neatly. But I would like to make one additional point with respect to this. And it is this that on day 1, post demeasure, we would expect the aggregate dividend to shareholders between Investec Bank and Wealth and the demerged IAM not to be 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 and similarly whatever dividend comes from the Wealth business is being passed through to our shareholders. So post demeasure, that dividend generation capability remains the same. So we have outlined the 3 year journey and 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% to 16% in case of the group to the 15% to 18% in case of Limited and to the 11% to 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.
So we've set demanding targets, they are clear and stretching, but we believe they are realistic and I indicated why we believe so. Importantly, executive remuneration will be aligned to the achievement of these targets, and 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. So returns in the short term, an incredibly strong business in the long term, placing clients at the heart of everything that we do. So in the businesses So in the businesses, there are significant plans and commitments to deliver on the commitments we have made.
At the center, we have Michelin, myself and Kieran, and 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 8 years ago was breaking even. Kieran led the efforts to restructure and revitalize the private bank.
We've talked about the redirectional strategy 3 years ago in the private 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. So at the center, initially, myself and Kieran will support the businesses with their management teams to deliver on what we have committed to do. And this effort is not only about the 10 of us at the group in terms of 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.
So this is a journey to build a stronger and a higher performing investor 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. And if we can deliver the plan, all those stakeholders should be better for it. So thank you for your attention. And 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 be made on you. Thank you for your patience and thank you for the work that you have done. We're ready to take questions. Thank you. Any questions?
Fani, thanks very much to you and the team for putting the presentation together today. Very interesting. Just a very high level question. I 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 UK presence, we are connected and we can take our clients down that journey. As I say, Stephen Elliott talks about the South African wealth clients as being some of the most internationally minded in the world. So 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. It did not outdo the current plan in terms of value creation for our shareholders.
Hi, Fani. Thanks very much for the presentation. It's Harry from Abior. 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? Is it a new kind of target market of clients? And then I think you obviously mentioned that you expect cost growth to slow in the UK bank. Should we read into it that maybe the product expansion in the UK bank will be slower than what we've seen in the last while?
Okay. On the first one, I'd like to invite Kumesh to answer. I said one of the objectives will be to expose a number of our executives. Kumesh, briefly the growth in the private banking
SA. Sure. Thanks, Harry. I think our focused target market within the private bank is in the young professional segment and we're focusing at clients employed at we determined to be preferred employers under 30 years of age and we've come up with a very bespoke offering for those clients, but still staying true to being a very defined target market within that segment. So young professionals is a key entrenchment and acquisition piece for us.
Thank you, Dave. Do you want to take the cost growth question from the U. K?
I missed the question. Just can you repeat
it? Sorry.
He thinks he's presented and that's the end of the day. Do you want to repeat the second question on cost growth in the U. K?
Yes, thanks. This is 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. I mean, we focused on client acquisition and actually rolling out the platform at the moment. So 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.
So really, it's just now about client acquisition. Thanks, Dave. Any further questions from the floor?
Yes, there's a question over there.
Great. Thanks. It's Matthew from Laurium Capital. Your dividend payout target of 30% to 50% maybe 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? Or is that ratio or that range given more dependent on growth in a particular year?
I think you're absolutely correct that in the early days, we expect to be at the lower end of that dividend payout ratio. But as we go, in particular, over the 3 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, but your assumptions are accurate. Yes.
Pravashan from 4th 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. So Kieran, you want to tackle the question?
Sure. I'm sure there is. We're not 100% sure what discovery is going to come with. They haven't launched yet, but they probably will be at the lower end. But 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.
So yes, there will be, but we've been in the business for a long, long time. Service is a key, as we have talked about today, and we have overcome a lot of the issues of how to give high quality service. It's very different being a medical aid and investment product provider than being a high net worth individual
great competitor, Discovery, and we respect what they do. And actually, Hendrik and the team manage some of Discovery's money. But really to summarize it in one sentence, they have 300,000 cards, over 2,000,000 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, Karen.
