84S0VF8TSMH0T6D4K848-2023-03-31-T01

Key highlights

Core areas
of activity

Total employees

Core loans

Customer deposits

Funds under
management


	Alternative performance measures We supplement our IFS figures with alternative performance measures used by management internally and which provide valuable, relevant information. These measures are highlighted with the symbol shown here. The description of alternative performance measures and their calculation is provided in the alternative performance measures section.

	Audited information Denotes information in the risk and remuneration reports that forms part of the Group's audited annual financial statements.

	Page references Refers readers to information elsewhere in this report.

	Website Indicates that additional information is available on our website: www.investec.com

	Group sustainability Refers readers to further information in the Investec Group's 2023 sustainability report which is published and available on our website: www.investec.com

	Reporting standard Denotes our consideration of a reporting standard.

	Unaudited information Indicated information which has not been audited.

	Strategic report The operational and strategic overview section together with the financial review section (sections 1 and 2 of this report respectively, and together, the strategic report) provide an overview of our strategic position, performance during the financial year and outlook for the business. This should be read in conjunction with the sections referenced below which elaborate on the aspects highlighted in the strategic report: •The risk management section in section 3 of this report which provides a description of the principal risks and uncertainties facing the company; and •The Group's 2023 sustainability report on our website which highlights the sustainability, economic, social and environmental considerations.

	Integrating sustainability Indicates where we have incorporated sustainability content, aims and ambitions.

Feedback

We value feedback and invite questions and comments on our

reporting. To give feedback please contact our Investor

Relations division.

For queries regarding information in this document:

Investor relations

Tel:(27) 11 286 7070

(44) 20 7597 5546

Email:investorrelations@investec.com


	www.investec.com/en_za/ welcome-to-investec/about-us/ investor-relations.html



01	Operational and strategic overview	Sections 01 to 02 comprise our Strategic Report

		Overview of the Investec Group’s and Investec Bank plc’s organisational structure	4
		Our business at a glance	5
		Our strategic objectives	6
		Our business model	7
		Overview of the activities of Investec Bank plc	8
		Our operational footprint	10
		Our performance at a glance	11
		Stakeholder engagement (Section 172 statement)	15


02	Financial review	Salient features	23
		Financial review	24
		Divisional review	28



03	Risk management and governance	Risk management approach and framework	40
		Year in review from a risk perspective	41
		Principal risks	43
		Corporate governance	60
		Directors’ report	86



04	Remuneration report	Remuneration report	92
04	Remuneration report


05	Annual financial statements	Independent auditor’s report to the member of Investec Bank plc	107
		Consolidated income statement	119
		Consolidated statement of comprehensive income	120
		Balance sheets	121
		Cash flow statements	123
		Statement of changes in equity	124
		Accounting policies	128
		Notes to the financial statements	140
		Notes to risk and capital management	232

		Alternative performance measures	276
		Definitions	277
		Glossary	278
		Credit ratings	280
		Corporate information	281



01	Strategic focus	CONTENTS	Investec Bank plc Annual Financial Statements 2023

CONTENTS

Operational

and strategic

overview



01	Operational and strategic overview	Investec Bank plc Annual Financial Statements 2023

IN THIS SECTION


4	Overview of the Investec Group’s and Investec Bank plc’s organisational structure

5	Our business at a glance

6	Our strategic objectives

7	Our business model

8	Overview of the activities of Investec Bank plc

10	Our operational footprint

11	Our performance at a glance

15	Stakeholder engagement (Section 172 statement)



01	Operational and strategic overview	Investec Bank plc Annual Financial Statements 2023

Investec Bank plc (IBP) is the main banking subsidiary of Investec plc.

During July 2002, Investec Group Limited (since renamed Investec Limited) implemented a dual listed companies (DLC) structure

and listed its offshore business on the London Stock Exchange (LSE).

In terms of our DLC structure, Investec Limited is the holding company of our businesses in Southern Africa, and Investec plc is the

holding company of our non-Southern African businesses. Investec Limited is listed on the Johannesburg Stock Exchange Limited

(JSE) South Africa (since 1986) and Investec plc on the LSE (since 2002).

All references in this report to the Bank, IBP or the Group relate to Investec Bank plc and its subsidiaries, whereas references to

Investec, Investec Group or DLC relate to the combined DLC Group comprising Investec plc and Investec Limited.

While Investec Wealth & Investment Limited is a wholly-owned, FCA-regulated subsidiary of IBP, it maintains an independent

governance structure.


	A circular on the establishment of our DLC structure was issued on 20 June 2002 and is available on our website.


How we are structured

	Non-Southern African operations	Southern African operations


	Investec plc	Investec Limited





	LSE primary listing	JSE primary listing
	JSE secondary listing	NSX secondary listing
		BSE secondary listing

Investec

Bank

Limited

Investec

Wealth &

Investment SA

Group

Investec Bank plc

Investec Wealth & Investment Limited

All shareholdings in the ordinary share capital of the subsidiaries shown are 100%.

Salient features of the DLC structure

•Investec plc and Investec Limited are separate legal entities and have separate listings, but are bound together by contractual

agreements and mechanisms

•Investec operates as if it is a single unified economic enterprise

•Shareholders have common economic and voting interests as if Investec plc and Investec Limited were a single company

•Creditors, however, are ring-fenced to either Investec plc or Investec Limited as there are no cross-guarantees between

the companies.



01	Operational and strategic overview	Investec Bank plc Annual Financial Statements 2023

OVERVIEW OF THE INVESTEC GROUP’S AND INVESTEC BANK PLC’S ORGANISATIONAL STRUCTURE

One Investec


Our purpose
Our purpose is to create enduring worth.


	Our mission
	Investec is a distinctive bank and wealth manager, driven by commitment to our purpose, values, core philosophies and culture. We deliver exceptional service to our clients in the areas of banking and wealth management, striving to create long- term value for all of our stakeholders and contributing meaningfully to our people, communities and the planet.



	Our distinction	Our strategic direction
	The Investec distinction is embodied in our entrepreneurial culture, supported by a strong risk management discipline, client-centric approach and an ability to be nimble, flexible and innovative. We do not seek to be all things to all people. Our aim is to build well- defined, value-adding businesses focused on serving the needs of select market niches where we can compete effectively and build scale and relevance.	The One Investec strategy is, first and foremost, a commitment to drawing on the full breadth and depth of relevant capabilities to meet the needs of each client, regardless of specialisation or geography. One Investec is also about improving internal operating efficiencies; ensuring that investments in infrastructure and technology support our differentiated service offering across the entire Group, not just within specific operating units or geographies. And in our allocation of capital, the One Investec strategy demands a disciplined approach to optimising returns, not merely for one region or business area but for the Group as a whole.

	Our unique positioning is reflected in our iconic brand, our high-touch and high-tech approach and our positive contribution to society, macro-economic stability and the environment. Ours is a culture that values purposeful thinking and stimulates extraordinary performance. We take pride in the strength of our leadership team, our people are empowered and committed to our values and culture.



	Our values*



	Deep client partnerships, built on trust and out-of-the-ordinary service, are the bedrock of our business

	We are dedicated to building meaningful relationships with all our stakeholders

	We uphold cast-iron integrity in all we do

	We are committed to living in society, not off it

	We embrace our responsibility to the environment

	We thrive on change and challenge convention with courage, constantly adapting to an ever-changing world

	We believe in open and honest dialogue to test decisions, seek consensus and accept responsibility

	We trust our people to exercise their judgement, promoting entrepreneurial flair and freedom to operate within the context of prudent risk parameters and unwavering adherence to our values

	We embrace diversity in a deeply caring organisation in which everyone can bring their whole selves.
	*We have recently realigned our values through extensive consultation and dialogue, across the organisation, with all business areas and geographies, ensuring that they reflect our steadfast beliefs and our aspirations. The processes has been bottom up and top down and then aggregated the wisdom of the organisation to reflect the depth of our thinking and the way we conduct ourselves



01	Operational and strategic overview	Investec Bank plc Annual Financial Statements 2023

OUR BUSINESS AT A GLANCE

Driving sustainable

long-term growth

Building on the successes to simplify, focus and grow the

business over the last years, we are well placed to pursue

disciplined growth in the long-term pursuit of our purpose of

creating enduring worth.

This growth will be pursued through our deep specialisations,

with more emphasis being placed on what we can do for our

clients if we act in an integrated way to bring the best of

Investec to every relationship and interaction.

This involves further pursuing cross client franchise integration

strategies and significantly improving internal operating

efficiencies.



	The One Investec mindset One Investec embodies our commitment to bring the best of Investec to every client relationship and interaction. It is premised on our obsession with client service and deep specialisation delivered in an integrated manner.

	–Is a commitment to drawing on the full breadth and depth of relevant capabilities to meet the needs of each client, regardless of specialisation or geography

	–Is about improving internal operating efficiencies, ensuring that investments in infrastructure and technology support our differentiated service offering across the entire Group

	–Demands a disciplined approach to optimising returns, not merely for one region or business area but for the Group as a whole

Fuelling a robust growth agenda

Growth objectives

Continued execution

with discipline to drive

optimisation of returns

Accelerate and scale

new growth initiatives

Further develop

connected client eco-

systems across business

units & geographies

Underpinned by


		Deepening our entrepreneurial culture (Out of the Ordinary)


		Continuous digitalisation


		Strategic use of data



01	Operational and strategic overview	Investec Bank plc Annual Financial Statements 2023

OUR STRATEGIC OBJECTIVES

Creating sustainable,

long-term value



	Our clients and offering

	• Corporate • Institutional • Private Equity • Intermediary • Government			• Private client (high net worth)/Charities/Trusts
	↓			↓
	Specialist Banking			Wealth & Investment
	Lending			Discretionary wealth management
	Transactional banking			Investment advisory services
	Advice			Financial planning
	Hedging
	Cash deposits and savings
	Equity placement

Our approach

We have market-leading, distinctive client franchises

We provide a high level of client service

enabled by comprehensive digital platforms

We are a people business backed by our Out of the

Ordinary culture and entrepreneurial spirit

Our stakeholders

To see a full list

of our stakeholders,

read more on

pages 15 to 20.

Our clients

Our people

Our communities

Our planet

We support our

clients to grow their

businesses by

leveraging our

financial expertise

to provide bespoke

solutions that are

profitable, impactful

and sustainable.

We continue to

build a diverse and

representative

workforce,

employing people

who are passionate

and empowered to

perform

extraordinarily.

We unselfishly contribute

to communities by helping

people become active

economic participants,

focusing on education and

economic inclusion.

We aim to operate

sustainably, within

our planetary

boundaries and

funding activities that

support biodiversity

and a zero carbon

world.



01	Operational and strategic overview	Investec Bank plc Annual Financial Statements 2023

OUR BUSINESS MODEL

We provide our clients with a diversified, combined and integrated banking

and wealth management offering with extensive depth and breadth of product

and services.

Specialist Banking

Our teams are well positioned to provide solutions to meet

private, corporate and institutional clients’ needs. Each business

provides specialised products and services to defined target

markets.

What makes us distinct?

•Provision of high-touch personalised service, with ability

to execute quickly

•Ability to leverage international, cross-border platforms

•Well positioned to capture opportunities between the

developed and the emerging world

•Strong ability to originate, manufacture and distribute

•Balanced business model with good business depth

and breadth

•Provision of high-quality solutions to corporate and private

clients, with leading positions in select areas.



	Private client banking activities					Corporate and investment banking activities


	•Lending •Private capital •Transactional banking •Savings •Foreign exchange.					•Lending •Treasury and risk management solutions •Advisory •Institutional research, sales and trading.


	UK Channel Islands					UK and Europe Channel Islands USA India
	UK Channel Islands					UK and Europe Channel Islands USA India


	Our high-touch and high-tech private client offering provides transactional banking, lending, private capital, savings and foreign exchange tailored to suit our clients’ needs. Our target market includes high net worth (HNW) active wealth creators (with >£300 000 annual income and >£3mn NAV). Our savings offering targets primarily UK retail savers.					Our client-centric, solution-driven offering provides Corporate Banking and Investment Banking services to private companies, private equity and sponsor-backed companies and publicly listed companies.


	Natural linkages between the private client and corporate business



01	Operational and strategic overview	Investec Bank plc Annual Financial Statements 2023

OVERVIEW OF THE ACTIVITIES OF INVESTEC BANK PLC

Wealth & Investment

A leading private client investment manager in the UK

We are one of the largest investment management firms in

the UK and are committed to providing bespoke personal

service to private clients, trusts, charities, intermediaries

and pension schemes.

With 14 offices across the UK, together with offices in the

Channel Islands and Switzerland, combined we employ

over 1 400 people with funds under management (FUM)

of £42.4bn.

The Boards of Investec plc and Rathbones Group plc

reached an agreement for an all-share combination of

Investec Wealth & Investment Limited (excluding Investec

Bank (Switzerland) AG) and Rathbones (subject to

regulatory and other approvals). This will create the UK’s

largest discretionary wealth manager with £100bn in FUMA,

giving it scale to support future growth and increasing our

relevance in the UK. For further detail, refer to the Wealth &

Investment divisional review on page 30.

What makes us distinct?

We put our clients first, providing a service suited to their

individual requirements. We aim to build long-term

relationships with our clients so they can live their lives

confident in the knowledge that their finances are being

expertly looked after.

Our client groups

•Private clients – domestic and international

•Clients of professional advisers

•Charities

•Trusts.

Distribution channels

•Direct

•Intermediaries

•Investec Private Bank

•Investec internationally.


	We exist to free our clients from the burden of having to look after their financial affairs on their own. We strive to do this every day, via the quality of our professional advice, the excellence of the service we deliver and through the preservation and growth of our clients’ wealth.

Our offering

UK and Europe



Investment and savings	Financial planning	Pensions and retirement


•Discretionary and advisory portfolio management services for private clients •Specialist investment management services for charities, pension schemes and trusts •Financial planning advice for private clients •Specialist portfolio management services for international clients •Platform-based managed portfolio service (MPS) for advisers •Range of specialist funds for direct clients and advisers.	•Retirement planning •Succession planning •Bespoke advice and financial reviews.	•Discretionary investment management for company pension and Self Invested Personal Pensions (SIPPs) •Advice and guidance on pension schemes.



01	Operational and strategic overview	Investec Bank plc Annual Financial Statements 2023

OVERVIEW OF THE ACTIVITIES OF INVESTEC BANK PLC CONTINUED



01	Operational and strategic overview	Investec Bank plc Annual Financial Statements 2023

OUR OPERATIONAL FOOTPRINT

Delivered a strong set of results in

volatile markets



		Adjusted operating profit increased 42.1%
	£408.8mn
	2022: £287.7 million

	Earnings attributable to shareholder increased 34.7%
	£313.6mn
	2022: £232.9 million

•Pre-provision adjusted operating profit

for the financial year ended 31 March

2023 increased, supported by

continued client acquisition, increased

client activity, enhanced cross-

collaboration, rising interest rates and

higher average advances

•The strong revenue growth

experienced in the first half of the

financial year continued into the

second half. Net interest income

benefitted from higher average

interest-earning assets and rising

global interest rates. Increased client

activity contributed to non-interest

revenue over the year, off-set by lower

fees from equity capital markets

•Operating costs increased by 9.6%

year on year driven by an increase in

variable remuneration in line with

improved business performance,

inflationary pressures and investment

in people and technology

•ECL impairment charges totalled

£66.7 million, resulting in a credit loss

ratio of 0.37% (2022: 0.17%). The

increase in ECL charges was driven by

an increase in modelled ECLs due to

forward-looking macro-economic

assumptions and Stage 3 ECL charges

on certain exposures. Post-model

management overlay of £11.9 million

raised since the onset of the COVID-19

pandemic was released and is now

reflected in-model. A management

overlay of £4.9 million was retained to

account for risks judged as not

reflected in-model

•The UK domestic Wealth & Investment

business reported a 1.3% increase in

adjusted operating profit driven

predominantly by net interest income

from rising global interest rates, offset

by a decrease in net fee and

commission income as a result of lower

market levels, and subdued net inflows

•We have maintained good net new

client inflows similar to the prior year

but have seen lower net client flows

from existing clients, which is expected

given the high inflationary and interest

rate rise environment. Net inflows of

£608.0 million resulted in net organic

growth in funds under management

of 1.4% (2022: 2.9%)

•FUM declined to £42.4bn at 31 March

2023 (2022: £44.4bn) largely

reflecting unfavourable market

movements

•The Specialist Banking client

franchises performed strongly,

showing continued traction in our

growth strategies across the business.

There was strong revenue growth

across our lending franchises and

increased trading income given

heightened market volatility during

the year

•Net core loans grew by 7.9% since

31 March 2022. This was driven by

growth in residential mortgages,

continued client acquisition and strong

demand for corporate credit across

multiple portfolios. There was a marked

slow-down in loan growth during the

second half of the year given

heightened uncertainty in the UK and

rising global interest rates at the

beginning of 2H2023, however, the

impact on lending activity has begun

to abate

•Taken together, Investec Bank plc

reported an adjusted operating profit

of £408.8 million for the year (2022:

£287.7 million).



01	Operational and strategic overview	Investec Bank plc Annual Financial Statements 2023

OUR PERFORMANCE AT A GLANCE

Financial performance



	Adjusted operating profit increased 42.1%		2023 £408.8mn
	Adjusted operating profit increased 42.1%		2022 £287.7mn



	Annuity income as a % of total operating income		2023 80.9%
	Annuity income as a % of total operating income		2022 75.9%



	Cost to income ratio		2023 63.7%
	Cost to income ratio		2022 70.8%



	Credit loss ratio		2023 0.37%
	Credit loss ratio		2022 0.17%

Diversified business model


	Contribution of adjusted operating profit
%


	Specialist Banking			Wealth & Investment

Continued growth of our key earnings drivers



	Customer accounts (deposits) increased 3.4% to £19.3 billion



	Core loans increased 7.9% to £15.6 billion


Customer accounts (deposits) and loans
£’billion	%


	Net core loans (LHS)			Customer accounts (deposits) (LHS)
	Loans as a % of customer deposits (RHS)
	Loans as a % of customer deposits (RHS)



	Funds under management decreased 4.5% to £42.4 billion reflecting unfavourable market movements

Funds under management

£’billion



01	Operational and strategic overview	Investec Bank plc Annual Financial Statements 2023

OUR PERFORMANCE AT A GLANCE CONTINUED

Strong and improved annuity base


Total operating income
£’million	Percentage


	Net interest income			Net fees and commission income
	Investment and associate income			Trading income
	Other operating income			Annuity income* as a % of total operating income
	Other operating income			Annuity income* as a % of total operating income

*Where annuity income is net interest income and annuity fees.



	Revenue was driven by strong net interest income growth and increased client trading income from customer flow given heightened market volatility during the year

Expected credit loss (ECL) impairment charges

£’million

Adjusted operating profit – Wealth & Investment

£’million


	Jaws ratio
	£’million	Percentage


	Operating income (LHS)			Operating costs (LHS)
	Cost to income (RHS)
	Cost to income (RHS)



	The cost to income ratio improved as revenue grew ahead of costs. Operating costs increased due to an increase in variable remuneration in line with performance, inflationary pressures, investment in people and technology, and post- pandemic normalisation in certain discretionary expenditure


Default and core loans
£’billion	Percentage


	Net core loans (LHS)			Credit loss ratio (RHS)
	Net core loans (LHS)			Credit loss ratio (RHS)
	Net default loans before collateral as a % of net core loans/Stage 3 exposure net of ECL as a % of net core loans subject to ECL (RHS)

Adjusted operating profit – Specialist Banking

£’million



01	Operational and strategic overview	Investec Bank plc Annual Financial Statements 2023

OUR PERFORMANCE AT A GLANCE CONTINUED

Maintained a sound balance sheet

The intimate involvement of executive management ensures stringent management of risk, capital and liquidity as set out below.

Capital management



	Capital and leverage ratios remain sound, ahead of internal targets and regulatory requirements. Investec Bank plc calculates capital requirements using the standardised approach under the Basel III framework, thus our risk-weighted assets represent a large portion of our total assets. We are comfortable with our Common Equity Tier 1 (CET1) ratio at 12.7% given our solid capital light revenues, and with the leverage ratio at 9.8%.

Capital ratios


	31 March 2023^^	31 March 2022^^
Common Equity Tier 1 ratio*	12.7%	12.0%
Common Equity Tier 1 ratio (fully loaded)**	12.4%	11.6%
Tier 1 ratio*	14.1%	13.6%
Total Capital ratio*	18.5%	18.2%
Leverage ratio^	9.8%	9.3%
Leverage ratio (fully loaded)^**	9.6%	9.1%

*The CET1, Tier 1 and Total Capital ratios are calculated applying the IFRS 9 transitional arrangements (including the changes introduced by the ‘quick fix’ regulation

adopted in June 2020).

**The CET1 ratio (fully loaded) and the leverage ratio (fully loaded) assumes full adoption of IFRS 9 (including the ‘quick fix’ regulation in the UK).

^The leverage ratios are calculated on an end-quarter basis.

^^The capital adequacy disclosures for IBP include the deduction of foreseeable charges and dividends when calculating the CET1 ratio. These disclosures are different

to the capital adequacy disclosures included in Investec Group’s 2023 and 2022 integrated and strategic annual report, which follow our normal basis of presentation

and do not include this deduction when calculating CET1 capital. IBP’s CET1 ratios would be 21bps (31 March 2022: 37bps) higher, on this basis.


	Note: Refer to pages 270 to 273 for further details.

A well-established liquidity management philosophy remains in place



	Continued to focus on: •Maintaining a high level of readily available, high-quality liquid assets targeting a minimum cash to customer deposit ratio of 25%, with the year-end ratio at 44.4% •Diversifying funding sources •Maintaining an appropriate mix of term funding •Maintaining low reliance on wholesale funding •Benefitting from a growing retail deposit franchise and recording an increase in customer deposits. Liquidity remains strong with cash and near cash balances amounting to £8.6 billion (2022: £8.9 billion). Average cash balances remained high as we maintained a conservative position. We exceed the minimum regulatory requirements for the liquidity coverage ratio (LCR) and net stable funding ratio (NSFR). The Bank’s loan to deposit ratio was 80.9% (2022: 77.5%).

Cash and near cash trend

£’million


	Central bank cash placement and guaranteed liquidity			Cash
	Near cash (other ‘monetisable’ assets)



01	Operational and strategic overview	Investec Bank plc Annual Financial Statements 2023

OUR PERFORMANCE AT A GLANCE CONTINUED

Listening to and

engaging with our

stakeholders



	The Board appreciates the importance of meeting the diverse needs and expectations of all stakeholders and building lasting relationships with them. Effective communication and stakeholder engagement are integral in building stakeholder value. The Board is committed to providing meaningful, transparent, timely and accurate financial and non-financial information to primary stakeholders, enabling them to make meaningful assessments and informed investment decisions. In order to achieve these outcomes, the Board addresses material matters of significant interest and concern, highlighting key risks to which the business is exposed and responses to mitigate these risks. IBP is a wholly-owned subsidiary of Investec plc (refer to operational structure on page 4) and as such has one shareholder. The IBP Board communicates regularly with the Board of Investec plc. Certain IBP engagements with its stakeholders are performed on a Group basis such as maintenance of its website, investor relations activity and ESG engagement. Section 172(1) statement This section of the strategic report describes how the directors have had regard to the matters set out in Section 172(1), and forms the directors’ statement required under the Companies Act 2006. This statement also provides details of how the directors have engaged with and had regard to the interests of our key stakeholders.

Strong partnerships and understanding

are essential to the creation of enduring

worth. To be the best we can be, and to

understand stakeholders’ needs, we work

hard to establish the most effective ways

of engaging with them.

Engagement is important to us because it means we can

understand stakeholder views and are able to respond

in a meaningful and impactful way.

We gather feedback through continuous dialogue with

our stakeholders throughout the year to gain an intimate

understanding of their needs. It’s only through this varied

dialogue that we can improve as a business, consider our

strategy and deliver on our purpose.

As detailed on the pages that follow, the Board’s oversight

of engagement with our stakeholders informs their principal

decisions during the year.



	Clients

	At IBP, we are all about partnership, striving to build deep and long-lasting relationships with our clients.

	What matters to them •A dependable banking, wealth creation and wealth management partner •Innovative and creative solutions •Financial security •Enhanced cyber security •Competitive pricing •Operational resilience •Assurance as to the security of their funds.

	How we engage •Client engagement is managed on a day-to-day basis by senior management and client relationship managers. The Board receives regular updates from senior management on key client issues •Client engagement methods have returned to predominantly face-to-face meetings post the COVID-19 pandemic •Comprehensive, user-friendly website and mobile app •Regular telephone and email communications •Industry relevant events and client marketing events, both of which have returned to in-person interactions.


	FY2023 highlights •We have further developed our ‘One Investec’ approach, which brings all of Investec that is relevant to every client. It is a coordinated approach with the client at the centre. In the UK mid-market, the breadth and diversity of offering to clients is unmatched. We have now integrated ourselves structurally around client groupings. This has enabled us to leverage the whole of our capability to provide solutions most relevant to clients’ needs •The private client franchise grew their client base by 9%, a large number of new clients were introduced via referrals by existing Investec clients.



01	Operational and strategic overview	Investec Bank plc Annual Financial Statements 2023

STAKEHOLDER ENGAGEMENT (SECTION 172 STATEMENT)



	Our people*

	Our people are at the heart of our business. We aim to be an organisation that values all of its people for their contributions and celebrates them for who they are.

	What matters to them •The purpose of the organisation •Culturally aligned leadership •Meaningful communication •Learning, development and career progression •Belonging, Inclusion and Diversity (BID) and equality •Wellbeing •Fair remuneration •Sustainable working practices •High degrees of flexibility •Positive contributions to society.

	How we engage •Designated Non-Executive Director overseeing workforce engagement •Regular CEO town hall discussions to keep staff up to date with strategic priorities and performance, supplemented by ongoing staff communication including email updates, staff intranet and other digital channels •An induction programme for new employees which seeks to inculcate our purpose, culture, values and strategic intent, hosted by the CEO and senior leaders •Ongoing learning, leadership and diversity programmes offered to all employees •Tailored internal investor relations presentations on IBP results, strategy updates and general feedback from the market •Bank Leadership Forum: a space for leadership of the bank to come together and engage on key areas such as purpose, values and our culture •Bespoke application and intranet to support purposeful communication, wellbeing and learning of our people.

	FY2023 highlights •Resumed spending most of our time in office, face to face with high degrees of flexibility, allowing employees freedom to operate in the context of high-performing teams •A once-off cost-of-living allowance awarded to all employees in the UK earning a salary below a certain threshold in recognition of the unprecedented increase in the cost of living across the UK •Reduced the gender pay gap for the fifth consecutive year in the UK.

*Includes permanent employees, temporary employees and contractors.



	Debt investors

	We engage with debt investors who hold instruments issued by IBP.

	What matters to them •Progress against strategic objectives •Financial performance •Credit ratings •Capital and liquidity position •Business sustainability •Management expectations and guidance on future business performance •Balance sheet resilience.


	How we engage •Regular meetings with Executive Directors, senior management and investor relations •Stock exchange announcements •Comprehensive investor relations website •Investor roadshows and presentations •Regular telephone and email communications •Annual and interim reports.


	FY2023 highlights •Organised three debt roadshows in the UK/Europe which raised over £550mn of debt.
	Engaged with >100 debt investors/lenders throughout the year



01	Operational and strategic overview	Investec Bank plc Annual Financial Statements 2023

STAKEHOLDER ENGAGEMENT (SECTION 172 STATEMENT) CONTINUED



	Communities

	Our values of making an unselfish contribution to society, valuing diversity and nurturing an entrepreneurial spirit drive our commitment to support the communities in which we exist. Our focus is on education, entrepreneurship and the environment.

	What matters to them •Financial and non-financial support •Time volunteered by our staff •Education and learning opportunities •Skills training and job creation •Protecting the environment.


	How we engage •Regular in-person meetings, telephone/conference calls and emails with our community partners •Comprehensive community website and social media platforms to encourage participation •Staff volunteering •Community partners and NGOs invited to collaborate at conferences and events.

	FY2023 highlights •17 people involved in the Beyond Business Programme in the UK providing more than 66 hours of advice •Staff volunteered 737 hours of their time at the Felix Project as part of our response to the cost of living crisis •Colleagues in our India office volunteered 30 hours and provided US$54 931 to five charities, including Olympic Gold Quest, Salaam Bombay, Animals Matter to Me, Sanjeevani – Life Beyond Cancer and Rescue Foundation •Arrival have adapted over the past two years to ensure that young people and volunteers could participate in the programme remotely. We have supported 2 108 Arrival learners in the UK over the past 14 years.
	£2.0mn spent on community initiatives (2022: £1.7mn)
		Further information can be found in the Group's 2023 sustainability report which is published and available on the Investec website.



	Government and regulators

	IBP is regulated by the UK Financial Conduct Authority and the UK Prudential Regulation Authority. We maintain continuous engagement with governments and regulators in our key markets to ensure our business adapts to evolving regulatory environments.

	What matters to them •Compliance with existing and evolving regulatory, legal and governance requirements •Assurance that we have robust prudential standards and supervision in place •Fair treatment of our clients and employees •Financial and operational resilience in the face of changing market conditions •Risk framework and appetite management •Capital and liquidity stress testing •Group tax strategy.


	How we engage •Our Chair, CEO, Executive Directors and the Board hold regular meetings with the UK Prudential Regulation Authority •IW&I Head of Compliance and Risk has regular and ongoing interactions with the UK Financial Conduct Authority (FCA). IW&I Board members also meet the FCA periodically •Active participation in a number of policy forums •Engagement with industry consultative bodies.


	FY2023 highlights •Approval for the appointment of Marlé van der Walt as Finance Director of IBP •Conducted a joint simulation exercise to test a simultaneous recovery scenario and the governance framework with the support of regulators.



01	Operational and strategic overview	Investec Bank plc Annual Financial Statements 2023

STAKEHOLDER ENGAGEMENT (SECTION 172 STATEMENT) CONTINUED



	ESG and climate-focused industry bodies and analysts

	We are committed to supporting the transition to a clean and energy efficient economy and regularly engage with climate-focused industry bodies and analysts to discuss our evolving sustainability strategy.

	What matters to them •Our climate change position statement and climate change framework •Managing and mitigating climate change impact within our operations (direct impact) •Indirect climate change impact through our loan book and investment portfolio •Addressing ESG risks within our business •Our progress towards our net-zero carbon emissions commitment •Reporting in line with industry standards.

	How we engage •Annual Investec sustainability report •Comprehensive Investec sustainability website •Comprehensive ESG disclosures, including a standalone TCFD report •Sustainability factsheets •The Investec Group CEO is a member of the UN Global Investors for sustainable development alliance •Regular and active participation in a number of ESG and climate forums •Commitment to industry standards including TCFDs and PCAF •Regular knowledge sharing on ESG industry standards.

	FY2023 highlights •Disclosed our Scope 3 financed emissions covering 78% of our loan book •Joined the Partnership for Biodiversity Accounting Financials (PBAF) •Participated in writing the climate curriculum for UN PRB.
	Carbon neutral Achieved carbon neutrality in Scope 1, 2 and operational Scope 3. We are sourcing 100% of our Scope 2 energy from renewables through the purchase of renewable energy certificates. The remaining unavoidable residual emissions of 84% off-set through purchasing verified and high-quality carbon credits.



	Suppliers

	We collaborate with suppliers and sub-contractors securely whom we expect to be resilient and to operate and behave in an environmentally and socially responsible manner.

	What matters to them •Compliance with applicable environmental, labour and anti-corruption laws and regulations •Prompt payment practices •Fair and transparent tender and negotiation practices •Clear guidance on policies and procedures, such as due diligence and onboarding.


	How we engage •The procurement function is responsible for engaging suppliers, and other business functions will be involved as required. For example, the Investec Group sustainability team may conduct a sustainability and ESG review once a supplier is engaged •Centralised negotiation process •Procurement questionnaires requesting information on suppliers’ environmental, social and ethical policies •Due diligence on cyber security and business continuity.


	FY2023 highlights •Consolidated and migrated all our vendor onboarding systems onto one system. The consolidation gives us a 360-degree view of all third parties •We continue to improve our due diligence processes around financial crime, data security and financial screening. Critical third parties are monitored 24/7 for financial and cyber security.
	All of our suppliers are screened against ethical supply chain practices



01	Operational and strategic overview	Investec Bank plc Annual Financial Statements 2023

STAKEHOLDER ENGAGEMENT (SECTION 172 STATEMENT) CONTINUED

Principal decisions

Here we outline how Board engagement with stakeholders

has informed principal decisions during the year.

Supporting our people

IBP has dealt with the aftermath of the COVID-19 pandemic and

the cost-of-living crisis, with our people returning to the office

while still having high degrees of flexibility. With this in mind, the

Board focused on the culture of the organisation, as well as the

ongoing wellbeing of our people, being on the front foot with

our clients, colleagues and our communities.

The Board conducted a review of the organisation’s values

against its stated purpose and a recommitment to how these

values are lived in the organisation. This has been supported by

ongoing leadership development, equipping all leaders with the

skills to lead within the Investec culture and enable Out of the

Ordinary performance.

Strategy in execution

Investec Group shareholders have a keen interest in the strategic

progress made by the Group since the 2019 Capital Markets Day

(CMD), with a particular interest in the progress made by the UK

Specialist Bank. The Bank’s 30 plus-year heritage, strong client

franchises, specialist expertise, exceptional and Out of the

Ordinary people and culture have provided a robust platform to

drive growth and deliver improved business performance. The

business delivered strong financial performance in the context of

an uncertain macro backdrop and volatile markets that prevailed

in the current financial year. The Board is pleased that the Bank

has achieved the results staff and Investec shareholders expect,

however, acknowledges that tough choices were made in order to

simplify and focus the business, and strategic plans were

executed with great discipline.

The Group Board has continued its regular engagement with

shareholders and endeavours to incorporate shareholder

feedback in its oversight of strategic execution. The Board is

focused on long-term growth which exemplifies our core

purpose of creating enduring worth. This growth continues to

be pursued by concentrating on what the Bank can do for its

clients if it acts in an integrated way to bring the best of

Investec to every client. This ‘One Investec’ strategy is about

generating sustainable growth and value for all stakeholders

through further cross-business integration strategies and

improving internal operating efficiencies. It means ensuring that

investments in infrastructure and technology support our

service offering across the Bank and includes a disciplined

approach to capital allocation, growth strategies and

optimisation of returns. In the current financial year, the IBP

Board considered and recommended the all-share combination

between Investec Wealth & Investment Limited and Rathbones

to the Investec Group Board. This is in pursuit of the Group’s

growth strategy. For more details, refer to page 30.

The Board has overseen internal communications of the ‘One

Investec’ strategy to all staff. Messaging has expressed

excitement in building an improved private client business

across Bank and Wealth, and propositions across the carefully

chosen client segments.

The Group is also in the early stages of developing a plan to

move to the Internal Ratings based (IRB) approach in the UK.

This decision is consistent with stated strategic priorities to

simplify the business and optimise capital, and incorporated

input received from Investec Group shareholders.

Commitment to sustainability

Investec has demonstrated that sustainability is central to its

strategic direction. Members of the Investec Group and IBP

Boards regularly engage with a range of stakeholders (including

shareholders, ESG analysts and rating agencies) on a number of

climate-related and sustainability topics that are relevant for the

business.

The Investec Group Board takes ultimate accountability for

climate-related issues, supported by the Group’s Social and Ethics

Committee (DLC SEC) . This structure has been in place for

many years and was strengthened to include senior executive

responsibility for identifying and managing climate-related risks.

The Investec Group and IBP Boards acknowledge that climate

change represents a financial risk, and continue to oversee the

evaluation of our exposure to understand and mitigate potential

risks. The Boards recognise the opportunities that climate

change present within our various business activities. All Board

members have a strong awareness around climate-related and

sustainability matters that was supplemented by presentations

from internal and external parties during various Board

meetings. Some targeted training to the Board was done during

the past year and more focused training will be done over the

next year.

Investec’s ambition towards net-zero has been strengthened by

Investec joining the Net-Zero Banking Alliance (NZBA) at the

end of 2021, highlighting the urgency for faster, immediate and

more ambitious climate action. We have delivered on our

commitment, tabled in the Group’s August 2021 AGM, with

regards to our net-zero ambitions and disclosed our Scope 3

financed emissions covering 78% of our loan book. In the past

year, we have made progress in refining our assumptions and

the external quality of the data for emission calculations. We are

currently unable to increase our coverage beyond 78% until

there is improved external data available across jurisdictions.

We also engaged with SBTi on their recently released

recommendations for the Financial Institutions and are refining

our proposed targets with the aim of reporting verified SBTi

targets in the next financial year.


	Further information on the Investec Group’s ESG initiatives and progress can be found in the Investec Group's 2023 sustainability report which is published and available on the Investec website.



01	Operational and strategic overview	Investec Bank plc Annual Financial Statements 2023

STAKEHOLDER ENGAGEMENT (SECTION 172 STATEMENT) CONTINUED

Belonging, Inclusion and Diversity

Initiatives

The Board’s commitment to Belonging, Inclusion and Diversity

(BID) at IBP continues to be a key strategic objective, with

a particular focus on appropriately balanced representation

across different groups and identities and creating a culture and

climate where a sense of belonging permeates. Stakeholders

such as our employees, debt investors, ESG analysts and clients

remain interested in our progress.

