Okay. Good morning, everybody. Welcome to our pre closed briefing. Most of you would have already seen that we made an additional announcement this morning, which I'll deal with at the end of the briefing. Let's see, I use that one.
Okay, that one's not working. Now if we look at this is for Give you some guidance to the end of September and some of the asset management balance sheet figures are up to the end of August. If we look at the operating environment, I think we still are operating with a lot of uncertainty in both our Core geographies, not to stand the fact that the global world is, when you look at the macro picture, doing okay, particularly the U. S. The South African economy is very weak as you would have seen with GDP figures released last week.
We talk about a technical recession. You can argue whether it's a recession or technical recession, but it is there is Negative confidence is weak as a consequence of policy uncertainty, and that is having an impact on overall business confidence. I think both the SA equity market and the UK equity market have been okay during this period, particularly the last few months. It's supported by Randstadx, UK also by a weaker sterling. I think if we look at our overall business for the period expected for the period ended 30 September, I think our Asset Management business As reported results ahead of the prior period, we should report results well ahead of the prior period, while the investment business we expect to report results behind the prior period.
Both divisions I have had high levels of funds under management and Reasonable Equity Markets and Good Net Inflows. When we look at the Specialist Banking business, U. K. Specialist This bank is expected to report results well ahead of the prior period. South African Banking business is more or less in line with the prior period.
Exchange rate has had a negative effect with the rand at this point in time depreciating 53.5% on average against sterling over the equivalent period. We do expect revenue to be modestly ahead of the prior period. Recurring revenue will be approximately 78% of our total revenue. And that will say that a weakness in our results Will it be the investment income? Otherwise, all the other factors we saw growth.
The total income statement charge It's less than the prior period. I think, obviously, we dealt with legacy. And so we expect our Bad debt charge should be between 0.21% and 0.25% compared to 0.54% last year. Costs are higher and that's growth in headcount to support both activity levels and increased regulatory requirements, in particular in the U. K, where we had MiFID II and GDPR.
So we do expect our adjusted operating profit to be ahead of the prior year. Looking at our core growth drivers, I think 3rd party assets under management increased 4% in sterling, 8 0.7% on a currency neutral basis. Customer accounts down 5.5% in sterling, that's really the rand, 2.5% on a currency neutral basis and loans and advances down a similar number, but an increase of 2.5% on a currency neutral basis. We maintained a very strong balance sheet. Liquidity has retained a pretty strong level of loan to customer deposits at end of August of 79.6%.
Our capital ratios are expected to be in line with our target. We Have got permission to do a parallel run, still subject to final regulatory approval to implement Foundation IRB in South Africa by the end of the 2019 year. And we expect that to have about a 1.2% improvement in our core Tier 1 ratio in South Africa. So that's a pre step towards advanced where there would be further improvement. Our leverage ratio is sound.
They're running at over 7%. They're comfortably ahead of that target. So overall, We believe the balance sheet remains very solid. If we look at Asset Management and look at the individual business units, I think very strong inflows. I think perhaps the feature of these results GBP 4,400,000,000 to the end of August 2018.
Again, we've had a competitive investment performance over the long term and not to stand challenging markets, in particular emerging markets where there has been outflow from emerging markets. And I think the leadership transition is well underway with an ordinary and well executed plan. If you look at funds under management, they're up 4.9% in sterling to £109,000,000,000 which is 9.7% on a currency neutral basis, which we believe is very strong underlying performance. On the Wealth and Investment business, we expect to be behind the time period. We have got higher funds under management.
We have net inflows of £600,000,000 and that is mainly discretionary in place. We did add some discontinued services as a consequence of MiFID. And we've seen obviously, we've had some outflows as a consequence of that. I think on the South African side, Underlying profitability is impacted by lower activity levels because of lack of confidence is an element of activity that always comes through in the wealth numbers. On the UK side, I think we've had higher costs driven by IT initiatives, implementation of MiFID II and GDPR, which has had an effect on this business.
So overall, funds under management up £2,400,000,000 in sterling to £57,400,000,000 7.1 percent on a currency neutral basis. Looking at Syspecial Bank, We are expecting to be reasonably ahead of the prior year. Net interest Income driven by book growth in both UK and South Africa is up. Fees and commissions driven by good performance from our UK Corporate Advisory business as well as the African Private and Business Banking activities are up. Other income, really investment income is well behind the prior year due to weaker forms from listed and unlisted equities relative to the past year and partially offset by improved trading income.
Costs in the UK are up in line with revenue and flat for the second if compared to the second half of last year. You are aware that there were a lot of investment costs in that business that is now flattened and tapered off. So we expect that we will not see cost rises of any kind of material form going forward. South Africa costs are increasing at below inflation, which I think is well under control. I think on other information, our expected tax rate is expected to be 18%.
Last year, it was at 14.5%. It's on to normalize and then a controlling net non controlling interest of £35,000,000 profit related to asset management business and the consolidation of the Investec Property Fund. And then weighted number of shares in issue approximately 9.30 7,000,000 shares. So overall, I think the environment here has been challenging. We still got a lot of uncertainty around the type of Brexit we're going to have, which has some impact on confidence in certain sectors.
