I'm just going to start off by giving you a brief overview of the results for the year ending March 2025. We are pleased to present to you very strong results against a background that was very complex and challenging. You will remember that in South Africa we had elections in the first half of our year. Equally, in the U.K., we also had elections. As a consequence, there was a level of uncertainty, and we saw muted activity and muted loan book growth in our first half. In the second half of the year, we were pleased to see a significant pickup in activity, but also growth in loan books. When you look at our loan books overall, they represent a pretty good outcome of the second half.
We also then saw pre-provision operating profit increasing by 8% to over GBP 1 billion for the first time in our history. This demonstrates the strength and depth of our differentiated client franchises. Just before we go into the highlights of the results, I wanted to take just a step back and talk about what we did from our May 2019, in fact, February 2019 Capital Markets Day. We announced a strategy at that time that we would focus the group, simplify it, and prepare the group for future disciplined growth. Over that time, I'm pleased to say that we saw an increase in underlying performance of about 200 basis points as measured in both ROE and ROTE. At the end of that period, we had a business that was highly focused on selected client segments, and the business was well positioned to support future growth.
Given that strong positioning, we are now at a position where we can look forward towards further growth. As we look forward, we will be investing in our businesses to generate more scale and leverage the operating platforms that we have. In addition, we are excited that today we have announced significant growth initiatives that we are backing with capital. As a consequence of these actions, we expect over the medium term to 2030 that we will generate an additional 200 basis points in return. If you think about the impact on ROE, that would take us to over 16%. ROTE will take us to approximately 18%. Really excited about what the future holds for us.
If we look at the business over a period of time, you can see that the momentum in our business has continued to build over the last three years or so. As you can see, adjusted EPS has been growing from 55.1 P to the reported 79.1 P. The fundamentals of our business have continued to improve. Loan books have been increasing. Funds under management have been increasing. Obviously, the deposit books have also been increasing. As we continue to build the business, we have made sure that we have the capacity to invest in future growth and the capacity to consider as we go in organic growth. What is pleasing about our wealth and investment business is the level of net inflows that we realized this year.
Of course, Rathbones has announced their assets under management or funds under management, and we generally will stick to commenting only on what they have said in their own results and releases. The business has continued to generate strong capital and strong returns, and that enables us to reinvest in the business in the first place. Secondly, it enables us to support distributions to our shareholders. We are very pleased that the board has declared a final dividend of 20 P, bringing the full year dividend to 36.5 P. In addition, the board has supported the recommendation that we would like to execute a buyback of around ZAR 2.5 billion over the next 12 months. That is approximately GBP 100 million. If we look at some highlights of the results, I have indicated that pre-provision operating profit grew quite nicely. This was supported by revenue that grew ahead of costs.
We have seen our cost-to-inc ome ratio improving from 53.8%- 52.6% over the last number of years. Going forward, we will continue to invest in our people because growth requires more people to execute it, and we will continue to invest in our operating platform. To see an improvement in our operating leverage under those circumstances is really quite pleasing. Our CLR, our credit loss ratio, is at around the midpoint of our 25-45 basis points. The increase from last year is really a consequence of the fact that in the prior year, we had recoveries in South Africa. We are quite comfortable with the credit quality of our book. The return on tangible equity at 16.2%, in our view, is quite healthy and very competitive from a market perspective. Obviously, we run our business to support our clients.
We make sure that the environment we operate in is quite empowering for our colleagues, and we work to support the communities in which we operate. Sustainability remains quite important to us as a business. On this slide, I would like to address fairly briefly the journey that we have been on on our support for climate change. This is really about climate action. I am pleased to say that we met our commitments with respect to a reduction in our exposure on fossil fuels. Similarly, we are quite excited that we are in a position to announce our 2030 target on our commitments to transition and sustainable finance. That target is set at GBP 18 billion. I can see Dr. Mark Khan here, who drives our sustainability efforts with a pretty brilliant team.
Mark, thank you for the work that you've done to get us to this point where we can make our commitments to climate change public with respect to transition and sustainable finance. As we look forward, there's a lot of work to do, obviously, to reach this particular target, but we also look forward to working with our clients and our suppliers, and we look forward to assisting them in their own decarbonisation process. As we make profits, these profits are purposeful, and they allow us to reinvest in our business, reinvest in communities, and continue to make sure that we do right by the environment. Now I'm going to ask our Group Finance Director, Nishlan, to take us quite briefly over the details of the financial performance. Thereafter, I will come and talk about the outlook and the plans we have for growth going forward. Thank you, Nish.