Hi, good afternoon. It's Mohammed Dounak from Mianza Asset Management. Thanks for the informative presentation. The 2 key themes I picked out from today, if you can just shed a bit more light and hopefully quantify a bit more of the numbers behind that. The one has been that you've been investing for growth.
So you've been investing in the last number of years. So 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? And ordinarily, would that investment level be higher than your peers? So would you always be investing higher than the others? And then the second part of the second theme has been preparing for the growth outlook.
So 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 percent growth, if not sub that.
So it's a tough market, and that affects your ability to do business. In the U. K, you've had the uncertainty around Brexit, but 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. So that is going on. We have made the investment required for us to get that platform ongoing. David indicated that over the last 3 years, we've invested €67,000,000 in the platform. That investment phase has ended.
Now we are building the acquisition of Clients. So 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, but we do not expect significant investment behind the growth that we are about to pursue that we are pursuing rather in those areas.
Michelin, 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?
Mahdi, it sounded like you answered the first question. Just remind me, was that effectively the investment platform? Yes. I think there's 2 things that we highlighted today. Number 1 is the targeted cost income ratio to bring it down to less than 63% from around about 68%.
So that should give you an indicator. And very, very specifically in the U. K. Bank where our current cost income ratio is running at around about 77%. Now there is a combination of revenue and cost in that.
So I don't think I'm giving you absolutely every pound of an answer, but I would use the cost to income ratios as the key indicators.
Thanks, Michelin. Any further questions from the floor? Okay. There's a question over there, 2 actually. Malcolm, you will have some questions from the webcast, do you?
Not yet. Not yet. Not yet. Okay. Thank you.
So we can keep betting here.
Good morning, Fani. Thank you for the presentation again. Just a couple of questions from myself. It's Benqi from Merrill Lynch here. Firstly, is there anything including the UK bank potentially being taken over by a competitor bank because of the deal listing company structure?
The second is, is the UK going to benefit the most from the sale of Asset Management? And also, you mentioned your risk weighted assets in mortgages at about 30% in the UK. What is the risk weighted density of the corporate bank in the UK? And are we going to see that come down over time?
Okay. 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 UK bank potentially being consolidated or taking part in consolidation in the UK banking market?
Look, 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. So whether it be in South Africa, whether it be Asset Management, whether it be the Wealth businesses and 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, and we will continue to look to simplify that business further and the growth opportunities there are particularly clear. So at the moment, we have no significant approach. We like the business.
We think the A plan that we have is the plan that will generate the most value for our shareholders. And then with respect to your second question, is the U. K. Bank the greater beneficiary of the demeasure. The demeasure has and I can't talk about the details, obviously.
It has the benefit of freeing the 2 businesses to pursue their strategic objectives over the long term. With respect to the UK business, we have clearly said that we would expect, post the demeasure, for the capital ratios to improve slightly. So if that is a benefit, yes, it will be a benefit, but we can talk about the details once we have posted the secular. 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 CET1 ratio of over 11% in the U. K. And similarly in SA post the adoption of FERB over 11%. Sorry, what was the third question?
The third question?
Yes. Chris runs the corporate bank in the U. K. So I'd like a mic given to him.
So yeah, from a UK perspective, we're on the standardized approach from capital perspective. So 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 2, 3 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.
But let's take the question from the back.
Stefan here at UBS. Just a question on the ROE for the African bank. You have the target 14% to 16%. Is the central cost allocated into that target as well as looking at the historical number there of 12.4 percent? I assume it's not in there.
And then also around pref dividends, have you deducted that in arriving at the ROE?
So the pref you go, Nish. I'm now usurping your role. 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 press.
So in other words, we look at the net return to ordinary shareholders in the calculation. The 14% to 16% that is set for the Specialist Bank is pre the group cost, but the 15% to 18% that is set for South Africa is post the group cost.
And similarly, the 11% to 15% set for the PLC is after including the DLC group costs. Thank you. Any further questions? Okay. It 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? Okay. No, we don't have any further questions.
So 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 demeasure 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 3 to 5 years as we look at both businesses because Hendrik and myself have the responsibility to our current set of shareholders. So we have a responsibility to support the demerged asset management as we go forward.
And similarly, Henrik 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.