Can you wait your minute? I'm going to go. Nishlan?
Stephen, I think you can go now.
Okay. Thank you. Good morning, everybody. Welcome to our pre-close briefing. If we look at the operating environment, clearly we're in two geographies where there is quite a lot of uncertainty. I think that the U.K., obviously, there's a lot of uncertainty around Brexit. Brexit, inflation has been rising and there's a bit of a squeeze on household spending. We're expecting lower growth. I'm not an economist, but I listen to my colleague, Philip Shaw. I think, the South African economy came out of recession in the second quarter. Business and consumer confidence are very low, and that's really because we have a very challenging political environment at this point in time.
On the other hand, we've had supportive stock markets, and I think that could have helped the overall results. We also had a supportive currency. If we look at an overview of the six months, I think our wealth and investment business is expected to report results comfortably ahead of the prior period, while the asset management business is expected to report results in line with the prior period. I'll give you a little bit of color as to why in a moment. Both the regions have benefited from higher average funds under management, and obviously the favorable equity markets as well, both have benefited from sound net inflows. I think the specialist banking business is expected to report results ahead of the prior year. South Africa, well out of the prior year.
U.K., well, it's behind the prior year, and I'll give you a little bit of color on that in a moment. A little bit mixed, but we have had support from the currency. We do expect revenue to be ahead of the prior year. Our recurring incomes will be about 75% of our total income. Expenses are growing in line as a consequence of quite a lot of planned investment, which we spoke about at the year-end, with regard to banking infrastructure, and building our client franchise businesses. As well, we have double rent in this particular period, which we didn't have in the same period last year, which has affected the U.K. bank results in particular. Overall, we expect our operating profit to be comfortably ahead of the prior year.
If we look at our key earnings drivers, I think third-party assets under management have increased 6.1% to GBP 160 billion. That was at the end of August. Clearly, we've still got a few weeks to go, and that could still be affected by both markets and the exchange rate. That's an annualized growth of just under 15%. Customer deposits are up 1.3%, GBP 29.5 billion. Again, we have been managing our excess liquidity to try and bring our cost of funds down, and we are seeing some benefit on that front. Core loans and advances, 4.5%, that's just under 11% annualized growth. That comes from, at this point in time, primarily, the South African business with a bit of growth in the U.K. business, but we are expecting reasonable growth for the half year to GBP 23.7 billion.
The balance sheet that we're talking about, which is the end of August, exchange rates would have had very little effect on the balance sheet as the ZAR-GBP exchange rate was almost identical at March and August. It has since weakened in the last week. Who knows? It's volatile. We don't know where it lands up. If we look at liquidity, I think we've continued to maintain sound liquidity levels. Our cost of funds in the U.K. has continued to decline, and that is a planned strategy, and we're making good traction on that. Advances as a percent of customer deposits was 79%, so we have let go some of our liquidity, as mentioned earlier, to try and improve our cost of funds. On the capital front, Investec Limited is still slightly below our target of 10%, and while Investec plc is well ahead of our target.
We're not worried about Investec Limited because we are on a migration to the advanced method, AIRB. We put in our application in August last year, and we're in the process with the central bank. We do expect AIRB to be implemented sometime in 2018 calendar year, whether it's 1st of April, whether it's 1st of July, sometime during that period. That will add quite a lot of additional capital or surplus capital because our risk weight will go up anywhere between, now shoot me for saying this, Barb, 1.5%-1.7%. That will be an improvement in our capital ratios. Our leverage ratios are still well ahead of our target of 6%, and that's on a fully loaded basis. We're very comfortable with our liquidity and capital position. On impairment, we do expect our impairments to be ahead of the prior period.
I think on a number of fronts. I think our legacy portfolio is marginally slightly ahead of the prior period. That's because we are anticipating acceleration of clearing of some of that book, and hopefully we'll see a lot of progress on that in the next six months. I think impairments in South Africa are expected to be ahead of the prior year and in the ongoing business, although the ratio is still at the very low end of our long-term range. We expect the credit loss charge to be about 0.5%-2.55% during this period. I think if we look at our divisions, I think asset management had positive net inflows of GBP 1.9 billion up to the end of August. I think earnings were supported by market levels. I think we had solid net inflows offset by lower performance fees in South Africa.