I can see you keen to present.
I have 22 slides to get through, and Stephen's going to do this soon. If we get into the financial review, I think just some of the background. Again, if we look into the macroeconomic environment, you will see that both in South Africa and the U.K., looking backwards, there has been quite a lackluster growth environment that we faced. The dotted lines on the right-hand side indicate an expectation of growth over the next financial year. I think from a South African perspective, if you try to gather this data, it ranges between 1%-1.5% because there is still a lot of volatility that is sitting in the system. I think globally, obviously, the impact of tariffs and policy changes from a U.S. perspective is having a fundamental impact as we look forward.
Interest rates have come down from a South African perspective around about 75 basis points since March 25. On an average perspective, a lot of those rates were into the latter part of the year, so not that severe from a reduction on an average basis. We anticipate for rates to come down by at least another 50-75 basis points off the next financial year. From a U.K. perspective, I think there was a recently announced rate reduction of 25 basis points in May, picking up our expectation that we will also see around about two to three cuts, including that particular adjustment. I think from an exchange rate perspective, we do report in sterling. In this period, whilst there is some influence on the rand sterling exchange rate, it's really not that influential in terms of the overall understanding of the results itself.
When we look at funds under management, I think markets have been quite significantly up over the period, and that has had a fairly positive impact, obviously with volatility as we look through it. Now coming to the drivers, here, I think Fani has already highlighted some of these key points, but we've continued to see growth across the businesses. If you look at our diversified core loan book, in South Africa, the corporate banking exposure is growing by about 12.6%. A lot of that skewed into the second half of the financial year, if not into the last quarter of the year. The full impact not in these results. Private banking business growing by 5.5%. From a U.K. perspective, our private banking book growing by 3.7% in the period.
Again, the corporate book growing by 0.5%, but that's really off the back of higher redemptions. I think when we look at gross originations, those holding up relatively strongly against the prior year. Now if we get into the group performance, this is where I thank Don for his animation, so let's hope it works. Adjusted operating profit has grown by 4% to GBP 920 million. That's really a function of revenue growing by 5% in the period. Looking at the growth of revenue, net interest income grew by 1.5% in the period, really benefiting from higher book growth. Obviously, as I've indicated, not all of that growth for the full period.
Coupled with the fact that interest rates have started to come down and the fact that we continue to effectively challenge our mix of book and increase our retail deposit base and therefore lower the cost of funds, and also the negative impact of deposit repricing in the U.K. that was experienced through the year as rates came down. Non-interest revenue grew strongly by 11.5%, and that's really supported by strong activity across all of our banking businesses, strong growth in fees from our wealth business, particularly in South Africa, as well as higher investment income across the board. This was partially offset by lower trading income. From a trading income perspective, that's really some of the structural changes that we introduced last year. The underlying performance of the business is actually quite strong.
From an ECL perspective, the credit loss ratio at 38 basis points, ECLs are up significantly year- on- year, but as we've indicated, the main impact to that is really the level of recoveries that we had in the prior year starting to normalize into these results. If we look at operating costs, operating costs increased by 2.8%. I will go through some detail around that. In the prior year, we did have a charge of GBP 30 million for our exposure to the motor vehicle finance issue, which hopefully will settle out as we go into the latter part of the year with no charge in the current period. Now, if we look at our overall expenditure, included in those numbers, we've effectively spent around about GBP 230 million in totality around IT and IT investment. That's a charge that's been sitting in our income statement.
That's up about 9.9% year- on- year. On the right-hand side of this graph, we try to represent the fact that we continue to challenge ourselves to increase the level of investment that is carried within that total cost. We've made good progress in that area. We've also continued to modernize our platforms, and to date, we've achieved a level of 48% of our platforms that are now effectively migrated onto the cloud platform. I think in today's day and age, there are a few things that I need to call out with regard to what we are focused on. Firstly, Fani will go through some of our growth initiatives, not only that represent previous initiatives, but looking forward into areas where we will look to expand our offering to our client bases. That involves a fair amount of delivery with regard to our IT platforms.
We think that the majority of that run rate is actually sitting in the number that we represent. Secondly, I think you've seen a pickup in cyber attacks, particularly in the retail space across the globe, also in the U.K. and in the U.S. From a banking perspective, this is an area that we take very seriously and have always done so. We continue to partner with expertise out there and also monitor the market as well as ensure that our defensive layers are properly maintained across the group. What is important for us at the end of the day is to ensure that our systems deliver the service that our clients are looking for. As much as we have a high-touch service at the end of the day, technology underpins that service.