During the year, the Board has continued to work towards our

commitments to address inequalities. Key areas of our strategy

have included increasing diversity representation with respect

to gender and ethnicity, particularly in senior roles and decision-

making forums, improving leader capability and awareness in

creating an inclusive work environment, and ensuring our

policies and principles entrench a level playing field. Following

extensive engagement with employees, the Board has

endorsed a number of initiatives this year in support of our

strategy including:

•As signatories to the Race at Work Charter, focused on the

development of Black, Asian and Minority Ethnic colleagues,

we delivered the following:

–Following the success of the pilot programme in 2021, we

delivered our second reciprocal mentoring. The programme

pairs senior leaders with people of colour from across the

organisation in order to facilitate reciprocal learning and

harness the value of difference

–We hosted an evening with Wol Kalade, a client and co-

founder of the #10000 black interns programme, exploring

the programme’s ability to catalyse the increase in black

representation in the City

–We hosted an evening for clients and colleagues with the

award-winning artist, activist, author and poet Akala on

Black Britain.

•In continuing the advancement of women into senior

positions and into principal decision-making committees we

achieved the following:

–We have exceeded the Women in Finance Charter target of

30% female representation at senior leadership by 2022

achieving 36.8% at 31 March 2023 (31 March 2022: 35.0%)

–Of 269 (FY2022: 223) external hires made during the year

in IBP, 45% (FY2022: 41%) were female

–Our 2022 Diversity Pay Gap report will include our ethnicity

pay gap alongside the gender pay gap. While ethnicity pay

gap reporting is not mandatory, we include these results

following the same methodology as the gender pay gap. As

at 31 March 2022 our mean hourly gender pay gap was

25.6% (2021: 26.2%)^ in IBP and 43.4% (2021: 43.3%)^ in

IW&I UK. Our mean hourly ethnicity pay gap was 15.1%

(2021: 12.9%)^ in IBP and 23.9% (2021: 20.7%)^ in IW&I UK

–For the fifth consecutive year we are participating in the

30% Club mentoring scheme, a cross-company programme

to boost female representation at board and executive

level.

^ Gender and ethnicity pay gap statistics are reported a year in arrears.

•In order to ensure we continue to focus on the creation of an

inclusive environment:

–We continue to offer our Allies programme equipping

colleagues with the skills to recognise and address

microaggressions, and challenge exclusion. 84 colleagues

across IBP have completed the Programme

–Our BID Champion initiative includes a network of

knowledgeable, trained colleagues committed to

supporting BID and providing a local point of contact for

people

–We became a proud member of the Business Disability

Forum, the leading business membership organisation in

disability inclusion in September 2022

–Our networks, including Young Minds, Pride, Multicultural

and Gender Balance, continue to provide a safe space for

people to network, offer support and guidance to its

members and raise awareness within the organisation

–We have active employee-led working groups for

menopause, neurodiversity and parents of neurodiverse

children

–We continue to run our flagship Zebra Crossing

programme, aimed at minimising unconscious bias and

raising awareness of multicultural differences at personal,

interpersonal and institutional levels.

The Board recognises that maintaining a strong focus on BID,

and having clear targets and measures to track progress, is

critical. BID is integral to Investec’s purpose to ‘create enduring

worth’. The Board firmly believes that improving representation

and fostering inclusion and belonging will better enable us to

meet our clients’ needs.


	Further information on our gender, diversity and transformation initiatives and progress can be found in the Investec Group's 2023 integrated annual report as well as in the Investec Group’s 2023 sustainability report which is published and available on our website.



01	Operational and strategic overview	Investec Bank plc Annual Financial Statements 2023

STAKEHOLDER ENGAGEMENT (SECTION 172 STATEMENT) CONTINUED

Financial

review



02	Financial review	Investec Bank plc Annual Financial Statements 2023

IN THIS SECTION


23	Salient features

24	Financial review

28	Divisional review



02	Financial review	Investec Bank plc Annual Financial Statements 2023


	31 March 2023	31 March 2022	% change
Income statement and selected returns
Earnings attributable to ordinary shareholders (£’000)	313 609	232 881	34.7%
Adjusted operating profit (£’000)	408 776	287 683	42.1%
Operating costs (£’000)	833 061	760 286	9.6%
Cost to income ratio	63.7%	70.8%
Return on average assets*	1.1%	0.9%
Return on average risk weighted assets*	1.8%	1.4%
Net interest income as a % of operating income	57.2%	46.2%
Return on average shareholders’ equity (post-tax)	12.8%	10.4%
Return on average tangible shareholders’ equity (post-tax)	14.6%	12.0%
Non-interest income as a % of operating income	42.8%	53.8%
Annuity income as a % of total operating income	80.9%	75.9%

	31 March 2023	31 March 2022	% change
Balance sheet
Total assets (£’million)	28 243	27 589	2.4%
Net core loans (£’million)	15 563	14 423	7.9%
Cash and near cash balances (£’million)	8 550	8 871	(3.6%)
Customer accounts (deposits) (£’million)	19 251	18 616	3.4%
Funds under management (£’million)	42 422	44 419	(4.5%)
Gearing ratio (total assets to equity)	10.1x	10.8x
Level 3 (fair value assets) as a % of total assets	6.5%	6.5%
Core loans to equity ratio	5.6x	5.7x
Loans and advances to customers as a % of customer deposits	80.9%	77.5%
Credit loss ratio	0.37%	0.17%
Stage 3 exposures as a % of gross core loans subject to ECL	2.3%	2.1%
Stage 3 exposures net of ECL as a % of net core loans subject to ECL	1.8%	1.6%

Other regulatory ratios
LCR (IBP solo basis)	432%	476%
NSFR (IBP solo basis)	138%	136%

Capital and leverage^
Total Capital ratio	18.5%	18.2%
Tier 1 ratio	14.1%	13.6%
Common Equity Tier 1 ratio	12.7%	12.0%
Leverage ratio	9.8%	9.3%

*Average balances are calculated on a straight-line average.

^The capital and leverage ratios are calculated applying the IFRS 9 transitional arrangements (including the CRR II changes introduced by the 'quick fix' regulation

adopted in June 2020).



02	Financial review	Investec Bank plc Annual Financial Statements 2023

SALIENT FEATURES

Overview

Investec Bank plc reported an adjusted operating profit of £408.8 million for the year ended 31 March 2023 (2022:

£287.7 million). The balance sheet remains strong, supported by sound capital, leverage and liquidity ratios.

Unless the context indicates otherwise, all income statement comparatives in the review below relate to the statutory results

for the year ended 31 March 2022.

Income statement analysis

The overview that follows will highlight the main reasons for the variance in the major category line items on the face of the income

statement during the year under review.

Total operating income before expected credit loss impairment charges

Total operating income before expected credit loss impairment charges of £1 308.6 million was 21.9% higher than the prior year.

The various components of total operating income are analysed below.


£’000	31 March 2023	% of total income	31 March 2022	% of total income	% change
Net interest income	749 025	57.2%	496 308	46.2%	50.9%
Net fee and commission income	440 843	33.7%	494 232	46.1%	(10.8%)
Investment income	5 003	0.4%	10 579	1.0%	(52.7%)
Share of post-taxation profit of associates and joint venture holdings	660	0.1%	1 988	0.2%	(66.8%)
Trading income/(loss) arising from
–customer flow	87 366	6.7%	60 372	5.6%	44.7%
–balance sheet management and other trading activities	13 060	1.0%	(1 305)	(0.1%)	(>100%)
Other operating income	12 620	1.0%	11 158	1.0%	13.1%
Total operating income before expected credit loss impairment charges	1 308 577	100.0%	1 073 331	100.0%	21.9%

The following table sets out information on total operating income before expected credit loss impairment charges on loans

and advances by division for the year under review:


£’000	31 March 2023	% of total income	31 March 2022	% of total income	% change
Wealth & Investment	361 920	27.7%	347 182	32.3%	4.2%
Private Banking	135 494	10.4%	75 294	7.0%	80.0%
Corporate, Investment Banking and Other	811 163	62.0%	650 856	60.6%	24.6%
Total operating income before expected credit loss impairment charges	1 308 577	100.0%	1 073 332	100.0%	21.9%


% of total operating income before expected credit loss impairment charges
31 March 2023 £1 308.6 million total operating income before expected credit loss impairment charges		31 March 2022 £1 073.3 million total operating income before expected credit loss impairment charges


Net interest income	57.2%	Net interest income	46.2%
Net fee and commission income	33.7%	Net fee and commission income	46.1%
Investment income	0.4%	Investment income	1.0%
Share of post-taxation profit of associates and joint venture holdings	0.1%	Share of post-taxation profit of associates and joint venture holdings	0.2%
Trading income arising from customer flow	6.7%	Trading income arising from customer flow	5.6%
Trading income arising from balance sheet management and other trading activities	1.0%	Trading income arising from balance sheet management and other trading activities	(0.1%)
Other operating income	1.0%	Other operating income	1.0%



02	Financial review	Investec Bank plc Annual Financial Statements 2023

FINANCIAL REVIEW

Net interest income

Net interest income increased by 50.9% to £749.0 million (2022: £496.3 million), driven by higher average interest earning assets

and the positive effect of rising global interest rates.


	For a further analysis of interest received and interest paid refer to page 142.

Net fee and commission income

Net fee and commission income decreased by 10.8% to £440.8 million (2022: £494.2 million), due to lower fees from equity capital

markets and lower market levels. This was partially off-set by higher advisory fees from Growth and Leveraged Finance and Fund

Solutions.


	For a further analysis of net fee and commission income refer to page 142.

Investment income

Investment income of £5.0 million (2022: £10.6 million) was lower than the prior year due to fair value adjustments on investments

and lower dividend income.


	For a further analysis of investment income refer to page 143.

Trading income

Trading income from customer flow netted an income of £87.4 million (2022: £60.4 million), reflecting strong client activity levels in

our interest rate and currency desks given market volatility.

Trading income from balance sheet management and other trading activities increased to a gain of £13.1 million (2022: loss of

£1.3 million) reflecting the positive positioning in balance management activities.

Other operating income

Other operating income mainly consists of income earned on operating lease rentals.

Expected credit loss impairment charges

Total ECL impairment charges increased to £66.7 million (2022: £25.4 million), driven by an increase in modelled ECLs due to

forward looking macro-economic assumptions and Stage 3 ECL charges on certain exposures. The credit loss ratio is trending

towards the top end of the through-the-cycle range at 0.37% (2022: 0.17%), and the ECL coverage ratio of our Stage 1 loan book

remained at 0.29%.

Stage 3 exposures increased to £343 million at 31 March 2023 (2022: £291 million) equating to 2.3% of gross loans subject to

ECL(2022: 2.1% ).


	Refer to pages 236 for further information on asset quality and page 237 for a breakdown of the expected credit loss impairment charges.



02	Financial review	Investec Bank plc Annual Financial Statements 2023

FINANCIAL REVIEW CONTINUED

Operating costs

Operating costs increased by 9.6% to £833.1 million (2022: £760.3 million), driven by an increase in variable remuneration in line

with performance, inflationary pressures, investment in people and technology, and the post-pandemic normalisation in certain

discretionary expenditure. The cost to income ratio improved to 63.7% (2022: 70.8%).

The various components of operating costs are analysed below:


£’000	31 March 2023	% of operating costs	31 March 2022	% of operating costs	% change
Staff costs (including directors' remuneration)	601 816	72.2%	553 767	72.8%	8.7%
Premises expenses (including depreciation)	40 299	4.8%	40 813	5.4%	(1.3%)
Equipment expenses (excluding depreciation)	64 390	7.7%	54 266	7.1%	18.7%
Business expenses	103 065	12.4%	90 407	11.9%	14.0%
Marketing expenses	17 113	2.1%	13 028	1.7%	31.4%
Depreciation, amortisation and impairment of equipment and intangibles	6 378	0.8%	8 005	1.1%	(20.3%)
Operating costs	833 061	100.0%	760 286	100.0%	9.6%

The following table sets out information on operating costs by division for the year under review:


£’000	31 March 2023	% of operating costs	31 March 2022	% of operating costs	% change
Wealth & Investment	270 195	32.4%	259 496	34.1%	4.1%
Private Banking	58 996	7.1%	42 034	5.5%	40.4%
Corporate, Investment Banking and Other	503 870	60.6%	458 756	60.3%	9.8%
Operating costs	833 061	100.1%	760 286	100.0%	9.6%


% of operating costs
31 March 2023 £833.1 million total operating costs		31 March 2022 £760.3 million total operating costs


Staff costs	72.2%	Staff costs	72.8%
Business expenses	12.4%	Business expenses	11.9%
Equipment expenses (excluding depreciation)	7.7%	Equipment expenses (excluding depreciation)	7.1%
Premises expenses (including depreciation)	4.8%	Premises expenses (including depreciation)	5.4%
Marketing expenses	2.1%	Marketing expenses	1.7%
Depreciation, amortisation and impairment of equipment and intangibles	0.8%	Depreciation, amortisation and impairment of equipment and intangibles	1.1%



02	Financial review	Investec Bank plc Annual Financial Statements 2023

FINANCIAL REVIEW CONTINUED

Adjusted operating profit

As a result of the foregoing factors, adjusted operating profit increased by 42.1% from £287.7 million to £408.8 million.

Amortisation of acquired intangibles

Amortisation of acquired intangibles of £12.6 million largely relates to the amortisation of amounts attributable to client relationships

in the Wealth & Investment business.

Taxation on operating profit before acquired intangibles and strategic actions

The increase in the effective operational tax rate from 14.8% to 20.4% was driven by increase in bank surcharge and reduction in

the tax credit arising due to changes in tax rates. For further details, refer to note 10 on page 149.


£'000	2023	2022	31 March 2023 £'000	31 March 2022 £'000	% change
Taxation on operating profit before acquired intangibles and strategic actions	20.4%	14.8%	83 288	42 174	97.5%

Balance sheet analysis

Since 31 March 2022:

•Total equity increased by 9.5% to £2.8 billion (2022: £2.5 billion), as a result of the increase in retained income.

•Total assets increased by 2.4% to £28.2 billion (2022: £27.6 billion), largely as a result of reasonable loan book growth.

•Total liabilities increased by 1.6% to £25.5 billion (2022: £25.0 billion), primarily driven by growth in customer accounts

(deposits).



02	Financial review	Investec Bank plc Annual Financial Statements 2023

FINANCIAL REVIEW CONTINUED



			Business Head Iain Hooley

	Awards
	Won 'Best Discretionary Fund Manager' at the Moneyfacts Investment Life & Pension Awards Won ‘Customer-Facing Digital Capabilities’, ‘Diversity and Inclusion in Wealth Management’ and ‘UK Wealth Planning Team’ at the WealthBriefing European Awards Winner of the ‘London’ Category at CityWire Adviser Choice Award



	With over £40 billion of FUM, we are one of the UK’s largest wealth and investment managers. We work with individual clients to allow them to grow, enjoy and protect their wealth, and with charities and clients of professional advisers to help deliver optimal returns on their investments and to bring financial peace of mind.

Performance highlights

•The business generated operating profit of £91.7 million (4.6% above the prior year) and an operating margin for the UK domestic

business of 27.2% (2022: 27.0%)

•Operating income increased by 4.2% with higher net interest income from rising global interest rates offset by net fee and

commission income decreasing by £11.5 million (3.4%) as a result of lower market levels, and subdued net inflows

•Operating costs increased by 4.1% (3.3% for the UK domestic business) primarily from inflationary pressures and normalisation

of certain business expenses as pandemic related restrictions eased

•FUM declined to £42.4bn at 31 March 2023 (2022: £44.4bn) largely reflecting unfavourable market movements.

Funds under management and net flows

£'billion


	Discretionary (LHS)			Non-discretionary (LHS)		l	Net inflows (RHS)

Reasons for the variance in FUM since 31 March 2022

•Unfavourable market movements (MSCI PIMFA Balanced Index down 5.4%), together with lower investment performance during

the year, partially offset by:

–Net inflows of £608.0 million resulting in net organic growth in funds under management of 1.4% (2022: 2.9%). We have

maintained good net new clients inflows similar to the prior year but have seen lower net client flows from existing clients

which is expected given the high inflationary and interest rate rise environment

–The acquisition of Murray Asset Management (MAM) during the year, which added £352 million to FUM at 31 March 2023.

Funds under management


£’million	31 March 2023	31 March 2022	% change
UK Domestic (including Channel Islands)	40 747	42 894	(5.0%)
Discretionary	35 291	36 728	(3.9%)
Non-discretionary*	5 456	6 166	(11.5%)
Switzerland	1 675	1 525	9.8%
Discretionary	553	487	13.6%
Non-discretionary*	1 122	1 038	8.1%
Total	42 422	44 419	(4.5%)

*Non-discretionary includes advisory-managed FUM of £1 185 million (31 March 2022: £1 627 million). Managed funds therefore represent 90% of the UK domestic total

FUM at 31 March 2023 (31 March 2022: 89%).



02	Financial review	Divisional review	Investec Bank plc Annual Financial Statements 2023

WEALTH & INVESTMENT

Net inflows over the period


£’million	31 March 2023	31 March 2022
Discretionary	521	808
Non-discretionary	87	410
Total	608	1 218

Income statement analysis and key income drivers


£’000	31 March 2023	31 March 2022	Variance	% change
Net interest income	28 150	2 268	25 882	>100%
Net fee and commission income	332 501	344 029	(11 528)	(3.4%)
Investment income	7	(2)	9	>100%
Trading income arising from
– customer flow	1 252	1 194	58	4.9%
– balance sheet management and other trading activities	10	(307)	317	>100%
Total operating income before expected credit loss impairment charges	361 920	347 182	14 738	4.2%
Of which: UK domestic	347 672	338 322	9 350	2.8%
Of which: Switzerland*	14 248	8 860	5 388	60.8%
Expected credit loss impairment charges	2	(5)	7	>100%
Operating income	361 922	347 177	14 745	4.2%
Operating costs	(270 195)	(259 496)	(10 699)	4.1%
Of which: UK domestic	(255 913)	(247 729)	(8 184)	3.3%
Of which: Switzerland*	(14 282)	(11 767)	(2 515)	21.4%
Adjusted operating profit	91 727	87 681	4 046	4.6%
Of which: UK domestic	91 760	90 593	1 167	1.3%
Of which: Switzerland*	(33)	(2 912)	2 879	98.9%
Key income drivers
Operating margin	25.3%	25.3%
Of which: UK domestic#	27.2%	27.0%
Net inflows in FUM as a % of opening FUM	1.4%	2.9%
Average income yield earned on FUM^	0.83%	0.81%
Of which: UK domestic	0.83%	0.81%

*The results of the Switzerland business have been reported separately to demonstrate the value of the UK domestic business.

#The calculation of the operating margin for the UK domestic business excludes net interest income of £2 670 000 (2022: net interest expense of £755 000) relating

to net interest income earned on the firm's cash deposits and the IFRS 16 Leases interest expense on right-of-use assets. This presentation is consistent with wealth

managers that are not part of a banking group and are therefore not required to report in accordance with the presentation and disclosure standards for banks.

Excluding this adjustment, the operating margin for the UK domestic business would be 26.4% (2022: 26.8%).

^The average income yield on funds under management represents the total operating income for the period as a percentage of the average of opening and closing

funds under management. This calculation does not adjust for the impact of market movements and investment performance throughout the period on funds under

management or the timing of acquisitions and disposals (where applicable) during the respective periods.

Strategy execution

Highlights: Sustainability

•Continued industry engagement and participation, including

attendance at the Annual Principles for Responsible

Investment (PRI) Conference

•Our Climate Change in the Arctic event, with a keynote

speech from HSH Prince Albert II of Monaco, directly

engaged clients in conversation around sustainability and

impact

•We published our most comprehensive disclosure

of Stewardship activity to date, including a summary

of our engagement and policy work

•We continued our focus on developing sustainability

expertise throughout the year, with 60 colleagues (including

executive committee and board members) completing

Sustainable Finance courses with the University of

Cambridge Institute for Sustainability Leadership (CISL), and

10 colleagues achieving the CFA Certificate in ESG Investing.

Highlights: Belonging, Inclusion and Diversity (BID)

•We became members of the Business Disability Forum –

the leading business membership organisation in disability

inclusion

•For the fifth consecutive year we are participating in the 30%

Club mentoring scheme, a cross company, cross industry

programme for women

•We continue to actively engage with colleagues and clients

on topics including neurodiversity, International Women’s Day

and racial inequality

•We continue to publish both our gender and ethnicity pay gap

data. As at 5 April 2022 our mean gender pay gap stood at

43.4% and our mean ethnicity pay gap stood at 23.9%. We

remain committed to reducing our gender and ethnicity pay

gaps, and we are working hard to increase senior female and

Black, Asian and Minority Ethnic representation throughout

the organisation

•We exceeded our Women In Finance target, with over 30%

representation of women on the Wealth Leadership Forum.



02	Financial review	Divisional review	Investec Bank plc Annual Financial Statements 2023

WEALTH & INVESTMENT CONTINUED

Strategic execution

•Referrals between Specialist Banking and W&I (UK and

IBSAG) resulted in £477 million FUM (FY2022: £473 million)

and £60 million (FY2022: £105 million) of new lending,

reflecting our continued strategy to provide integrated

solutions to clients through access to Group-wide products

and services

•During the second half of the year we developed a more

targeted approach to offering our Managed Portfolio Service

(MPS) to Independent Financial Advisers (IFAs). We are

seeing encouraging early results from this activity, with net

inflows of £92mn into our MPS since 1 January 2023. Whilst

the FUM associated with MPS is lower yielding than our core

Discretionary Fund Management (DFM) service, the nature of

the MPS means it is highly scalable and creates opportunities

to build relationships with IFAs who may also require our

higher yielding bespoke DFM service for their clients

•Following the formation of our new Investment & Research

Office in FY2022, we continue to improve the consistency

and quality of our investment offering, including updating our

Strategic Asset Allocation to broaden our exposure to global

market opportunities and differentiated asset classes

•We successfully completed the acquisition of Edinburgh-

based wealth management firm – Murray Asset Management

(MAM). The acquisition strengthens our presence in the

strategically important Scottish market

•We entered into a definitive agreement regarding an all-share

combination of Investec Wealth & Investment Limited and

Rathbones – Please see further details below.

Growth opportunities and outlook

•Iain Hooley has been appointed as the IW&I Chief Executive

Officer (subject to regulatory approval) effective 16 February

2023. Barbara-Ann King stepped down from the Board of

Investec Wealth & Investment Limited and from her role as

Chief Executive Officer and will be on garden leave until her

departure from the Group on 13 August 2023

•The long-term outlook for the UK wealth management

industry remains positive and attractive, despite current

macro-economic headwinds

•Our commitment to continued investment in technology to

improve efficiency remains key and will be realised through

the Rathbones combination given Rathbones is already using

the platform we have selected as our platform of choice to

scale the business.



	Growth opportunities and outlook: Rathbones and Investec Wealth & Investment UK all-share combination
	The Boards of Investec plc and Rathbones Group plc have entered into a definitive agreement regarding an all-share combination of Investec Wealth & Investment Limited and Rathbones. This will create the UK’s leading discretionary wealth manager (the ‘Enlarged Rathbones Group’), with ~£100 billion of funds under management and administration, delivering scale that will underpin future growth. The combination establishes a long-term strategic partnership between the Enlarged Rathbones Group and Investec, which will enhance the client proposition across banking and wealth management services for both Groups. This is core to Investec’s growth strategy, which is underpinned by our commitment to bring the best of Investec to every client interaction, and drives synergies between our business units and geographies. On completion, Investec will own 41.25% of the economic interest in the Enlarged Rathbones Group’s share capital, with Investec’s voting rights limited to 29.9%. This reaffirms our commitment to the attractive UK wealth management sector The Enlarged Rathbones Group will remain an independent listed business operating under the Rathbones brand, with Investec as a long-term, strategic shareholder. It is intended that the Enlarged Rathbones Group’s London office will be at 30 Gresham Street, which will further support the strategic partnership between our two organisations. The commercial and strategic benefits of the proposed combination include the following: •The combination of talent and offerings between Investec and Rathbones will create real client value and a real powerhouse in the industry. Rathbones and IW&I UK have complementary business models providing bespoke investment management and financial planning services to private clients, intermediaries and charities •Geographic coverage: The Enlarged Rathbones Group will have an expanded network of offices across 23 towns and cities in the UK and Channel Islands, making it attractive to the brightest and best talent in the industry. This will give us presence in strategically important locations like Newcastle and Cambridge and reinforces our presence in the North of England •Systems & Technology: The Enlarged Rathbones Group will also benefit from cooperation on select services with Investec. The combination allows the Enlarged Rathbones Group to leverage Rathbones’ investment in technology and operating model to deliver best-in-class client experience whilst improving operating efficiency across the larger combined business •The combination is expected to deliver significant value creation through the strong fit between the two operating models with target annual run rate cash synergies of at least £60 million driven by cost savings and higher net interest income. The combination is subject to regulatory and other approvals. Rathbones shareholder approval was obtained on 23 June 2023. Completion is expected to occur either late Q3 or early Q4 2023. The Investec W&I UK transaction perimeter includes Investec Group’s Wealth & Investment businesses in the UK and Channel Islands but excludes Investec Bank (Switzerland) AG (‘IBSAG’) and Investec Wealth & Investment International (Pty) Ltd (‘Investec W&I SA’). Both IBSAG and Investec W&I SA will remain wholly-owned subsidiaries of the Investec Group.



02	Financial review	Divisional review	Investec Bank plc Annual Financial Statements 2023

WEALTH & INVESTMENT CONTINUED



			Business head Ruth Leas

	Awards
	Won 'Bank of the Year' at the 2023 City A.M. Awards Won 'Lender of the Year' at the 2023 Real Deal Private Equity Awards Dominated the top rankings of the 2022 Institutional Investor's UK SMID Survey of Institutional investment professionals



Highlights

	Adjusted operating profit		Net core loans
£317.0mn (2022: £200.0mn)		£15.6bn (2022: £14.4bn)
£317.0mn (2022: £200.0mn)
	Cost to income		Credit loss ratio
59.5% (2022: 69.0%)		0.37% (2022: 0.17%)

Overview of performance in the period under review

•Strong performance, with adjusted operating profit up 58.5% against the prior year driven by strong revenue growth across our

lending franchises and increased trading income given heightened market volatility during the year

•Net core loans grew by 7.9% since 31 March 2022. This was driven by growth in residential mortgages, continued client

acquisition and strong demand for corporate credit across multiple portfolios. There was a marked slow-down in loan growth

during the second half of the year given heightened uncertainty in the UK and rising global interest rates at the beginning of

2H2023, however, the impact on lending activity has begun to abate

•Operating income was supported by book growth, continued client activity, and rising interest rates

•Operating costs increased by 12.4% year on year, driven by an increase in variable remuneration in line with improved business

performance, inflationary pressures and investment in people and technology. Fixed operating costs grew 8.4% and below the

UK inflation rate. Fixed operating costs have been well managed over the past four years, growing at a c.1% CAGR. Cost to

income ratio improved to 59.5% (2022: 69.0%)

•Pre-provision adjusted operating profit was up 70.3% to £383.8 million (2022: £225.4 million)

•ECL impairment charges totalled £66.7 million, resulting in a credit loss ratio of 0.37% (2022: 0.17%). The increase in ECL charges

was driven by an increase in modelled ECLs due to forward-looking macro-economic assumptions and Stage 3 ECL charges on

certain exposures. Post-model management overlay of £11.9 million raised since the onset of the COVID-19 pandemic was

released and is now reflected in-model. A remaining post-model management overlay of £4.9 million at 31 March 2023 is

considered appropriate to capture risks assessed to be inadequately reflected in the model

•These results are underpinned by positive momentum in our client franchises and strategic cross-collaboration within the One

Investec client ecosystem. See more on this enhanced collaboration in the pages that follow.

Income statement


£’000	31 March 2023	31 March 2022	Variance	% change
Net interest income	720 875	494 040	226 835	45.9%
Net fee and commission income	108 342	150 204	(41 862)	(27.9%)
Investment income	4 996	10 581	(5 585)	(52.8%)
Share of post-taxation profit of associates and joint venture holdings	660	1 988	(1 328)	(66.8%)
Trading income/(loss) arising from
– customer flow	86 114	59 178	26 936	45.5%
– balance sheet management and other trading activities	13 050	(998)	14 048	>100%
Other operating income	12 620	11 158	1 462	13.1%
Total operating income before expected credit loss impairment charges	946 657	726 150	220 507	30.4%
Expected credit loss impairment charges	(66 743)	(25 358)	(41 385)	>100%
Operating income	879 915	700 792	179 123	25.6%
Operating costs	(562 866)	(500 790)	(62 076)	12.4%
Adjusted operating profit	317 049	200 002	117 047	58.5%



02	Financial review	UK and Other	Investec Bank plc Annual Financial Statements 2023

SPECIALIST BANKING OVERVIEW



	Enhanced collaboration through integration		In FY2023
	A key strategic differentiator is our client ecosystem approach, taking our clients along both the personal and business journey. Our approach of 'One Investec' brings all of Investec that is relevant to each and every client. It is a coordinated approach with the client at the centre, supporting meaningful and long- lasting client relationships with Investec. We have integrated ourselves structurally by organising our business activities around target client groupings. This enables us to leverage Investec's full capability suite to provide solutions most relevant to clients' needs. In the UK corporate mid-market our breadth of capabilities differentiates us from competitors. In the Private Client market our high levels of service attract HNW individuals underserved by traditional retail and private banks.		Our focus on connectivity and collaboration continues to deliver strong results. •Continued momentum of intra-bank referrals, generating new business predominantly through lending, advisory, and client hedging solutions •Enhanced connectivity where Bank referred and created £477 million of incremental FUM for the UK and Swiss Wealth & Investment businesses (FY22: £473 million) •Unlocking significant client value: providing our clients with a holistic solution remains a priority as we target to increase the average number of products per core client.


Diversified loan book by risk category: Core loans
£15.6 billion


Corporate and other lending		49%
	Asset finance	15%
	Corporate and acquisition finance	14%
	Fund finance	9%
	Power and infrastructure finance	4%
	Other corporate and financial institutions and governments	3%
	Asset-based lending	2%
	Aviation finance	2%
Lending collateralised by property		15%
	Commercial real estate	10%
	Residential real estate	5%
High net worth and other private client lending		36%
	Mortgages	30%
	Other high net worth lending	6%

Highlights: Sustainability

•We remain active participants in the Net-Zero Banking

Alliance to align our lending and investment portfolios with

net-zero emissions by 2050

•We have strengthened our fossil fuel policy and set a target

to have zero coal exposure in our loan book by 31 March

2027. In addition, we have committed to not provide

financing to new oil and gas exploration, extraction and

production projects from 1 January 2035

•We have signed up to the Partnership for Biodiversity

Accounting Financials (PBAF) to help us assess and disclose

the impact of dependencies on biodiversity of our loans and

investment

•We have included high-level information according to the

Task Force on Nature-related Financial Disclosures (TNFD) in

our Task Force on Climate-related Financial Disclosures

(TCFD) report

•We are proud to have been selected as one of the top 100

most sustainable companies in the world by Corporate

Knights and one of Europe’s 2023 climate leaders by the

Financial Times.

Highlights: Belonging, Inclusion and Diversity (BID)

•We have a female CEO, CFO and COO, and currently have

50% females and 30% minority ethnic representation on the

Investec Bank plc Board. Our senior leadership has 37%

female representation and 37% minority ethnic

representation. Of total hires in the period 40% were female

and 38% were minority ethnic

•We continue to publish both our gender and ethnicity pay

gap data. As of 5 April 2022 our mean gender pay gap was

25.6% and our mean ethnicity pay gap was 15.1%

•We are actively engaged with colleagues and clients and

held several events on topics including neurodiversity,

International Women’s Day and racial inequality

•We became members of the Business Disability Forum –

business membership organisation in disability inclusion

•Our recently launched Peppy Health app, supporting with

fertility, pregnancy and menopause has been extended to

include support for Men’s and Women’s health

•We continue to offer programmes to develop our

organisational capabilities in relation to BID including; 30%

Club cross company mentoring programme for women,

Reciprocal mentoring, Allies programme, and Zebra Crossing,

our flagship two-day diversity and inclusion programme

aimed at minimising unconscious bias and raising awareness

of multicultural differences at personal, interpersonal and

institutional levels.



02	Financial review	UK and Other	Investec Bank plc Annual Financial Statements 2023

SPECIALIST BANKING OVERVIEW CONTINUED

Our Private Banking activities focus on providing bespoke solutions underpinned by in-depth knowledge and understanding of our

clients’ personal and business aspirations and goals, supported by a broad private banking offering. We understand that every

client is an individual, and that they are typically active wealth creators with complex financial needs. Our proposition is aligned with

a clearly defined target client base and a market opportunity to address an underserviced part of the UK market. This segment

comprises lending (primarily residential mortgages), risk management solutions and transactional banking to HNW clients, as well

as flexible capital solutions for established privately owned businesses and entrepreneurs (Private Capital).

Performance in the period under review

•Adjusted operating profit of £70.2 million (2022: £30.8 million) reflects ongoing strategic execution in growing the business to

scale by leveraging existing infrastructure

•Net interest income increased 82.4% compared to the prior year, driven by a higher average loan book growth of 26.7% since

31 March 2022 and rising interest rates. The mortgage growth of 15.9% annualised in 1H2023 was followed by muted growth in

2H2023 given the sharp interest rates increases post the UK political instability around the mini budget at the end of

September 2022.



	Loans and advances to customers
	£’billion



	Loan book growth:
	•Loan book growth continued for both HNW banking and Private Capital, up 14.1% and 38.5%, respectively, since 31 March 2022 – driven by focused execution of strategy and continued client acquisition •In contrast to 2021, when demand for residential mortgages accelerated ahead of the deadline for the COVID-19 related Stamp Duty relief, we experienced lower mortgage activity levels in 2H2023 given the rising and volatile interest rate environment in the UK •The book growth was achieved with no changes to credit underwriting standards notwithstanding the increasingly competitive market.
	Note: In addition to the loan book shown above, our Channel Islands business had c.£520mn (2022: £500mn) of mortgages as at 31 March 2023.



	UK HNW client acquisition




	Continued success in client acquisition:
	•We acquired 960 new clients over the period – a number of which were introduced via referrals by existing Investec clients •Aligned to our One Investec approach, this offering serves as a valuable client acquisition tool for the wider UK Bank and Wealth & Investment businesses: our clients have an average income of £700 000+ and average NAV of £11 million (well above our quantitative criteria) •HNW mortgage lending is focused on target clients in established areas (London and the South East) with recourse to the individual and high level of cash equity contributions into transactions.
	Note: In addition to these client figures, our Channel Islands business has 1 062 HNW clients (2022: 870). This brings our total number of HNW clients to 7 747 (2022: 6 982).

Strategy execution

•The results reflect our continued success in executing our

HNW client acquisition strategy. This HNW client activity also

connects to the rest of the client ecosystem, where our

client-centric, One Investec approach enables us to win

mandates in other areas

•We continue to collaborate with our Wealth & Investment

business to provide an integrated HNW proposition.

In addition, the ability to provide our UK private banking

offering to South African clients seeking an international

proposition continues to be a key differentiator for the Group

•Our growing Private Capital offering addresses a gap in the

UK market, providing capital directly to owner-managed

businesses and their owners. These HNW clients value our

innovative, flexible approach to understanding both their

business and personal assets.



02	Financial review	UK and Other	Investec Bank plc Annual Financial Statements 2023

PRIVATE BANKING

Income statement analysis and key income drivers


£’000	31 March 2023	31 March 2022	Variance	% change
Net interest income	128 945	70 692	58 253	82.4%
Net fee and commission income	1 946	1 556	390	25.1%
Investment income/(loss)	141	816	(675)	(82.7%)
Trading income arising from
– customer flow	4 449	2 228	2 221	99.7%
– balance sheet management and other trading activities	13	2	11	>100%
Total operating income before expected credit loss impairment charges	135 494	75 294	60 200	80.0%
Expected credit loss impairment charges	(6 344)	(2 432)	(3 912)	>100%
Operating income	129 150	72 862	56 288	77.3%
Operating costs	(58 996)	(42 034)	(16 962)	40.4%
Adjusted operating profit	70 154	30 828	39 326	>100.0%
Key income drivers
Cost to income ratio	43.5%	55.8%
Growth in loans and advances to customers	15.4%	35.1%

Other factors driving the performance in the period under review included

•Adjusted operating profit of £70.2 million (2022: £30.8 million) reflects ongoing strategic execution in growing the business to

scale by leveraging existing infrastructure and continued client acquisition

•Growth in net interest income was driven by a higher average loan book and the positive effect of rising interest rates

•ECL impairment charges for the period increased to £6.3 million (2022: £2.4 million) largely driven by Stage 3 ECL charges on

certain exposures as well as overall book growth and seasoning of the loan book. The credit loss ratio on the private client

mortgage book remains low at c.4bps, indicative of the strong credit performance of the book. Refer to page 107 for further

information on the Group's asset quality

•Operating costs increased by £17.0 million or 40.4%, reflecting increased variable remuneration in line with business

performance, post-pandemic normalisation of discretionary expenditure and inflationary pressures.

Growth opportunities and outlook

•Notwithstanding the uncertain macro-economic backdrop that prevailed during the year, and with growth in the mortgage book

being higher in 1H2023 vs 2H2023, we have continued to grow our lending book, increase our client base, and capitalise on the

existing market opportunity. We continue to see demand for our efficient, refreshingly human private client offering. Our

increased profitability is testament to the clear market opportunity and the strength of our proposition to capture it

•Our One Investec approach ensures that we provide an integrated banking and wealth management offering to our clients.