I think that's really the reason why asset management will be flat overall, is because performance fees in South Africa were lower. Notwithstanding the fact that we've had quite good performance. Remember, in the previous period, we said performance was a little bit weak there. It has turned around. We are seeing very good long-term performance and quite a strong short-term performance in recent months. They've broken the GBP 100 billion mark at 7.2% to GBP 102 billion at the end of August. I think on wealth, performance of the global business is well ahead of the prior year. We're seeing higher average funds under management inflows of GBP 0.200 billion. I think earnings in South Africa has been impacted by lower activity levels, while the U.K. business has had a very strong performance. You're seeing a different story in the two geographies.
I think South Africa is impacted by, not balances, but by confidence levels. Click & Invest was successfully launched in June 2017. That is a defensive strategy. It will be a long ride before we see a lot of benefit from it, but we have received a lot of positive input from all commentators. Funds under management at £57.1 billion at the end of August. Going to the specialist bank, I think, as we said, results expected to be ahead of the prior year. On net interest income, that is up, supported by book growth. In the U.K., strongly up. In South Africa, down slightly. That's, again, always a little bit of noise in net interest income. We also have had cost of foreign liabilities as a consequence of the downgrade affecting that number. It won't be down much, but it is down slightly.
U.K. also benefiting from the reduction in cost of funds. If we look at investment associates trading other operating income, that will be ahead of the prior year. Strong performance from the South African investment portfolio, including our equity accounted earnings in Investec Equity Partners, impacted by less realizations in the U.K. investment portfolio. Trading income from cost to customer flow, I think was down in this period as a consequence of lower levels of volatility. If you remember last year, we had Brexit. July would have been a very active kind of month, and there was quite very good levels of activity relative to what we're seeing in a much lower volatility environment. On fees and commissions, I think, again, good performance from the South African corporate treasury and structuring businesses.
In the U.K., we had a very strong first half last year in the investment bank, we've seen less investment banking and securities activity off the back of a very strong period last year. Still a reasonable amount of activity, but not quite as strong as the first half last year. On costs, as I said, we have a deliberate strategy of investing in infrastructure, building some of our franchises, in particular the building of a private client offering in the U.K. Obviously, we're moving to new premises in London. This would have had an impact on the cost line, although they're growing more or less in line with, I would say, in this part of the business. Overall, in line with revenue. In this part of the business, still, the investment is a little bit faster than revenue. We'll get to legacy.
We expect legacy loss to be moderately ahead of the prior period off the back of anticipated acceleration of sales of a portion of the book. We are trying to accelerate getting legacy down, and hopefully you'll see a lot of progress by the end of the year. We are making good progress, but we expect to really break the back of it either by the end of this year or by the end of next year. We expect the book to be £430 million or thereabout by the end of September. I think other information, our tax rate is down. We've had provisions no longer required, so we'll have a lower tax rate. That's not a sustainable number. It's just in this particular period of 15%. Non-controlling interests of £32 million.
That's both related to minorities in the asset management business and the consolidation of our property fund. We expect number of shares in issue to be 924 million, roughly. In conclusion, I think the geopolitical environment has been challenging, with a lot of uncertainty prevailing in our core geographies. I think you've got apart from the complexity of Brexit, as well as the South African political environment is very unsteady at the moment in the run-up to the December elections, ruling party elections, which could have a lot of impact on direction of the country. I think we have had some support from global markets and improved outlook for the global economy. We've had, I would say, decent activity levels. Our client base has demonstrated a lot of resilience in the environment.
We continue to see positive overall performance, driven by diverse revenue streams and very strong franchise businesses. I think we will continue to focus on execution of our strategic initiatives, mindful of the fact that we're in a tough macro environment and there could be a lot of uncertainty in the second half. Overall, we are very comfortable with where we are as a firm. We've always got work to do, but I think we're making a significant amount of progress. That is a quick summary. I'm happy to take questions. We can start in South Africa. Mitchell? Yeah. Thanks, Stephen. Are there any questions out here? Wow. Stephen, no questions, eh? Nothing? Nothing. What's wrong with you? Okay. London? Nothing. You want early tea, huh? Derek? Okay. We'll see you in November. Thank you