These teams have been dedicated, and we are quite proud of what's been achieved to date, but it's not an area that you can lighten up on. Obviously, the question around AI, and I think whilst there's a lot of buzz around AI, from our perspective, it's digesting it. It's understanding the toolsets. It's exposing the toolsets. It's ensuring that we think through how can we introduce efficiency. At the same time, there are fundamental developments that we continue to monitor with the best providers out there. To that extent, to the extent that we can enhance the speed of execution and we can enhance the quality of execution, we're quite excited about the tools that are out there. Now, if I get into the divisional reviews, from a U.K. perspective, our operating profit grew by 0.3% in the current period.
I will unpack the wealth business and the specialist banking business in the next couple of slides. Group investments is our return on our dividend related to the Ninety One investment that we hold, which is just currently over 10%. And that is slightly lower year- on- year. In the group costs, the impact of the merged wealth business with Rathbones is still felt within that particular line item. So there's still around about GBP 5 million of costs in that line item, which will make its way out significantly next year and pretty much all done by the following financial year. If we look at the specialist bank, in this particular business, net interest income reduced by 4.4%.
That is notwithstanding the growth in the loan books, which we think over a period of time will be a much more stronger contribution to revenue in a lower interest rate environment as momentum will pick up in a lower interest rate environment. In the short term, you do feel the impact of lower interest rates. You do feel the impact of deposit repricing as interest rates come down, and that is what is reflected in these results. Non-interest revenue growing by 5.3% in the current period, really representing the fact that the momentum of the business has remained strong in a complex environment. With our corporate franchises, as well as our advisory business, that being Capital Mind that is now rebranded into Investec, contributing for a full year in the current year.
Higher investment income, and that's a result of realizations as well as higher valuations on some of the investments that we hold in that portfolio. Last year, we implemented a structural hedge, and we had a positive impact as we closed up some instruments that were associated with that particular strategy. That's not repeated in the current year. Whilst trading income is lower, it's really representing the underlying level of customer flow trading income with very few exceptional income levels as we experienced in the prior year. From a cost to income perspective, the cost-to-income ratio improving from 55.6%- 53.5%. That's a combination of revenue and costs. As I've mentioned, we don't have a repeat of the motor finance provision level in this current year.
If we had to take that out, operating costs would have fixed costs grew by about 4% on a like-for-like basis. That really represents the environment with a significant component of those costs being employee costs. The credit loss ratio, I think we've spoken a lot about. I think what this slide also points out for you is that our stage two and stage three exposures have remained relatively stable over the period. We have not experienced any credit quality deterioration that we would call out on this particular portfolio. Wealth and investment in the U.K. is really our investment in Rathbones. They reported a quarterly update with AUM of GBP 104.1 billion. I think what was really important in their December results is the fact that the operating margin has increased from 22.3%- 25.4%.
The business remains committed to achieving an operating margin of around 30% by September 2026. To date, synergies, which we had indicated at the time of the execution of the transaction at levels of about GBP 60 million, have been achieved at a level higher at this point in time at around GBP 30 million. A lot of those synergies will be achieved as the business consolidates, and a lot of that work has already been executed. Turning to South Africa, operating profit is up 6.7% to ZAR 10.8 billion, and that's a strong performance. I think our wealth business is quite proud of the business now, contributing just over ZAR 1 billion in profitability, but very strong growth at 15.3% and the specialist bank at 4.8%, which I'll go through some details just now.
The group investments portfolio, that's really a re-rate of the Burstons stock price in the current period, as well as a strong dividend hill from that underlying investment. We did reduce our level of investment and will continue to exit our investments as we see opportunities for value. Group costs are up at 8.5%. That really represents higher people as well as marketing costs in that particular area. The specialist banking business, I think, has seen strong growth in NRI and non-interest revenue. Net interest income really, again, with a deep focus on increasing our retail deposit bases. Fani will talk about strategies around increasing our transactional base, which will continue to have an impact on NRI as we look forward. Similarly, non-interest income supported by a strong fee generation as well as investment income in the period.
The cost-to-income ratio, I think, comparably at 48.1% for the nature of the businesses at levels that we think are appropriate. Credit loss ratio in South Africa, negative 4 last year, 15 this year. On a gross basis, probably running at about 22-23 basis points. There were one or two higher specific impairments in the current period, but really the delta is lower recoveries experienced. Again, nothing to call out from an asset quality perspective. It remains quite robust. Looking at the wealth business, I think that business in a high interest rate environment generating net inflows into the discretionary portfolio of ZAR 16.9 billion is a great outcome for this particular financial year.