Private Banking client base continues to generate wealth opportunities and FUM for our Wealth & Investment businesses.

However, over 80% of our HNW banking clients do not currently have a relationship with our Wealth & Investment businesses,

with significant levels of investible wealth currently sitting with other financial institutions, thus we remain focused on capitalising

on this this opportunity. We continue to enhance collaboration to provide a holistic proposition for our HNW clients’ growth

journeys

•The proposed all-share combination of with Rathbones will enhance the client proposition across banking and wealth

management services for both Investec Group and the Enlarged Rathbones Group

•Having established a strong presence in the market over the last five years, our Private Capital business is in growth mode,

focused on increasing lending at pace through deepening existing relationships and further client acquisition

•We are focused on maintaining business momentum and generating a stable annuity income stream for the Group, while

investing with discipline in the required technology to support our growth to scale.



02	Financial review	UK and Other	Investec Bank plc Annual Financial Statements 2023

PRIVATE BANKING CONTINUED

This segment comprises business activities that provide lending, advisory and risk management services to growth-orientated

corporate clients in the private companies, private equity and listed companies arenas, including specialist sector-focused

expertise. This segment also includes our central treasury and liability management channels.

Performance in the period under review

•The results reflect a solid performance, with an adjusted

operating profit of £246.9 million or 45.9% ahead of

£169.2 million reported in 2022. The continued improvement

in performance is in part attributable to the strategic

changes we have implemented over the past 24 months

•Net interest income increased by £168.6 million (39.8%) to

£591.9 million, driven by higher average loan book and rising

interest rates

•Impairment charges increased to £60.4 million

(2022: £22.9 million) driven by an increase in modelled ECLs

due to forward-looking macro-economic assumptions and

the Stage 3 ECL charges, offset by a release in the

management overlay held.

Loans and advances to customers

£’billion

Loan book growth

•The loan book grew by 4.6% since 31 March 2022 to

£10.3 billion

•Lending activity increased across portfolios, supported by

new client acquisition as we continue to build scale and

relevance in our client franchises, as well as repeat business

with existing clients

•We continue to utilise our origination and distribution capability

to manage diversity and concentration of our lending portfolios

and generate additional ROE-accretive revenue for the Group.



	Spotlight on our Private Equity Fund Solutions offering
	•Our Fund Solutions business creates holistic and bespoke solutions for Funds and General Partner (GP) Financing covering each stage of the fund lifecycle •We partner and grow with a range of institutional investors building strong relationships in the market. This allows us to be relevant to various funds and to provide funds with the support and flexibility to seize opportunities, deliver returns and generate value •Our Fund Solutions business is helping us achieve our key strategic objective of growing external sources of capital and capital light revenues. Many of our Fund Solutions clients are also clients of other areas of the Bank •Through the business, we also give investors access to the private funds management industry, where we leverage our market-leading position and experience to simultaneously meet investor and borrower needs •Structured solutions that provide mutual benefits are the hallmark of our capability. During the financial year, the team partnered with pension and insurance investors to provide more than £7 billion of financial facilities to fund managers, of which over £5.5 billion was provided by our institutional partners •Looking forward, the Fund Solutions business remains focused on unlocking further growth and putting our clients' funding needs at the centre of everything we do.
	Fund Solutions gross origination and distribution

Awards won in the past year

Winner

Research analyst rank

across eight sectors

Winner

Best Fund Financing

Solution

(Private Equity Wire European

Awards 2022)

(2022 Institutional Investor's UK

Small & Mid-Cap survey)

Best Service from an

Asset Based Finance

Provider

(Business Moneyfacts Winner

2023)

Best Service from an

Invoice Finance Provider

(Business Moneyfacts Winner

2023)



02	Financial review	UK and Other	Investec Bank plc Annual Financial Statements 2023

CORPORATE, INVESTMENT BANKING AND OTHER

Income statement analysis and key income drivers


£’000	31 March 2023	31 March 2022	Variance	% change
Net interest income	591 930	423 348	168 582	39.8%
Net fee and commission income	106 396	148 647	(42 251)	(28.4%)
Investment income	4 855	9 765	(4 910)	(50.3%)
Share of post-taxation profit of associates and joint venture holdings	660	1 988	(1 328)	(66.8%)
Trading income/(loss) arising from
– customer flow	81 665	56 950	24 715	43.4%
– balance sheet management and other trading activities	13 037	(1 000)	14 037	>100%
Other operating income	12 620	11 158	1 462	13.1%
Total operating income before expected credit loss impairment charges	811 163	650 856	160 307	24.6%
Expected credit loss impairment charges	(60 398)	(22 926)	(37 472)	>100%
Operating income	750 765	627 930	122 835	19.6%
Operating costs	(503 870)	(458 756)	(45 114)	9.8%
Adjusted operating profit	246 895	169 174	77 721	45.9%
Key income drivers
Cost to income ratio	63.2%	70.5%
Growth in loans and advances to customers	4.6%	10.4%

*Prior year ROE and growth in risk weighted assets have been restated due to a reallocation of risk weighted assets

Other factors driving the performance in the period under review included

•The £168.6 million increase in net interest income was primarily driven by higher average loan books across a number of

portfolios, and the impact of rising interest rates

•Net fee and commission income decreased by £42.3 million to £106.4 million. Higher advisory fees from Growth and Leveraged

Finance and Fund Solutions was off-set by lower fees from equity capital markets

•Investment income of £4.9 million was driven by realised gains on disposal of investments and dividend income and unrealised

losses on investments

•Trading income from customer flow increased 43.4% over the prior period reflecting strong client activity levels in our interest

rate and currency desks given market volatility. This was off-set by subdued activity in the listed companies client group

•Trading income from balance sheet management and other trading activities increased to £13.0 million from (£1.0 million) in the

prior year reflecting the positive positioning in balance sheet management activities

•Other operating income of £12.6 million (2022: £11.2 million) primarily reflects the fair value movements of the Ninety One shares

held in the Group’s staff share scheme as a result of the demerger and separate listing of Ninety One

•Expected credit loss impairment charges increased to £60.4 million, primarily due to a deterioration of forward-looking macro-

economic assumptions and updated scenario weightings. Post-model management overlay of £11.9 million raised since the onset

of the COVID-19 pandemic was released and is now reflected in-model. A management overlay of £4.9 million was retained to

account for risks judged as not reflected in-model. Refer to page 236 for information on the Group’s asset quality and page 250

for further information on the macro-economic scenarios applied

•Operating costs increased by 9.8% to £503.9 million, driven by an increase in variable remuneration in line with business

performance, post pandemic normalisation of discretionary expenditure, and investment into people and technology.



02	Financial review	UK and Other	Investec Bank plc Annual Financial Statements 2023

CORPORATE, INVESTMENT BANKING AND OTHER CONTINUED

Strategy execution

•The business is delivering on its growth phase in the journey

to enhance shareholder returns. Our success to date in

building scale and relevance in the mid-market is reflected

in broad-based loan book growth and continued client

acquisition

•Our One Investec approach – underpinned by connected

client ecosystems – has continued to facilitate increased

collaboration, supporting our ability to provide clients with

a holistic solution and generate additional opportunities

•The strength of our client franchises has been independently

recognised through the numerous awards we have won

•We continue to generate diversified, capital light earnings

by utilising external capital to facilitate our highly successful

origination and distribution capability. In addition to

accelerated growth in our existing fundraising capabilities for

Fund Solutions and Power and Infrastructure Finance, similar

strategies for Growth and Leverage Finance and Real Estate

lending have positioned us well to further diversify this

income stream

•We continue to proactively pursue growth in our Mergers and

Acquisitions (M&A) Advisory business both locally within the

UK and internationally, by leveraging our own international

networks and partnerships. In June 2023, we acquired a

majority interest in Capitalmind, increasing our shareholding

from 30% to approximately 60% and becoming a leading

provider of M&A advice in Europe. This is transformative for

Investec’s capital light strategy in Europe, bringing

Capitalmind’s M&A business into the Investec umbrella, and

providing Investec with a majority owned footprint across

several major economies in Western Europe. Our European

M&A Advisory offering is also highly complementary to our

European lending activities, in particular Fund Solutions and

Growth & Leveraged Finance, as these are all focused on the

private equity community. The acquisition enhances the

opportunity to leverage a broader array of products into

Capitalmind’s clients in Continental Europe and, by having an

integrated M&A Advisory presence in Europe, we are able to

demonstrate relevance to clients located in other

geographies (in particular South Africa and India)

•We remain focused on digitalisation and innovation to deliver

scale, efficiency and longer-term growth through investing

in technology and strategic alliances. Our selection of

Microsoft as our key cloud provider has offered a multitude

of benefits. The vast portfolio of services has enabled us

to expedite our cloud strategy, including the exploration of

cutting edge technologies like generative AI and quantum

computing. We have coupled this with investment in our

people to upskill and engage with hypothesis led

experimentation to identify where our technology offerings

are our differentiator. Our Out of the Ordinary people and

deep relationships is Investec’s key differentiator

•Investec India strategy is consistent with Group strategy to

increase contribution from capital light revenues. The India

equities business writes research on 250 listed Indian

companies, the M&A business has significant market

presence in our target sectors,the private credit business has

arranged in excess of $5bn of debt for Indian counterparts

and has successfully closed its first private credit third party

capital fund for $135 million.

Growth opportunities and outlook

•We are cautiously optimistic looking ahead as the UK

economic position and growth evolves following increased

inflation, higher cost of living and energy prices. We are well-

capitalised, lowly leveraged, and continue to maintain strong

liquidity buffers and ratios. We are well placed to manage

further volatility should it arise and to take advantage of

opportunities as they present themselves

•Our One Investec client ecosystem approach remains one

of our key strategic differentiators and will continue to drive

success in leveraging the whole of Investec's capability to

provide solutions for clients. The announced combination

of our UK W&I business and Rathbones is expected to drive

further collaboration opportunity between the UK Bank and

the enlarged Rathbones Group. The cooperation agreement

will govern the long-term, strategic partnership and is

expected to unlock significant value in the medium to long

term

•Aligned to our organisational purpose of 'living in, not off,

society', our Belonging, Inclusion and Diversity (BID) focus

is on inclusive leadership and creating an environment where

a sense of belonging permeates

•With respect to sustainability, we are focused on embedding

an ESG mindset that is fully integrated in our support for

clients. We will continue to grow our sustainability offering

to support our clients with renewable energy financing and

innovative debt structuring

•We continue to enhance our offering to UK private

companies to allow us to continue growing our client base

and market share, and provide greater depth of support to

clients. This has included further automation and

digitalisation of our asset finance and FX propositions which

will support growth going forward. This is in addition to the

good progress we are seeing from the One Investec

approach to delivering multiple solutions to more clients

•In our Private Equity Client Group, we continue to see

positive growth prospects and strong position in the mid-

market. We anticipate our clients will look to be opportunistic

in a period of economic pressure and valuation weakness

•We expect our M&A Advisory business to benefit from

maturing and new sector teams, the growing Private Equity

Coverage and Origination function and our international

partnerships in Continental Europe (with Capitalmind) and the

USA (with BlackArch), which continue to facilitate an

expansion of our cross-border M&A advisory services

•Against a difficult market backdrop and historically low levels

of equity capital markets activity persisting market-wide,

public M&A continues to be a key contributor to performance

for our Listed Client Group and we remain committed to

investing to deepen and broaden our offering and

capabilities. We anticipate growth companies to return

to equity as an attractive source of funding and the strength

of our top-ranked platform will allow us to capitalise on the

opportunity when equity capital markets recover

•We intend to raise additional external capital through funds

and syndications to support a wider client offering and we

are excited about our effort to generate further capital light

revenue for the Group

•Within the Indian market, we see an opportunity to increase

our market share, underpinned by the strength of our

partnership with the State Bank of India.



02	Financial review	UK and Other	Investec Bank plc Annual Financial Statements 2023

CORPORATE, INVESTMENT BANKING AND OTHER CONTINUED

Risk

management

and

governance



03	Risk management and governance	Investec Bank plc Annual Financial Statements 2023

IN THIS SECTION


40	Risk management

40	Risk management approach and framework

41	Year in review from a risk perspective

43	Principal risks

60	Corporate Governance

60	Chair’s introduction

62	Director Biographies

66	Compliance with the UK Corporate governance code

67	Board and executive roles

68	Board activities

70	IBP Nomination Committee report

74	IBP Audit Committee report

80	IBP Board Risk and Capital report

86	Directors’ report



03	Risk management and governance	Investec Bank plc Annual Financial Statements 2023

Information provided in this section of the annual report is

prepared on an Investec Bank plc (IBP) consolidated basis

unless otherwise stated.

Philosophy and approach to risk

management

The Bank's comprehensive risk management process involves

identifying, quantifying, managing, monitoring, mitigating and

reporting the risks associated with each of the businesses to

ensure the risks remain within the stated risk appetite.

The Board ensures that there are appropriate resources to

manage the risks arising from running our businesses.

The IBP BRCC (comprising both Executive and Non-Executive

Directors) is the Board mandated committee to monitor and

oversee risk. IBP BRCC meets at least six times per annum and

recommends the overall risk appetite to the Board for approval.

We monitor and control risk exposure through independent

credit, market, liquidity, operational, legal, internal audit, capital

and compliance teams. This approach is core to assuming a

tolerable risk and reward profile, helping us to pursue controlled

growth across our business.

Risk management operates within an integrated geographical

and divisional structure, in line with our management approach,

ensuring that the appropriate processes are used to address all

risks across the Bank. There are specialist divisions in the UK

and smaller risk divisions in other regions tasked with promoting

sound risk management practices.

Risk management units are locally responsive yet globally

aware. This helps to ensure that all initiatives and businesses

operate within our defined risk parameters and objectives. We

continually seek new ways to enhance risk management

techniques.

We believe that the risk management systems and processes

we have in place are adequate to support the Bank’s strategy

and allow the Bank to operate within its risk appetite tolerance.

Risk management objectives are to:

•Ensure adherence to our risk management culture

•Support the long-term sustainability of the Bank by providing

an established, independent framework for identifying,

evaluating, monitoring and mitigating risk with good customer

outcomes

•Set, approve and monitor adherence to underlying risk

parameters and limits across the Bank and ensure they

are implemented and adhered to consistently within the

Board-approved risk appetite

•Aggregate and monitor our exposure across risk classes

•Coordinate risk management activities across the

organisation, covering all legal entities and jurisdictions

•Give the IBP Board reasonable assurance that the risks we

are exposed to are identified and appropriately managed and

controlled

•Resource risk teams suitably and with appropriate expertise

and facilitate operating independence

•Run appropriate risk committees, as mandated by the

relevant Boards

•Maintain compliance in relation to regulatory requirements.

Risk management framework, committees

and forums

A number of committees and forums identify and manage risk

at a Bank level, as shown in the diagram below. These

committees and forums operate together with risk management

and are mandated by the IBP Board. Investec Wealth &

Investment Limited, a Financial Conduct Authority (FCA)

regulated subsidiary of the Bank, maintains an independent

governance structure, comprising an independent Board,

Audit Committee, Nomination Committee, Remuneration

Committee and Risk Committee. The membership of the

Investec Wealth & Investment Board includes both executive

and non-executive directors. The Investec Wealth & Investment

Board and the Investec Wealth & Investment Board committees

report to the DLC Board and the DLC Board committees. Any

matters relevant to IBP are communicated to the Bank, in part,

through having one or more directors of Investec Group

as members of the Board committees of the Bank.

IBP Board of Directors

IBP

Nomination

Committee

IBP

Remuneration

Committee

IBP Audit

Committee

IBP Board

Risk and

Capital

Committee

(IBP BRCC)

IBP Reward

Committee

IBP Risk and

Controls

Forum

IBP Executive

Risk

Committee

(IBP ERC)

IBP Credit

Committees

IBP Capital

Committee

IBP Executive

Investment

Committee

IBP

Review

Executive Risk

Review Forum

(IBP Review

ERRF)

IBP

Models Forum

IBP

Product

Governance

Forum

IBP

Market Risk

Forum

IBP

Asset and

Liability

Committee

IBP

Policies

Review

Committee

IBP

Impairment

Decision

Committee

IBP

New Product

and Initiative

Forum



03	Risk management and governance	Investec Bank plc Annual Financial Statements 2023

RISK MANAGEMENT APPROACH AND FRAMEWORK

A summary of the year in review

from a risk perspective

The executive management is integrally

involved in ensuring stringent

management of risk, liquidity, capital and

conduct through our risk appetite

framework, embedding a culture of risk

consciousness in all staff. The risk

appetite framework is set taking into

consideration prevailing market

conditions and the Bank’s strategy. The

primary aim is to achieve a suitable

balance between risk and reward in our

businesses.

Against a backdrop of extreme volatility,

rising inflation and interest rates and

falling GDP growth, we have continued to

grow our business in a risk conscious

manner. The Bank remains well

capitalised, maintains high levels of

liquidity, runs modest levels of market risk

and favours lending to clients with

predictable income streams that provide

sound collateral.

Liquidity is and has remained a key focus

against the backdrop of a mini banking

crisis which led to the failure of a number

of US regional banks as well as a

significant G-SIB. The US failures were

driven by a mismatch in interest rates and

duration of assets and liabilities, both of

which are closely monitored against the

Bank’s conservative risk appetite.

Loans and advances to customers as

a percentage of customer deposits

remained conservative at 80.9%. The

Bank has a substantial portion of eligible

deposits that are covered by Financial

Services Compensation Scheme (FSCS)

protection. We are confident that we are

well funded should further disruption

occur in funding markets given our

diversified deposit base and bias towards

term rather than overnight funding.

We have limited reliance on wholesale

markets and took advantage of

opportunities to lengthen the duration

of this funding at favourable terms.

As a result we have no requirement to

issue in the wholesale markets in the

financial year to end March 2024.

Cash and near cash balances at

31 March 2023 amounted to £8.6 billion.

We maintain a high level of readily

available, high-quality liquid assets

(HQLA) – targeting a minimum cash to

customer deposit ratio of 25%. Current

cash and near cash is equivalent to

44.4% of customer deposits. HQLA is

primarily cash at central bank (BoE), and

short-dated government bonds. Given

the short-dated nature, the majority of

the HQLA securities portfolio is held at

FVOCI. At 31 March 2023, on an IBP solo

basis, the Liquidity Coverage ratio (LCR)

was 432% and Net Stable Funding ratio

(NSFR) was 138%, both metrics well

ahead of current minimum regulatory

requirements.

In December 2022 the Board approved

a structural hedging programme in the

UK to reduce sensitivity of earnings to

interest rate movements. No material

earnings impact has occurred for this

reporting period given the short duration

of time since initiating the hedge.

The Bank’s focus remains on maintaining

a strong liquidity position in light of

overall market volatility. Funding

continues to be actively raised, across

a diverse funding base, supported by

stable credit ratings.

IBP’s long-term Moody’s deposit rating is

A1 (stable outlook). IBP’s long-term Fitch

rating is BBB+ (stable outlook).

Activity levels remained high amongst

clients during the financial year despite a

complex macro-economic backdrop and

a rising interest rate environment

globally. Increased client activity and new

client acquisition resulted in an increase

in the Bank's net core loan book by 7.9%

to £15.6 billion. Growth was driven by the

private client residential mortgage

portfolio as well as corporate client

lending portfolios across multiple asset

classes.

Credit exposures are focused on secured

lending to a select target market,

comprising high-income and high net

worth individuals, established corporates,

and medium-sized enterprises. Our risk

appetite continued to favour lower risk,

income-based lending, with exposures

well collateralised and with credit risk

taken over a short to medium term. We

remain focused on our target market,

supporting clients with significant wealth

and experience in their chosen sectors,

as indicated by our continued growth in

the private banking space as we execute

on our strategy to target this sector of

the market. Over the past few years we

have realigned and rebalanced our

portfolios in line with our risk appetite

framework and this is reflected in the

movements in asset classes on our

balance sheet; showing an increase in

private client, mortgages and corporate

and other lending, and maintaining

lending collateralised by property as a

proportion of net core loans.

The Bank’s net core loan exposures

remain well diversified with commercial

rent producing property loans comprising

approximately 7.8% of net core loans,

other lending collateralised by property

7.2%, high net worth and other private

client lending 36.0% and corporate and

other lending 49.0% (with most industry

concentrations well below 5%).

We remain confident that we have a well-

diversified portfolio across sectors.

The credit loss ratio is trending towards

the top end of the ‘through-the-cycle’

range at 0.37% at 31 March 2023

(31 March 2022: 0.17%) driven by

increased Stage 3 ECL charges, as well

as an increase in modelled ECLs due

to forward-looking macro-economic

assumptions offset by a release in the

management overlay held.

Stage 3 exposures total £343 million or

2.3% of gross core loans subject to ECL

at 31 March 2023 (31 March 2022: 2.1%).

The underlying loan portfolios continue to

perform well with no evident signs of

deteriorating trends in specific sectors.

Stage 2 exposures total £1 321 million or

8.7% as a proportion of gross core loans

subject to ECL at 31 March 2023

(31 March 2022: 7.1%) and remain

elevated relative to pre-pandemic levels

reflecting the forward-looking macro-

economic environment.

The measurement of ECL under IFRS 9

has increased complexity and reliance on

expert credit judgements. Key

judgemental areas under IFRS 9 are

highlighted in this document and are

subject to robust governance processes.

The Bank applies the IFRS 9 transitional

arrangements (including COVID-19 ECL

add-backs) to regulatory capital

calculations to absorb the impact

permissible of IFRS 9 over time.

The Bank has maintained a lower level

of post-model management overlay to

account for risks assessed as

inadequately reflected in the models.

A portion of post-model management

overlays raised since the onset of

COVID-19 for potential risk migration have

been released and now catered for in-

model. Stage 3 ECLs continue to be

assessed using a combination of scenario

analysis, informed by expert judgement

and modelled ECL. Management will

continue to review the need and basis

of calculation for the overlay given the

evolving situation and significant

uncertainty faced with respect to the

economic outlook.



03	Risk management and governance	Investec Bank plc Annual Financial Statements 2023

YEAR IN REVIEW FROM A RISK PERSPECTIVE

A remaining management overlay of

£4.9 million at 31 March 2023

(£16.8 million at 31 March 2022,

£8 million at 31 March 2019) is

considered appropriate in addition to

the Bank’s calculated model-driven ECL

to capture specific areas of model

uncertainty. The overlay is apportioned

to Stage 2 assets.


	Further detail on key judgements can be found on page 249.

We continue to progress in entrenching

sustainability across all aspects of our

business. Our commitment to human rights

and support for internationally recognised

principles, guidelines and voluntary ESG

standards is tightly integrated into our

credit decision-making process and

considers the important aspects of each

geography we operate in.

Market risk within our trading portfolio

remains modest with Value at Risk (VaR)

and stress testing scenarios remaining at

prudent levels. Trading revenues are

driven by client activity.

We continue to manage our investment

portfolio exposure in line with our

objective of optimising capital allocation,

reducing income volatility and aligning

the business with our client franchises.

The investment portfolio on the balance

sheet reduced by 6.5% over the year

under review to £312 million at

31 March 2023.

The Bank continued to maintain a sound

balance sheet with a low gearing ratio

of 10.1 times and a core loans to equity

ratio of 5.6 times at 31 March 2023.

The Bank’s leverage ratio was 9.8%

ahead of the minimum 6% target level.

We maintain a target CET1 ratio in excess

of 10% which is currently considered

appropriate for our business, given our

sound leverage ratios and significant

capital light revenues. The Bank is on the

standardised approach for capital. The

CET1 ratio was 12.7% at 31 March 2023

well in excess of regulatory minimums

and ahead of our capital target.

The Bank is in the early stages

of a process to migrate from the

Standardised approach to the Internal

Ratings Based (IRB) approach.

Non-financial risks that arise through the

group's operations remain highly topical

and continue to receive a significant

amount of management time, particularly

in light of the evolving technological

landscape.

The importance of operational resilience

to ensure minimal client disruption is

paramount. Across our banking and

Wealth & Investment businesses we take

a highly disciplined approach to recovery

and resolution planning and remain

focused on managing conduct,

reputational and operational risks.

Concentration risk related to big tech and

cloud platforms is increasing. Growing

reliance on technology service providers,

an industry-wide trend, heightens the

potential impact of third party disruption,

cyber threats, and data breaches.

We will continually aim to strengthen and

test our systems and controls to mitigate

cyber risk and fulfil our moral and

regulatory obligations to combat money

laundering, fraud and corruption.

On 4 April 2023, the Group announced an

all-share combination of the UK Wealth &

Investment business with Rathbones

Group plc. This transaction, subject to

certain approvals (some of which have

since been obtained), will create the UK’s

leading discretionary wealth manager and

establish a long-term strategic

partnership between the enlarged

Rathbones and Investec. Work is

underway with a dedicated transition

team to ensure that execution risk of the

transaction is minimised.

The Bank operates in a legal and

regulatory environment that exposes it to

litigation risks. As a result, the Bank is

involved in disputes and legal

proceedings which arise in the ordinary

course of business. The Bank evaluates

all facts, the probability of the outcome of

legal proceedings and advice from

internal and external legal counsel when

considering the accounting implications.

During the year, a number of stress

scenarios were considered and

incorporated into our processes including

assessing the potential impact of climate

change.

The Board, through its respective risk

and capital committees, continued to

assess the impact of its principal risks

and the Bank’s stress testing scenarios

(including ‘bottom-up and reverse stress

testing analyses) on its business. The

Board has concluded that the Bank has

robust systems and processes in place to

manage these risks and that, while under

a severe stress scenario business activity

would be very subdued, the Bank would

continue to maintain adequate liquidity

and capital balances to support the

continued operation of the Bank.

Fundamental risk performance during the

period has been solid and management

remains focused on maintaining the

sound underlying balance sheet,

notwithstanding the macro-economic

pressures we continue to face in our

areas of operation, including the

potentially higher-for-longer interest rate

environment. This is enabled by strong

ongoing management of the portfolios

and supported by a strong capital base

as well as high levels of liquidity and

diversified funding.



03	Risk management and governance	Investec Bank plc Annual Financial Statements 2023

YEAR IN REVIEW FROM A RISK PERSPECTIVE CONTINUED

An overview of the principal risks

relating to our operations

The most material and significant risks

we face, which the Board and senior

management believe could have an

impact on our operations, financial

performance, viability and prospects are

summarised below with further

information pertaining to the

management and monitoring of these

principal risks shown in the references

provided.

The Board, through its various sub-

committees, has performed a robust

assessment of these principal risks and

regular reporting of these risks is made to

the Board.

The Board recognises that, even with

sound appetite and judgement, extreme

events can happen which are completely

outside of the Board’s control. It is,

however, necessary to assess these

events and their impact and how they

may be mitigated by considering the risk

appetite framework. It is the Bank’s policy

to regularly carry out multiple stress

testing scenarios (including reverse

stress testing) which, in theory, test

extreme but plausible events and from

that, assess and plan what can be done

to mitigate the potential outcome.

The Bank’s stress testing framework is

well embedded in its operations and is

designed to identify and regularly test the

Bank’s key vulnerabilities under stress. A

fundamental part of the stress testing

process is a full and comprehensive

analysis of the Bank’s material business

activities, incorporating views from risk,

the business units and the executive – a

process called the ‘bottom-up’ analysis.

Resulting from the ‘bottom-up’ analysis,

the Investec-specific stress scenarios are

designed to specifically test the unique

attributes of the Bank’s portfolio. The key

is to understand the potential threats to

our sustainability and profitability and

thus a number of risk scenarios are

developed and assessed.

These Investec-specific stress scenarios

form an integral part of our capital

planning process and IFRS 9 reporting.

The stress testing process also informs

the risk appetite review process and the

management of risk appetite limits and is

a key risk management tool of the Bank.

Reverse stress tests are conducted to

stress the Bank’s business plan to failure

and consider a broad variety of extreme

and remote events. These processes

allow the Bank to proactively identify

underlying risks and manage them

accordingly.

The Bank has a strong and embedded

risk and capital management culture with

policies, processes and systems in place

to address these principal risks. Risk

awareness, governance, controls and

compliance are embedded in all our day-

to-day activities through a levels of

defence model.

The levels of defence model is applied as

follows:

•Level 1 – Business line management:

responsible for identifying and

managing risks inherent in the

products, activities, processes and

systems for which it is accountable

and escalating risk events where

necessary

•Level 2 – Independent risk and

compliance functions: responsible for

building and embedding risk

frameworks, challenging the business

lines’ inputs to, and outputs from, the

Group’s risk management, risk

measurement and reporting activities

•Level 3 – Independent internal audit:

responsible for reviewing and testing

the application and effectiveness of

risk management procedures and

practices.

Risk appetite

The Bank has a number of Board-

approved risk appetite statements and

policy documents covering our risk

appetite and approach to our principal

aspects of risk. The risk appetite

statement and framework set out the

Board’s mandated risk appetite. The risk

appetite statement ensures that limits/

targets are applied and monitored across

all key operating jurisdictions and legal

entities. The risk appetite framework acts

as a guide to determine the acceptable

risk profile of the Bank while keeping in

line with the Investec Group’s risk

appetite parameters.

The risk appetite framework is a function

of business strategy, budget and capital

processes, our stress testing reviews and

the regulatory and economic

environment in which the Bank is

operating. The risk appetite framework is

reviewed (in light of the above aspects)

and approved by the Board at least

annually or as business needs dictate.

A documented process exists where

our risk profile is measured against

our risk appetite and this positioning

is presented to the IBP Board Risk

and Capital Committee (IBP BRCC)

and Board as well as the DLC BRCC

and DLC Board. In the section that

follows, the Bank's high-level summary of

overall risk appetite and positioning has

been detailed against the respective

principal risks.



03	Risk management and governance	Investec Bank plc Annual Financial Statements 2023

PRINCIPAL RISKS

Connected client

ecosystems

Growth initiatives

Optimisation of

returns

Entrepreneurial

culture

Digitalisation

Strategic use

of data



Credit and counterparty risk		Credit and counterparty risk is defined as the risk arising from an obligor’s (typically a client or counterparty) failure to meet the terms of any agreement thereby resulting in a loss to the Bank, arising when funds are extended, committed, invested, or otherwise exposed through contractual agreements, whether reflected on- or off-balance sheet


Link to strategy and opportunities		Monitoring and mitigation activities •Independent credit committees exist which also have oversight of regions where we assume credit risk. These committees operate under Board-approved delegated limits, policies and procedures •There is a high level of executive involvement in decision-making with non-executive review and oversight •Our credit exposures are to a select target market comprising high-income and high net worth individuals, established corporates, small and medium-sized enterprises, financial institutions and sovereigns •Our risk appetite continues to favour lower risk, income-based lending, with exposures well collateralised and credit risk taken over a short to medium term •Investec has a limited appetite for unsecured debt, thus the credit risk mitigation technique most commonly used is the taking of collateral, with a strong preference for tangible assets •Portfolio reviews (including stress testing analyses) are undertaken on all material businesses, where the portfolios are analysed to assess any migration in portfolio quality, highlight any vulnerabilities, identify portfolio concentrations and make appropriate recommendations, such as a reduction in risk appetite limits or specific exposures.



Further information
	Read more on pages 232 to 248.


		Risk appetite and tolerance metric	Positioning at 31 March 2023 We currently remain within all tolerance levels given the current weakened economic environment. The credit loss ratio was calculated at 0.37% for 31 March 2023 (31 March 2022: 0.17%). Stage 3 net of ECL as a % of net core loans subject to ECL was 1.7% (excluding the Legacy portfolio*). Stage 3 net of ECL as a % of CET1 is 12.2%.
		We target a credit loss ratio of less than 0.5% (less than 1.5% under a weak economic environment/ stressed scenario). We target Stage 3 net of ECL as a % of net core loans subject to ECL to be less than 2% (excluding the Legacy portfolio*; less than 4% under a weak economic environment/stressed scenario). We target Stage 3 net of ECL as a % of CET1 less than 25%.

*Refer to definitions on page 277.



03	Risk management and governance	Investec Bank plc Annual Financial Statements 2023

PRINCIPAL RISKS CONTINUED

Connected client

ecosystems

Growth initiatives

Optimisation of

returns

Entrepreneurial

culture

Digitalisation

Strategic use

of data



Concentration risk		Concentration risk refers to the risk that could arise from a single client or counterparty, group of connected counterparties, or from a particular geography, asset class, supplier or industry. Concentration risk may occur when counterparties are mutually affected by similar economic, legal, regulatory or other factors which could hinder their ability to meet contractual obligations


Link to strategy and opportunities		Monitoring and mitigation activities •As a matter of course, concentration risk is well managed and exposures are well spread across geographies and industries •We target a diversified funding base, avoiding undue concentrations by investor type, maturity, market source, instrument and currency •Consideration is given to concentration risk when assessing outsourcing and third parties, both within the business and across the financial sector systemically •We target a diversified loan portfolio, lending to clients we know and understand. Credit and counterparty risk is always assessed with reference to the aggregate exposure to a single counterparty or group of related parties to manage concentration risk. In order to manage concentration, we will consider a sell-down of exposures to market participants •Concentration risk can also exist where loan maturities are clustered to single periods in time. Loan maturities are monitored on a portfolio and a transaction level.

More information
	Read more on page 232.

		Risk appetite and tolerance metric	Positioning as of 31 March 2023
		We limit our core loan exposure to a single/ connected individual or company to £120 million. We also have a number of risk tolerance limits and targets for specific asset classes. Third party and outsourcing concentrations are permitted in relation to regulated, systemically important entities, external auditors or specialist global network infrastructures. Where strategic decisions result in concentration risk in third parties outside of these classifications, these decisions are based on considered analysis where the benefits outweigh the risks and appropriate controls have been deployed for managing and monitoring the associated risks.	We maintained this risk tolerance level throughout the year.



Country risk		Country risk refers to the risk of lending to a counterparty operating in a particular country or the risk inherent in a sovereign exposure, i.e. the risk of exposure to loss caused by events in that country. Country risk covers all forms of lending or investment activity whether to/with individuals, corporates, banks or governments


Link to strategy and opportunities		Monitoring and mitigation activities •Exposures are only to politically stable jurisdictions that we understand and have preferably operated in before •The legal environment should be tested, have legal precedent in line with the Organisation for Economic Co-operation and Development (OECD) standards and have good corporate governance •In certain cases, we may make use of political risk insurance to mitigate exposure where deemed necessary.



Further information
	Read more on page 233.

		Risk appetite and tolerance metric	Positioning at 31 March 2023
		We have a preference for primary exposure in the Bank’s main operating geography (i.e. the UK). We will accept exposures where we have a branch or local banking subsidiary and tolerate exposures to other countries where we have developed a local understanding and capability or we are facilitating a transaction for a client.	We maintained this risk tolerance level in place throughout the year.



03	Risk management and governance	Investec Bank plc Annual Financial Statements 2023

PRINCIPAL RISKS CONTINUED

Connected client

ecosystems

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Climate, nature and biodiversity risk		The risk that our lending and investment activities give rise to unintended biodiversity and/or physical climate deterioration through not managing transition risk in alignment with the Paris goals

Link to strategy and opportunities		Monitoring and mitigation activities •We recognise the complexity and urgency of climate change. We are committed to supporting the transition to a clean and energy efficient world while preserving biodiversity and the wellbeing of our people and our planet •Investec’s climate change position statement and climate change framework stems from the belief that the greatest impact we can have is to partner with our clients to decarbonise their activities and to offer products and services that help accelerate a cleaner and healthier world •Our environmental policy considers the risks and opportunities that climate change, nature and biodiversity degradation present to the global economy •Accordingly, climate-related, nature-related and biodiversity risks are considered by the relevant credit committee or investment committee when making lending or investment decisions •There is also oversight by the Group ESG Executive Committee and the DLC Social and Ethics Committee on general sustainability issues, including climate-related, nature-related and biodiversity matters •The Group ESG Executive Committee coordinates climate-related and biodiversity risks and opportunities across geographies and businesses from both a strategy and policy perspective.


More information
	Read more on pages 233, 252 and 253 and page 107 to 122 of the Investec Group's 2023 integrated and strategic annual report, and the Investec Group’s 2023 sustainability report which is published and available on our website: www.investec.com

		Risk appetite and tolerance metric We take a cautious approach with respect to industries that are known to have negative consequences on climate change or that cause environmental and/or biodiversity damage. Financial risk from climate change, nature and biodiversity is a highly important topic which helps to inform decisions. We acknowledge that our approach will evolve as new regulations, recommendations and best practices regarding climate, nature and biodiversity (in specific the Task force for Nature Related Financial Disclosures (TNFD)) matures.	Positioning as of 31 March 2023 We maintained this risk tolerance level in place throughout the year.



Environmental, social and governance (ESG) risk		The risk that our lending and investment activities give rise to unintended environmental, social and economic consequences

Link to strategy and opportunities		Monitoring and mitigation activities •Investec has a holistic approach to sustainability, which runs beyond recognising our own footprint on the environment, includes our many community activities and is based on a broader responsibility to our environment and society •Accordingly, ESG risks are considered by the relevant credit committee or investment committee when making lending or investment decisions •There is also oversight by the Group ESG Executive Committee and the DLC Social and Ethics Committee on general ESG and sustainability matters •The Group ESG Executive Committee coordinates general sustainability and ESG risks and opportunities across geographies and businesses from both a strategy and policy perspective.