Activity levels in the UK have ever been supporting profitable growth and has been acceptable. I think on the South African front, there has been negative emerging market sentiment. There's continued policy uncertainty, hopefully, that starts getting dealt with. We're in an election year, so that also encourages populous rhetoric. But that has hurt investment confidence and we've had a significant weakening of the currency, particularly in the last few months.
So growth in that environment is challenging and is being reflected in overall activity levels and performance. So when we look at the overall group results, I think they have been supported by good growth in funds under management, Positive net inflows and an improving performance from the UK Specialist Bank. And that's another issue. So what we told you before was once we get through this legacy, which I've mentioned here that it is behind us. You'll start seeing a strong uplift in the U.
K. Business Bank, which is what we've seen in these numbers. So that's the trading update. I don't know if anyone wants to ask questions. And I'll start in London Before I go into the next story.
Okay, no questions. Can I go to Johannes? I can't see Janice Any questions? So we also announced this morning the proposed demerger listing of Investec Asset Management. I think since we made this decision announcement on in Feb 2018, we focused on Audley TransUnion Health's leadership.
Fani and Hendrik will assume their roles as joint CIs on the 1st October as was previously planned. In conjunction with this leadership transition. The Board, together with the executive directors, old executives and new incoming executives, I did have a strategic review of the group. The strategic review is focused on ensuring that the group is positioned to enhance long term interest to shareholders, clients and employees. I think through the strategic review, we concluded that we comprised the group comprises of A number of successful businesses operating across, in essence, 2 core geographies with different capital requirements and growth trajectories in those businesses.
We see that they are compelling current and potential linkages between the Specialist Bank and the Wealth and Investment business. We deal with private individuals. Elements of the Specialist Bank and the Wealth business does deal with private individuals. However, there are limited synergies between those businesses and the asset management time here. So post that review, I think the Board has concluded that we it is now appropriate to demerge and publicly list the Investec Asset Management.
The Specialist Bank and Wealth and Investment business will continue to remain part of the dualistic company structure. And it is intended that asset management will be listed on the London exchange with an inward listing into Johannesburg. We believe that this transaction simplifies the group and focuses both asset management and the remaining group in the respective growth parts. We also believe that this will enhance the long term prospects and potential of both businesses for the benefit of all stakeholders. The transaction is subject to regulatory approval, shareholder approval and other approvals and is expected to be completed within a 12 month period.
The asset management team's management stake will be retained by them, So they will end up with shares in the listed entity and the remaining group will retain a minority stake in Investec Asset Management. I mean, post implementation of the transaction, shareholders of the Investec group will have a direct sheholding in asset management in addition to the shelving in the remaining group. I mean, following the implementation, Fani Titi will lead the remaining group and Hendrik Zittoy will lead Investing Asset Management. The precise mechanics of the demerger listing will be communicated in due course. So we're not yet to talk about the mechanics because that's a process and we will come back to the market as soon as That process is clearly defined.
So we believe that our individual businesses are well positioned strategically The strong market positions and good prospects and that is now the right time to demerge the asset management business. It wasn't possible in the immediate short in the immediate past. So I think we believe it's now the right time. We have made very good progress on expanding our banking and wealth management franchises in our 2 key markets over the years. And we are focusing and have improved the operational and financial performance.
I think the transaction does allow these businesses to reach their full potential. And shareholders, we believe, will benefit from future value creation having direct ownership of 2 separately listed companies. So now what am I doing? So I always try people ask me why And I related to when my daughter left home and got married. And first, it was very hard, and then I had 3 grandchildren, and that's easy.
So she was also allowed to go on and develop as an individual. And I think we have been Building Investec Asset Management together with Hendrick and his team for 28 years, it's like letting one of our children go, that we're giving its own wings to fly. So I think this is where we've come to as a firm and we believe that both businesses It should flourish in the ongoing future and there will be a much greater degree of focus and much more simplicity. And we understand you guys in the market, you like simplicity. We don't like complexity.
So that's the end of the story. Thank you. Questions? No questions here, Anita? I mean, London?
Richard,
any questions in
We are appreciating. Hello. Hi. It's Stephen Cranston. So does that mean, obviously, John Green and Mimi Farini get back to their old jobs, so they must have been disappointing.
You have to be cynical,
Stephen, I'm sorry to avoid your questions for a long time, but I was even going to banking to not deal with them. And now you catch me. No, absolutely not. There's an executive transition happening in the group and in the Asset Management business on 1 October as announced. Mimi and John become joint CEOs of the Asset Management Business.
And Fani and I Take up the group and we have to navigate this. And after that, we each go different ways, But only after that is executed. So John and Mimi remain as exactly as announced. The lady have to Any more questions, Richard? No.
Steven can't ask more questions.
Yes, looks like it's still. Okay. And we'll have a lot of food. Thank you.
Thank you. Okay.
Thank you very much. Thanks, everybody, for attending, and We'll see you soon. Next time, Fani and Hendrik will present.