I've spoken about operating profit and the operating margin at 30.1%, notwithstanding the fact that operating costs continue to grow much higher than inflation as the business continues to invest in not only its local but its international capability. This really brings us, in summary, to the performance of the overall businesses with a return on equity in South Africa at 18.3%, return on tangible equity for the U.K. at 14.5%, and the combined group at 16.2%, and adjusted operating profit growing by 4% in the period from GBP 885 million to GBP 920 million. Pre-provision operating profit, obviously, growing at 7.8% in the current period. I think this is a slide for Chris Stewart because at the end of the day, let's explain how does 4% turn out to be 1.4% in terms of adjusted EPS.
We did have a higher, as we indicated in September, higher cost for some of our additional tier one instruments that we issue as we redeemed older instruments issued at lower base costs and newer instruments at higher base costs. There is an element of double carry in the cost in the current year. We will see that number come down to probably GBP 64 million-GBP 65 million as those double costs come out of the system. The tax rate in the current period is relatively comparable year- on- year. That really brings us to the outcome on return on equity and return on tangible equity, and also gives you detail as to how we have deployed capital across the different businesses.
I think an important note is the difference between our average allocated capital of about GBP 4.9 billion and tangible equity at GBP 4.2 billion is represented by the listed price in Rathbones, which is recognized on our balance sheet as an intangible asset. I think, and then just a reconciliation of net asset value and tangible net asset value. The story in this period is really growth generated by generated profits net of distributions. Capital and liquidity has remained robust and strong. I think we've remained fairly defensive over this period given the volatility in the market. At the end of the day, we continue to measure capital on a standardized basis from a U.K. perspective, and we remain on a path to convert to the IRB basis over the next few years. The South African capital ratio at 14.8% remains quite strong and leverage ratio at 6.2%.
Group and cash and near cash at GBP 16.9 billion. All in all, a strong balance sheet, a well-positioned business. Now for Fani to bring it home.
Thank you, Nish. There is a bit of an echo, so tell me if the echo is still there because I am hearing myself talking. Are you okay, Kumesh? Kumesh, in that beautiful tie-up, he says it is all right. Nish, thank you. That was a good exposition of the results. As they say, that was the rearview mirror. The year is gone. We are very proud of the results that are achieved in a very difficult environment, as we said. We are now going to take a step and look forward. Before we do so, I would like to spend a few minutes just reviewing the last six years of progress.
You remember that at the time in 2019, when we saw our shareholders, we presented a roadmap. It was a strategy to simplify and focus the business and prepare the business for sustainable growth. We had at that time a market capitalization of GBP 4.6 billion. Obviously, you've had COVID, and markets have come back. Now we have trade wars, but I'm just going to give you a sense of what has happened over that time. The simplification process saw us distribute the holding in Ninety One that we had, 70%. We retain 10% at the moment. We announced and executed a share buyback of GBP 300 million in the recent past, and we have obviously been distributing through dividends capital back to our shareholders. In total, over the years of the initial market cap of GBP 4.6 billion, we've distributed GBP 2.7 billion.
Of course, we would have generated capital as well in that period. We have seen an overall growth in tangible net asset value. In addition, we have seen on the back of a very focused business and higher returns, a re-rating from the market of about GBP 1.7 billion, getting us to where we are today at about GBP 4.1 billion. A strong foundation of execution, a very focused business supported by a very entrepreneurial culture that prizes service to clients and understanding what clients require and being long-term in our relationships with clients. Sorry, before I get there, how do you go back? There are a number of disciplines that we learned over that period, which we will carry forward. I'll go through a few of these just quite briefly.
It was really quite important over the time that we have a discipline in terms of capital allocation. If we couldn't build our franchise or we couldn't get a return above the cost of capital or the risk in a particular business activity was more than we were comfortable with, we would withdraw capital from such an activity. So strict discipline around capital allocation. Second, we had discipline around cost management. Ruth always talks about the pain we went through in resizing our operating infrastructure in the U.K. in the early days. And we've continued that discipline in cost management. Even, as I said earlier, we are investing in people and in operating system to support the growth that we seek. Thirdly, we refined our risk management processes. And I see Kevin Kerr is sitting here in the front seat.