More information
	Read more on pages 233, 252 and 253, and page 107 to 122 of the Investec Group's 2023 integrated and strategic annual report, and the Investec Group’s 2023 sustainability report which is published and available on our website: www.investec.com

		Risk appetite and tolerance metric We take a cautious approach with respect to industries falling in our high-risk ESG categories and that may have negative environmental and/or social impacts. It is important to consider potential financial risk that could result from unmanaged ESG risks. We are continually monitoring best practice in this area and will continue to develop and enhance our approach over time.	Positioning as of 31 March 2023 We maintained this risk tolerance level in place throughout the year.



03	Risk management and governance	Investec Bank plc Annual Financial Statements 2023

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Investment risk		Investment risk arises where the Bank invests in largely unlisted companies and select property investments, with risk taken directly on the Bank’s balance sheet


Link to strategy and opportunities		Monitoring and mitigation activities •Independent credit and investment committees exist in the UK which provide oversight of regions where we assume investment risk •Risk appetite limits and targets are set to limit our exposure to equity and investment risk •As a matter of course, concentration risk is avoided and investments are well spread across geographies and industries.



Further information
	Read more on page 254.

		Risk appetite and tolerance metric	Positioning at 31 March 2023
		We have moderate appetite for investment risk, and set a risk tolerance of less than 27.5% of CET1 capital for our unlisted principal investment portfolio.	Our unlisted investment portfolio amounted to £310 million, representing 14.1% of CET1.



Market risk in the trading book		Traded market risk is the risk of potential value changes in the trading book as a result of changes in market factors such as interest rates, equity prices, commodity prices, exchange rates, credit spreads and the underlying volatilities where derivatives are traded. The trading book is defined as positions in financial instruments and commodities, including derivative products and other off-balance sheet instruments that are held within the trading businesses


Link to strategy and opportunities		Monitoring and mitigation activities •To identify, measure, monitor and manage market risk, we have independent market risk management teams •The focus of our trading activities is primarily on supporting our clients. Our strategic intent is that proprietary trading should be limited and that trading should be conducted largely to facilitate client flow •Within our trading activities, we act as principal with clients or the market. Market risk exists where we have taken on principal positions resulting from market making, underwriting and facilitation of client business in the foreign exchange, interest rate, equity, credit and commodity markets •Measurement techniques used to quantify market risk arising from our trading activities include sensitivity analysis, Value at Risk (VaR), stressed VaR (sVaR), expected shortfall (ES) and extreme value theory (EVT). Stress and scenario analyses are used to add insight to possible outcomes under severe market disruptions.



Further information
	Read more on pages 256 to 259.


		Risk appetite and tolerance metric	Positioning at 31 March 2023
		Market risk arises through our trading activities which are primarily focused on supporting client activity. Appetite for proprietary trading is limited. We set an overall tolerance level of a one-day 95% VaR of less than £3.5 million.	We met these internal limits; one-day 95% VaR was £0.4 million at 31 March 2023.



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Liquidity risk		Liquidity risk refers to the possibility that, despite being solvent, we have insufficient capacity to fund increases in assets or are unable to meet our payment obligations as they fall due, in normal and stressed conditions. This includes repaying depositors or maturing wholesale debt. This risk arises from mismatches in the timing of cash flows, and is inherent in all banking operations and can be impacted by a range of institution-specific and market- wide events


Link to strategy and opportunities		Monitoring and mitigation activities •Our banking entity in the UK is ring-fenced from the Investec Group's banking entity in South Africa and is required to meet the UK regulatory liquidity requirements •Each geographic entity must be self-sufficient from a funding and liquidity standpoint •Investec plc undertakes an annual Internal Liquidity Adequacy Assessment Process (ILAAP) which documents the approach to liquidity management across the firm, including IBP (solo basis). This document is reviewed and approved by IBP BRCC, DLC BRCC and by the IBP and DLC Boards •We maintain a liquidity buffer in the form of unencumbered cash, government or rated securities (typically eligible for repurchase with the central bank), and near cash well in excess of the regulatory requirements as protection against unexpected disruptions in cash flows •We maintain a contingency funding plan designed to protect depositors, creditors and shareholders and maintain market confidence during adverse liquidity conditions •The maintenance of sustainable prudent liquidity resources takes precedence over profitability •We target a diversified funding base, avoiding undue concentrations by investor type, maturity, market source, instrument and currency •Our core loans must be fully funded by stable funding •The Bank does not rely on committed funding lines for protection against unforeseen interruptions to cash flow •The balance sheet risk management team independently monitors key daily funding metrics and liquidity ratios to assess potential risks to the liquidity position, which further act as early warning indicators of potential normal market disruptions •Daily liquidity stress tests are carried out in order to help accurately measure the liquidity profile and ensure that in the absence of market or funding liquidity during periods of stress, we would continue to meet our obligations.



Further information
	Read more on pages 260 to 266.



		Risk appetite and tolerance metric	Positioning at 31 March 2023
		We carry a high level of liquidity in all our banking subsidiaries in order to be able to cope with shocks to the system, targeting a minimum cash and near cash to customer deposit ratio of 25%.	Total cash and near cash balances amounted to £8.6 billion at year end representing 44.4% of customer deposits.



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Interest rate risk in the banking book (IRRBB)		IRRBB arises from the impact of adverse movements in interest rates on both net interest earnings and economic value of equity. IRRBB is an inherent consequence of conducting banking activities, and arises from the provision of retail and wholesale (non- trading) banking products and services


Link to strategy and opportunities		Monitoring and mitigation activities •The daily management of IRRBB is centralised within the Treasury of each banking entity and is subject to local independent risk and local Asset and Liability Committee (ALCO) review •Together with the business, the treasurer develops strategies regarding changes in the volume, composition, pricing and interest rate characteristics of assets and liabilities to mitigate the interest rate risk and ensure a high degree of net interest margin stability over an interest rate cycle. These are presented, debated and challenged in the Liability Product and Pricing Forum and the ALCO •Each banking entity has its own Board-approved IRRBB policy and risk appetite, which is clearly defined in relation to both income risk and economic value risk •The policy dictates that long-term (>one year) IRRBB is materially eliminated. Where natural hedges between banking book items do not suffice to reduce the exposure within defined limits, interest rate swaps are used to transform fixed rate assets and liabilities into variable rate items •IRRBB is measured and analysed by utilising standard tools of traditional interest rate repricing mismatch and net present value (NPV) sensitivity to changes in interest rate risk factors.



Further information
	Read more on pages 264 to 265.


		Risk appetite and tolerance metric	Positioning at 31 March 2023
		A movement in rates can result in a negative impact on revenues across the banking industry. This risk is managed within the Bank's risk appetite framework as a proportion of capital and net interest income in order to limit volatility.	The Bank is within these tolerance metrics. The UK regulatory framework requires banks to assess their Pillar II requirements, including those related to IRRBB, as part of systems and processes included in their ICAAP.



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Capital risk		The risk that we do not have sufficient capital to meet regulatory requirements or that capital is inefficiently deployed across the Bank


Link to strategy and opportunities		Monitoring and mitigation activities •The Bank undertakes an approach to capital management that utilises both regulatory capital as appropriate to the jurisdiction in which it operates and internal capital, which is an internal risk-based assessment of capital requirements •A detailed assessment of the regulatory and internal capital position is undertaken on an annual basis and is documented in the Internal Capital Adequacy Assessment Process (ICAAP). The ICAAP is prepared at the consolidated Investec plc level and incorporates the Bank (solo-consolidation basis)*. The document is reviewed by the IBP, PLC and DLC Capital Committees before being recommended for approval to the IBP BRCC, DLC BRCC and the IBP and DLC Boards •The determination of target capital is driven by our risk profile, strategy and risk appetite, taking into account the regulatory and market factors applicable to the Group •At the most fundamental level, we seek to balance our capital consumption between prudent capitalisation in the context of the Group’s risk profile and optimisation of shareholder returns •Our internal capital framework is designed to manage and achieve this balance •The framework has been approved by the Board. The IBP Capital Committee (mandated by IBP BRCC) is responsible for the oversight and management of capital and leverage. •The leverage ratio is considered and monitored as part of the capital management framework.



Further information
	Read more on pages 270 to 273.


		Risk appetite and tolerance metric	Positioning at 31 March 2023
		We intend to maintain a sufficient level of capital to satisfy regulatory requirements and our internal target ratios. We target a Total Capital ratio range of between 14% and 17% on a consolidated basis and we target a minimum Tier 1 ratio of >11% and a CET1 ratio of >10%. We are a lowly leveraged firm and target a leverage ratio in excess of 6% tolerance.	The Bank met all these targets. Capital has grown over the period. The leverage ratio is 9.8%.

*IBP applies the provisions laid down in article 9 of the CRR (solo-consolidation waiver) and therefore includes Investec Investments (UK) Limited in the solo-

consolidation basis.



Reputational risk		Reputational risk is damage to our reputation, name or brand. Reputational risk is often associated with strategic decisions made and also arises as a result of other risks manifesting and not being appropriately mitigated or managed


Link to strategy and opportunities		Monitoring and mitigation activities •We have various policies and practices to mitigate and/or manage reputational risk, including strong values that are regularly and proactively reinforced •Reputational risk is mitigated and/or managed as much as possible through detailed processes and governance/escalation procedures from business units to the Board, and from regular, clear communication with Investec Group shareholders, customers and all stakeholders •The Investec Group has a disclosure and market communications policy which is reviewed and approved annually by Group ERC and DLC BRCC.



Further information
	Read more on page 78 of the Investec Group's 2023 risk and governance report.


		Risk appetite and tolerance metric	Positioning at 31 March 2023
		We have a number of policies and practices in place to mitigate and/or manage reputational risks.	We have continued to mitigate and/or manage these risks where possible throughout the year.



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Business and strategic risk		Business and strategic risk relates to external market factors that can create income volatility


Link to strategy and opportunities		Monitoring and mitigation activities •The risk of loss caused by income volatility is mitigated through diversification of income sources, reducing concentration of income from any one type of business or geography and maintaining a flexible cost base •Bank strategy is directed towards generating and sustaining a diversified income base for the Bank •In the instance where income falls we retain the flexibility to reduce costs (particularly variable remuneration), thereby maintaining a competitive cost to income ratio.



Further information
	Read more on pages 4 to 14 and pages 21 to 37.

		Risk appetite and tolerance metric	Positioning at 31 March 2023
		We seek to maintain an appropriate balance between revenue earned from capital light and balance sheet driven activities. Ideally capital light revenue should exceed 50% of total operating income, dependent on prevailing market conditions. We have a solid annuity income base supported by diversified revenue streams, and target an annuity income ratio in excess of 65%. We seek to maintain strict control over fixed costs. Investec plc has a stated cost to income ratio target of below 67%.	Capital light activities contributed 34.7% to total operating income and balance sheet driven activities contributed 65.3%. Annuity income amounted to 80.9% of total operating income. The cost to income ratio for IBP amounted to 63.7%.



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Operational risk		Operational risk is defined as the potential or actual impact to the Bank as a result of failures relating to internal processes, people, systems or from external events. The impact can be financial as well as non-financial such as customer detriment, reputational or regulatory consequences


Link to strategy and opportunities		Monitoring and mitigation activities •IBP manages operational risk through an embedded operational risk management framework •Operational risk sub-types which are significant in nature are managed by dedicated specialist teams within the Bank. These operational risk sub-types are addressed in specific, detailed risk policies and procedures, but are included within the operational risk management framework and are reported and monitored within the operational risk appetite. These sub-types include: –Business disruption and operational resilience risk –Conduct risk –Data management risk –Financial crime risk –Fraud risk –Information security and cyber risk –Legal risk –Model risk –People risk –Physical security and safety risk –Processing and execution risk –Regulatory compliance risk –Tax risk –Technology risk –Third party risk.



Further information
	Read more on pages 267 and 268 and pages 79 to 81 of the Investec Group’s 2023 risk and governance report.

		Risk appetite and tolerance metric	Positioning at 31 March 2023
		We maintain sound operational risk practices to identify and manage operational risk. We monitor the level of acceptable operational risk exposure/loss through qualitative and quantitative measures.	Operational risk losses continue to be monitored against the tolerance levels with appropriate escalation where required




Operational risk – Business disruption and operational resilience risk		The risk associated with disruptive incidents which may impact important business services and critical functions/resources including processes, premises, staff, equipment, third party services and systems


Link to strategy and opportunities		Monitoring and mitigation activities
Link to strategy and opportunities		•IBP maintains continuity through appropriate resilience strategies that cater for disruptions, irrespective of the cause •These strategies include, but are not limited to, relocating the impacted business to alternate processing sites, enabling staff to work from home, the application of high availability technology solutions, obtaining third party dependency business continuity assurances and ensuring readiness of physical solutions for critical infrastructure components •Resilience testing is conducted annually to validate continuity strategies and ensure they remain effective and appropriate. This includes annual recovery testing for all key systems that support important/critical business services.



Further information
	Read more on pages 267 and 268.



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Operational risk – Conduct risk		The risk associated with inappropriate behaviours or business activities that may lead to client, counterparty or market detriment, erosion of Investec values, culture and ethical standards expected of its staff, reputational and/or financial damage to the Bank


Link to strategy and opportunities		Monitoring and mitigation activities
Link to strategy and opportunities
		•IBP’s approach to conduct risk is driven by our values and philosophies, ensuring that the Bank operates with integrity and puts the wellbeing of its clients at the heart of how the business is run •Products and services are scrutinised and regularly reviewed to identify any issues early on and to make sure they are escalated for appropriate resolution and, where necessary, remedial action taken •The conduct risk policy is designed to create an environment for consumer protection and market integrity within the business, supported with the right conduct risk management framework •Risk and Conduct Forums have the objective of ensuring that the Bank maintains a client-focused and fair outcomes-based culture.


Further information
	Read more on pages 267, 268 and page 79 of the Investec Group's 2023 risk and governance report.



Operational risk – Data management risk		The risk associated with poor governance in acquiring, processing, storing and protecting data. Issues with data quality, reliability or corruption can adversely impact business decisions, client services and financial reporting


Link to strategy and opportunities		Monitoring and mitigation activities
Link to strategy and opportunities		•The Bank drives robust data governance principles across the business, including data ownership, management, quality control, taxonomies and defined data architecture •Consistent mechanisms are in place for data consolidation, storage and reporting •Data flows and reconciliations are automated as far as possible and integration between systems is streamlined to reduce the need for manual tasks, minimise data processing delays and limit single points of failure •Data quality is monitored, reported and enhanced in line with business needs and regulatory principles •Predictive intelligence is increasingly obtained through data analytics to support proactive risk management •Data retention and destruction processes are designed to meet business needs and comply with applicable legal obligations.



Further information
	Read more on pages 267 and 268.



03	Risk management and governance	Investec Bank plc Annual Financial Statements 2023

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Operational risk – Financial crime risk		The risk associated with the possibility of handling proceeds of crime, financing of terrorism, proliferation financing, sanctions breaches and bribery or corruption, as well as any related regulatory breaches


Link to strategy and opportunities		Monitoring and mitigation activities
Link to strategy and opportunities		•Established policies and procedures are in place to promote business with clients in such a manner that minimises the risk of the Bank’s products being used for money laundering and terrorist or proliferation financing •There is regular reporting to IBP BRCC •A risk-based approach supports these objectives, while complying with the Bank’s regulatory compliance obligations. At a high level the control framework ensures that: –Sufficient information about clients is obtained –All clients and prospective clients are risk rated and verification commensurate with their risk profile is conducted –All prospective and existing clients and relevant related parties are screened against relevant lists (including applicable sanctions list) to identify increased financial crime risk –Staff are appropriately trained –Suspicious transactions and terrorist financing are identified and reported –Existing and prospective clients that are not within the Bank’s financial crime risk appetite are exited or declined.



Further information
	Read more on pages 267, 268 and page 80 of the Investec Group's 2023 risk and governance report.



Operational risk – Fraud risk		The risk associated with any kind of criminal conduct arising from fraud, corruption, theft, forgery and misconduct by staff, clients, suppliers or any other internal or external stakeholder


Link to strategy and opportunities		Monitoring and mitigation activities
Link to strategy and opportunities		•The Bank manages internal and external fraud risk through an integrated framework which includes global policies, standards and methodologies •Detection and prevention systems are utilised to help identify potential fraud, reaching out to clients where appropriate to validate or discuss concerns •Fraud risk assessments are conducted to proactively identify and map existing preventative and detective controls to the relevant fraud risks to ensure effective mitigation •Fraud prevention and detection controls are enhanced on an ongoing basis in response to increased fraud losses across the industry and new fraud modus operandi •Industry collaboration assists with fraud prevention efforts and the recovery of funds that have been paid away •Adherence to fraud prevention policies is proactively monitored •Practices which comply with updated regulations, industry guidance and best practice are embedded within the Bank •Awareness of existing and horizon fraud threats is created through internal training and education of clients and intermediaries on fraud prevention and detection.



Further information
	Read more on pages 267 and 268.



03	Risk management and governance	Investec Bank plc Annual Financial Statements 2023

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Operational risk – Information security and cyber risk		The risk associated with unauthorised access, use, disclosure, modification or destruction of information assets, including cyber threats to the Bank’s operations and data


Link to strategy and opportunities		Monitoring and mitigation activities
Link to strategy and opportunities		•In light of the broad range of risks to which information resources are exposed, this risk is managed by addressing both internal and external threat exposures •Internal threats relate to data theft, inappropriate access or confidentiality breaches by staff –These are mitigated by implementing risk-appropriate data protection controls to safeguard information assets in line with data sensitivity and business criticality –Access to systems and data is closely controlled and privileged IT access is restricted and actively monitored –A dedicated insider threat team drives proactive discovery of confidential data, targeted monitoring, and response to potential data loss events •External threats relate to cyberattacks such as ransomware, denial of service and cyber fraud –This is mitigated by an adaptive cyber strategy integrating prediction, prevention, detection and response capabilities –Robust security controls leverage defence-in-depth and advanced technologies to protect against sophisticated attacks –Cyber risk is actively monitored by a 24/7 global cyber team and threat intelligence services, and security incident response processes are continuously improved –Cyber controls are stress-tested through security assessments and attack simulations, run both internally and in conjunction with independent specialists –Periodic updates to the Board keep them abreast of the threat landscape and informed on the Bank’s security position. –Regular security training to all staff ensures high levels of awareness and vigilance.



Further information
	Read more on pages 267 and 268.



Operational risk – Legal risk		The risk associated with losses resulting from any of our rights not being fully enforceable or from our obligations not being properly performed. This includes our rights and obligations under contracts entered into with counterparties. Such risk is especially applicable where the counterparty defaults and the relevant documentation may not support the anticipated rights and remedies in the transaction


Link to strategy and opportunities		Monitoring and mitigation activities
Link to strategy and opportunities		•Members of the legal risk function are mandated to ensure we keep abreast of developments and changes in the nature and extent of our activities, and to benchmark our processes against best practice •There is a central independent in-house legal team with embedded business unit legal officers where business volumes or needs dictate	•The Bank maintains adequate insurance to cover key insurable risks •The legal risk function is supplemented by a pre-approved panel of third party legal firms to be utilised where necessary •The Board may, at their discretion, constitute dedicated committees to deal with specific legal matters •The key principles of the legal risk policy describe the overall responsibility of the legal risk function, outline how legal risks are to be assessed and how material legal risks should be reported and escalated where necessary.

More information
	Read more on page 78 of the Investec Group's 2023 risk and governance report



03	Risk management and governance	Investec Bank plc Annual Financial Statements 2023

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Operational risk – Model risk		The risk associated with the adverse consequences that arise from decisions based on incorrect or misused model outputs (including reports). Material sources of model risk include: credit model risk, liquidity model risk, trading book model risk and non-trading IRRBB model risk


Link to strategy and opportunities		Monitoring and mitigation activities
Link to strategy and opportunities		•The Bank manages model risk through embedded, risk specific frameworks and policies •The frameworks address roles and responsibilities, governance processes and committees and approaches to managing and monitoring model risk •Models are subject to regular, independent validation by specialist risk teams •The relevant committees are mandated to oversee model risk and have delegated further oversight and approval to appropriate sub-committees.



Further information
	Read more on pages 267 and 268.



Operational risk – People risk		The risk associated with the inability to recruit, retain and engage diverse talent across the organisation and remain aligned to the Investec cultures and values


Link to strategy and opportunities		Monitoring and mitigation activities
Link to strategy and opportunities		•We focus on building a strong, diverse and capable workforce by providing a workplace that stimulates and rewards distinctive performance •Investec invests significantly in opportunities for the development of all employees, and in leadership programmes to enable current and future leaders of the Group •Internal mobility is a valued mechanism for the development and retention of people •Our people and organisation team plays a critical role in assisting the business to achieve its strategic objectives, which are matched to learning strategies and market trends •The people and organisation team is mandated to enable the attraction, development and retention of talent who can perform in a manner consistent with our culture and values •The people and organisation team also works with leadership to strengthen the culture of the business, ensure its values are lived, build capability and contribute to the long-term sustainability of the organisation.



Further information
	Read more on pages pages 110 and 111 of the Investec Group's 2023 integrated and strategic annual report and the Investec Group’s 2023 sustainability report which is published and available on our website: www.investec.com



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Operational risk – Processing and execution risk		The risk associated with the failure to process, manage and execute transactions and/or other processes (such as change) completely, accurately and timeously due to human error or inadequate process design or implementation


Link to strategy and opportunities		Monitoring and mitigation activities
Link to strategy and opportunities		•The Bank seeks to minimise process failures or human error which can disrupt operations or impact delivery of services to clients •Policies, processes, procedures and monitoring controls which mitigate against control failures are implemented to protect clients, markets and the Bank from detriment •We manage operational capacity to meet client and industry needs and continue to explore automation to improve efficiency and reduce human error •Key business processes are regularly reviewed and the relevant risks assessed through the risk and control self-assessment process •Material change is managed through dedicated projects with formalised project governance.



Further information
	Read more on pages 267 and 268.



Operational risk – Regulatory compliance risk		The risk associated with changing legislation, regulation, policies, voluntary codes of practice and their interpretation in the markets in which we operate


Link to strategy and opportunities		Monitoring and mitigation activities
Link to strategy and opportunities		•The Bank remains focused on achieving the highest levels of compliance with professional standards and integrity in each of our jurisdictions •Our culture is a major component of our compliance framework and is supported by robust policies, processes and talented professionals who ensure that the interests of our stakeholders remain at the forefront of everything we do •An independent integrity (whistleblowing) line is in place to ensure that staff can report regulatory breaches, allegations of fraud, bribery and corruption, and non-compliance with policies •There are independent compliance, legal and risk management functions in each of our core operating jurisdictions, which ensure that the Bank implements the required processes, practices and policies to adhere to applicable regulations and legislation.



Further information
	Read more on pages 267, 268 and page 79 of the Investec Group's 2023 risk and governance report.



03	Risk management and governance	Investec Bank plc Annual Financial Statements 2023

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Operational risk – Tax risk		The risk associated with inadequate tax planning, transaction execution, tax compliance and reporting failures


Link to strategy and opportunities		Monitoring and mitigation activities
Link to strategy and opportunities		•IBP’s control environment for the management and mitigation of tax risk includes a formalised tax strategy, policy and framework •The Bank ensures that all transactions and financial products and services are commercially motivated •All advisory and tax planning work is conducted in accordance with the relevant tax laws, regulations and intentions of legislators of the country in which the Bank operates.



Further information
	Read more on pages 267, 268 and page 81 of the Investec Group's 2023 risk and governance report.



Operational risk – Technology risk		The risk associated with disruption to or malfunction of critical IT infrastructure, systems or applications that support key business processes and client services


Link to strategy and opportunities		Risk management and key mitigating actions
Link to strategy and opportunities		•The technology environment is proactively monitored for continuous visibility of operational performance and availability •Mature incident management processes and continuity plans support a resilient technology environment that is able to withstand failure and minimise service disruption •Strategic roadmaps direct implementation of new technologies to enhance capacity, scalability and reduce reliance on legacy components within the technology environment •Cloud computing is leveraged in a risk appropriate manner, to accelerate value delivery while ensuring that required safeguards are in place •Internal controls are automated where possible and augmented with monitoring to reduce human error and enhance efficiency •Technology governance structures review IT projects and provide oversight of new investments in infrastructure and software •Systems are aligned to approved standards and sound architectural principles to reduce technical complexity and leverage common functions and services •The risk of errors in production systems is reduced through design reviews, secure development practices and robust testing.



Further information
	Read more on pages 267 and 268.



03	Risk management and governance	Investec Bank plc Annual Financial Statements 2023

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Operational risk – Third party risk		The risk associated with the reliance on and use of external providers of services to the Bank


Link to strategy and opportunities		Risk management and key mitigating actions
Link to strategy and opportunities		•Third party policies and practices govern the assessment, selection, approval and oversight of third party services •A global third party management team has been established to coordinate, streamline and enhance consistency of third party processes •Robust due diligence processes are in place to evaluate third party suitability, resilience and controls with the appropriate level of rigour based on the scale, complexity and service materiality •Service disruption or security risks that third parties may introduce are identified and managed •Ongoing monitoring ensures that contractual obligations are met and required service levels are maintained •Appropriate supplier business contingency plans, including exit strategies for key/critical vendors, are established and managed to minimise client impact following any disruption in service •Regular monitoring is conducted to maintain an understanding of our strategic partnerships with cloud providers and that of their fourth party providers.



Further information
	Read more on pages 267 and 268.

Emerging and other risks

In addition to the principal risks outlined above, the risks below

may have the potential to impact and/or influence

our principal risks and consequently the operations, financial

performance, viability and prospects of the Bank. A number

of these risks are beyond the Bank’s control and are considered

in our capital plans, stress testing analyses and budget

processes, where applicable.

The Bank recognises the potential challenges faced in ensuring

successful delivery of digitalisation strategies and the

embedding of change. These challenges relate to the

technology investments, resourcing levels, and skills needed to

operate a digital business. Concentration risk related to big tech

and cloud platforms is increasing. Growing reliance on

technology service providers heightens the potential impact of

third party disruption, cyber threats and data breaches.

Developments in the technology landscape are closely

monitored to ensure appropriate response and management of

disruptive effects on the Bank. Recent advances in artificial

intelligence language models highlight the additional risk

created (including to security of data) as a result of exponential

growth and speed of take-up in new technologies and the

importance of remaining up-to-date with the evolving

landscape. The impact of digitalisation initiatives and cloud

adoption on the Bank’s risk profile is continually tracked, with

consideration given to key controls related to cyber risk,

technology integration, data privacy and vendor resiliency.

IBP focuses on building a strong, diverse and capable

workforce. The risk associated with staff recruitment and

retention in an extremely competitive market, with shortage of

certain skills, is continuously considered and reviewed. We are

constantly considering the future world of work, how we

prioritise a safe working environment for employees and remain

relevant and forward thinking, with a focus on adaptability and

agility in response to a changing environment. We are closely

monitoring the implications of flexible working arrangements on

the Bank's culture and performance as well as consequential

impacts on talent retention.

In March 2023, the global banking industry experienced

volatility driven by uncertainty around the viability of certain

banks, particularly US regional banks, as a result of strategies

deployed to manage interest rate risk. The US failures were

driven by a mismatch in interest rates and duration of assets and

liabilities, both of which are closely monitored against

conservative risk appetites at IBP.


	These emerging risks are briefly highlighted on pages 23 and 24 of the Investec Group's 2023 risk and governance report and should be read in the context of our approach to risk management and our overall Group risk appetite framework


	Additional risks and uncertainties not presently known to us or that we currently deem immaterial may in the future also negatively impact our business operations. Emerging and other risks are factored into the Board’s viability assessment. Read more on page 86



03	Risk management and governance	Investec Bank plc Annual Financial Statements 2023

PRINCIPAL RISKS CONTINUED



			The Bank has the ability to adapt quickly and support clients within a framework of sound governance and effective
			risk management.
			Brian Stevenson Chair

Over recent years the Board has

overseen a period of simplification and

optimisation of the Bank’s operating

model in terms of scale, resilience and

technology with a focus on delivering

increased growth and efficiency under

the ‘One Investec’ banner.

This journey marked a significant

milestone with the announcement of

a transaction whereby wealth manager,

Rathbones Group plc (Rathbones), will

combine the Investec Wealth &

Investment UK business with Rathbones

in an all-share combination, subject to

regulatory approval. This will see the

Bank becoming a strategic shareholder

in the enlarged Rathbones business.

One Investec remains at the core of the

Investec Group strategy and has been

the principal driver for this deal, which

will provide enhanced opportunities for

both our Wealth and Investment and

Banking businesses. Rathbones and

Investec have entered into an ongoing

strategic partnership agreement to

include client referrals where appropriate,

between the organisations for wealth

management and banking services.

The strategic partnership will drive

greater cooperation between Rathbones

and the Bank.

Strategy

The Board has continued to oversee and

monitor progress on the Bank’s strategy.

The financial performance is indicative

of the successful implementation and

a focus on growth following the

simplification efforts, as already

mentioned. The strategy of growth is

focused on further developing a

connected client ecosystem, improving

digitalisation and enabling a high-touch,

high-tech service and client experience.

The Board keeps its strategy under

review, considering the potential

opportunities to further accelerate and

scale new growth initiatives and to

develop One Investec Group initiatives.

Read more in our section 172(1)

statement on pages 15 to 20.

Succession planning and Board

and committee changes

The composition of the Board and its

Committees remains under review by the

Nomination Committee. There have been

changes processed through the IBP

Nomination Committee which are

considered to strengthen the Board’s

independent governance while at the

same time enhancing reciprocity

between the Board and its committees

and the corresponding DLC forums.

As reported last year, a new independent

Non-Executive Director, Vanessa Olver,

was appointed to the DLC Board with

effect from May 2022. Following

David Friedland’s resignation as a DLC

director in August 2022 he also stepped

down as a member of the Bank BRCC.

Vanessa had been identified as the

successor to David as Chair of DLC

BRCC and accordingly she was duly

appointed a member of the Bank BRCC

in August 2022.



03	Risk management and governance	CORPORATE GOVERNANCE	Investec Bank plc Annual Financial Statements 2023

CHAIR'S INTRODUCTION

The Board also considered the span of

control of the Executive Directors and

reviewed succession plans for the

Executive Directors and senior executive

management. Consequently, the Board

appointed Marlé van der Walt as an

additional Executive Director, following

regulatory approval, in September 2022

to act as the Finance Director on the

Bank Board. Marlé has substantial

experience in banking and the Investec

Group having served as a director of

Investec Bank Limited in South Africa.

This appointment will strengthen the

existing CEO and CRO executive team

with a particular focus on operations and

finance.

Finally, Moni Mannings stepped down in

January 2023. Moni held a number of

Non-Executive roles in the Bank and the

Bank’s European subsidiary in Ireland as

well as in the Investec Group with her

membership on the DLC Social and

Ethic’s Committee. Following Moni’s

departure, David Germain was appointed

to replace her as the Board’s designated

Non-Executive for workforce

engagement and Henrietta Baldock was

appointed as Chair of the IBP

Remuneration Committee. The Bank took

the opportunity to fill Moni’s roles at the

Bank’s Irish subsidiaries with existing

senior management to enhance their

skill-set. Moni was invaluable as a

member of the Board and, on behalf of

the Board, I would like to thank Moni for

her contribution over the last seven years

as well as her support in her role as the

Senior Independent Director of the Bank.

Read more on the Nomination Committee

on page 70 to 73.

People and culture

The Board keeps culture under review,

with a particular focus on the impact of

hybrid working arrangements on culture.

The Board recognises that culture is a

key differentiator for Investec and one

that drives behaviour and enables us to

fulfil our purpose and achieve the Bank’s

strategic objectives.

Investec prioritises belonging, inclusion

and diversity and the Board received

regular updates on our diversity profile

and management’s progress in driving

diverse recruitment and inclusive

programmes of work across the business.

More details of the approach to diversity

and workforce engagement can be found

on pages 16 and 20 respectively.

Environment, social and

governance (ESG) and climate,

nature and biodiversity

The Board believes that being a

responsible corporate citizen and having

regard to the ethical, social, and

environmental dimensions in which we

operate, generates long-term sustainable

stakeholder value. Climate change in

itself, societal expectations of how we

behave and how businesses are

managed in the interests of society has

been of increasing interest to

stakeholders in the last three years.

Similarly, ESG issues and climate change

has been on the Board’s agenda and we

have received regular updates on the

business’s approach to ESG matters.

More details of the business’s

engagement on ESG can be found in the

Group’s sustainability report.

Board effectiveness

A key component of governance is

ensuring the Board’s efficacy in

exercising its responsibilities. This year

the Board participated in an internally

facilitated evaluation process overseen

by the Nomination Committee. The

findings of this review and how we are

addressing our progress against these

findings can be found on page 72-73.

Corporate governance code

The Board has applied the UK Corporate

Governance Code 2018 (the Code) for

the year under review.

Following Moni stepping down, the

Board, on the recommendation of the IBP

Nomination Committee, agreed to not fill

the position of Senior Independent

Director. The explanation and further

details of how we applied the Code can

be found in our statement of compliance

on page 66.

Looking ahead

The theme at the end of the previous

financial year was one of cautious

optimism in the context of a post-

pandemic recovery which was picking up

momentum. Since then, the geo-political

tensions, inflationary pressures and

uncertainty as a result of UK political

issues has led to a marked change in the

business environment. Notwithstanding

the macro-economic challenges, the

Bank’s focused operating model is

technologically and operationally resilient

and primed to support and manage this

volatility together with our clients. The

Board will continue to monitor the impact

of economic conditions and oversee the

strong risk management, liquidity, and

governance of the Bank and its

subsidiaries as conditions evolve.

There remains no broad-based

equivalency framework for UK firms

wishing to provide regulated financial

services in the European Union. Our

business has the operational flexibility to

adapt to the appropriate regulatory

regime in due course and the Board will

continue to assess the Bank’s strategy in

Europe, including, where feasible,

operating through the Bank’s European

subsidiary in Ireland.

The Bank’s financial performance this

year validates the journey of

simplification and focus we have been on

in recent years. Amidst markedly

uncertain and volatile macro-economic

conditions this performance also testifies

to the resilience and flexibility of our

people, systems and controls to adapt to

fast moving development. Including our

ability to support and grow with our

clients – within a framework of prudent

governance.

Brian Stevenson

Chair

27 June 2023



03	Risk management and governance	CORPORATE GOVERNANCE	Investec Bank plc Annual Financial Statements 2023

CHAIR'S INTRODUCTION CONTINUED

Who we are

Biographies of our current

directors are outlined

below, including their

relevant skills and

experience, key external

appointments and any

appointments to Board

committees.


Committee membership key
		IBP BRRC
	B

		IBP Nomination Committee
	N

		IBP Remuneration Committee
	R

		IBP Audit Committee
	A

Gender diversity


	Male	5
	Female	5

Age


	45-50	20.0%
	51-59	40.0%
	60-69	40.0%




Brian Stevenson
Chair

B	N	R
Director of DLC Board and member of DLC BRCC and DLC Nomdac

Age 69

Nationality British

Qualifications MBA, ACIB, FCBI

Date of appointment 14 September 2016

Relevant skills and experience Brian is the Chair of Investec Bank plc. He has substantial strategic, governance and financial services experience, having held a number of senior executive roles, including CEO and Chair of Royal Bank of Scotland’s global transaction services division and as Head of Global Banking Division Asia Pacific at Deutsche Bank, as well as various non-executive positions including Agricultural Bank of China and Deutsche Bank Nederland. Brian is an advisory Board member of Lysis Financial and a Board mentor for Critical Eye.

External appointments Westpac Europe Limited




Henrietta Baldock
Independent Non-Executive Director

R
Director of DLC Board, Chair of DLC Remuneration Committee and member of DLC BRCC and DLC Nomdac

Age 52

Nationality British

Qualifications BSc (Hons)

Date of appointment 10 February 2021

Relevant skills and experience Henrietta has extensive knowledge of the financial services sector, through her 25 years’ experience in investment banking, most recently as Chair of the European Financial Institutions team at Bank of America Merrill Lynch, where she advised many boards on a number of significant transactions. In 2021, she was appointed Chair of Investec Wealth & Investment (UK). Henrietta’s industry experience demonstrates her valuable strategic and transformation advisory skills.

External appointments Legal and General Group plc and Legal and General Assurance Society Limited



03	Risk management and governance	CORPORATE GOVERNANCE	Investec Bank plc Annual Financial Statements 2023

DIRECTOR BIOGRAPHIES





Zarina Bassa
Independent Non-Executive Director

A
Chair of DLC Audit Committee, member of DLC BRCC, DLC Nomdac, DLC Remuneration Committee and DLC Senior Independent Non- Executive Director

Age 58

Nationality South African

Qualifications BAcc, DipAcc, CA (SA)

Date of appointment 1 April 2017

Relevant skills and experience Zarina’s previous appointments include partner of Ernst & Young, Executive Director of Absa Bank, Chair of the South African Public Accountants’ and Auditors’ Board and the South African Auditing Standards Board. She has also been a member of the Accounting Standards Board, and a Non-Executive Director of the Financial Services Board, the South African Institute of Chartered Accountants, Kumba Iron Ore Limited, Mediclinic International, Sun International Limited, Mercedes South Africa, Oceana Group, Vodacom South Africa Proprietary Limited, YeboYethu Limited and Woolworths Holdings Limited. This background affords significant audit and risk experience, and financial, leadership, banking and regulatory reporting skills.