The idea was to have very diversified loan books, make sure that we do not have concentrations, and also make sure we do not have what Ruth calls tall trees so that when a tree falls, you get hurt. That has been the disciplines that we followed. Of course, central to that success was maintaining the client-centric culture and the entrepreneurial culture of our people. That has been the basis for success. As we look forward, we are at another inflection point in terms of our strategy, and we have made significant decisions to narrow down what it is we are going to focus on as we go forward. We call it discipline growth. The first element of that, the growth over the next year, is to recognize that we have highly attractive franchises that we are continuing to invest in and increasing scale and leverage.
In particular, in our U.K. business, we have tiny market shares. In fact, we have an opportunity also to grow into Europe. Just doing the basics right will add to our returns as we go forward. Obviously, as we focus on specific initiatives that I would like to talk about very briefly, in November, Ruth and Kumesh, who are not on the stage today, will go deep into the detail of these new propositions, particularly the corporate mid-market one in November. In May next year, we will look at what we are doing in the private client segment to add value over the medium term to 2030. We have always been known for our private banking franchises. We have been known for our wealth franchises. We have been known for our corporate finance, corporate banking, so on and so forth.
To that arsenal of a rich heritage, expertise, and deep client relationships, we are adding a client segment that we've generically called the corporate mid-market, both in South Africa and in the U.K. In South Africa, we've been making some investments over a period of time. In the U.K., that process is starting now as we take advantage of a very attractive position. We're in the mid-market. We are the most diversified in terms of the services we offer and the clients that the selected clients that we serve. What would be the key proposition here is that we would like to continue to have event and flow-driven business with our clients, but we are now looking for a transactional relationship with our clients. What some would call relationship banking, others would call everyday banking with these corporate mid-market clients.
There are three fundamental benefits for us or reasons why we want to do this. As I said, as I will indicate a little later, we have a fundamental drive to increase our non-interest revenue. With that transactional banking capability that we have built in South Africa and we will be building in the U.K., and we will increase intensity in South Africa, we aim to generate transactional revenues. We also aim to boost our deposit franchise as a consequence of attracting transactional deposits from our clients. Thirdly, we want to entrench ourselves in our clients by offering a broader and a more comprehensive suite of services and solutions to our clients. This is a pretty fundamental drive as we go forward and should significantly positively benefit our business and our clients.
The second element of our investment as we go forward is in our private client proposition. You know, in the U.K., we have built a pretty formidable U.K. private client business. What we intend to do is enhance our transactional banking offering to these clients and significantly ramp up our penetration in that market. I will give you a sense of what our expectation of that are within our South African environment. In fact, let me go back to the U.K. We obviously work with Rathbones in giving a comprehensive set of services that cover banking, but also wealth management through the strategic partnership that we have with Rathbones. In South Africa, we have been investing in growing our client base. So client acquisition has been quite important. I do not see Itumeleng here. I am sure he is listening somewhere.
If he's not taking clients to Millvale with Lawrence von Rensburg, I'm not sure where Itumeleng is. We have been acquiring clients at a pretty significant rate. The concentration with respect to South Africa will be at the high end. We will be looking at internationalizing our offering through IWNI expansion in a number of the areas we have talked about, our Swiss offering. We have a nascent office in Dubai to serve some of our expat clients there. We have a number of interesting and really attractive propositions to internationalize our offering and our capability. In South Africa, we will look to continue to acquire clients, as I said, and in particular, the high-income and professional market side of our propositions. The third area of work will be how we dynamically manage our capital allocation.
First and foremost, we are into organic growth, and we're excited about what we are doing, where we find attractive acquisitions that will be accretive in terms of building our franchises more. Secondly, supporting our returns as we go forward. We have the capacity to invest, and we will be looking to invest. Thirdly, we want to continue to make distributions to our shareholders. That is the waterfall, organic growth, any opportunities to build our franchise. Thirdly, supporting distributions to our clients. That is why we say dynamically manage. Lastly, over the next five years or so, we have the intention of increasing our capitalized revenues and specifically revenues and profits from wealth to about a third of our profits. When we had the asset management business up to 2020, we had what we thought was a good mix between capitalized revenues and capital-heavy revenues.
We have a strategic intent to move that way. That implies that we will be open to inorganic opportunities in the space as we go forward, but always looking to generate accretive returns. Just to give you a sense of what we are planning to do, and as I said, our colleagues will give you a deep dive later in the year. In South Africa, we've been investing. We have 2,700 clients in what we call the corporate mid-market. Our intent is to triple the number of clients and increase our market share to 8% over the next five years. I don't see Duran Mensing here, who has been doing a lot of work with the team. Again, I've mentioned what the strategic benefits are around this.