External appointments JSE Limited





David Germain
Independent Non-Executive Director

B


Age 47

Nationality British

Qualifications FBCS, CITP, FIET

Date of appointment 15 September 2020

Relevant skills and experience David has extensive technology, operations and transformation experience in financial services. He is currently Group Chief Information Officer for QBE Limited. He was previously Group, UK & International Chief Information Officer for RSA Limited where he had oversight of significant and complex IT transformation projects and has previously held a number of other roles including Head of Technology, Operations and Product at the Royal Bank of Scotland Corporate and Private Banking, COO/CAO at Deutsche Bank Capital Markets and COO at Close Brothers Retail.

External appointments University of Cambridge, Great Ormond Street Hospital Charity





Paul Seward
Independent Non-Executive Director

A		B


Age 67

Nationality British

Qualifications BSc (Hons) Mathematics

Date of appointment 1 April 2019

Relevant skills and experience Paul has comprehensive experience of strategy and risk governance in financial services having held a number of senior executive roles including Chief Risk Officer HSBC UK, as well as having held a number of Non-Executive Directorships including M&S Bank, HSBC Asset Finance and HSBC Life (UK) Limited. Paul was also a trustee and Chair of the Audit and Risk Committee of the HSBC plc pension fund.

External appointments Axis Bank UK Limited



03	Risk management and governance	CORPORATE GOVERNANCE	Investec Bank plc Annual Financial Statements 2023

DIRECTOR BIOGRAPHIES CONTINUED





Lesley Watkins
Independent Non-Executive Director

A	B	R	N


Age 64

Nationality British

Qualifications BSc (Hons) Mathematics, FCA

Date of appointment 13 November 2018

Relevant skills and experience Lesley has expert knowledge of audit and assurance and regulatory reporting having worked at PwC and subsequently as finance director of private equity firm, Calculus Capital Limited. She also has significant experience of governance and strategy in financial services having been a managing director at UBS and Deutsche Bank as well as having been a Non-Executive Director and Audit Chair at the Competition Commission, Panmure Gordon & Co Plc, Game Digital plc and Braemar Shipping Services plc.

External appointments Chaucer Syndicates Limited, Great Lakes Insurance UK Limited





Fani Titi
Executive Director, Group CE


Director of DLC Board and member of DLC BRCC

Age 60

Nationality South African

Qualifications BSc Hons (cum laude), MA, MBA

Date of appointment 3 August 2011

Relevant skills and experience Fani was a founding member of Kagiso Trust Investments Limited, and later cofounded and led the public offering of Kagiso Media Limited. He was subsequently the founding executive chair of the Tiso Group, which later merged with Kagisgo Trust Investments Limited, to form Kagiso Tiso Holdings. Fani has served on the boards of a number of listed entities, and investment companies. He also joined the Secretary General of the United Nations CE Alliance on Global Investors for Sustainable Development (GISD). Fani brings strong banking and commercial expertise to the Board.

External appointments IEP Group (Pty) Ltd





Ruth Leas
Executive director, IBP CEO




Age 51

Nationality British

Qualifications BA (cum laude), Hons (Economics), MPhil (Cantab)

Date of appointment 27 July 2016

Relevant skills and experience Ruth has deep knowledge of Investec and banking having joined Investec in South Africa in 1998. She moved to Investec in London in 2002 and was appointed co-head of US Principal Finance in 2004 focusing on credit derivatives and structured credit. Ruth joined the credit team in 2008, and was appointed as Head of UK Investor Relations in 2012. She was appointed as an Executive Director in 2016 and was head of risk management before becoming Chief Risk Officer in 2017. Ruth was appointed as IBP CEO in 2019. Prior to Investec, Ruth was treasury economist for Gencor SA Limited, and took up this role after winning the Gencor-Chairman’s scholarship to study at Cambridge University.

External appointments UK Finance Board and Cambridge Judge Business School Advisory Board



03	Risk management and governance	CORPORATE GOVERNANCE	Investec Bank plc Annual Financial Statements 2023

DIRECTOR BIOGRAPHIES CONTINUED





Kevin McKenna
Executive director, IBP CRO




Age 57

Nationality Irish

Qualifications BCom, BAcc, CA(SA)

Date of appointment 10 May 2012

Relevant skills and experience Kevin has substantial strategic, financial, operational and risk experience. He is a qualified accountant and previously worked for ING Baring’s South Africa before joining Investec as Finance Director for Investec Securities in 2000. He was appointed as Chief Operating Officer for the Treasury and Specialised Finance/Corporate and Investment Banking division in South Africa before moving with this role to London in 2006. Kevin was appointed as Chief Operating Officer for IBP in 2011. He was appointed as an Executive Director in 2012, and became Chief Risk Officer in 2019.

External appointments None





Marlé van der Walt
Executive director, IBP Finance Director




Age 47

Nationality South African

Qualifications BAcc (cum laude), BAcc Hons (cum laude), CA(SA)

Date of appointment 20 September 2022

Relevant skills and experience Marlé has substantial banking, finance, risk and audit related knowledge and expertise. She completed her articles at PwC in South Africa in 2000 serving as an audit manager, and subsequently worked for two of South Africa's major retail banks before joining Investec Bank Limited as the Chief Audit Executive in 2010. In 2013 and 2019 respectively Marlé was appointed as financial director for particular divisions within IBL and was appointed as Finance Director of IBL in 2021. Marlé transferred to Investec in the UK and was appointed as Finance Director in September 2022.

External appointments None



03	Risk management and governance	CORPORATE GOVERNANCE	Investec Bank plc Annual Financial Statements 2023

DIRECTOR BIOGRAPHIES CONTINUED

The UK Corporate Governance Code 2018 (the Code) applied to the Bank for the financial year ended 31 March 2023. The Board

confirms that the Bank has complied with the principles, the application of which are evidenced throughout this report. The table below

is designed to help stakeholders evaluate how this has been achieved. The Board considers that compliance has been achieved

throughout the year, with the exception of Principle 12 and the explanation can be found below.



	Board leadership and Company purpose
	A.An effective entrepreneurial Board, which is collectively responsible for the long-term sustainable success of the Bank, ensuring due regard is paid to the interests of our stakeholders. Please refer to pages 62-65 for the directors’ biographies B.Purpose, values and strategy are aligned with culture, which is promoted by the Board (read more on page 15) C. Resources allow the Bank to meet its objectives and measure performance. A framework of controls enables assessment and management of risk (read more in section 3 of this report)		D. Engagement with the Bank's stakeholders is effective and encourages their participation (read more on page 15) E. Workforce policies and practices are consistent with the Investec Group's purpose and values, and overseen by the Board (read more on page 23). The workforce is able to raise matters of concern, and responsibility for whistleblowing arrangements sits with the IBP Audit Committee, as detailed on page 79.


	Division of responsibilities
	F. The Chair has overall responsibility for the leadership of the Board and for ensuring its effectiveness in all aspects of its operations. The Chair, Brian Stevenson, was considered to be independent on appointment. The responsibilities of the Chair are set out on page 67 G. There is a clear division of responsibilities at the head of the Company. There is a clear separation between the role of the Chair and CEO. The Board comprises an appropriate combination of Non- Executive and Executive Directors (read more on page 67)		H. Non-Executive Directors are advised of time commitments prior to appointment. The time commitments of the directors are considered by the Board on appointment, and annually thereafter. External appointments, which may affect existing time commitments, must be agreed with the Chair, and prior approval must be obtained before taking on any new external appointments I.The Company Secretaries and the correct policies, processes, information, time and resources support the functioning of the Board.


	Composition, succession and evaluation
	J. There is a procedure for Board appointments and succession plans for Board and senior management which recognise merit and promote diversity (read more on page 70) K. There is a combination of skills, experience and knowledge across the Board and the Board Committees. Independence, tenure and membership are regularly considered		L. The annual effectiveness review of the Board and the individual directors considers overall composition, diversity, effectiveness and contribution (read more on page 72).


	Audit, risks and internal controls
	M. Policies and procedures have been established to ensure the independence and effectiveness of the internal and external audit functions. The Board satisfies itself of the integrity of the Bank's financial and narrative statements (read more on pages 87-88) N. The Board presents a fair, balanced and understandable assessment of the Bank's position and prospects (read more on page 88)		O. Procedures are in place to manage risk, oversee the internal control framework, and determine the nature and extent of the principal risks the Bank is willing to take in order to achieve its long-term strategic objectives (read more on page 40)


	Remuneration
	P. The Bank is committed to offering all employees a reward package that is competitive, performance-driven and fair. Our policies are designed to support the Bank's strategy and to promote its long- term sustainable success, with executive remuneration aligned to our purpose, values and strategic delivery (read more on page 92)		Q. A transparent and formal procedure is used to develop policy and agree executive and senior management remuneration (read more in the Remuneration Report starting on page 91) R. The remuneration policy seeks to ensure all remuneration decisions made by directors, fully consider the wider circumstances as appropriate, including, but not limited to, individual performance (read more in the Remuneration Report starting on page 92).

Non-compliance with Provision 12

Following the departure of Moni Mannings, the Board, on the recommendation of the Nomination Committee, agreed to not appoint a

Senior Independent Director (SID). Whilst we note the Code requirement for a SID, we are confident that we have sufficient

arrangements in place. It is noted that under the Code, the key responsibilities of the SID are to provide a sounding board for the

Chair, to serve as an intermediary for the other directors and shareholders, and to appraise the Chair’s performance. Given the

structure of the Investec Group, in particular the cross directorships between the Boards and committees and our culture, we believe

that there are sufficient communication channels open for Directors. There are existing communication channels available to the

Bank Chair from a sounding board perspective, and for other directors and the shareholder, the Group, from an intermediary

perspective. This further aligns with the process adopted by the Group’s other principal subsidiaries, which do not have a SID. The

assessment of the Chair’s performance will be conducted by the Chair of the Group, who already considers the Bank Chair’s

performance on an annual basis, given his role on the Group Board.



03	Risk management and governance	CORPORATE GOVERNANCE	Investec Bank plc Annual Financial Statements 2023

COMPLIANCE WITH THE UK CORPORATE GOVERNANCE CODE

The key governance roles and responsibilities of the Board are outlined below:


Chair	Chief Executive	Chief Risk Officer
•Leads the effective operation and governance of the Board •Sets agendas which support efficient and balanced decision-making •Ensures effective Board relationships and a culture that supports constructive discussion, challenge and debate •Together with the Investec Group Chair, leads the development of and monitors the effective implementation of policies and procedures for the induction, training and professional development of all Board members •Oversees the evaluation of the performance of the Board collectively, Non-Executive Board members individually and contributes to the evaluation of the performance of the Executive Directors •Ensures that the Board sets the tone from the top, in regards to culture •Serves as the primary senior interface with regulators and the Bank on behalf of the Board.	•Leads and manages the Bank within the authorities delegated by the Board •Proposes and directs the delivery of strategy as agreed by the Board •Develops and recommends business plans, policies, strategies and objectives for consideration by the Board, taking into consideration business, economic and political trends that may affect the operations of the Bank •Ensures the Bank’s culture is embedded and perpetuated across the organisation •Develops and supports the growth of all the Bank’s businesses •Monitors and manages the day-to- day operational requirements and administration of the Bank •Manages the Bank’s risk appetite.	•Responsible for the effective management of risk within the Bank •Ensures that the Bank’s risk management, conduct and governance processes and procedures are effective •Provides the Board with updates on the Bank’s risk management, conduct and governance processes •Manages within the Bank’s risk appetite.

Non-Executive Director	Company Secretary	Finance Director
•Brings unique perspectives to the boardroom to facilitate constructive dialogue on proposals •Constructively challenges and contributes to assist in developing the Group’s strategy •Monitors the performance of management against their agreed strategic goals •Oversees the effectiveness of internal controls and the integrity of financial reporting •Reviews succession planning for the Board and management •Oversees the management of risk as set out in the risk management framework •Oversees the remuneration of the Executive Directors and the Bank's employees.	•Maintains the flow of information to the Board and its committees and ensures compliance with Board procedures •Ensures and keeps the Board updated on corporate governance developments •Facilitates a programme for the induction and ongoing development of directors •Provides advice, services and support to all directors as and when required.	•Leads and manages the finance function •Provides the Board with updates on the Bank’s financial performance •Provides strategic and financial guidance to ensure that the Bank’s financial objectives and commitments are met •Oversees the financial management of the Bank including financial planning, capital, cash flow and management reporting •Develops all necessary policies and procedures to ensure the sound financial management and control of the Bank’s business.



03	Risk management and governance	CORPORATE GOVERNANCE	Investec Bank plc Annual Financial Statements 2023

BOARD AND EXECUTIVE ROLES

What we did in 2022/23


The following pages outline the key topics reviewed, monitored, considered and debated by the Board in 2022/23. Board meeting discussions are structured to allow for strategic discussions, consideration of key risks and monitoring of the Bank’s culture with the agenda being agreed in advance by the Chair, in conjunction with the CEO and the Company Secretary.



Meetings held in 2022/23
Members	Meetings attended	Eligible to attend1
Brian Stevenson (Chair)	7	7
Henrietta Baldock	6	7
Zarina Bassa	7	7
David Germain	6	7
Ruth Leas	7	7
Moni Mannings2	4	5
Kevin McKenna	7	7
Paul Seward	6	7
Fani Titi	7	7
Marle van der Walt3	5	5
Lesley Watkins	7	7

1.Where a director is unable to attend a meeting,

they receive papers in advance and have the

opportunity to provide comments to the Chair.

2 Moni Mannings stepped down as a director

on 31 January 2023

3.Marle van der Walt was appointed a director on

20 September 2023.

Strategy

Strategic initiatives

The Board reviewed the key strategic

initiatives, including the Bank’s digital

savings platform and strategic

investments in Monese and Capitalmind

International B.V.

The Board also reviewed and approved

the proposed combination of Investec

Wealth & Investment UK and Rathbones

Group plc.

Business reviews

The Board welcomed leaders within the

business on certain business areas

including Fund Solutions, the Listed Client

Group, Real Estate and Investec Bank

(Channel Islands) receiving an update on

the business unit’s performance, strategy

and any risks faced by the business.

Financial

Budget

The Board considered performance versus

the 2022/23 budget,

The Board also agreed the 2023/24

budget.

Going concern and viability

statement

The Board received and approved the

going concern and viability statements.

Results

The Board reviewed and approved the full

year results.



03	Risk management and governance	CORPORATE GOVERNANCE	Investec Bank plc Annual Financial Statements 2023

BOARD ACTIVITIES

Governance

Committee reporting

The Board received written Committee

reports from the Chairs of our Board

Committees on the proceedings of those

meetings, including the key discussion

points and particular matters to bring to

the Board’s attention.




Matters Reserved for the Board
The Board approved the Matters Reserved for the Board following a comprehensive review.
Board effectiveness review
The Board discussed the outcome of the annual Board effectiveness review and agreed actions arising from it. The Board also reviewed progress made against the action plan for 2021/22.

	Read more on pages 72-73

Risk and assurance

Risk profile

The Board reviewed and debated the

overall risk profile, particularly the principal

risk, emerging risks and risk appetite. The

Board approved the risk appetite ensuring

that there was adequate diversification,

reducing concentration and country risk

whilst achieving the Bank’s strategic

objective of growth.

Risk management

The Board reviewed the management

systems, including financial, operation and

compliance controls, and reviewed the

effectiveness of the Bank’s internal control

systems.

Regulatory matters

Projects

The Board reviewed the progress of key

regulatory projects including operational

resilience, Consumer Duty and the

transition to the Internal Ratings Based

(IRB) approach.

The Board approved the annual self-

assessment for operational resilience and

the Consumer Duty implementation plan.

The Board also received training on the

new Consumer Duty rules.

Regulatory documents

The Board reviewed and approved the key

regulatory documents including the

Management Responsibilities Map, the

CASS attestation, the ILAAP and ICAAP.

Purpose, culture and

values

Purpose

The Board received an update and

supported the Group’s further

communication of Investec’s purpose.

Culture and values

The Board monitored and assessed

culture, receiving regular updates from the

Head of People & Organisation.

The Board also received regular updates

on the output from workforce engagement

activities.

People strategy,

leadership and

succession

Executive succession

The Board considered the succession plan

for the executives and senior management

and certain operating subsidiaries.

The Board also reviewed the talent pipeline.



Board succession
The Board oversaw the arrangements for Board succession planning as Moni Mannings stepped down in January 2023 and also approved the appointment of Marlé van der Walt as the Finance Director.

	Read more on pages 70-72



03	Risk management and governance	CORPORATE GOVERNANCE	Investec Bank plc Annual Financial Statements 2023

BOARD ACTIVITIES CONTINUED

Introduction

I am pleased to present the IBP Nomination

Committee (the Committee) report. The

role of the Committee is to have oversight

of the composition and effectiveness of

the Board and its key governance

arrangements. Given the continuing

uncertainty and challenging macro-

economic environment, both domestically

and globally, ensuring a stable and

effective Board was of utmost importance.

Succession planning

During the year, the Committee

continued to focus on succession

planning for the Board and subsidiary

Boards. There was a particular focus

placed on senior managers in control

positions as well as certain subsidiary

CEOs and members of the Executive

Committee. As the Bank continued its

strategy of growth, the Committee also

focused on ensuring a balance of

collective skills while also aligning to the

Bank’s culture and values of diversity and

inclusion. As noted in last year’s report,

it had been determined that the addition

of a Finance Director would further

strengthen the Board. Marlé van der Walt

was identified as the candidate following

work undertaken by the Committee, and

Marlé was appointed as a director in

September 2022, following regulatory

approval.

The Committee also focused on non-

executive succession planning as

Moni Mannings stepped down during the

course of the financial year. The

Committee had considered the roles at

length and the current Director and

senior management skills, experience and

knowledge to identify who was best

placed to succeed Moni in her respective

roles. Further details are provided within

the Committee report below.

The Committee also had regard to the

principles of the UK Corporate

Governance Code as well as

recommendations made within the Parker

and FTSE Women Leaders Review.

Board effectiveness

The Committee oversaw the board

effectiveness review, and assessed the

feedback from the evaluation process.

The 2022 Board effectiveness review was

facilitated internally as the last external

effectiveness review was conducted in the

prior year by Fidelio Partners, an external

governance specialist, in line with the

recommended approach set out in the UK

Corporate Governance Code.

Full details of the Board effectiveness

review, including the evaluation of the

Committee’s effectiveness are provided

in the Committee report.

Board diversity

The Committee remained focused

on ensuring the Board considered

diversity when considering composition

and succession planning. The Committee

also focused on ensuring diversity

within the management team and

challenged management on the diversity

of candidates when reviewing

succession plans.

Roles and responsibilities

The role of the Committee is to keep the

Board's composition, skills, experience,

knowledge, independence and

succession arrangements under review

and to ensure that appropriate

procedures are in place for nominating

and evaluating directors. Due regard

is given to the benefits of diverse senior

leadership, including diversity of thought,

gender, social background and ethnicity.

Investec Wealth & Investment (IW&I),

a subsidiary of Investec Bank plc

regulated by the FCA, maintains an

independent governance structure,

comprising an independent Board and

Nomination Committee. The membership

of the Nomination Committee of the

Wealth business comprises independent

Non-Executive Directors. Matters relating

to IW&I do not fall within the remit of the

IBP Nomination Committee.



03	Risk management and governance	CORPORATE GOVERNANCE	Investec Bank plc Annual Financial Statements 2023

IBP NOMINATION COMMITTEE REPORT

The IW&I Nomination Committee reports

to the DLC Nominations and Directors

Affairs Committee (Nomdac). Any

matters relevant to the Bank are

communicated to the Bank, in part,

through having the Chair of the DLC

Nomdac, Philip Hourquebie, as a member

of the IBP Nomination Committee. It was

noted that Philip was also a member of

the IW&I Nomination Committee.

The Committee reports to the Board on

how it discharges its responsibilities and

makes appropriate recommendations to

the Board.

Role of the Chair

The role of the Chair of the IBP

Nomination Committee requires regular

meetings with the executives of the

Bank, along with liaison with the Chair of

the DLC Nomdac. The Chair also has

interactions with internal and external

specialist advisers and with Heads of

People & Organisation, Compliance and

Company Secretarial, in order to keep

knowledge up to date, and to keep

abreast of commercial, regulatory and

legislative developments and challenges

facing the business. These interactions

are an essential part of the role of the

Chair of the IBP Nomination Committee.

Committee composition,

attendance, skills and

experience

The Committee is composed of an

independent Non-Executive Director, the

Group Chair and the Bank Chair who

were independent on appointment.

Membership is designed to provide the

breadth of experience necessary, for the

members to consider the issues that are

presented to the Committee.

The Chief Executive is invited to attend

meetings as appropriate.



Meetings held in 2022/23
Members	Member since	Meetings attended	Eligible to attend1
Brian Stevenson (Chair)	16 May 2019	6	6
Philip Hourquebie	5 Aug 2021	6	6
Moni Mannings2	16 May 2017	4	5
Lesley Watkins3	1 Feb 2023	1	1

1 Where a director is unable to attend a meeting,

they receive papers in advance and have the

opportunity to provide comments to the Chair

of the Committee.

2 Moni Mannings stepped down as a director

on 31 January 2023

3Lesley Watkins was appointed as a member

of the Committee on 1 February 2023.

Looking ahead

In 2023/24, the Committee will continue

to review the composition of the Board

and the Board Committees, taking into

consideration the Bank’s strategy and

evolving market conditions while being

mindful of all aspects of diversity,

including gender, race, skills, experience

and knowledge. The Committee will

focus on the executive and non-

executive succession plans. The

Committee will also work with the DLC

Nomdac on the recruitment of a further

non-executive director.

The Committee will also oversee the

implementation of the action plan

following the external Board

effectiveness review.

Brian Stevenson

Chair, IBP Nomination Committee

27 June 2023



03	Risk management and governance	CORPORATE GOVERNANCE	Investec Bank plc Annual Financial Statements 2023

IBP NOMINATION COMMITTEE REPORT CONTINUED

What we did in 2022/23

Succession planning

Robust succession planning takes into

account current and future business

needs and ensures a good balance of

skills, experience and effectiveness,

while recognising the benefits of

diversity.

Effective succession planning should

take into account contingency planning

(for any unforeseen departures or

unexpected absences), medium-term

planning (orderly refreshing of the Board

and Board Committees) and long-term

planning (looking ahead to the skills,

experience and knowledge that may be

required on the Board in the future).

Effective succession planning also

contributes to the ability of the Bank

to deliver on its strategic objectives.

The Committee reviewed the succession

plans below the Board including the IBP

Executive Committee members, certain

subsidiary CEOs and other senior

managers. The Committee identified

‘step in’ successors and longer-term

candidates throughout the financial year,

emphasising the importance of

development plans for future and

potential leaders. This included exposure

to the Board, representation on

committees and technical development

such as executive coaching. In both the

short-term and longer-term plans, the

curricula vitae (CVs) of the potential

successors were reviewed.

A number of the recent appointments

to subsidiary boards, including Investec

Europe Limited and Investec US, had

been utilised to offer development and

growth opportunities to senior

management. The appointments and

succession planning were considered

in terms of diversity, development of our

employees and the needs of the relevant

Board while ensuring alignment to

regulatory expectations and

requirements.

In terms of non-executive succession,

as already noted, Moni Mannings

stepped down as a director in January

2023. The Committee considered the

numerous key roles that Moni held

throughout the organisation covering her

responsibilities as the Senior

Independent Director (SID), Chair of the

Remuneration Committee, membership

on the IBP Audit Committee, membership

on the Nomination Committee,

membership on the DLC Social and

Ethics Committee as the IBP

representative, and her role as the

designated Non-Executive Director for

workforce engagement. The Committee

on review of the Board composition and

the individual skills and experience of

directors, made a series of

recommendations. Based on the

recommendations, the Board approved

the appointment of Lesley Watkins as a

member of the Committee, Henrietta

Baldock as Chair of the IBP Remuneration

Committee, subject to regulatory

approval and David Germain as the

designated Non-Executive Director for

workforce engagement. The Board, on

the recommendation of the Committee,

decided not to replace Moni immediately

on the Audit Committee. On discussion of

the role requirements of the SID role, it

was considered that while the role was a

UK Corporate Governance Code

requirement, the Committee

recommended not to elect a SID with the

annual performance evaluation of the

Chair being conducted by the Group

Chair, Philip Hourquebie, going forward.

Please refer to page 66 for our statement

of compliance with the UK Corporate

Governance Code and our explanation in

this regard.

Board effectiveness and

training

The Committee oversees development

undertaken by the Non-Executive

Directors ensuring that the mandatory

computer-based compliance training was

completed. Directors’ Development

sessions were also held at least four

times during the year, with the Bank’s

parent company, to provide the Board

opportunities to develop knowledge

regarding the business, the market,

trends and/or regulation. The Committee,

in conjunction with the DLC Nomdac,

drives the agenda and topics discussed.

Topics during the year included:

•Technology/cybersecurity/Fintech

•Operational resilience

•ESG

•Update on the UK economy

•Joint simulation exercise with a

simultaneous recovery scenario

focusing on governance arrangements

and the management of operational

dependencies between the UK and SA.



03	Risk management and governance	CORPORATE GOVERNANCE	Investec Bank plc Annual Financial Statements 2023

IBP NOMINATION COMMITTEE REPORT CONTINUED

The Board effectiveness review was

conducted internally, as the previous

year the evaluation had been conducted

externally by Fidelio Partners. There were

four stages to the 2022 internal review:

Stage 1: The Committee, with the

assistance of the company secretary,

prepared a self-assessment

questionnaire, which was distributed

digitally to all the directors for

completion. The questionnaire sought the

directors’ views on a range of topics

including performance and effectiveness

of the Board and its committees,

composition, strategy, culture and

composition of the Board.

Stage 2: The Chair held one on one

meetings with each of the directors to

discuss the responses and to provide the

opportunity to raise any other matters.

Stage 3: A report was prepared by the

Company Secretary, based on the results

of the questionnaire and the meetings

held. The draft report was then discussed

with the Chair, whose feedback was

incorporated into a final discussion paper

including the proposed action plan.

Stage 4: The final report was presented

to the Board in March 2023, following its

consideration by the Committee. The

Board approved the proposed action plan

noting that the Committee would monitor

the implementation.

The review identified the particular

strengths of the Board as being the

cohesiveness of the Board which had a

good grasp of accountability, a diverse

range of skills and an improved focus on

strategy.

From a development perspective, the

review highlighted certain areas of focus

that would further improve the

effectiveness of the Board which

included an enhanced focus on medium-

term strategy and reporting from

subsidiaries. These were considered by

the Board and an appropriate action plan

was agreed.

The Board committees were also

reviewed, and, overall, were considered

to function well in terms of their

effectiveness, decision making and the

rigorous manner in which they addressed

any issues brought to their attention.

The board action plan for 2022/23

includes:

•Review quality and quantity of

reporting information reducing

duplication and refining the

management information (MI)

•Enhanced reporting from subsidiaries

•Further improving the focus on

medium-term strategy

The Chair was also reviewed, with a

process led by Moni Mannings in her role

as SID, prior to her stepping down from

the Board. The Chair was considered

to provide robust leadership for the

Board, strengthening the link between

the executive and non-executive

members of the Board as well

as providing an improved level of

insight into the Group Board.

The Committee will continue to

monitor the progress of implementing

the action plan.

Board composition

The Committee has continued to review

its composition for Board and Board

Committees with particular regard to the

breadth of skills, knowledge, experience

and diversity of members.

The Committee keeps under review and

consideration the balance of Non-

Executive Directors and Executive

Directors, tenure and diversity including

gender balance.

The composition of the Board can be

seen in the directors’ report on page

63-65.

In terms of key considerations, as at the

date of this report:

•50% of the Board are female

•30% of the Board are Black, Asian and

Minority Ethnic

•60% of the Board are Non-Executive

Directors

•All Non-Executive Directors have

served on the board for less than nine

years

Board suitability

In order to provide assurance that the

composition of the Board was

appropriate and in line with internal

procedures and regulatory guidance, the

suitability assessment of the Non-

Executive Directors was conducted in

July 2022, with the Committee reviewing

the feedback in the financial year. A skills

matrix has been developed for the annual

assessment of the individual suitability of

each director and the collective suitability

of the Board.

There were no matters of concern raised

and the Committee was satisfied that all

Non-Executive Directors remained

independent in character and judgement.

The review provided the Committee with

assurance that the composition of the

Board was appropriate to support the

Bank’s strategy.

Diversity

New appointments are made on merit,

taking account of the specific skills and

experience, independence and

knowledge needed to ensure a rounded

Board and the diverse benefits each

candidate can bring to the overall Board.

The Committee maintains the Board

Diversity and Inclusion Policy which sets

out the approach to the diversity of the

Board of Directors and provides a high-

level indication of the Board’s approach

to diversity for senior management roles.

There are also measurable objectives

including but not limited to, aspiring to

meet the recommendations of the FTSE

Women Leaders Review and the Parker

Review. The Bank has also signed up to

the HM Treasury Women in Finance

Charter and the Race at Work Charter.

Diversity will remain an area of focus

when considering any succession plans.

Further information on the Bank’s broader

approach to belonging, inclusion and

diversity can be found on page 20.



03	Risk management and governance	CORPORATE GOVERNANCE	Investec Bank plc Annual Financial Statements 2023

IBP NOMINATION COMMITTEE REPORT CONTINUED



			Ensuring the effectiveness of the
			Bank’s internal controls and the integrity of financial reporting

			Lesley Watkins Chair of the IBP Audit Committee

Introduction

I am pleased to present you with the

report of the IBP Audit Committee (the

Committee) for the financial year ended

31 March 2023.

The theme at the end of the previous

financial year was one of cautious

optimism in anticipation of a broad-based

recovery across most sectors of the

global economy. Geo-political tensions

and the continuous macro challenges,

including inflationary pressures and

resultant tightened monetary policy, led

to the work of the Committee being

conducted against a backdrop of

heightened uncertainty and volatility.

Accordingly, a key focus of the

Committee has been consideration of the

assumptions, key accounting judgements

and impairment assessments in light of

revised credit model output and valuation

assessments. Given the uncertainty of

the economic outlook beyond the short

term, the Committee reviewed the

macro-economic scenarios and

weightings used for IFRS 9 purposes

ensuring that they remained appropriate

to capture the uncertainty in the macro-

economic environment and model

limitations which could impact the loan

portfolios. The Committee devoted time

to assessing management’s estimates of

the appropriate ECL assumptions for the

Bank’s lending portfolios and the

appropriateness of an ECL overlay, with

consideration of peers and any findings

raised by Ernst & Young (EY), and other

judgmental items in the financial

statements, including management’s

assessment of valuations for the Bank’s

principal investments and mark-to-

market and hedged positions as well as

the going concern and viability

assessment and the treatment and

disclosure of uncertain tax and other

legal matters.

Further details of the key accounting

issues considered by the Committee are

set out on the following pages.

The Committee has reviewed the output

of the internal audit and compliance

monitoring plans with a focus on ensuring

the timely remediation of findings and

received updates from management’s

Risk & Control Forum, with a particular

focus on IT controls, cyber and

operational resilience. The Committee

has received assurance that the control

environment continued to be improved

and the risk and control consciousness

within the Bank was established. Further

details of the internal control issues

considered by the Committee during the

year are set out on the following pages.

How the Audit Committee works

The IBP Audit Committee’s principal

responsibilities are to:

•Monitor the integrity of the Bank’s

financial reporting and satisfy itself,

having regard to any issues raised by

the external auditor, as to the

appropriateness of management’s

accounting policies and practices;

assess that any significant financial

judgements, assumptions or estimates

made and the disclosures

recommended by management are

appropriate; and assess whether

overall the annual report, taken as

a whole, is fair, balanced and

understandable, and provides

the information necessary for

stakeholders to assess the Bank’s

position and performance, business

model and strategy

•Review the effectiveness of the Bank’s

internal controls, including internal

financial controls

•Monitor the activities and the

performance of the internal and

external auditors (including monitoring

their independence and objectivity)

•Oversee the relationship with the

Bank’s external auditor

•Review and monitor the effectiveness

of the Bank’s whistleblowing policies

and procedures.

Composition, meeting

attendance, and interaction with

Investec Group

All members of the Committee are

independent Non-Executive Directors in

accordance with the UK Corporate

Governance Code 2018. The Committee

includes members who have recent and

relevant financial experience and as a

whole have competence relevant to the

sectors in which the Group operates.

The CEO and Finance Director of the

Bank attend meetings on a regular basis

but are not members. Other Bank

directors may also attend by invitation.

The Head of Risk, Head of Internal Audit,

Head of Compliance, the external auditor,

and Group Company Secretaries also

attend meetings on a regular basis.

The Committee meets alone with the

external auditor and, separately, with the

Head of Internal Audit. Committee

members also meet periodically with

management and the Heads of Internal

Audit, Compliance, Operational and IT

risk, and Finance as well as the lead

external audit partner and senior

management in order to keep knowledge

up to date, and to keep abreast of

commercial developments and

challenges facing the business.

The Chair of the Committee is also a

member of the IBP BRCC and, similarly,

the chair of IBP BRCC, Paul Seward, is

a member of this Committee. This

reciprocity of membership helps to

ensure interaction between these two



03	Risk management and governance	CORPORATE GOVERNANCE	Investec Bank plc Annual Financial Statements 2023

IBP AUDIT COMMITTEE REPORT

committees and a coordinated

consideration of the Bank's risks and

internal controls where they overlap in

relation to both financial risks and non-

financial risks, which reflects the holistic

oversight of risk at Board level.

The Committee reports formally to the

Board. The chair of the DLC audit

committee, Zarina Bassa, is a member

of this Committee which reflects the dual

listed structure of the Investec Group in

which Investec Bank plc is the principal

banking subsidiary in the UK and the

parent company of other material

overseas subsidiaries. This

representation of the Investec Group

audit committee Chair ensures that key

audit matters for Bank and its

subsidiaries are visible at the Investec

Group level, and likewise key audit

matters and matters of mutual interest

for the Investec Group and IBP are

communicated and addressed, where

applicable, in the Bank and its

subsidiaries. As an example, the IBP Audit

Committee worked together with the

Investec Group Audit Committee in

evaluating the audit firms participating in

the audit tender described in this report.

Investec Wealth & Investment, a

subsidiary of Investec Bank plc and

separately regulated by the FCA,

maintains an independent governance

structure comprising an independent

Board and Audit Committee. The

membership of the Wealth & Investment

Audit Committee comprises independent

Non-Executive Directors. Matters relating

to Wealth & Investment do not fall within

the remit of the IBP Audit Committee.

The Wealth & Investment Audit

Committee matters are reported to the

DLC Audit Committee. Any matters

relevant to the Bank are communicated

through the mechanism of having the

chair of the DLC Audit Committee as a

member of the IBP Audit Committee and

the IW&I Audit Committee.



Members	Member since	Eligible to attend1	Attended
Lesley Watkins (Chair)	13 Nov 2018	6	6
Zarina Bassa	1 Apr 2017	6	6
Moni Mannings2	2 Jul 2017	5	4
Paul Seward	1 Apr 2019	6	5

1.Where a director is unable to attend a meeting,

they receive papers in advance and have the

opportunity to provide comments to the Chair

of the Committee.

2.Moni Mannings stepped down as a director on

31 January 2023.

External audit

EY were appointed as the Bank’s auditor

in 1996. The Bank’s parent company,

Investec plc, is subject to the Statutory

Audit Services for Large Companies

Market Investigation (Mandatory Use of

Competitive Tender Processes and Audit

Committee Responsibilities) Order 2014

(the Order). This regulation requires

FTSE-listed companies to put their

statutory audit services out to tender at

least every 10 years. Accordingly EY

(having been Investec plc’s auditors since

2000) are subject to a mandatory

rotation by the end of March 2024 at the

latest. In addition to the requirement as

mentioned above for Investec plc, the

Bank is also required to rotate EY given

the length of EY’s service and the Bank’s

status as a Public Interest Entity (PIE).

Accordingly, this Committee participated

in a comprehensive tender process, led

by the Investec plc audit committee, to

consider a range of potential successors

to EY. The outcome of this tender

process was that Deloitte LLP was

nominated as the new external auditor

for the Investec Group and the Bank for

the financial year starting 1 April 2024.

The Board, on the recommendation of

the Committee, approved the

appointment of Deloitte as external

auditor for the financial year commencing

1 April 2024. However, this appointment

will be subject to the requisite formalities,

including Investec plc shareholder

approval in August 2024. Shareholder

approval is being sought in August 2023

for Deloitte to act in a shadow capacity

for a full audit cycle as part of their

transition process to replace EY.

Further information regarding the tender

of the Investec Group and the Bank’s

external auditors may be found in the

Investec Group’s 2023 integrated annual

report along with the Investec Group’s

information on the effectiveness,

objectivity and independence of EY as

auditor of the wider Investec Group.

The Committee continuously assesses

the effectiveness, objectivity and

independence of the external auditors

at formal Committee meetings, during

private meetings with EY and through

discussions with key executive

stakeholders. The Committee considers

the relationship with the auditor to be

working well and remains satisfied with

their effectiveness. The Committee

monitors whether the level of non-audit

fees could impact the independence of

the auditors having regard to the nature

of the services rendered and the fees

paid as a proportion of the overall audit

fee. The Committee is satisfied that the

quantity and type of non-audit work

undertaken throughout the year did not

impair the independence of EY.

Further details in regards to the audit

fees paid are on page 144.