In the U.K. corporate mid-market, we are looking to get to a tiny market share of 2%, about 1,000 clients who would have two or more products with us. In fact, in the past, some of our competitors have asked us the question, how do you make the profits you make out of the few clients you have? I mean, we have just over 100,000 private clients. The other participants have millions and millions and millions. Even in a corporate mid-market approach, we will still be very niched and selective, and we will have a high service offering. In fact, Kumesh characterizes our offering to this market as bringing a high service ethic, a private banking type service ethic into the corporate mid-market. Our clients are literally knocking on our doors to offer them these services as we go. We are quite excited about that.
On the private banking side, I've talked a bit about our South African business. I'll talk more specifically about the U.K. private client opportunity. Currently, we have 7,500 clients. As I said, we will be enhancing our transactional banking capability. We intend to increase that client set to about 18,500. We intend to get our market share in the sector that we have defined to about 18%. Ryan Toller in our U.K. business leads a very capable team. We work with these entrepreneurs and business owners and directors of companies. In fact, what Ruth normally talks about is that we have a proposition that caters for businesses and the people that own them or run them. This particular strategy is a natural evolution of the strong positions that we have. Let's look forward at what this implies for our business.
Firstly, looking at financial year 2026, we recognize, of course, that there is a level of uncertainty within the global economy. We talk about trade wars, a deglobalization of sorts. We expect that inflation may be an issue much longer if you have restrictions in global trade. We would expect market volatility to continue. As we will continue to monitor that environment, we remain confident in the businesses that we have, the clients that we have, in the ability of our people to navigate this environment. We expect revenue momentum to be supported by book growth. As we indicated in the second half of our financial year, we saw significant book growth post the settling of some of the environments in the U.K. and South Africa post the election. We would expect to see activity levels improving.
We also will continue our efforts to acquire more clients and to entrench ourselves through offering more to existing clients. We expect the return on equity to be around 14% and the return on tangible equity to be around 16%. Our cost-to-income ratio, we expect to be between 52% and 54%. Our credit loss ratio, we expect to be in the 25%-45% through the cycle target range. A difficult environment ahead, but we expect our businesses to continue to support our clients. We have the capital and the liquidity to continue to do so. Looking beyond the horizon of one year, I have indicated how we are thinking about building our business for more substantial growth and how we intend to generate incremental returns. We expect that we will be able to increase returns by 200 basis points.
We would expect our ROE to be above 16% and ROTE to be around 18%, which would be at the top end of our ranges of performance for both ROE and ROTE. Of course, to achieve these results, we have to depend again on our people and on their ingenuity and on our entrepreneurial culture. I could not be more proud about our colleagues for looking forward to this challenge. We are really, really, really excited that we can take the market on in the very specific things we are doing. Kumesh said earlier last week that we are not going to do everything all the time. We are going to say no more than we will say yes because we have a degree of focus and discipline in terms of execution.
In closing, we have a business that is focused in the areas of the market we have chosen to operate. Deep client relationships. Our client franchises have scale and relevance, but remain small where we operate. The opportunity for growth is pretty significant. I gave you market shares we intend to capture in the new areas of growth. Those market shares are still small. We look for more growth there. As we have indicated, we continue to generate strong capital to support growth. We hope that as we go forward, there will be better macroeconomic support, but our strategy is not dependent on better macro support. We have a culture and a people that are entrepreneurial, and we believe we have the capacity to navigate the environment ahead.
We have detailed for you, and we will give you a deep dive on these particular opportunities that we believe will deliver sustainable growth to our business. On that note, thank you very much for your attention. We will now go over to questions. Where is Donovan? Where do we start? Donny? Start in the room. Any questions from the room? How did we do on time, Nish? Forty-five minutes. Not bad. Any questions from the room? Okay, let us move to what Stephen normally says, you should not offer another opportunity. I was going to say we are going to come back to the room. I am sure we will come back to the room. What is next? London. Any questions from London? I see Marley Wonderwall there. Any questions, Marley? No? And London? Nothing from London. Okay, thank you. Was that no question or question? No question. Thank you. Where do we go, Donny?
Online.
We're moving on to Corus Call.
Corus Call, okay.
We have a question from Alexander Bowers of Berenberg. Please go ahead.