Looking ahead

The Committee will continue to assess

the dynamics driving the economy

outlined above and the implications of

these on accounting requirements and

internal controls, and will also continue

to assess the adequacy of the internal

audit and compliance monitoring plans to

ensure adequate oversight of the control

environment.

Disclosures relating to climate change

and other environmental, social and

governance issues will continue to be an

area for review and the Committee will

continue to ensure that the Bank meets

its reporting requirements on these

topics in the financial statements. More

generally, the Committee will assess any

changes to regulations as a result of the

UK Government’s ‘restoring trust in audit

and corporate governance’ reform

package which proposes enhancements

to the UK Corporate Governance Code,

and responsibilities and remit of audit

committees.

The Committee will monitor the

transitional arrangements as Deloitte act

in a shadow capacity, until they

commence their responsibilities for the

financial year commencing 1 April 2024.

On 4 April 2023, it was announced that

Investec plc and Rathbones Group plc

(Rathbones) had entered into a definitive

agreement regarding an all-share

combination of Rathbones with Investec

Wealth & Investment (the Combination).

The accounting treatment on and post

completion can be found in note 54. The

Combination is subject to regulatory

approval. The Committee will keep under

review the accounting treatment of the

Combination and the ongoing impact on

reporting and internal controls.

Finally, I must record my thanks to

Moni Mannings, who stepped down

as a member of the Committee in

January 2023, for her contribution to the

work of the Committee. The Committee

will continue to work with the Nomination

Committee to monitor the composition

of the Committee.

Lesley Watkins

Chair

27 June 2023



03	Risk management and governance	CORPORATE GOVERNANCE	Investec Bank plc Annual Financial Statements 2023

IBP AUDIT COMMITTEE REPORT CONTINUED

Significant matters

Significant matters are those matters in the view of the IBP Audit Committee that:

•Required significant focus from the Committee

•Were considered to be significant or material in nature requiring exercise of judgement

•In relation to the 2023 annual report and financial statements were otherwise considered to be subjective from an accounting

or auditing perspective.


	Significant matters relating to the 2023 financial statements		What we did
	Expected credit loss (ECL) assessment The appropriateness of the allowance for expected credit losses is highly subjective and judgemental. The impact of geo-political tension and the resultant economic impacts in the geographies in which the business operates have resulted in key judgements and assumptions being made during the current year.		•Reviewed and challenged the appropriateness of the forward-looking macro-economic scenarios and assumptions (including the probability weights applied to each scenario and the sensitivity of each) used in credit models and the impact of these on forecast ECL •Evaluated the appropriateness of and methodology for management’s proposed ECL overlay to capture model limitations and economic uncertainty •Challenged the level of ECL and the assumptions used to calculate the ECL provisions held •Assessed ECL experienced against forecasts, and peers and considered whether the level of ECL was appropriate. Particular focus was given to exposures which were specifically affected by the high inflation, high interest rate economic environment •Evaluated the IFRS 9 disclosures for relevance and compliance with IFRS.

	Valuation of fair value instruments with higher risk characteristics and associated income For level 3 instruments, such as unlisted investments in private equity businesses, fair value loans and large bespoke derivative structures, and structured products there is a large degree of subjectivity and judgement surrounding the inputs to the valuations.		•Received reports on the material investments including an analysis of the key judgements and assumptions applied and approved the valuation adjustments proposed by management for the year ended 31 March 2023 •Received reports on and considered the valuation of financial instruments with higher risk characteristics •Challenged and debated significant subjective exposures and assumptions including: –the valuation principles applied for the valuation of level 3 investments (unlisted and private equity investments) and fair value loans –fair value of exposures in industries affected by the effects of the high inflationary, high interest rate environment and the Russia-Ukraine war –the appropriateness of the IFRS 13 disclosures on fair value.



03	Risk management and governance	CORPORATE GOVERNANCE	Investec Bank plc Annual Financial Statements 2023

IBP AUDIT COMMITTEE REPORT CONTINUED


	Significant matters relating to the 2023 financial statements (continued)		What we did
	Uncertain tax, contingent liabilities and other legal matters		•Considered potential legal and uncertain tax matters and contingent liabilities with a view to ensuring appropriate accounting treatment in the financial statements •Evaluated the appropriateness of the accounting and disclosures regarding the investigation by the Office of the Public Prosecutor in Cologne, claims by the German Federal Tax Office in Bonn, and the potential related civil claims. This was done by having closed sessions with executive management and external audit. At these meetings, the Committee considered the feedback as received from external and internal legal counsel and the probability of the outcomes including a commercial settlement. Refer to note 45 of the annual financial statements •Received updates from Group Legal on uncertain tax, legal and regulatory matters to enable the Audit Committee to probe and consider the matters and evaluate the basis and appropriateness of the accounting treatment and disclosure •Analysed the judgements and estimates made and discussed the potential range of outcomes that might arise to determine the liability, if any, for uncertain tax positions as required by the International Financial Reporting Interpretations Committee (IFRIC) 23 •Concluded on the appropriateness of the IAS 37 accounting treatment and the overall disclosure in the financial statements. Conferred with and received confirmation from the external auditors on the overall treatment.

	Going concern and viability statement		•Considered the Bank’s profitability, board approved budgets and capital plans through to March 2026, liquidity, operational risk and contingent liabilities. Particular account was taken of the impact of the combination of Investec Wealth & Investment and Rathbones Group plc, the impact of rising inflation, the continuing Russia-Ukraine War as well as the reverse stress testing conducted •Following confirmation from the IBP BRCC, recommended the approval of the going concern and the viability statement assumptions underlying the financial statements to the IBP Board for approval.

	External audit		•Managed the Bank’s relationship with the external auditor •Met with key members of the EY audit team to discuss and then approve the 2022/23 audit plan and agree key areas of focus •Assessed regular reports from EY on the progress of the 2022/23 audit and material accounting and control issues identified •Discussed EY’s feedback on the Bank’s critical accounting estimates and judgements •Discussed EY’s report on certain control areas including IT and the control environment ahead of the 2023 financial year-end •Assessed the performance, independence and objectivity of the external auditors •Collaborated with the Investec plc audit committee on the external auditor tender process to nominate Deloitte as a successor for EY for the 2024/25 audit.



03	Risk management and governance	CORPORATE GOVERNANCE	Investec Bank plc Annual Financial Statements 2023

IBP AUDIT COMMITTEE REPORT CONTINUED


	Significant matters relating to the 2023 financial statements (continued)		What we did
	Fair, balanced and understandable reporting The Bank is required to ensure that its external reporting is fair, balanced and understandable, and whether it provides the information necessary for stakeholders to assess the Bank’s position and performance, business model and strategy.		•Met with senior management to gain assurance that the processes underlying the compilation of the annual financial statements were appropriate •Conducted an in-depth, critical review of the annual financial statements including the accounting policies used and, where necessary, requested amendments to disclosure •Reviewed the accounting treatment of key judgements •Assessed disclosure controls and procedures •Confirmed that management had reported on and evidenced the basis on which representations to the external auditors were made •Concluded that the processes underlying the preparation of the annual report and financial statements for the year ended 31 March 2023 were appropriate in ensuring that those statements were fair, balanced and understandable •Obtained input and assurance from the external auditors and considered the level of and conclusion on the summary of audit differences •Recommended to the Board that the 2023 annual report and financial statements were fair, balanced and understandable •Considered in particular the disclosures relating to climate change.



03	Risk management and governance	CORPORATE GOVERNANCE	Investec Bank plc Annual Financial Statements 2023

IBP AUDIT COMMITTEE REPORT CONTINUED


	Other significant matters		What we did
	Internal controls and the business control environment		•Received regular reports from management’s Risk and Controls Forum and the Head of Compliance and Internal Audit on IBP and subsidiaries within the Committee’s terms of reference. Based on this reporting, evaluated the impact of evolving risk, including operational risk, on the internal control environment, including IT •Evaluated and tracked the status of material control issues identified by internal and external audit and tracked the progress of the associated remediation plans against agreed timeframes. Particular attention was paid to the effectiveness of IT general controls and controls impacting financial reporting as well as IT and cyber security risk management and governance •Evaluated reports on the internal control environment from the internal and external auditors •Assessed reports on individual businesses and functions on their control environment, discussed identified control failures and closely monitored the status of remediation plans •Received updates from senior management, and monitored action plans following internal audit findings •Requested confirmation from management regarding the remediation of issues identified including the time frames and accountability for remediation •Reviewed and approved the compliance monitoring plan and received regular updates •Reviewed the results of the Combined Assurance Matrix coverage plan at the year-end to assess the results of actual coverage and conclusions •Reviewed the internal and external CASS assurance reports on client money and assets.

	Internal audit		•Agreed the internal audit plan taking into account the risk assessment, methodology and resourcing •Received regular reports from internal audit of all significant issues identified by them •Monitored the delivery of the agreed plan •Tracked the levels of high and moderate risk findings and monitored the related remediation plans •Met with the Head of Internal Audit without management being present to discuss any issues arising •Monitored the skill set, independence and objectivity of internal audit and considered succession and resource planning •Debated and considered the Head of Internal Audit’s independence and determined that she remained independent •Received an opinion from internal audit on the effectiveness of the internal controls and the risk management framework as part of the year-end sign-off process •Monitored audit quality in relation to internal audit reviewing the methodology, process and skills.

	Whistleblowing		•Received and considered reports from management on the Bank's whistleblowing arrangements •Reviewed the reports to ensure that there were arrangements in place which colleagues could use in confidence and anonymously without fear of retaliation to report concerns about inappropriate and unacceptable practices, and that there was proportionate and independent investigation of such matters or appropriate follow-up •Considered the independence and effectiveness of the Bank’s policies and procedures on whistleblowing.



03	Risk management and governance	CORPORATE GOVERNANCE	Investec Bank plc Annual Financial Statements 2023

IBP AUDIT COMMITTEE REPORT CONTINUED


$Paul-Seward-(web).jpg$
			As the macro environment evolves so does
			our risk management enabling the Bank to succeed

			Paul Seward Chair of IBP BRCC

Introduction

I am pleased to present the report

on how the IBP BRCC (the Committee)

has discharged its responsibilities

throughout the financial year ended

31 March 2023.

The past year proved to be challenging

as a result of the macro-economic

environment. From a global perspective,

the inflationary pressures and geo-

political tensions, particularly the war

in the Ukraine, had resulted in significant

market disruption presenting a number

of risks to the Bank, our people and

clients. In addition, the political backdrop

in the UK and the instability of certain US

banks introduced uncertainty and a lack

of confidence which further worsened

the market disruption. Notwithstanding

the macro-economic environment, the

Committee through review and challenge

was assured that the Bank remained

focused on its strategy, strengthening

the franchise, and achieving good results

for clients. Overall, the Committee was

satisfied that the Bank’s risk culture and

control environment remained strong and

the Bank was in a good position to deal

with the risks faced by the business.

The major focus areas for the Committee

were the monitoring of risks, in particular,

liquidity, market risk, credit quality, fraud

and financial crime. Deep dives for all

material portfolios were undertaken by

Credit to ensure that they were as

resilient as possible to the operating

environment with the review including

interest rate sensitivity analysis. The

Committee continued its practice of

extensively reviewing the benchmarking

exercises undertaken by management to

seek comfort in terms of ECLs, the

management ECL overlay, credit loss

ratio and coverage ratios for assets.

Whilst the credit loss ratio had increased

slightly, this was predominantly as a

result of it normalising following a benign

environment in terms of rates and

assurance was received that it was not

indicative of any worsening in credit

quality.

Fraud risk continued to be heightened,

with the rise in brand impersonation

fraud, stolen device fraud and authorised

push payment fraud. The Committee

received updates on controls and

enhancements being implemented as well

as the training and awareness undertaken

both for employees and clients. The

Committee received updates from the

Money Laundering Reporting Officer

(MLRO) on the controls in place in order

to mitigate the increased sanction risks as

well as the Bank’s preparedness to

comply with the enhanced due diligence

and onboarding criteria for South African

clients as a result of the Financial Action

Task Force’s (FATF’s) decision to place

South Africa on its grey list.

The Bank’s liquidity and capital was

closely monitored and continued to be

managed conservatively to ensure

financial resilience in light of ongoing

market volatility due to the macro-

economic environment. The liquidity and

capital metrics continued to far exceed

regulatory and internal minimums. The

Committee reviewed and challenged the

appropriateness of the funding mix of the

Bank. The Committee also reviewed the

impact of rising interest rates and the

structural hedge implemented to manage

interest rate risk going forward.

Regular stress testing (which includes

reverse stress testing) was conducted

and the assumptions were challenged to

ensure that they were sufficiently severe.

The stress testing also extended to

climate transition risk utilising the Bank of

England’s Climate Biennial Exploratory

Scenario (CBES) scenario, with the focus

being on the Transportation (Aviation and

automotive) and Real Estate portfolios.

The Committee also reviewed the new

requirements published by the Basel

Committee on the effective management

and supervision of climate-related

financial risks.

People risk continued to be a key area

of focus for review by both the

Committee and at Board level particularly

relating to the wellbeing of employees,

the impact of the cost-of-living crisis,

upward pressure on reward and the risk

around talent retention and attrition, with

a specific focus on technology

resourcing. The Committee ensured that

key risk and compliance functions were

adequately resourced in order to

appropriately manage risks faced by

the Bank.

In July 2022, the Financial Conduct

Authority (FCA) announced a new

consumer duty for financial services

which will apply across all firms’ regulated

activities provided to consumers.

A project was established to implement

the actions required to ensure

compliance and the Committee received

regular updates on progress. As an

independent Non-Executive Director and

Chair of the Committee, the Board

determined that I had the appropriate

experience and knowledge so was

appointed as the board champion for

Consumer Duty and as such meet

regularly with the Chief Risk Officer and

those involved with the project to gain

a better understanding of the regulatory

expectations and progress being made,

ensuring sufficient resource and focus



03	Risk management and governance	CORPORATE GOVERNANCE	Investec Bank plc Annual Financial Statements 2023

IBP BOARD RISK AND CAPITAL MANAGEMENT REPORT

was being assigned to the project and

was being considered by the Board.

The operational resilience of the Bank

continued to be an area of focus

particularly as the Bank prepared for the

new Prudential Regulation Authority

(PRA) and FCA regulation on operational

resilience, reaffirming the Bank’s

important business services and impact

tolerances and reviewing the Bank’s

operational resilience self-assessment.

Progress updates were received and the

Committee noted that further testing was

to be conducted on the Bank’s

operational resilience which would also

provide further information on third party

concentration risk. In addition, the

Committee reviewed the operational

readiness of the Bank in the event of a

power outage impacting the UK.

The Committee continued to challenge

and guide management in strengthening

the key risk documents including the risk

appetite statements (RAS), the internal

capital adequacy assessment process

(ICAAP), the internal liquidity adequacy

assessment process (ILAAP), the

contingency funding plan and recovery

plan (CFRP).

Finally, on behalf of the Committee, I

would like to take the opportunity to

thank David Friedland for his invaluable

contribution to the Committee.

Role of the Committee

The role of the Committee is to review,

on behalf of the Board, the range of risks

facing the business. The Committee

performs this function by considering the

risk reports presented and questions

whether existing actions taken by

management are appropriate.

The Committee is an essential part of the

Bank's governance framework to which

the Board has delegated the overseeing

of the Bank's risk framework to ensure

that the framework is appropriate to the

size, scale and nature of the Bank's

activities for the purposes of effectively

managing the material risks to which the

Bank is exposed. The Committee is the

most senior Risk Management Committee

of the Bank.

The Committee has to ensure that all

risks are identified and properly mitigated

and managed. The Committee also

considers whether the resources

allocated to the risk management

functions are adequate for effectively

managing the Bank's risk exposures.

The Committee reports to the Board on

how it discharges its responsibilities and

makes appropriate recommendations to

the Board.

Investec Wealth & Investment (IW&I),

a subsidiary of Investec Bank plc

regulated by the FCA, maintains an

independent governance structure,

comprising an independent Board and

Board Risk Committee. The membership

of the Board Risk Committee of the

Wealth business comprises independent

Non-Executive Directors. Matters relating

to IW&I do not fall within the remit of the

IBP Board Risk and Capital Committee.

The IW&I Board Risk Committee reports

to the DLC BRCC. Any matters relevant

to the Bank are communicated to the

Bank, in part, through having the Chair

of the DLC BRCC, Vanessa Olver, as a

member of the IBP BRCC.

Role of the Chair

The role of the Chair of the IBP Board

Risk and Capital Committee requires

regular meetings with the executives

of the Bank, along with liaison with the

Chair of the DLC BRCC. The Chair also

has interactions with the risk functions,

Compliance and Head of IT, in order to

keep knowledge up to date, and to keep

abreast of commercial, regulatory and

legislative developments and challenges

facing the business.

Composition and attendance

The Committee is composed solely of

independent Non-Executive Directors,

with membership designed to provide the

breadth of risk expertise and commercial

acumen it needs to fulfil its

responsibilities. The Chair of the DLC

BRCC is a member of the Committee to

ensure the interconnection between the

Bank and its parent.



Meetings held in 2022/23
Members	Member since	Attended	Eligible to attend1
Paul Seward (Chair)	1 Apr 2019	6	6
David Friedland2	18 Jan 2019	2	3
David Germain	5 Nov 2020	5	6
Vanessa Olver3	4 Aug 2022	3	3
Brian Stevenson	8 Mar 2019	6	6
Lesley Watkins	18 Jan 2019	6	6

1.Where a director is unable to attend a meeting,

they receive papers in advance and have the

opportunity to provide comments to the Chair

of the Committee.

2. David Friedland stepped down as a director

of the Investec Group on 4 August 2022

3.Vanessa Olver assumed the role of DLC BRCC

Chair on 4 August 2022 and accordingly became

a member of the Committee



03	Risk management and governance	CORPORATE GOVERNANCE	Investec Bank plc Annual Financial Statements 2023

IBP BOARD RISK AND CAPITAL MANAGEMENT REPORT CONTINUED

Looking ahead

The Committee will continue to monitor

overall levels of risk within the business

as a result of the Bank’s growth strategy

as well as macro-economic factors such

as the higher interest rate environment

and general inflationary pressures on

consumers and businesses and the lack

of confidence in the global financial

market performance. Monitoring will also

cover the regulatory changes as a result

of Brexit and following the UK

government’s announcement of the

Edinburgh Reforms which are intended to

distance the UK from EU regulation and

stimulate innovation and competition in

the financial services industry. The

Committee will continue to review risks

arising out of the Bank’s retail and overall

funding strategies and ensure that the

Bank maintains sufficient liquidity and

capital buffers to meet regulatory and

internal minimums.

The Committee recognises that while

strides have been made in terms of the

Bank’s ESG and climate risk approach,

there will continue to be close monitoring

of improvements made and the work

undertaken to address any requirements

as they are published by regulators and

other bodies.

In terms of non-financial risks, people

risk, fraud risk and operational risk will

continue to be areas of focus as well as

the effective management of IT and

cyber risks, with additional scrutiny of the

role of third parties and concentration

risk. Operational resilience will also

continue to be closely monitored

including a focus on understanding third

party concentration risk and identifying

any third parties critical to the Bank’s

operations as being part of an important

business service (IBS), and including

them in the planned testing exercises.

There will be enhanced oversight of

material regulatory projects including the

process of migrating from the

standardised approach to the IRB

approach, and the Consumer Duty

project.

Paul Seward Chair, IBP BRCC

27 June 2023



03	Risk management and governance	CORPORATE GOVERNANCE	Investec Bank plc Annual Financial Statements 2023

IBP BOARD RISK AND CAPITAL MANAGEMENT REPORT CONTINUED

Committee Activities


	Area of focus		Conclusions and actions
	Regulatory Matters and Projects Consideration of key risk documents, the impact of regulatory developments and projects established to implement change effectively.		•Reviewed and challenged the key risk documents, including the ILAAP, ICAAP and CFRP, ahead of final approval •Regular presentations were provided on the new Consumer Duty regulations giving the Committee an understanding of the FCA and PRA expectations, guidance and advising on the project scope, and progress in implementing the new regulation. A deep dive into the regulation, requirements and approval of the implementation plan was also provided to the IBP Board to ensure that all directors had a full understanding •Frequent updates on the IRB project were received providing detail of the governance processes, and the development work so far, including two models which had been approved for validation •Received an update on the discontinuation of LIBOR and transition to risk-free rates as the deadline for the transition of US LIBOR of the end of June 2023 neared. The USD LIBOR decommissioning was significantly smaller than the GBP LIBOR scope was and there were no issues identified as the project remained on track •In terms of the operational resilience regulations, the Committee received regular updates on the progress made to address vulnerabilities identified in the self-assessment, reaffirmed the important business services and impact tolerances and reviewed the updated self-assessment. The Committee challenged the Bank’s impact tolerances for important business services as well as providing input on the Bank’s self-assessment. The Committee reviewed the work underway to test the resilience of the services and platforms provided by Investec Bank Limited (IBL) and other third party providers •Reviewed any potential and/or actual regulatory breaches and actions taken to mitigate breaches from occurring. The Committee were kept abreast of any relevant regulatory guidance, fines or new regulations •Reviewed the liquidity risk appetite and credit and investment risk appetite, challenging the key assumptions and ensuring the limits were appropriate to enable well- managed, diversified growth as well as other risk appetites including operational risk and business risk •The Committee reviewed the Market Risk appetite and Counterparty Credit Risk appetite to ensure that any learnings from the recent volatility had been incorporated.



03	Risk management and governance	CORPORATE GOVERNANCE	Investec Bank plc Annual Financial Statements 2023

IBP BOARD RISK AND CAPITAL MANAGEMENT REPORT CONTINUED


	Area of focus		Conclusions and actions
	Financial risk management of the Bank Consideration of the key financial risks and the controls in place to mitigate and effectively manage the risks faced by the Bank. The Committee closely reviewed the management of the credit book in light of macro-economic headwinds and continued to monitor the Structured Products book notwithstanding the significantly reduced risk and reducing materiality.		•Closely assessed the impact on the Bank’s ECLs, with a review of the provision, in conjunction with the Audit Committee, to ensure that it was appropriate, taking into account the economic outlook and scenarios. Benchmarking by management had been conducted to provide assurance that the level of ECL and credit loss ratio remained within the range of other UK banks •The Committee were comfortable that whilst the credit loss ratio had increased slightly, it still remained low as ECLs had not been experienced as forecast, it was deemed prudent to partially maintain the management overlay given ongoing uncertainty and the challenging market environment which was a similar approach to the Bank’s peers •Closely monitored the credit book given the macro- economic environment and potential for an increase in defaults and Stage 2 and Stage 3 exposures with a focus on the real estate and aviation books. Detailed presentations were received on the top non-performing exposures and the overall performance of the book as well as the mortgage book given the growth in this portfolio over the last two years. The Committee were cognisant that the interest rate environment had changed however, on review of loan to value (LTV) ratios which had reduced, were comfortable with the risk •The Committee received an in-depth presentation from the Bank Funding Group which detailed the diversity of the funding mix which assisted in reducing costs and ensuring adequate liquidity. The Committee also received an update on the structural hedging program which would assist in reducing net interest income (NII) sensitivity •Further enhanced the review and focus on emerging risks and the mitigation thereof which included both internal and external risks •Continued to review and challenge management actions to address the risks ensuring that there was surplus liquidity and capital buffers in place to manage the possible negative impact arising from the challenging macro-economic environment •Reviewed the business areas subject to market risk given the market volatility experienced within the year receiving updates on any losses which remained low •The Committee were kept updated of the actions being taken to improve from an ESG and climate risk perspective which included sustainability workshops and assessing core loans and advances and reviewing the risk classification and energy exposures •In terms of the Structured Products book, the Committee received and challenged the in-depth reporting on the risk management of the exposure to capital-at-risk products including the results of stress testing and focused on management’s continued progress in de-risking the book which included, but was not limited to, the effectiveness of the macro hedge in place to provide downside protection for the FTSE, Eurostoxx and S&P at certain levels, the unwinding of over-the-counter (OTC) interbank trades and monitored the forecasts of the book's performance and run- off profile. The Committee gained assurance that the risk continued to reduce and had been well managed through the market volatility experienced in September 2022 and March 2023



03	Risk management and governance	CORPORATE GOVERNANCE	Investec Bank plc Annual Financial Statements 2023

IBP BOARD RISK AND CAPITAL MANAGEMENT REPORT CONTINUED


	Area of focus		Conclusions and actions
	Non-financial risk management of the Bank Consideration of the key controls and processes to ensure that they were appropriate and effective to manage the material non-financial risks faced by the Bank.		•There had been an enhanced focus on IT and cyber risk with updates received on the progress to close any findings from the latest targeted attack simulation (TAS) exercise and improvements being made relating to data loss minimisation and access management controls. Updates on third party monitoring and the work being undertaken to enhance oversight processes and better understand concentration risk of third and fourth parties was received with a particular focus on Cloud concentration risk •Closely monitored operational risk losses and events to gain assurance that there were no trends or issues within the control environment •The Chair of the Committee, David Germain and DLC representative member (Vanessa Olver) attended DLC IT Risk and Governance Committee meetings to provide enhanced oversight of IT risk •The Committee closely monitored people risk from a wellbeing perspective as well as the risks arising as a result of the cost-of-living crisis and resourcing as well as the market-wide challenges in terms of talent attraction and retention •The Committee reviewed the financial crime controls and systems used, tracking the implementation of the new transaction monitoring system, with a particular focus as a result of the sanctions and risks arising from the war in Ukraine. There was also attention given to the processes and controls implemented to ensure compliance with the additional due diligence requirements and enhanced level of transaction monitoring because of FATF placing South Africa on the grey list •Any potential or actual fraud losses were examined by the Committee as fraud risk remained heightened throughout the industry. Overall, losses remained low and within risk appetite and the controls and processes were assessed to ensure they remained appropriate with enhancements being implemented to support fraud investigations. Updates on the training undertaken and enhanced quality assurance framework were reviewed as well as the progress of the retail transition from a fraud perspective •The Committee enhanced its oversight of projects with a focus on regulatory projects ensuring that adequate time and resource had been assigned to effectively deliver projects.



03	Risk management and governance	CORPORATE GOVERNANCE	Investec Bank plc Annual Financial Statements 2023

IBP BOARD RISK AND CAPITAL MANAGEMENT REPORT CONTINUED

The directors present their directors’

report and financial statements for the

year ended 31 March 2023.

The Company has chosen, in accordance

with Section 414C(11) of the UK

Companies Act, to include certain matters

in its strategic report which are

incorporated into this report by reference

as follows:

•An indication of likely future

developments in the business of the

Company and its subsidiaries

(throughout our strategic report)

•Our risk management objectives and

policies in relation to the use of

financial instruments, page 41

•A statement as to material events since

31 March 2023, page 226

•Our approach to diversity includes

employment of disabled persons, page

15. More detail can be found in the

Investec Group Sustainability Report

which is published and available on our

website www.investec.com

•Stakeholder engagement (including

employees and others), page 15

•Details of charitable activities

including any donations, page 15

•Statement of corporate governance

arrangements, pages 60-85

Results and dividends

The results for the year are shown on

page 23. Movements in reserves are

shown in the reconciliation of equity on

page 124 of the financial statements. An

interim dividend of £15 million was paid

on 15 November 2022. On 16 May 2023,

the Board declared that a dividend of

£35mn for the period ended 31 March

2023 be paid on 9 June 2023.

Directors

The names of the persons who were

directors during the financial year are set

out in the table below. Biographical details

of directors appointed as at the date of

this report are set out on pages 62-65.


	Appointed	Stepped down
Henrietta Baldock
Zarina Bassa
David Germain
Ruth Leas
Moni Mannings		31 Jan 2023
Kevin McKenna
Paul Seward
Brian Stevenson
Fani Titi
Lesley Watkins
Marlé van der Walt	20 Sept 2022

Independent auditor and

audit information

Ernst & Young LLP have indicated their

willingness to continue in office as

auditors. A resolution proposing their

re-appointment as auditors will be

submitted to the annual general meeting.

Each person who is a director at the date

of approval of this report, confirms that,

so far as the director is aware, there is no

relevant audit information of which the

company’s auditor is unaware and each

director has taken all steps that he or she

ought to have taken as a director to make

himself or herself aware of any relevant

audit information and to establish that

the Company’s auditor is aware of that

information. This confirmation is given

pursuant to Section 418 of the

Companies Act 2006 and should be

interpreted in accordance with and

subject to those provisions.

Going Concern statement

In adopting the going concern basis for

preparing the consolidated financial

statements, the directors have

considered the Bank’s business activities,

objectives and strategy, principal risks

and uncertainties in achieving its

objectives, and performance which are

set out in the strategic report. The

Directors have performed a robust

assessment of the Bank’s financial

forecasts across a range of scenarios

over a 12 month period from the date the

financial statements are authorised for

issue. The assessment specifically

incorporated analysis of the

macroeconomic environment and the

impact of the proposed combination of

Investec Wealth & Investment and

Rathbones Group plc on the Bank’s

projected performance, capital, liquidity

and funding positions, including the

impact of scheduled repayment of

borrowings and other liabilities. After

considering the analysis and factors

referenced, the directors confirm that

they have a reasonable expectation that

the Bank has adequate resources to

continue in operational existence for the

12 months from the date the financial

statements are authorised for issue.

Therefore, the directors consider it

appropriate to adopt the going concern

basis of accounting in preparing the

accompanying consolidated financial

statements.

Viability statement

In accordance with the UK Corporate

Governance Code, which was adopted

by Investec Bank plc as the corporate

governance code of the Bank, in addition

to providing a going concern statement,

the Board is required to make a

statement with respect to Investec Bank

plc’s viability (i.e. its ability to continue in

operation and meet its liabilities), taking

into account the current position of the

Bank, the Board’s assessment of Investec

Bank plc’s prospects and the principal

risks it faces. Following consideration, the

IBP Audit Committee recommended the

viability statement for Board approval.

The Board has identified the principal and

emerging risks facing the Bank and these

are highlighted on page 41 onwards, with

further detail provided in the Investec plc

(Investec Bank plc’s parent company)

annual report.



03	Risk management and governance	CORPORATE GOVERNANCE	Investec Bank plc Annual Financial Statements 2023

DIRECTORS' REPORT

Through its various committees, notably

the IBP Audit Committee, the IBP BRCC

and the IBP Capital Committees, the

Board regularly carries out a robust

assessment of these risks and their

potential impact on the performance,

liquidity, solvency, and operational

resilience of Investec Bank plc. The

activities of these Board sub-committees

and the issues considered by them are

described in the governance section of

this report.

Taking these risks into account, together

with the Bank’s strategic objectives and

the prevailing market environment, the

Board approved the overall mandated

risk appetite framework for Investec Bank

plc. The risk appetite frameworks set

broad parameters relating to the Board’s

expectations around performance,

business stability and risk management.

The Board considers that prudential risk

management is paramount in all it does.

Protection of depositors, customers’

interests, capital adequacy and

shareholder returns are key drivers. To

manage the Bank’s risk appetite, there

are a number of detailed policy

statements and governance structures in

place. The Board ensures that there are

appropriate resources in place to manage

the risks arising from running the

business by having independent Risk

Management, Compliance, and Financial

Control functions. These are

supplemented by an Internal Audit

function that reports independently to a

non-executive Audit Committee Chair.

The Board believes that the risk

management systems and processes,

supported by the conclusions of the

Internal Audit function and the results of

their combined assurance coverage and

each assurance function, are adequate to

support Investec Bank plc’s strategy and

allow the Bank to operate within its risk

appetite framework. A review of Investec

Bank plc’s performance/measurement

against its risk appetite framework is

provided at each IBP BRCC meeting and

at the main Board meetings.

In terms of the FCA and PRA

requirements, Investec Bank plc is also

required to meet regulatory standards

with respect to capital and liquidity. In

terms of these requirements, Investec

Bank plc is required to stress its capital

and liquidity positions under a number of

severe stress conditions. Investec’s

stress testing framework is well

embedded in its operations and is

designed to identify and regularly test the

Bank’s key ‘vulnerabilities under stress’.

In order to manage liquidity risk, liquidity

stress testing is performed for a range of

scenarios, each representing a different

set of assumptions. These include

market-wide, firm specific, and combined

scenarios (combination of the market-

wide and firm specific stresses). Investec

Bank plc manages its liquidity risk

appetite in relation to combined stress

parameters which represent extreme but

plausible circumstances. The objective is

to have sufficient liquidity under a

combined stress scenario to continue to

operate for a minimum period as detailed

in the Board-approved risk appetite. In

addition to these stress scenarios, the

Bank’s risk appetite also requires it to

maintain specified minimum levels for

both the liquidity coverage ratio and net

stable funding ratio, greater than those

required by the regulators; a minimum

cash and near cash to customer deposit

ratio of 25%; and to maintain low reliance

on wholesale funding to fund core asset

growth. Each legal banking entity within

Investec Bank plc is required to be fully

self-funded. The Bank currently has £8.6

billion in cash and near cash assets,

representing 44.4% of customer

deposits.

Investec Bank plc develops annual capital

plans (refreshed after six months) that

look forward over a three-year period.

The capital plans are refreshed on an ad

hoc basis if a material event occurs or is

likely to occur. These plans are designed

to assess the capital adequacy of

Investec Bank plc and its subsidiaries

under a range of economic and internal

conditions, with the impact on earnings,

asset growth, risk appetite and liquidity

considered. The output of capital

planning allows senior management and

the Board to make decisions to ensure

that Investec Bank plc continues to hold

sufficient capital to meet internal and

regulatory capital targets over the

medium term (i.e. three years). Investec

Bank plc targets a CET1 ratio in excess of

10%, a tier 1 ratio greater than 11%, a

minimum capital adequacy ratio of 14% to

17%, and a leverage ratio in excess of 6%.

The parameters used in the capital and

liquidity stresses are reviewed regularly,

taking into account the principal and

emerging risks facing the Bank, changes

in the business environments and inputs

from business units. Scenarios are

designed considering macro-economic

downside risks, portfolio-specific risk

factors and business model

vulnerabilities. Multiple scenarios are

considered to account for the uncertain

forward-looking macro-economic

environment. The scenarios described

below were as at 31 March 2023, and we

have experienced an evolving macro-

economic environment since the financial

year-end which has resulted in higher

interest rates than were previously

assumed in the base case forecast

horizon. Nevertheless these scenarios

are still considered appropriate to assess

the ongoing viability of the Bank given

the severity of the two downside

scenarios.

•Base Case: The UK economy recovers

from a period of weakness, a trajectory

which is followed by a number of other

western economies, while inflation falls

sharply. This is underpinned by the

absence of sharp energy price

increases and indeed UK natural gas

prices are expected to remain

materially lower than in 2022. The

expected recession over 2023 is

expected to be relatively short and

shallow with a peak to trough drop in

output of around 0.5%. The Bank rate

is 4.50% and falls later in 2023 as

inflation declines and the economy

remains weak. The unemployment rate

increases from a starting point below

4% to 5.3% as economic conditions are

unfavourable but also because the

decline in labour participation rates is

gradually reversed. The housing

market goes through a difficult period

in 2023. National house prices

experience a peak-to-trough decline of

7% with no recovery before the end of

the year. Globally, the situation is

projected to be similar to that of the

UK with many economies struggling,

inflation pressures falling and with

some central banks easing monetary

policy this year.

•Inflation Entrenched:The entrenched

inflation scenario assumes that upside

inflation risks materialise, with core

inflation remaining persistent across

the forecast horizon, for example

inflation is expected to still average 4%

at the end of the forecast period. As

such central banks tighten policy

further and maintain high policy rates,

The Bank of England base rate is

4.50% and is maintained at that level

throughout the scenario horizon.

Amidst this high interest rate, high

inflation environment, a recession

ensues in the near term and remains

stagnant across the forecast period as

a whole.

•BoE Annual Cyclical Scenario (ACS):

The Bank of England’s regulatory

scenario which encompasses a severe

global economic downturn, which both

at the domestic and global level is

more severe than the Global Financial

Crisis of 2008/09, with world GDP

assumed to fall 2.5%. The context of



03	Risk management and governance	CORPORATE GOVERNANCE	Investec Bank plc Annual Financial Statements 2023

DIRECTORS' REPORT CONTINUED

the scenario is an economic shock

driven by energy and other cost

pressures which cause a sharp rise

in inflation, in turn prompting a sharp

rise in interest rates; the BoE’s Bank

rate is assumed to rise to 6%. In the UK

a year long recession ensues before

a recovery is witnessed, supported by

an easing in monetary policy. Notably

there are severe shocks across various

sectors, UK house prices are expected

to fall 30% for example, whilst global

financial markets witness a significant

repricing, equity indices such as the

FTSE 100 fall 45%, whilst credit

spreads widen sharply.

Investec Bank plc implements regulatory

scenarios (UK BoE Annual Cyclical

Scenario) when they are published by the

regulator. The BoE published their new

ACS in September 2022, and this

scenario has been implemented as part

of IBP’s 2023 stress testing program.

The Board has assessed the Bank

viability in its ‘base case’ and stress

scenarios. In assessing Investec Bank

plc’s viability, a number of assumptions

are built into its capital and liquidity plans.

In the stress scenarios these include, for

example, foregoing or reducing dividend

payments and asset growth being

curtailed.

The Board has also assessed the Bank’s

viability with regards to the impact of the

proposed combination of the Rathbones

Group and Investec Wealth & Investment

Limited in its ‘base case’ and stress

scenario. In assessing Investec Bank plc’s

viability, a number of assumptions are

built into its capital and liquidity plans. In

the stress scenario these include, for

example, foregoing or reducing dividend

payments and asset growth being

curtailed.