Morning. Just had two questions, if I may. I appreciate it's still a couple of years off, but wanting to give you a sort of bit of an update on the move to IRB for the U.K. business over the next few years. Is there any sort of capital benefit from that assumed in your sort of 200 basis point increase target by 2030? The second question I have was just on the high net worth business in the U.K. Has there been any impact from the sort of removal of non-dom status in the U.K.? Is there any, I guess, given your international model, any way you can kind of capitalize on that through serving customers in different geographies? Thank you.
Sorry, Alex, I did not quite hear the questions. I am going to ask either Q or Ruth to repeat the questions. What were the questions? Ruth, did you hear the questions? Or an update on IRB? And? Non-dom.
Sorry, I do not know if this is, yeah. As we indicated, that journey is probably three to four years. I think we still, whilst we have developed what I would call first-gen models and now moving on to second-gen models, the next stage is to interact with the regulators, and that is probably still a year or so out. From there on, there is quite a lengthy approval process, and that is how we get to the time horizons that I mentioned. In terms of what Fani has outlined as the medium-term objectives and the 200 basis point uplift, that is independent of any capital management opportunities from IRB that may arise at a later stage.
Thank you, Nish. Ruth, do you want to take the non-dom question? I am going to ask you to come to the stage because I think the camera is here. Nish should have come up. Is it working?
Morning, everybody. Hi, Alex. Thanks for the question. I think you are asking about the impact of non-dom changes in policy. From our own perspective, in terms of our own high net worth clients, we have seen very little impact. I think this is the nature of high net worths that we deal with. We certainly have had a small number of high net worths relocate away from the United Kingdom, but often they do retain their properties and their business interests in the United Kingdom, although they themselves as individuals may have moved on. Very little impact to our London-based business and even to our Channel Islands business.
Of course, anecdotally, in the United Kingdom, we have heard of thousands of high net worths relocating due to really mainly the inheritance tax changes that have come along with the non-dom changes.
Thank you, Ruth. Any further question on the Corus Call? No?
We have a question.
Yep. Okay.
We have a question from Harry Porter of Bank of America. Please go ahead.
Hi, good morning, Fani, Nish, and Mensim. Thanks very much. I just wanted to see how you think about net interest margins into 2026 financial year. Is there anything meaningful to consider outside of interest rate movements? Just your currency expectations for 2026, their meaningful impact in your guidance. Finally, could you give us a sense of your current market share in the South African mid-market corporate space from a revenue or client perspective, please?
I think just commenting on margin, from a South African perspective, we've seen the margin improve from 2.25% to about 2.45%. As we've indicated, that's really got to do with improving the cost of money overall in a decreasing interest rate environment. Now, sensitivity to a decreasing interest rate environment, I think it's about ZAR 100 million for every 25 basis point change from a South African perspective. The counter to that is obviously momentum and the churn of the book. I think what you saw in this year's financial statements is a strong generation of fee income. From a U.K. perspective, our margin decreased from about 3.1% at a high to around about 2.8%. To the extent that there are reductions in interest rates, I think our sensitivity for every 25 basis points is about GBP 9 million.
To the extent that we actively manage the cost of money and the mix of the book, as well as growth, you will get counters to that impact. Fani, I do not remember the other questions,
but what was the other question? The sound in the room is not good.
I think that market share is probably under 3%, around about that level. As Fani has indicated, we would like to push that further up the chain to closer to 8%.
Thank you, Nish. Any further questions?
There are no further questions on the conference.
Thank you. Kumesh was quite happy that Nish took that second question.
We have a few questions on the webcast.
On the webcast, okay. Let's go there.
The first question is from Baron Nkomo from JP Morgan.
Over the next five years, in which business or segment do you see the greatest opportunity to grow earnings and help reach your incremental target returns of 200 basis points by 2030?
Okay. We have obviously done the work around each of these businesses, and the opportunity is quite significant in each of them. The private client opportunity in the U.K. is really significant and will contribute a significant level of uplift in earnings. In South Africa, tripling the number of clients in our corporate mid-market business will be significant. Initially, I think I had the profit numbers that we were looking to generate, and Kumesh said, could we just hold this back for November? We see significant opportunity.
The drivers, because we've looked at the bridge from where we are to the upper end of our target ranges, the drivers obviously will be operating scale and leverage of that. That'll be a significant driver. Of course, the mid-market opportunity on both sides will be quite significant. I don't want to give you specific numbers around it. I'd just ask you to wait for us in November when we can give you a lot more detail. We've done the detailed work. We've got the plans. We know the incremental revenues, incremental profits, and how the ROE bridge builds up over that time. If you could just bear with us, my colleagues, Ruth and Kumesh, will wait for a big reveal in November.