We also carry out ‘reverse stress tests’,

i.e., scenarios that would cause the IBP

business model to fail. Reverse stress

scenarios are developed thematically,

and their impact is assessed in qualitative

and quantitative terms with respect to

regulatory capital and liquidity threshold

conditions, taking into account the loss

absorbing effects of the bank’s capital

stack. Escalating losses may expose the

business model to unacceptable levels

of risk well before regulatory threshold

conditions are breached, and mitigation

actions are identified with the aim to

prevent the failure of IBP. Reverse

scenarios are extreme tail events and are

considered remote, and mainly serve the

purpose of identifying and addressing

potential weaknesses that may not be

identified through the ongoing risk

management and stress testing

processes.

In addition, the Bank performs climate

scenario analysis and risk assessments in

line with the requirements stipulated by

Supervisory Statement SS3/19

‘Enhancing banks’ and insurers’

approaches to managing the financials

risks from climate change’, on a

proportionate basis for the size and

complexity of the firm. The BoE’s ‘2021

Climate Biennial Exploratory Scenario’ has

been used as the framework for scenario

analysis. To date, findings indicate that

transition and physical risk is low and

Investec Bank plc has sufficient capital

and liquidity to continue as a going

concern and meet regulatory capital and

liquidity requirements.

Investec Bank plc’s parent company,

Investec plc is required to maintain a

contingency funding and recovery plan,

and a resolution pack for the Investec plc

consolidated Group. The purpose of the

recovery plan is to document how the

Board and senior management will

ensure that the Investec plc Group

recovers from extreme financial stress to

avoid liquidity and capital difficulties. The

key focus in the recovery plan is the Bank

and the protection of its depositors and

other clients.

Investec Bank plc also maintains an

operational resilience framework that

defines important business services and

impact tolerances and plans to respond

effectively to a disruption. This not only

ensures continuity of business operations

but also safeguards the interests of key

stakeholders including clients and

regulators, as well as maintaining our

reputation, brand and value‐creating

activities.

The capital and liquidity plans, stress

scenarios, contingency funding and

recovery plan, resolution pack and the

risk appetite statement are reviewed at

least annually. In times of severe

economic distress and if applicable,

stress scenarios are reviewed more

regularly; for example, as was the case

with the COVID‐19 pandemic. In addition,

senior management hosts an annual risk

appetite process at which the Bank’s risk

appetite frameworks are reviewed and

modified to take into account risk

experience and changes in the

environment. Furthermore, strategic

budget processes take place within each

business division at least annually. These

focus on, amongst other things: the

business and competitive landscape;

opportunities and challenges; and

financial projections. A summary of these

divisional budgets is presented to the

Board during its strategic review process

early in the year.

In assessing the Bank’s viability, the

Board has taken all of the above-

mentioned factors, documents and

processes into consideration. The

directors can confirm that they have

a reasonable expectation that Investec

Bank plc will continue to operate and

meet its liabilities as they fall due over

the next three years. The Board has used

a three‐year assessment period as this

is aligned to Investec Bank plc’s medium-

term capital plans which incorporate

profitability, liquidity, leverage and capital

adequacy projections and include impact

assessments from a number of stress

scenarios. Detailed management

information therefore exists to provide

senior management and the Board

sufficient and realistic visibility of

Investec Bank plc’s viability over the

three years to 31 March 2026.

The viability statement should be read

in conjunction with the following sections

in the annual reports, all of which have

informed the Board’s assessment of

Investec Bank plc’s viability:

•Pages 4 to 14, which show a strategic

and financial overview of the business

•Page 43 to 59 which provides detail on

the principal and emerging risks the

Bank faces and the processes in place

to assist Investec Bank plc in mitigating

its principal risks

•Pages 40 which provide an overview of

Investec Bank plc’s approach to risk

management

•Pages 43, 233, 254 and 271 which

highlight information on Investec Bank

plc’s various stress testing processes

•Page 260 to 266 which focuses on

Investec Bank plc’s philosophy and

approach to liquidity management

•Page 269 which provides detail on the

recovery and resolution pack

•Pages 270 to 275 which explain

Investec Bank plc’s capital

management framework.

This forward‐looking viability statement

made by the Board is based on

information and knowledge of Investec

Bank plc at 27 June 2023. There could

be a number of risks and uncertainties

arising from (but not limited to) domestic

and global economic and business

conditions beyond IBP’s control that

could cause Investec Bank plc’s actual

results, performance or achievements in

the markets in which it operates to differ

from those anticipated.



03	Risk management and governance	CORPORATE GOVERNANCE	Investec Bank plc Annual Financial Statements 2023

DIRECTORS' REPORT CONTINUED

Events after the reporting

date


	Refer to Note 54 of the Annual Financial statements.

Directors’ responsibility

statement

The following statement, which should be

read in conjunction with the auditor’s

report set out on pages 107 to 118, is

made with a view to distinguishing for its

shareholder the respective

responsibilities of the directors and of the

auditors in relation to the accounts.

The directors are responsible for

preparing the annual report and the

Bank’s financial statements in

accordance with applicable United

Kingdom law and regulations.

Company law requires the directors to

prepare financial statements for each

financial year. Under that law the

directors have elected to prepare the

financial statements in accordance with

International Financial Reporting

Standards (IFRSs) in conformity with the

Companies Act 2006. Under company

law the directors must not approve the

Group financial statements unless they

are satisfied that they give a true and fair

view of the state of affairs of the Group

and the Company and of the profit or loss

of the Group and the Company for that

period.

In preparing these financial statements

the directors are required to:

•Select suitable accounting policies

in accordance with IAS 8 Accounting

Policies, Changes in Accounting

Estimates and Errors and then apply

them consistently;

•Make judgements and accounting

estimates that are reasonable and

prudent

•Present information, including

accounting policies, in a manner that

provides relevant, reliable, comparable

and understandable information

•Provide additional disclosures when

compliance with the specific

requirements in IFRSs is insufficient to

enable users to understand the impact

of particular transactions, other events

and conditions on the Bank’s financial

position and financial performance

•In respect of the Bank financial

statements, state whether IFRSs in

conformity with the Companies Act

2006 and IFRSs adopted pursuant to

Regulation(EC) No. 1606/2002 as it

applies in the European Union have

been followed, subject to any material

departures disclosed and explained in

the financial statements

•In respect of the parent company

financial statements, state whether

IFRS’s in conformity with the

Companies Act 2006, have been

followed, subject to any material

departures disclosed and explained in

the financial statements

•Prepare the financial statements on

the going concern basis unless it is

appropriate to presume that the Bank

will not continue in business.

The directors are responsible for keeping

adequate accounting records that are

sufficient to show and explain the Bank’s

transactions and disclose with

reasonable accuracy at any time the

financial position of the Bank and enable

them to ensure that the Bank’s financial

statements comply with the Companies

Act 2006. They are also responsible for

safeguarding the assets of the Bank and

hence for taking reasonable steps for the

prevention and detection of fraud and

other irregularities.

Under applicable law and regulations, the

directors are also responsible for

preparing a strategic report, directors’

report, directors’ remuneration report and

corporate governance statement that

comply with that law and those

regulations. The directors are responsible

for the maintenance and integrity of the

corporate and financial information

included on the Company’s website.

The directors confirm, to the best of their

knowledge:

•That the consolidated financial

statements, prepared in accordance

with IFRSs in conformity with the

Companies Act 2006 and IFRSs

adopted pursuant to Regulation(EC)

No.1606/2002 as it applies in the

European Union, give a true and fair

view of the assets, liabilities, financial

position and profit of the parent

company and undertakings included in

the consolidation taken as a whole

•That the annual report, including the

strategic report, includes a fair review

of the development and performance

of the business and the position of the

Bank, together with a description of

the principal risks and uncertainties

that they face

•That they consider the annual report,

taken as a whole, is fair, balanced and

understandable and provides the

information necessary for shareholders

to assess the Bank’s position,

performance, business model and

strategy.

The strategic report, directors’ report and

the financial statements of the Bank,

were approved by the Board of Directors

on 27 June 2023.

Signed on behalf of the board



Ruth Leas Chief Executive 27 June 2023	Brian Stevenson Chair 27 June 2023



03	Risk management and governance	CORPORATE GOVERNANCE	Investec Bank plc Annual Financial Statements 2023

DIRECTORS' REPORT CONTINUED

Remuneration

report



04	Remuneration report	Investec Bank plc Annual Financial Statements 2023

IN THIS SECTION


92	Remuneration report



04	Remuneration report	Investec Bank plc Annual Financial Statements 2023



	Key achievements in FY2023 •Considered and approved the proposed 2023 remuneration approach for Executive Directors, senior management, Material Risk Takers (MRTs), control function employees and other employees •Approved the variable remuneration spend and overall remuneration approach for the financial year ended 31 March 2023 •Reviewed and approved fixed remuneration increases, taking into consideration the overall approach in the context of the current high inflationary environment and its impact on the cost of living •Approved the delivery of one-off support payments of up to £2 000 to colleagues on full time equivalent salaries of less than £50 000 in light of the cost-of-living crisis •Reviewed the diversity implications of the remuneration philosophy, policy and structures, including the diversity pay gap figures •Considered the interaction between culture and reward and the potential implications thereof •Reviewed the non-standard remuneration structures within Investec Bank plc •Regularly considered external legislative and regulatory developments •Regularly considered the application of malus and/or clawback •Reviewed key new hires and exits, including the remuneration outcomes for leavers.		Areas of focus in FY2024 •Continue to review fixed remuneration levels considering the current high inflationary environment and its impact on the cost of living for our employees •Consider and approve the remuneration framework and objectives for the Chief Executive, in the context of the Group Executive Team framework •Consider and approve the remuneration framework and objectives for the Investec Bank plc (IBP) Executive Committee •Consider the belonging, inclusion and diversity implications of the remuneration philosophy, policy and frameworks including equal pay and the diversity pay gaps •Consider how our remuneration philosophy, policy and practices support and align with our ESG initiatives •Consider how the overall remuneration philosophy and approach supports and aligns with the Investec Group strategy •Continue to regularly consider the application of malus and/or clawback •Consider the alignment of remuneration policies and practices for all employees with the Chief Executive and executive team •Review and consider how the remuneration philosophy, policy and approach align with and support our culture •Consider the risk implications of our remuneration policies and frameworks •Review regulatory changes relating to remuneration, including the proposed removal of the bonus cap for MRTs.

Meetings held in 2022/23

Members

Member since

Eligible to

attend

Attended

Henrietta Baldock (Chair)*

5 August 2021

Moni Mannings*

20 May 2019

Brian Stevenson

20 May 2019

Lesley Watkins

20 May 2019

*Henrietta Baldock became Chair of the Remuneration Committee on 1 February 2023.

**Moni Mannings stepped down from the IBP Board and as Chair of the Remuneration Committee on 31 January 2023.



04	Remuneration report	Investec Bank plc Annual Financial Statements 2023

REMUNERATION REPORT

Introduction

It is my pleasure to present the

remuneration report for the year ended

31 March 2023, which describes the

approach to remuneration at the

Specialist Bank

I was appointed Chair of the

Remuneration Committee on

1 February 2023, pending regulatory

approval. I would like to thank Moni

Mannings for her contribution as Chair of

the Remuneration Committee since 2019.

The IBP Remuneration Committee

has responsibility for remuneration within

the Specialist Bank and ensures

compliance with applicable legislation

and governance requirements of the

jurisdictions within which the Bank

operates, including its obligations as an

independent bank regulated by the

Prudential Regulation Authority (PRA) and

Financial Conduct Authority (FCA). While

the IBP Remuneration Committee is

responsible for remuneration within the

Specialist Bank, it reports key items up to

both the IBP Board and the DLC

Remuneration Committee.

Before we turn to look in more detail

at key aspects of our remuneration,

I would like to reflect on the

IBP Remuneration Committee’s

responsibilities, achievements and

challenges encountered over the past

year, and to consider the key areas

of focus for the Committee in the

year ahead.

Role of the Chair

The role of the Chair of the IBP

Remuneration Committee requires regular

meetings with the executives of the

Bank. The Chair also has interactions with

internal and external specialist advisers

and with the Heads of Reward, People &

Organisation, Compliance and Risk, in

order to keep knowledge up to date,

and to keep abreast of commercial,

regulatory and legislative developments

and challenges facing the business.

These interactions are an essential

part of the role of the Chair of the IBP

Remuneration Committee.

Composition

I served as Chair of the IBP Remuneration

Committee from 1 February 2023,

pending regulatory approval which was

received on 11 April 2023.

Moni Mannings served as Chair of the IBP

Remuneration Committee from

1 April 2022 to 31 January 2023.The

other members of the Committee, who

served for the full year, were Brian

Stevenson and Lesley Watkins.

The IBP Remuneration Committee

is composed of independent Non-

Executive Directors, with membership

designed to provide the breadth of

experience necessary for the members to

consider the issues that are presented to

the IBP Remuneration Committee.

I also served as Chair of the DLC

Remuneration Committee for the full

year. This has enhanced the

interconnection between the IBP

Remuneration Committee and the DLC

Remuneration Committee.

Committee responsibilities

The IBP Remuneration Committee

is responsible for considering the

remuneration arrangements of the

Executive Directors, senior employees

including Material Risk Takers (MRTs),

and that of the wider workforce of the

Specialist Bank. The remuneration

framework, performance measures and

metrics for the IBP Chief Executive Ruth

Leas, who is a person discharging

managerial responsibilities (PDMR) of the

Investec Group, are determined by the

DLC Remuneration Committee following

consultation with the IBP Remuneration

Committee. The annual remuneration for

the Chief Executive is then reviewed by

the IBP Remuneration Committee, with a

recommendation provided to the DLC

Remuneration Committee.

The IBP Remuneration Committee receive

reports from the IBP Reward Committee,

which has been mandated to oversee the

reward framework for Investec Bank plc

employees, and act as the Malus and

Clawback Committee to apply the

Specialist Bank’s policy in this regard.

Investec Wealth & Investment (IW&I),

a subsidiary of Investec Bank plc

regulated by the FCA, maintains an

independent governance structure,

comprising an independent Board

and Remuneration Committee.

The membership of the Remuneration

Committee of our wealth business

comprises independent Non-Executive

Directors. Matters relating to IW&I do

not fall within the remit of the IBP

Remuneration Committee, with the

exception of any individuals who are

designated as MRTs for the Investec plc

consolidation group under the PRA

Remuneration Code.

The IW&I Remuneration Committee

reports to the DLC Remuneration

Committee. Any matters relevant to the

Specialist Bank are communicated to the

Bank, in part, through having the Chair of

the DLC Remuneration Committee,

myself, as the Chair of the IBP

Remuneration Committee.

The IBP Remuneration Committee

reviews and recommends the

remuneration for the Executive Directors

and senior employees of the Bank to

the DLC Remuneration Committee.

The policy on remuneration packages

for Non-Executive Directors is agreed

and determined by the Investec

Group Board.

The past year in focus

The past year was a challenging year for

the IBP Remuneration Committee,

requiring a strong focus on operating

within and responding to the high

inflationary environment and its impact

on the cost of living, whilst encouraging

return to the office and ensuring that key

talent was retained in a competitive job

market. The Committee ensured they

focused on balancing the interests of

various stakeholders in considering the

approach to remuneration, in particular

variable remuneration payouts.

In response to the impact of the cost-of-

living crisis, the Committee approved the

delivery of one-off support payments of

up to £2 000 to colleagues on full-time

equivalent salaries of less than £50 000.

As outlined in the Corporate

Governance section, the Board and

the IBP Remuneration Committee have

a strong focus on culture. It has been

frequently documented, including by our

regulators, that remuneration structures

and practices can and do have a

significant impact on the culture within

organisations. Therefore this potential

effect has a significant bearing on the

approach and deliberations of the IBP

Remuneration Committee when

reviewing remuneration processes

and practices within the Specialist Bank,

and has driven some of the changes

implemented, including the executive

remuneration framework outlined below.

David Germain has replaced Moni

Mannings as the designated Non-

Executive Director for workforce

engagement for the Specialist Bank.

Activities during the year have included

culture dialogues, diversity and inclusion

programmes, talent programmes, town

halls, and question and answer sessions.

A quarterly workforce engagement

synthesis meeting is also held with

myself as the designated Non-Executive

Director for workforce engagement for

the Board of Investec Plc, and

Cath Thorpe for IW&I, to ensure that the



04	Remuneration report	Investec Bank plc Annual Financial Statements 2023

REMUNERATION REPORT CONTINUED

matters of interest to our people are

considered across the Group.

The IBP Remuneration Committee

also oversaw the details and publication

of the Bank’s annual pay gap report,

which includes the ethnicity pay gap.

Refer to the pay gap report published on

the Investec website for full details.

The IBP Remuneration Committee is

committed to ensuring further

improvement in the future. In addition,

the Specialist Bank is a signatory to

the Women in Finance Charter, and

in doing so has committed to, among

other items, linking the pay of senior

executives to delivery against the

set targets. We exceeded our 2022

Charter Targets and we are pleased to

confirm that new Charter targets have

been set for 2027. Full details were

disclosed on our website in

December 2022.

Throughout the year, the Remuneration

Committee reviewed the proposed

approach to variable remuneration for the

financial year ending 31 March 2023 and

agreed the final approach in May 2023.

We are confident that the approach taken

has enabled us to invest in appropriate

strategic initiatives, reward those who

performed strongly, retain our key people

and further strengthen the alignment with

the Specialist Bank, the Group and our

shareholder.

Performance and

outcomes for the year

The revenue momentum experienced in

the first half of the financial year

continued into the second half. Net

interest income benefitted from higher

average interest-earning assets and

rising global interest rates. Increased

client activity contributed to non-interest

revenue over the year, off-set by lower

fees from equity capital markets.

Variable remuneration for the 2023 year

was calculated using the standard

Economic Value Added (EVA) calculation.

Profits have increased this year by 42.1%

and our people have delivered a strong

performance and have been rewarded

accordingly. We considered the needs of

all of our stakeholders, including our

shareholder, when determining the

remuneration spend for the year. We

agreed the following principles to guide

our approach:

•Ensure we are rewarding for

performance

•Protect our business (so we have

a sustainable, viable business

in the long term)

•Ensure we retain those individuals who

are deemed key to the future strategy

of the business

•Mitigate flight risk and potential impact

to the franchise

•Account for external factors, including

the views of our shareholder and

regulators

•Ensure we are sensitive to and

supportive of the communities in which

we operate.

Looking ahead

It has been a very positive year for the

business and we remain confident in the

performance and strength of our

business, the dedication of our people

and the optimised scale, resilience and

technology within the business.

The IBP Remuneration Committee will

focus in the coming year on our

remuneration practices, with particular

attention being given to ensuring that our

philosophy, policy and approach support

and align with our culture, and our

approach to belonging, inclusion and

diversity. The IBP Remuneration

Committee will also be focused on

continuing the return to the office and

operating within and responding to the

high inflationary environment and its

impact on the cost of living.

The IBP Remuneration Committee

believes that the Specialist Bank’s

approach to executive remuneration

is designed to incentivise exceptional

performance from its executives and

employees, and ensure they are

rewarded appropriately for performance.

The Specialist Bank is also focused on

ensuring that its approach to reward is

fair in all aspects, and that all

stakeholders are taken into account

when determining how executives and

employees are rewarded.

The IBP Remuneration Committee

considers that there is strong alignment

between the Specialist Bank’s

remuneration structure and the Bank’s

stakeholders, especially with vesting

periods of share awards granted to

employees which generally vest over five

years, and in some cases seven years,

with additional post-vesting retention

periods for MRTs.

Conclusion

The Committee has had a positive year,

dealing with many challenging matters

which include operating within and

responding to the high inflationary

environment and its impact on the cost-

of-living, whilst encouraging the return to

the office and ensuring that key talent

was retained in an extremely competitive

job market.

We are confident that the steps we

have taken have allowed us to effectively

reward our people who have performed

strongly, retain our key people, and

ensure strong alignment with the

Specialist Bank, the Group and

our shareholder.

Henrietta Baldock

Chair, IBP Remuneration Committee

27 June 2023



04	Remuneration report	Investec Bank plc Annual Financial Statements 2023

REMUNERATION REPORT CONTINUED

Remuneration overview

Inside this section

Remuneration philosophy and approach for all employees

Remuneration policy

Variable remuneration

Other remuneration structures

Governance

Remuneration philosophy and

approach for all employees

Our remuneration approach is designed

to foster an exceptional performance

culture that enables an entrepreneurial

spirit as well as a strong sense of

ownership. We use remuneration to help

attract and retain culturally aligned,

smart, innovative and talented people

who adhere and subscribe to our culture,

risk appetite, values and philosophies,

and to recognise and drive out of the

ordinary performance.

The Specialist Bank’s remuneration levers

work to:

•Provide a sense of security, so people

feel free to innovate, challenge and

influence

•Motivate people to deliver exceptional

performance

•Give people a sense of ownership, so

they feel invested in the organisation.

Our remuneration approach reflects our

culture; it is an honest and challenging

process that is tailored to individual roles

and acknowledges personal and team

contributions. We reward people for the

contribution they make through payment

of a fixed package, variable performance

bonus, and ownership through a share

incentive scheme. We strive to provide a

working environment that stimulates

extraordinary performance so that

Executive Directors and employees may

be positive contributors to our clients, our

communities and the Group.

When determining levels of variable

remuneration, the Specialist Bank

considers the overall level of

performance, culture and risk events in

the year. The proportion of variable to

fixed remuneration is carefully monitored

to ensure compliance with regulatory

requirements. All incentives are subject

to the Bank’s performance adjustment

policy. This provides the Bank with the

ability to reduce, revoke or recover

variable remuneration in respect of a risk,

control or conduct issue, event or

behaviour.

Given IBP Executive Directors

and additional senior Specialist Bank

executive incentives are deferred for up

to seven years, the Bank does not

believe that the incentive structures

inadvertently motivate irresponsible or

short-term behaviour.



04	Remuneration report	Investec Bank plc Annual Financial Statements 2023

REMUNERATION REPORT CONTINUED

OVERVIEW OF REMUNERATION FOR ALL EMPLOYEES


	Element		Operation – Specialist Bank

	Salary		•Paid monthly in cash


	Role-Based Allowance		•Role-Based Allowances may be awarded to certain Material Risk Takers to reflect their roles and ensure an appropriate balance between fixed and variable remuneration –Paid monthly in cash –These are fixed, according to the nature of each role, and can only be amended in certain limited circumstances (e.g. a material increase in organisational responsibilities).


	Benefits and pension		•Benefits are provided, with the details depending on local market practice –Employees have access to country-specific, company-funded benefits such as pension schemes, private medical insurance, permanent health insurance, life insurance and cash allowances –Pension and benefit levels differ globally to be competitive in different markets, and there is no single pension level across the Group –Specialist Bank Executive Directors have access to the same benefits as Bank employees mentioned above, being Company-funded benefits such as pension schemes, private medical insurance, permanent health insurance and life insurance.


	Short-term incentive		•Discretionary performance bonuses based on business and individual performance •The amounts available to be distributed are based on the Bank-wide risk adjusted Economic Value Added (EVA) model which is, at a high level, based on revenue less risk- adjusted costs, and overall affordability •At an individual level the bonus allocations are determined based on performance against qualitative and quantitative factors. Qualitative measures include adherence to culture, including supporting belonging, inclusion and diversity, client outcomes, market context, contribution to performance and brand building, attitude displayed towards risk consciousness and effective risk management.


			Non-Material Risk Takers: •For employees who are not Material Risk Takers, all bonus awards exceeding a pre- determined threshold are subject to 60% deferral in respect of the portion exceeding the threshold •The deferred amount is awarded in the form of: short-term share awards vesting in three equal tranches over a period of approximately three years; or cash released in three equal tranches over a period of approximately three years •Deferred bonuses are subject to malus conditions.


			Material Risk Takers: Bonus awards are subject to deferral as follows: •Where variable remuneration, comprising bonus and long term incentives, exceeds £500 000, 60% of variable remuneration is deferred •Where variable remuneration is less than £500 000 40% is deferred, unless the de- minimis concession is met in which case there is no deferral •A minimum of 50% of both the deferred and non-deferred elements are delivered in shares, with the remaining balance in cash or shares •The deferred elements vest over periods from four up to seven years and are subject to an appropriate retention period, generally 12 months, after vesting •All variable remuneration is subject to clawback •All deferred variable remuneration is subject to malus •MRTs are subject to the 2:1 maximum ratio of variable to fixed remuneration.


	Other		•Variable remuneration of employees in the audit, risk and compliance functions is set independently of the business they oversee •The Non-Executive Directors are not eligible to participate in any of the Group’s incentive plans or to join any pension scheme. They do not receive any taxable benefits over and above reimbursement for agreed travel and subsistence.



04	Remuneration report	Investec Bank plc Annual Financial Statements 2023

REMUNERATION REPORT CONTINUED

Consideration of all employee

remuneration

The IBP Remuneration Committee

reviews changes in remuneration

arrangements in the workforce as we

recognise that all our people play an

important role in the success of the

Specialist Bank. The Bank is committed

to creating an inclusive working

environment and to rewarding our

employees throughout the organisation in

a fair manner, and the IBP Remuneration

Committee reviews our practices around

creating a fair, diverse and inclusive

working environment.

In making decisions on executive pay, the

IBP Remuneration Committee considers

wider workforce remuneration and

conditions to ensure that they are aligned

on an ongoing basis. Effective from 2019

the Board appointed a designated Non-

Executive Director (NED) to represent

employees in the boardroom. The

designated NED acts as an engagement

mechanism between our employees and

the Board and some of their key

objectives are to:

•Ensure the reward, incentives and

conditions available to the Company’s

workforce are taken into account when

deciding the pay of Executive Directors

and senior management

•Enable the IBP Remuneration

Committee to explain to the workforce

each year how decisions on executive

pay reflect wider Company pay policy

•Assist the IBP Remuneration

Committee to provide feedback to the

Board on workforce reward, incentives

and conditions, and support the latter’s

monitoring of whether Company

policies and practices support culture

and strategy.

The Board believes that employees

throughout the Specialist Bank should be

able to share in the success of the Bank.

As such, as outlined in the table on

the prior page, in addition to the fixed

pay element, all of our employees have

access to market relevant benefits,

and all employees are eligible to be

considered for an annual bonus after a

short initial qualifying period. The Board

believes strongly in share ownership

among our employees and therefore all

employees are, in principle, eligible to

participate in our long-term incentive

scheme.

Remuneration policy

All remuneration payable (salary, benefits

and incentives) is assessed at

a Specialist Bank, business unit and

individual level. This framework seeks to

balance both financial and non-financial

measures of performance to ensure that

the appropriate factors are considered

prior to making awards, and that the

appropriate mix of cash and share-based

awards are made.

Determination of remuneration

levels for employees

Qualitative and quantitative

considerations form an integral part

of the determination of overall levels

of remuneration and total compensation

for each individual.

Factors considered for overall levels

of remuneration in the Specialist Bank

include:

•Financial measures of performance:

–Risk-adjusted EVA model

–Affordability.

•Non-financial measures of

performance:

–Market context

–Specific input from the risk and

compliance functions.

Factors considered to determine total

compensation for each individual include:

•Financial measures of performance

–Achievement of individual

targets and objectives

–Scope of responsibility and individual

contributions.

•Non-financial measures of

performance

–Alignment and adherence to

our culture and values, including

supporting belonging, inclusion and

diversity

–The level of cooperation and

collaboration fostered

–Development of self and others

–Attitude displayed towards risk

consciousness and effective risk

management

–Adherence to internal control

procedures

–Compliance with the Specialist

Bank’s regulatory requirements and

relevant policies and procedures,

including treating customers fairly

–The ability to grow and develop

markets and client relationships

–Multi-year contribution to

performance and brand building

–Long-term sustained performance

–Specific input from the risk and

compliance functions

–Attitude and contribution to

sustainability principles and

initiatives.

Remuneration levels are targeted

to be commercially competitive

on the following basis:

•The most relevant competitive

reference points for remuneration

levels are based on the scope

of responsibility and individual

contributions made

•The IBP Remuneration Committee

recognises that the Specialist Bank

operates an international business and

competes with both local and

international competitors in each of our

markets

•Appropriate benchmark of industry

and comparable organisations’

remuneration practices are reviewed

regularly

•While benchmarking information is

utilised, it is considered along with

other relevant factors, including

internal comparators, the scope and

complexity of the role and the

individual’s contribution.

Variable remuneration

All employees are eligible to be

considered for a discretionary annual

bonus, subject inter alia to the factors set

out above in the section dealing with the

determination of remuneration levels. The

structure of short-term incentives

reflects differing regulatory requirements

for the different legal entities and also

differing competitive pressures in each

distinct market in which the Specialist

Bank operates.

Specialist Bank: variable short-

term incentive

Risk-weighted returns form the basis

for variable remuneration levels


	In our ordinary course of business, we face a number of risks that could affect our business operations, as highlighted on page 43.



04	Remuneration report	Investec Bank plc Annual Financial Statements 2023

REMUNERATION REPORT CONTINUED

Risk management is independent

from the business units and monitors,

manages and reports on the Specialist

Bank’s risk to ensure it is within the

stated risk appetite, as mandated by the

Board of Directors through the IBP Board

Risk and Capital Committee (IBP BRCC).

The Bank monitors and controls risk

exposure through credit, market, capital,

liquidity, operational and legal risk

divisions/forums/committees.

The Specialist Bank’s central credit,

investment and risk forums, IBP

Executive Risk Review Forum (Review

ERRF) and IBP Executive Risk Committee

(IBP ERC) provide transaction approval

independent of the business unit on

a deal-by-deal basis.

EVA model: allocation of performance-

related bonus pool

Our business strategy and associated risk

appetite, together with effective capital

utilisation, underpin the EVA annual

bonus allocation model.

Business units share in the annual

bonus pool to the extent that they have

generated a realised return on their

allocated risk-adjusted capital base in

excess of their target return on equity.

Many of the potential future risks that the

firm may face are avoided through

ensuring that the bonus pools are based

on actual realised risk-adjusted profits.

The bonus pools for non-operating

business units (central services and head

office functions) are generated by a levy

payable by each business unit on its

operating profit. This bonus pool may, in

some years, be supplemented by a

discretionary allocation as determined by

the executive, and agreed by the IBP

Remuneration Committee.

In terms of our EVA process, if business

and individual performance goals

are exceeded, the variable element of the

total remuneration package is likely to be

substantially higher than the relevant

target benchmark. This ensures that

overall remuneration levels have the

potential to be positioned at the upper

quartile level for superior performance,

in line with our overarching remuneration

policy.

In circumstances where a business unit

does not have an EVA pool (e.g. when

it incurs a loss or when it is a start-up),

the executive and IBP Remuneration

Committee, with support from the Group

and the DLC Remuneration Committee,

may consider a discretionary allocation to

allow for a modest bonus for those staff

who were expected to contribute to the

longer-term interests of that business

unit or the Specialist Bank, despite the

lack of EVA profits in the short term, e.g.

control functions, support staff and key

business staff.

It should be noted that the salaries and

proposed bonuses for employees

responsible for risk, internal audit and

compliance are not based on a formulaic

approach and are independent of any

revenues or profits generated by the

business units where they work. The

level of rewards for these employees

are assessed against the overall financial

performance of the Specialist Bank;

objectives based on their function;

and compliance with the various non-

financial aspects referred to above.

Key elements of the bonus allocation

process are set out below:

•A fixed predetermined percentage

of any return in excess of the EVA

hurdle accrues to the business

units’ EVA pool

•A portion of the total EVA pool is

allocated towards the bonus pool

for central services and head

office employees

•These bonus pools are reviewed

regularly by the appropriate

management and Non-Executive

committees to ensure that awards

are only paid when it is appropriate

to do so, considering the Group-wide

performance against non-financial

risk (both current and future) and

compliance-based objectives and in

order to ensure that the payment of

such discretionary bonuses does not

inhibit the Bank’s ability to maintain/

raise its capital levels. All users of

capital operate within a strict

philosophical framework that requires

a balancing of risk and reward and that

is designed to encourage behaviour in

the interests of all stakeholders as

opposed to just employees.

•The EVA pools are calculated centrally

by the Specialist Bank’s finance

function and are subject to audit as

part of the year-end audit process

•Once the annual audit is complete, line

managers in each business unit will

make discretionary bonus

recommendations for each team

member taking into consideration

qualitative and quantitative criteria

(as mentioned above)

•Bonus recommendations are then

subject to an extensive geographic

review involving the People &

Organisation function and the

executive

•Thereafter, these recommendations

are subject to a global review by

executive management before the IBP

Remuneration Committee and DLC

Remuneration Committee review

and approval process.

Deferral of annual bonus awards:

other than Material Risk Takers

within the Bank

All annual bonus awards exceeding a

predetermined hurdle level are subject to

60% deferral in respect of the portion

that exceeds the hurdle level. The

deferred amount is awarded in the form

of: forfeitable share awards vesting in

three equal tranches over approximately

three years; or cash released in

three equal tranches over approximately

three years. Where shares are being

awarded to employees as part of the

deferral of performance bonus awards,

these are referred to as short-term share

awards. These awards are made under

the terms of our existing long-term

incentive plans. The entire amount of the

annual bonus that is not deferred is

payable upfront in cash.

Deferral of variable remuneration

awards: Material Risk Takers within

the Bank

•Material Risk Takers include senior

management, risk takers, staff

engaged in certain central functions

and any other employees whose

professional activities have a material

impact on the Specialist Bank’s risk

profile

•Individual awards to MRTs are

determined based on EVA pools in

the same manner as is applicable

to all staff (as set out above), and

subject to the Specialist Bank’s

remuneration policy and governance

processes (also set out above)



04	Remuneration report	Investec Bank plc Annual Financial Statements 2023

REMUNERATION REPORT CONTINUED

•Variable remuneration awards

to Executive Directors of the Bank

(excluding Executive Directors who are

employees of a separately regulated

firm) and all variable remuneration

awards to other MRTs where total

variable remuneration exceeds

£500 000 are subject to 60% deferral

•All variable remuneration awards

to other MRTs where total variable

remuneration is less than £500 000 are

subject to 40% deferral

•The 40% not deferred in the former

instance or the 60% not deferred in the

latter instance are awarded as 50% in

cash and 50% in short-term share

awards

•The upfront short-term share

awards vest immediately, but are only

released after a period of 12 months

for all MRTs, with the exception of risk

managers, for which it is six months

•Variable remuneration awards for

MRTs who are not exempted by the

de-minimis concession are subject

to 40% deferral (60% if total variable

remuneration exceeds £500 000) after

taking into account the value of share

awards granted to each staff member

in the applicable financial year and

which are included in deferred variable

remuneration. The deferred portion of

discretionary awards to MRTs will,

at the election of the staff member,

be made either entirely in the form

of short-term share awards, or 50%

in short-term share awards and 50% in

cash

•All deferrals in the form of short-term

share awards (being either 50% or

100% of such deferral) vest over

periods of up to seven years and are

then subject to an appropriate period

of retention, being 12 months, with the

exception of risk managers, for which

it is six months.

Malus and clawback within the

Specialist Bank

Employees who leave the employment of

the Specialist Bank prior to the vesting of

deferred incentive awards will lose their

deferred bonus forfeitable shares other

than as a result of retirement, subject

to the Bank’s normal good leaver

provisions and approval process

in exceptional cases.

The deferred share and cash awards for

MRTs are subject to malus and clawback

adjustments. The assessment of whether

any malus adjustment should be made to

an individual’s unvested awards will be

undertaken within the following

framework:

•Where there is reasonable evidence

of employee misbehaviour

•Where the firm or business unit suffers

a material failure of risk management

•Other relevant events.

In these cases, management and the IBP

Remuneration Committee will take into

account the following factors in

determining the extent (if any) to which

the quantum of deferred awards should

be subject to clawback:

•The extent to which the individual

had control over the outcome

•Failure of internal control systems

•The impact of the risk profile of the

relevant member of the Specialist Bank

or business unit

•Any violation of the Bank’s culture

and values

•The long-term impact of the outcome

on the Bank or relevant business unit

•External factors including market

conditions

•Any other relevant factors.

Specifically for short-term share awards,

where profits which were used to

determine the original bonus are

materially reduced after the bonus

determination, the awards will be

recalculated for such reduction and

consideration will be given to malus and/

or clawback (if any) to the extent that the

prior period’s EVA pool is reduced and

the extent to which it affected each

employee.

The deferred share awards of non-

Material Risk Takers are subject to malus

adjustments.

Long-term incentive: share

awards

The Specialist Bank has a number of

share option and long-term share

incentive plans that are designed to align

the interests of employees with those of

shareholder and long-term organisational

interests, and to build material share

ownership over the long term through

share awards. These share option and

incentive plans are also used in

appropriate circumstances as a

mechanism for retaining key talent.

Awards are made in the form of

forfeitable share awards other than for

countries where the taxation of such

awards is penal. In these cases awards

are made in the form of conditional

awards or market strike options.

In principle all employees are eligible

for long-term incentives. Awards are

considered by the IBP Remuneration

Committee and made only in the 42-day

period following the release of our interim

or final financial results in accordance

with the Investment Association

Principles of Remuneration. These

awards comprise two elements, namely:

•‘New starter’ awards may be awarded

on a discretionary basis to new starters

and are generally linked to salary levels

•‘General allocation’ awards are similar

to new starter awards and may be

awarded on a discretionary basis to

employees who have not had any

other share award for a number of

years

•‘Top up’ awards are made at the

discretion of line management

primarily to ensure multi-year

performance and long-term value

generation.