The next question is from Siphelele Md udu from Matrix Fund Managers.
In the U.K. Specialist Bank, why are you still guiding to 60 basis points ECL, yet this has reduced from 67 in September 2024 to 60 basis points in March 2025? What are you concerned about?
Look, as we indicated, the environment continues to be quite volatile. You still have high levels of interest rates. You have these trade tensions as we go. We are very comfortable with our mid-market position. We think for this type of environment, we want to just be cautious and guide conservatively. That is why we said we would guide to the level of reported CLRs for this year. We are quite comfortable that we are generating the profits that will cover that type of CLR as we go forward.
The environment is not easy in the short term, but our business is well positioned and strong, and we're really happy with where we are with our U.K. franchise. If, sorry, if I may just add a little bit of context, that CLR is symptomatic of a mid-market positioning. If, as an example, a loan book had 50-60% mortgages, which is what you would find in the larger high-street banks, our CLR would be substantially lower, probably in the 30s. It is the mix of the book that you have. If you compared that to a Barclays, to a Lloyd's, you may think that ours is higher. It is really the mix of business. That is why for this segment, we think that our experience is not significantly different to market experience. That is why we have a level of comfort around it. Ruth, do you want to add anything?
Okay. Thank you.
We have two questions from Bubuyan Ncube from Morula Capital Partners. The first question, can you provide a review of the long-term human capital strategies and how this will support the long-term strategy achievement? The second question, can you touch on how, if at all, artificial intelligence is creating opportunities for enhancing internal efficiencies and business development?
That question is a bit too detailed. Needless to say that we've always primed the talent that we have inside of the business as the critical factor that allows us to achieve the results we achieve. That is why when I talked about the last seven years, I talked about capital discipline, cost management discipline, risk management discipline. I said, above all, seats are people driven by a culture of client centricity and entrepreneurship.
To maintain that culture over five decades, particularly with the founders having left the business, has been a significant work that we need to do. We continue to invest in that. In fact, if you sit in our meetings, you will find that we spent significant time on our people development and in particular leadership development as we prepare the business for this phase of growth. We are quite comfortable with our talent pipelines, our benches, if I may use such a horrible word as to describe talent and leadership. Stephen looks at me. Okay, you got yourself into that one. We are quite comfortable. Your question is too detailed. I think to the extent you want to follow up on it, we can take it offline.
In terms of efficiencies, I mean, if you look at where we were a few years ago, you will see that we continue to improve in our cost-to-income ratio despite the fact that we are investing. By the way, for us, we do not capitalize much of the investment spend that we have. The platform continues to improve. That is why we also talk about the benefits of scale as our business grows over time. Lyndon sits in London, and he and his team do look at how we can use technology to significantly fast track the execution of the areas of our business that we are investing in and how we can make existing platforms much better. The impact of technology, and in particular AI on businesses, as you know, is likely to be quite substantial over time.
That's why we're spending a bit of time understanding how we can make the lives of our colleagues better, how we can deploy operating systems much faster, taking into account the latest technology. I'm happy to have Q and some of our colleagues touch base with you to have a discussion. As I say, I think it is a bit too operational in some aspects and too detailed in others. Happy to engage.
There are no further questions on the webcast.
On that good basis, I want to thank you for your interest. We really are excited about the opportunity that lies ahead for Investec and our stakeholders. We continue to be deeply invested in what we do and deeply invested in the communities in which we operate. We are excited about South Africa and its prospects.
You will hear from Kumesh as we go. Despite the theatrics of last night, we're hoping that we can stabilize our relations with the U.S., get more foreign investment into our country to get growth going. We understand from the budget that there's a big allocation towards infrastructure, and hopefully that kicks off this economy. In the U.K., we have seen a rapprochement between the U.K. and Europe. We think as the current tensions hopefully settle, we will see a bit more growth in the U.K. and we can grow, firstly, into the large market that there is, and secondly, into whatever growth there is that comes up. We have a number of specializations that we have in places like the U.S. and New York, particularly our energy and infrastructure finance. We have a world-class wealth offering that we talked about in terms of internationalization.
Our banking businesses have been around for a long time. Our heritage is deep, and we are so excited about competing in the market, serving our clients, and delivering value and long-term worth to our stakeholders. Thank you very much.