All proposed long-term incentive awards

are recommended by business unit

management, approved by the DLC

Share Incentive Executive Committee

and the IBP Remuneration Committee

before being awarded.

Forfeitable shares for non-Material Risk

Takers are subject to one-third vesting

after approximately three, four and five

years, which we believe is appropriate for

our business requirements. LTIP awards

to Material Risk Takers are subject to

performance conditions and vest over a

period of two to four years, or three to

seven years, as determined by regulatory

requirements. Such LTIP awards are then

subject to a 12-month retention period,

with the exception of risk managers, for

which it is six months. The awards are

forfeited on termination, but ‘good leaver’

discretion is applied in exceptional

circumstances.

Retention is addressed through the long-

term nature of awards granted, which

provides an element of ‘lock-in’ for

employees throughout the vesting period

and allows for multi-year contribution to

performance and brand building.



04	Remuneration report	Investec Bank plc Annual Financial Statements 2023

REMUNERATION REPORT CONTINUED


	For further information on the share option and long-term share incentive plans in operation and in which the directors are eligible to participate, refer to the Investec Group’s 2023 Remuneration Report.

Other remuneration

structures

Guaranteed variable

remuneration

Guaranteed variable remuneration

comprises all forms of remuneration

whose value can be determined prior

to award. This includes, but is not limited

to sign-on, buy-out and guaranteed

awards. Guaranteed variable awards

will not be awarded, paid or provided

to any individual within the Specialist

Bank unless they are:

•Exceptional

•In the context of hiring new staff

•Limited to the first year of service.

The IBP Remuneration Committee, or the

Chair on behalf of the Committee, is

required to pre-approve individual

remuneration packages (including new

joiner, retention and severance

remuneration) for the following:

•IBP Executive Directors, in consultation

with the DLC Remuneration Committee

•IBP PDMRs

•IBP Senior Managers as defined under

the Senior Management and

Certification Regime (SMCR).

All other forms of guaranteed

remuneration above pre-determined

thresholds are reported to the IBP

and DLC Remuneration Committees.

Retention awards

The Specialist Bank only pays retention

awards to serving staff in exceptional

circumstances. In all such cases, the

People & Organisation and Reward

functions shall review proposed

payments to ensure that they are in line

with this policy and any other relevant

regulation. Additionally, for MRTs, the IBP

Remuneration Committee shall review

and approve all proposed awards.

Circumstances where the Bank will

consider making retention awards include

the case of a major restructuring of the

Group or any subsidiary or one of its

business units (for instance in the start-

up of a new business line, or the closure

of a business line), or where the retention

of individuals is essential to the

completion of the task. A valid business

case for the retention of the individual

must be presented to the IBP

Remuneration Committee in order for

a retention award to be approved. It is

required that the PRA be notified prior

to a retention award being made to

an MRT, and their guidance sought

on the appropriateness of retention

awards for certain other individuals.

Severance awards

Severance payments for the early

termination of a contract are at executive

management’s absolute discretion and

must reflect performance achieved over

time and be designed in a way that does

not reward failure. Severance payments

for MRTs in the Specialist Bank are

subject to all necessary regulatory

requirements, and approval by the IBP

Remuneration Committee.

Other remuneration structures

On occasion, the Specialist Bank may

utilise other remuneration structures

which are not mentioned above, in

certain pre-agreed circumstances such

as are required by our clients or market

practice.

Discretionary extended pension

benefits policy

Extended pension payments are very

rarely made and any such proposed

payments to employees upon reaching

retirement are required to be reviewed

and approved by the IBP Remuneration

Committee for alignment with appropriate

laws, policy and regulation.


	Governance

Compliance and governance

statement

The remuneration report complies with

the provisions of Schedule 8 of the Large

and Medium-sized Companies and

Groups (Accounts and Reports)

(Amendment) Regulations 2008 (as

amended), the UK Corporate Governance

Code, the UK Companies Act 2006, the

Rules of the UK Listing Authority, the UK

Financial Conduct Authority rules, the

PRA and FCA Remuneration Code and

Pillar III disclosure requirements.

Scope of our remuneration policy

The Specialist Bank aims to apply

remuneration policies to Executive

Directors and employees that are largely

consistent across the Bank, but

recognises that certain parts of the Bank

are governed by local regulations that

may contain more onerous requirements

in certain respects.

In those cases, the higher requirements

are applied to that part of the Specialist

Bank. This is relevant to Investec Bank

plc and its subsidiary companies that are

subject to the PRA Remuneration Code

(as a level 2 organisation as defined

therein), and in particular in relation

to MRTs. Additionally, where any aspect

of our remuneration policy contravenes

local laws or regulations, the local laws or

regulations shall prevail.

IW&I is separately regulated by the FCA

and as such maintains its own

remuneration policy, separate to the Bank

policy, in line with the FCA MIFIDPRU

Remuneration Code and the entity’s own

risk profile and business activities.



04	Remuneration report	Investec Bank plc Annual Financial Statements 2023

REMUNERATION REPORT CONTINUED

100

Directors’ emoluments (audited)


	2023	2022
Aggregated emoluments (excluding pension contributions)	9 276	6 800
Contributions to defined contribution scheme	112	102
	9 388	6 902
Number of directors in defined contribution scheme	4	3
Number of directors in closed defined benefits scheme	—	—

Included in aggregate Director emoluments for the current year are performance awards to IBP Executive and Non-Executive

Directors. Performance awards comprise £564 996 in upfront cash, £1 525 126 in upfront shares (vesting immediately and subject

to 12 months’ retention thereafter), £607 644 in deferred cash (vesting equally over three to seven years, subject to regulatory

requirements), and £1 695 538 in deferred short-term share awards (vesting equally over three to seven years, subject to

regulatory requirements).

Fani Titi was the highest paid director. Emoluments of the highest paid director were £3 115 083 (2022: £2 703 147) excluding

£34 308 of pension contribution to the defined contribution scheme, emoluments disclosed for Fani Titi is for services rendered as

the Executive Director of Investec Group. The performance awards of the highest paid director comprise £0 in upfront cash,

£960 130 in upfront shares (vesting immediately and subject to 12 months’ retention thereafter) and £608 194 in deferred short-

term share awards (vesting over four to seven years). The emoluments exclude long-term incentives with vesting subject to

achievement against future performance conditions.

All four Executive Directors exercised share options during the financial year, this includes Fani Titi as the highest paid director. Fani

Titi was granted shares in respect of qualifying services under a long term incentive scheme. Please refer to the Investec Group

Remuneration Report for further details.

PRA Remuneration Code quantitative disclosures

In terms of the PRA’s Chapter on Disclosure Requirements and Part 8 of the Capital Requirements Regulation, the Specialist Bank in

the UK is required to make certain quantitative and qualitative remuneration disclosures on an annual basis with respect to Material

Risk Takers.

Material Risk Takers are defined as those employees (including directors) whose professional activities could have a material

impact on the Specialist Bank’s risk profile. A total of 56 individuals were Material Risk Takers at 31 March 2023.


	The bank’s qualitative remuneration disclosures are provided on pages 95 to 100 and further information is provided in the Investec Group’s 2023 Remuneration Report.

The information contained in the tables below sets out the Specialist Bank’s quantitative disclosures in respect of Material Risk

Takers for the year ended 31 March 2023.

Aggregate remuneration of Material Risk Takers:


	Management Body remuneration			Business Areas
£’million	MB Supervisory Function	MB Management Function	Total MB	Investment Banking	Retail Banking 1	Corporate Functions	Independent Control Functions	All Other	Total
Total number of identified staff									57
–Of which: members of the management body	13	7	20
–Of which: other senior management				4	—	3	—	2
–Of which: other identified staff				10	2	8	7	1
Total remuneration of identified staff	2.5	16.3	18.8	19.4	2.7	8.1	4.9	3.2
–Of which: variable remuneration	—	10.7	10.7	11.5	1.7	4.5	2.6	1.8
–Of which: fixed remuneration	2.5	5.6	8.1	7.9	1.0	3.6	2.3	1.4

1.Refers to Private Client division



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101

Aggregate remuneration by remuneration type awarded during the financial year:


£’million	MB Supervisory Function	MB Management Function	Other Senior Management	Other Identified Staff
Fixed remuneration
Number of Identified Staff	13	7	9	28
Total Fixed Remuneration
–Of which cash based	2.5	5.6	4.6	11.6
–Of which shares	—	—	—	—
Variable remuneration
Number of identified staff	—	7	9	27
Total variable remuneration
–Upfront cash	—	0.6	1.4	3.3
–Deferred cash	—	0.6	1.1	2.3
–Upfront shares	—	3.7	1.4	3.3
–Deferred shares	—	3.1	2.4	5.9
–Deferred shares – long-term incentive awards**	—	2.7	0.6	0.2
Total remuneration (£’million)	2.5	16.3	11.5	26.6

**Value represents the number of shares awarded multiplied by the applicable share price. These awards were made during the period but have not yet vested. These

awards are subject to performance conditions and vest over a period from two and a half to four and a half years, up to three to seven years, determined by regulatory

requirements. They are also subject to a 6 or 12 month retention period after vesting.

Material Risk Takers who received £800,000 or more in the financial year:


	Number of Material Risk Takers
£800 000 – £1 200 000	6
£1 200 001 – £1 600 000	10
£1 600 001 – £2 000 000	2
£2 000 001 – £2 400 000	5
£2 400 001 – £2 800 000	3
£2 800 001 – £3 200 000	—
£3 200 001 – £3 600 000	1
£3 600 001 – £4 000 000	—
£4 000 001 – £4 400 000	—
£4 400 001 – £4 800 000	—
£4 800 001 – £5 200 000	—
> £5 200 001	—



04	Remuneration report	Investec Bank plc Annual Financial Statements 2023

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102

Deferred remuneration by Material Risk Taker Category:


£’million	Total amount awarded for previous performance periods	Of which due to vest in the financial year	Of which vesting in subsequent financial years	Amount of performance adjustment made in the financial year to deferred remuneration that was due to vest in the financial year	Amount of performance adjustment made in the financial year to deferred remuneration that was due to vest in future performance years	Total amount of adjustment during the financial year due to ex post implicit adjustments*	Total amount awarded before the financial year actually paid out in the financial year	Total of amount awarded for previous performance period that has vested but is subject to retention periods
MB Supervisory Function
–Cash	—	—	—	—	—	—	—	—
–Shares	—	—	—	—	—	—	—	—
MB Management Function
–Cash	0.7	0.2	0.5	—	—	—	0.2	—
–Shares	23.2	2.1	21.1	—	1.0	—	2.1	2.1
Other Senior Management
–Cash	1.5	0.2	1.3	—	—	—	0.2	—
–Shares	5.5	1.2	4.3	—	0.1	—	1.2	1.2
Other Identified Staff
–Cash	2.3	0.3	2.0	—	—	—	0.3	—
–Shares	17.2	3.4	13.8	—	0.1	—	3.4	3.4
Total amount	50.4	7.4	43.0	—	1.2	—	7.4	6.7

*i.e. changes of value of deferred remuneration due to the changes of prices of instruments.

Special payments to Material Risk Takers:


£’million	MB Supervisory Function	MB Management Function	Other Senior Management	Other Identified Staff	Total
Guaranteed bonuses
Number of Identified Staff	—	—	—	—	—
Total Amount	—	—	—	—	—
–Of which paid during the financial year, that are not taken into account in the bonus cap	—	—	—	—	—
Severance payments awarded in previous periods, that have been paid out during the financial year
Number of Identified Staff	—	—	—	—	—
Total Amount	—	—	—	—	—
Severance payments awarded during the financial year
Number of Identified Staff	—	—	1.0	3.0	4.0
Total Amount	—	—	0.1	0.5	0.6
–Of which paid during the financial year	—	—	0.1	0.5	0.6
–Of which deferred	—	—	—	—	—
–Of which paid during the financial year, that are not taken into account in the bonus cap	—	—	—	—	—
–Of which highest payment that has been awarded to a single person	—	—	—	—	—



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103


	Key Management Personnel (audited)


	Details of directors’ remuneration and interest in shares are disclosed on pages 159-162.

IAS 24 ‘Related party disclosures’ requires the following additional information for key management compensation.


Compensation of key management personnel	2023 £’000	2022 £’000
Short-term employee benefits	23 356	17 568
Other long-term employee benefits	2 704	3 950
Share-based payments	3 385	2 941
Total	29 445	24 459

Shareholdings, options and other securities of key management personnel


	2023 £’000	2022 £’000
Number of options held over Investec plc or Investec Limited ordinary shares under employee share schemes	8 157	6 593


	2023 £’000	2022 £’000
Number of Investec plc or Investec Limited	3 890	3 693
Ordinary shares held beneficially and non-beneficially	3 890	3 693

We have defined key management personnel as the Executive Directors of Investec Bank plc plus those classified as persons

discharging managerial responsibility. In addition to the directors listed in the report, those are Mark Currie (Investec Group Chief

Risk Officer), Lesley-Anne Gatter (Investec Group Head of People & Organisation), Iain Hooley1 (Acting Chief Executive - IW&I UK) ,

Marc Kahn (Investec Group Chief Strategy Officer), Barbara-Ann King2 (Former Chief Executive - IW&I UK), Abey Mokgwatsane

(Investec Group Chief Marketing Officer), Nishlan Samujh (Investec Group Finance Director), Stuart Spencer (Investec Group Chief

Operations Officer) and Lyndon Subroyen (Investec Group Head of Digital & Technology), Richard Wainwright (Investec Group

Executive Director) and Ciaran Whelan (Investec Group Executive Director).

1.Iain Hooley appointed Acting Chief Executive of IW&I UK 30 January 2023, pending PDMR regulatory approval.

2.Barbara-Ann King was appointed IW&I UK Chief Executive and PDMR 1 October 2022, stepped down 15 February 2023.



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Annual

financial

statements



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105

IN THIS SECTION


107	Independent auditor’s report to the members of Investec Bank plc

119	Consolidated Income Statement

120	Consolidated Statement of Total Comprehensive Income

121	Balance Sheets

123	Cash Flow Statements

124	Statements of Changes in Equity

128	Accounting policies

140	Notes to the Financial Statements

232	Notes to risk and capital management



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Opinion

In our opinion:

•Investec Bank plc’s Group financial statements and Parent Company financial statements (the “financial statements”) give a true

and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 March 2023 and of the Group’s profit for the

year then ended;

•the Group financial statements have been properly prepared in accordance with UK adopted international accounting standards

and International Financial Reporting Standards (IFRS) adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the

European Union;

•the Parent Company financial statements have been properly prepared in accordance with UK adopted international accounting

standards as applied in accordance with section 408 of the Companies Act 2006; and

•the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements of Investec Bank plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the year

ended 31 March 2023 which comprise:


Group	Parent Company
Consolidated balance sheet as at 31 March 2023	Balance sheet as at 31 March 2023
Consolidated income statement for the year then ended	Statement of changes in equity for the year then ended
Consolidated statement of comprehensive income for the year then ended	Cash flow statement for the year then ended
Consolidated statement of changes in equity for the year then ended	Related notes 8, 9,13-31, 33-40, 42-48, 51-52 and 67 to the financial statements
Consolidated statement of cash flows for the year then ended
Related notes 1 to 55 to the financial statements, including a summary of significant accounting policies
Related risk and capital management notes 56, 57 and 62 excluding information marked as ‘‘unaudited’’ and the information in note 63 marked as ‘‘audited’’.
Information identified as ‘audited’ in the annual report on remuneration in section four

The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international

accounting standards and IFRS adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union and; as

regards to the Parent Company financial statements, as applied in accordance with section 408 of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our

responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements

section of our report. We are independent of the Group and Parent Company in accordance with the ethical requirements that are

relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest

entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.



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107

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the

preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the Group and Parent

Company’s ability to continue to adopt the going concern basis of accounting included:

•understanding management’s going concern assessment process, including obtaining an understanding of the business planning

process, assessing the Board approved budgets and the reasonableness and completeness of assumptions applied. In assessing

these assumptions, we considered the impact of the current macro-economic environment in which the Group operates on

future operating performance and the principal risks affecting the Group;

•involving specialists to assess the results of management’s stress testing, including consideration of principal and emerging risks

on funding, liquidity and regulatory capital. We performed independent stress testing of capital and liquidity ratios and evaluated

the plausibility of the outcome under which regulatory minimum requirements would be breached. In addition, we evaluated the

viability of management actions available to mitigate erosion of capital and liquidity. We also assessed the impact of the

disclosed proposed combination of Investec Wealth & Investment UK and Rathbones Group;

•assessing the Group’s compliance with external debt covenants;

•inspecting correspondence with the Prudential Regulatory Authority (PRA) and Financial Conduct Authority (FCA) for matters that

may impact the going concern assessment; and

•evaluating the appropriateness and conformity of the going concern disclosure included in the annual report with the reporting

standards and management’s going concern assessment.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,

individually or collectively, may cast significant doubt on the Group and Parent Company’s ability to continue as a going concern for

a 12 month period from the date the financial statements are authorised for issue.

In relation to the Group and Parent Company’s reporting on how they have applied the UK Corporate Governance Code, we have

nothing material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the

directors considered it appropriate to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of

this report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the

Group’s ability to continue as a going concern.


Overview of our audit approach

Audit Scope		•We performed an audit of the complete financial information of two components and audit procedures on specific balances for a further component. •The components where we performed full or specific audit procedures accounted for 99% of operating profit before impairment of goodwill and amortisation of acquired intangibles and strategic actions (“operating profit”), 98% of total operating income before expected credit loss impairment charges (“revenue”) and 99% of total assets.


Key Audit Matters		•Adequacy of the provision for expected credit losses on loans and advances to customers; •Valuation of financial instruments with higher risk characteristics and associated income; •Adequacy of the provision held relating to the investigation by the Office of the Public Prosecutor in Cologne and related potential civil and tax claims; and •IT systems and controls impacting financial reporting.


Materiality		•We applied Group materiality of £20.4 million which represents 5% of operating profit before impairment of goodwill and amortisation of acquired intangibles and strategic actions (“operating profit”).



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An overview of the scope of the Parent and Group audits

Tailoring the scope

Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope

for each company within the Group. Taken together, this enables us to form an opinion on the consolidated financial statements.

We take into account size, risk profile, the organisation of the Group and effectiveness of Group wide controls, and other factors

such as changes in the business environment when assessing the level of work to be performed at each company.

Of the three components selected, we performed an audit of the complete financial information of two components (“full scope

components”) which were selected based on their size or risk characteristics. For the one other component (“specific scope

components”), we performed audit procedures on specific accounts within that component that we considered had the potential

for the greatest impact on the significant accounts in the financial statements either because of the size of these accounts or their

risk profile.


Component	Scoping
Investec Bank plc*	Full
Investec Wealth and Investment Limited	Full
Investec Bank (Channel Islands) Limited	Specific
* This component consists of Investec Bank plc, the Parent Company along with all the consolidation adjustments and other material balances relating to UK and Australian subsidiaries of Investec Bank plc which are also signed off by the senior statutory auditor.

The reporting components where we performed audit procedures accounted for 99% (2022: 99%) of the Group’s operating profit,

98% (2022: 98%) of the Group’s revenue and 99% (2022: 98%) of the Group’s total assets. For the current year, the full scope

components contributed 87% (2022: 94%) of the Group’s operating profit, 93% (2022: 94%) of the Group’s revenue and 89% (2022:

88%) of the Group’s total assets. The specific scope component contributed 12% (2022: 5%) of the Group’s operating profit, 5%

(2022: 4%) of the Group’s revenue and 10% (2022: 10%) of the Group’s total assets. The audit scope of these components may not

have included testing of all significant accounts of the component but will have contributed to the coverage of significant accounts

tested for the Group. The remaining components represent 1% (2022: 1%) of the Group’s operating profit and for these

components, we performed other procedures, including analytical review, review scope components and ensuring journals for

these components were included in the population from which we selected journals to test in order to respond to potential risks of

material misstatement to the Group financial statements.

The charts below illustrate the coverage obtained from the work performed by our audit teams.

Operating profit


	Full scope components	87%
	Specific scope components	12%
	Other procedures	1%

Revenue


	Full scope components	93%
	Specific scope components	5%
	Other procedures	2%

Total Assets


	Full scope components	89%
	Specific scope components	10%
	Other procedures	1%



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

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Changes from the prior year

Due to the way Investec Holdings Australia Pty Limited is now managed by the entity the component has moved from a specific

scope audit in the prior year to one covered within the scope of the Investec Bank plc component.

Involvement with component teams

In establishing our overall approach to the Group audit, we determined the type of work that needed to be undertaken at each of

the components by us, as the primary audit engagement team, or by component auditors from other EY global network firms

operating under our instruction. Where the work was performed by component auditors, we determined the appropriate level of

involvement to enable us to determine that sufficient audit evidence had been obtained as a basis for our opinion on the Group as a

whole.

During the current year’s audit cycle, the primary audit team followed a programme of in-person visits and virtual oversight reviews

that had been designed to ensure that the Senior Statutory Auditor visits all full scope and specific scope locations in the UK and

Europe. These in-person visits and virtual reviews involved discussing the audit approach with the component team and any issues

arising from their work. The primary audit engagement team interacted regularly with the component audit teams, where

appropriate, throughout the course of the audit, which included attending planning meetings, maintaining regular communication on

the status of the audits, reviewing relevant audit working papers on risk areas and taking responsibility for the scope and direction

of the audit process. We also attended certain audit team meetings with component management as well as audit committee

meetings.

This, together with the additional procedures performed at Group level, gave us appropriate evidence for our opinion on the Group

financial statements.

Climate change

Stakeholders are increasingly interested in how climate change will impact companies. The Group has determined that the most

significant future impacts from climate change on their operations will be from credit risk, operational risk, conduct risk, regulatory

risk and reputational risk. These are explained in Note 58 ESG risk and Note 59 Climate, nature and biodiversity risk, on pages 252

to 253 in the Task Force for Climate related Financial Disclosures and on page 46 in the principal risks. All of these disclosures form

part of the “Other information,” rather than the audited financial statements. Our procedures on these unaudited disclosures

therefore consisted solely of considering whether they are materially inconsistent with the financial statements or our knowledge

obtained in the course of the audit or otherwise appear to be materially misstated, in line with our responsibilities on “Other

information”.

In planning and performing our audit we assessed the potential impacts of climate change on the Group’s business and any

consequential material impact on its financial statements.

The Group has explained in the Accounting Policies note, how they have reflected the impact of climate change in their financial

statements and the significant judgements and estimates relating to climate change. These disclosures also explain where

governmental and societal responses to climate change risks are still developing, and where the degree of certainty of these

changes means that they cannot be taken into account when determining asset and liability valuations under the requirements of

UK adopted international accounting standards and IFRS adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the

European Union.

Our audit effort in considering the impact of climate change on the financial statements was focused on evaluating management’s

assessment of the impact of climate risk, physical and transition, their climate commitments, the effects of climate risks disclosed in

the key management assumptions disclosed in the Accounting Policy note and whether these have been appropriately reflected in

asset values where these are impacted by future cash flows and associated sensitivity disclosures, and in the timing and nature of

liabilities recognised. As part of this evaluation, we performed our own risk assessment, supported by our climate change internal

specialists, to determine the risks of material misstatement in the financial statements from climate change which needed to be

considered in our audit.

We also challenged the directors’ considerations of climate change risks in their assessment of going concern and viability and

associated disclosures. Where considerations of climate change were relevant to our assessment of going concern, these are

described above.

Based on our work we have considered the impact of climate change on the financial statements to impact certain key audit

matters. Details of our procedures and findings are included in our explanation of key audit matters below, where relevant.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial

statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to

fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of

resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit

of the financial statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters.



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Risk		Our response to the risk
Adequacy of the provision for expected credit losses on loans and advances to customers
Refer to the Audit Committee Report (page 76); Accounting policies (page 131-135, 138); and Note 26 of the Consolidated Financial Statements (page 188) The determination of the provision for expected credit losses (‘ECL’) is highly subjective. The subjectivity relates to the current uncertain geopolitical and economic outlook and the impact of climate change which were considered in our risk assessment. At year-end the Group reported gross loans and advances to customers subject to expected credit losses of £15,158 million (2022: £13,948 million); expected credit losses on loans and advances to customers at amortised cost of £140 million (2022: £130 million); and expected credit loss impairment charges of £66 million (2021: £25 million). Given the subjective nature of the calculation of ECL there is a heightened risk that the provisions could be misstated. We focused on the following: •Staging/assessment of significant increase in credit risk: Allocation of assets recognised in stages 1, 2 and 3, including the triggers for an asset moving between stages; •Multiple economic scenarios: The appropriateness of the economic scenarios determined by management, the probability weights assigned to each and the inputs and assumptions used to estimate their impact; •ECL models: The assumptions used to calculate ECL, including: –the accounting interpretations, modelling assumptions and data used in the Probability of Default (‘‘PD’’), Loss Given Default (‘‘LGD’’) and Exposure at Default (‘‘EAD’’) models; –Key model assumptions and techniques, including in-model adjustments. •Post model adjustments: Adequacy and completeness of post model adjustments; •Individually assessed provisions: where the measurement of the provision is dependent on the valuation of collateral, estimates of exit value, timing of cash flows, the recovery strategies and discount rates. The level of risk has remained consistent with the prior year.		To address the risks we performed the following key procedures, amongst others: Staging/assessment of significant increase in credit risk We assessed the design and tested the operating effectiveness of key controls focusing on the following: •assessment and approval of a significant increase or reduction in credit risk and monitoring of asset in each stage; •assessment of manual overrides to staging outcomes; and •data accuracy and completeness. We recalculated the assets in stages 1, 2 and 3 to assess if they were allocated to the appropriate stage and performed sensitivity analysis to assess the impact of different staging criteria and ECL. Multiple economic scenarios We assessed the design and tested the operating effectiveness of key controls focusing on management’s review and approval of the base case scenario, the methodology and output of alternative scenarios, including the probability weights assigned. We involved economists to assist us to assess the base case and alternative scenarios generated, including the probability weights applied to each scenario. This included independent analysis on management’s economic forecasts, which incorporated the use of third-party data. This assessment included developments related to the current uncertain geopolitical and economic outlook. We involved our modelling specialists to assess the correlation of the forecast macroeconomic factors to the ECL and to test the translation of the macroeconomic factors to the ECL. ECL models We assessed the design and tested the operating effectiveness of key controls, focusing on model governance, including the design, build, testing, review, and approval of relevant models. As part of this we assessed the accounting interpretations made for compliance with IFRS 9. We performed a risk assessment on all models involved in the ECL calculation to select a sample of models to test. We involved EY modelling specialists to assist us to test this sample of ECL models by testing the assumptions, inputs and formulae used. This included performing an assessment of: •the model design documentation against accepted industry principles; •the appropriateness of the methodology, considering alternative techniques including in-model adjustments; and •the programming code to review its consistency with the design documentation. To evaluate data quality, we agreed a sample of ECL calculation data points to source systems.



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Risk		Our response to the risk
Adequacy of the provision for expected credit losses on loans and advances to customers (continued)
		Post model adjustments We obtained an understanding of the model limitations to evaluate the completeness and appropriateness of the related adjustments. We determined an independent range of adjustments based on our understanding of the models and the current economic environment to compare against management’s estimate. We assessed the governance processes that the Group has put in place to review and approve post model adjustments. Individually assessed provisions We selected a sample of loans to recalculate the ECL with the involvement of our valuation specialists, where appropriate. Our sample considered high-risk sectors including retailers and wholesalers, leisure, entertainment and tourism, construction and corporate commercial real estate. For each sample selected we formed an independent view of collateral or exit values, cash flow assumptions and exit strategies. We also considered management’s potential alternative scenarios and the probability weights assigned. We assessed the discount rate used, re- performed the discounted cash flow calculations and compared our measurement outcomes to those prepared by management, investigating any significant differences arising. Overall stand-back assessment We performed a stand-back assessment of the ECL provision and coverage at an overall level and by stage to determine if provision levels were reasonable by considering the overall credit quality of the Group’s portfolios, risk profile, the impacts of the current economic conditions and geopolitical factors, and climate change on the Group’s customers. We performed peer benchmarking where available to assess overall staging and provision coverage levels. We evaluated the adequacy of disclosures in the financial statement considering the accounting standards including the assumptions and sensitivities disclosed. We tested the data and calculations supporting the disclosures.
The audit work was performed centrally by the Group audit team supported by relevant component audit teams, as required. We have performed audit work over 100% of the ECL.
Key observations communicated to the Audit Committee Based on the testing performed we concluded that the ECL provision made by management is within a reasonable range of outcomes and in compliance with IFRS 9. We highlighted the following matters to the Audit Committee: •Our stand-back assessment of the overall provision balance in light of the current economic environment and through peer benchmarking analysis of key indicators, such as coverage ratios, indicated the provision recorded as at year end was reasonable; •Where the design of key controls was effective, we tested those key controls and concluded they had operated effectively. We identified a limited number of design and operating deficiencies that required us to perform compensating substantive procedures to conclude that the ECL provision was not materially misstated; •Our testing of models and model assumptions highlighted some design deficiencies; however, these did not result in a material impact on the financial statements; •Overall, the post-model adjustments applied were reasonable and addressed model shortcomings identified; and •For individually assessed impairments and multiple economic scenarios, judgemental differences both increasing and decreasing impairment levels were identified; however, none of these individually or in aggregate were material to the financial statements.



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Risk		Our response to the risk
Valuation of fair value instruments with higher risk characteristics and associated income
Refer to the Audit Committee Report (page 76); Accounting policies (page 131, 137-138); and Note 14 of the Consolidated Financial Statements (page 162). As at 31 March 2023, the Group held fair value financial instruments; assets of £4,407 million and liabilities of £842 million (2022: assets £4,651 million and liabilities £1,048 million). This included certain level 2 and level 3 assets and liabilities with higher risk characteristics whose values are dependent upon unobservable inputs, where management’s significant judgement is applied. The valuation of those financial instruments with higher risk characteristics can include significant judgement and therefore the risk of inappropriate revenue recognition through incorrect valuation, as outlined below exists. The judgement in estimating the fair value of these instruments can involve complex valuation models or techniques and/or significant fair value adjustments; both of which may be reliant on inputs where there is limited market observability or liquidity. The estimation of the fair value is also subject to the current uncertain geopolitical and economic outlook and the impact of climate change. Management’s estimates which required significant judgement included: •Complex models – complex model-dependent derivatives and debt securities, which include structured equity derivatives with exotic features; •Valuation techniques – illiquid investments in, and fair valued loans to, unquoted private companies valued using different valuation techniques (e.g. price-earnings multiples, discounted cash flow, net asset valuations); •Illiquid inputs – pricing inputs, calibrations and discounts for illiquid instruments, which include securities, unlisted equity investments and profit shares, and fair valued loans referencing the corporate, aviation and property sectors. The level of risk has remained consistent with the prior year.		We obtained an understanding of management’s processes and tested the design effectiveness of controls relating to financial instrument valuation and related income statement measurement. We performed a detailed examination of management’s valuation methodologies and assessed the appropriateness and consistency of model inputs, key assumptions, contractual obligations and exit values on a sample basis. In addition, we assessed whether there were any indicators of aggregate bias in financial instrument valuation pricing sources and methodology assumptions. We considered the impact of the current uncertain geopolitical and economic outlook throughout the procedures performed on the higher risk characteristic financial instruments by challenging whether the valuation methodologies and assumptions used remained appropriate. Throughout our audit procedures, we considered the impact of climate change on the valuation of financial instruments. Complex models We involved valuation and modelling specialists, where appropriate, to assist in testing complex model-dependent valuations for derivatives, fair value loans and debt securities by performing independent revaluation, on a sample basis, to assess the appropriateness of models and the adequacy of assumptions and inputs used. We performed a search for potential contrary evidence by assessing trends in trading P&L and counterparty valuation differences. Valuation techniques We performed procedures on key judgments made by management in the calculation of fair value of a sample of illiquid unlisted investments, fair value loans and profit-sharing arrangements, including: •assessing the suitability and completeness of the comparable companies used in the calculation of the earnings multiples in price-earnings multiple valuations; •performing calculations to assess the appropriateness of discount rates used in discounted cash flow valuations, with reference to relevant industry and market data; •assessing external valuation reports received by management, where an external valuer has been engaged, and assessing their competence and objectivity in valuations which reference a net asset valuation; and •confirming that the accuracy of information provided by management was free from manipulation or amendment, including management accounts and reporting, unaudited financial information, and market pricing sources. •assessing the appropriateness of any significant illiquidity or other uncertainty adjustments applied by management; and •performed independent valuation estimates for a sample of financial instruments and compared them to managements estimate. Illiquid inputs We performed procedures on key judgments made by management on inputs used in the valuation a sample of unlisted equity investments, illiquid securities, fair value corporate, aviation and property loans and unlisted investment portfolios, including: •for unlisted equity investments and illiquid securities, independently re- pricing instruments that had been valued using illiquid pricing inputs, using alternative pricing sources, where available, to evaluate management’s valuation; and •for the fair value corporate, aviation and property loans and unlisted investment portfolios: we involved aircraft, real estate, and business valuation specialists to independently assess the valuations of a sample of positions. Our analyses considered the range of acceptable fair values taking account of other qualitative risk factors, such as company specific risk factors.



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Risk		Our response to the risk
Valuation of fair value instruments with higher risk characteristics and associated income (continued)
		For all positions, we compared our determined ranges and estimates to management’s fair values. We assessed the appropriateness of the disclosures in the consolidated financial statements in accordance with IFRS 13.
We performed full audit procedures over this risk area for two components, which covered 100% (2022: 100%) of the risk amount.
Key observations communicated to the Audit Committee We are satisfied that the assumptions used by management to reflect the fair value of financial instruments with higher risk characteristics and the recognition of related income are reasonable and in accordance with IFRS. We highlighted the following matters to the Audit Committee: •Complex-model dependent valuations and techniques were appropriate based on the output of our independent re-valuations, including the analysis of any trade activity during the year, peer benchmarking, and counterparty valuation differences; •For the valuation of fair value instruments with higher risk characteristics judgemental differences both increasing and decreasing valuation levels were identified; however, none of these individually or in aggregate were material to the financial statements.
Adequacy of the provision held and disclosure relating to the investigation by the Office of the Public Prosecutor in Cologne and related civil proceedings
Refer to the Audit Committee Report (page 77); Accounting policies (page 138); and Note 45 of the Consolidated Financial Statements (page 205) There are ongoing investigations into historical German dividend tax arbitrage transactions where the outcome is dependent on the resolution of the investigation by the Office of the Public Prosecutor in Cologne. Formal claims have also been made by the German Federal Tax Office in Bonn related to reclaims of tax related to the dividend tax arbitrage transactions. Further, whilst the Group is not a claimant nor a defendant to any civil claims in respect of dividend arbitrage transactions, it cannot rule out the possibility of civil claims by or against the Group in the future. Consequently, management made judgements about the adequacy of provisions which are subject to change in future periods as more information becomes available. Management have also assessed the need to disclose these matters as contingent liabilities. The level of risk has remained consistent with the prior year.		We examined the latest court rulings impacting other participants in cum-ex activity and analysis performed by management which set out the basis for the judgements in relation to the historical German dividend tax arbitrage transactions, federal tax claim and related provision. We also inspected the correspondence between the Group and its external legal advisors, between the Group and Office of the Public Prosecutor in Cologne, and between the Group and the German Federal Tax Office in Bonn. In addition, we obtained legal confirmations from, and spoke directly with, the Group’s external legal counsels to confirm the current status of the matters. We have obtained and evaluated the minutes of internal committees overseeing management’s response to the matters. With the assistance of Tax specialists, we have considered the matters in dispute and made comparisons with externally available information to challenge management’s assessment. We also evaluated the appropriateness of management’s accounting treatment and disclosure in relation to the investigation by the Office of the Public Prosecutor in Cologne, claims by the German Federal Tax Office in Bonn, and the potential related civil claims.
We performed full scope audit procedures over this risk area in the component impacted by the risk.
Key observations communicated to the Audit Committee Based on the information that is currently available we are satisfied with management’s assessment, calculation and recognition of the provision for historical German dividend tax arbitrage transactions, the federal tax claim and related potential civil claims. We are also satisfied with the adequacy of the disclosure presented in the financial statements for these matters.



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

INDEPENDENT AUDITOR’S REPORT TO THE MEMBER OF INVESTEC BANK PLC CONTINUED

114


Risk		Our response to the risk
IT systems and controls impacting financial reporting
The IT environment is complex and pervasive to the operations of the Group due to the large volume of transactions processed in numerous locations on a daily basis with extensive reliance on automated controls. Appropriate IT controls are required to ensure that applications process data as expected and that changes are made in an appropriate manner. As part of our audit we rely upon the IT control environment, in particular in relation to: •User access management across application, database and operating systems; •Controls over changes to the IT environment, including transformation, that changes the IT landscape; •IT operational controls; and •IT application or IT-dependent manual controls. These controls contribute to mitigating the risk of potential fraud or error in the financial accounting and reporting records as a result of changes to IT systems, applications or data. The Group has implemented a series of remediation programmes during the year to address previously identified control deficiencies, however we have still identified risks of inappropriate access and unauthorised changes to in-scope applications and production environments. The level of risk has reduced compared with the prior year.		We evaluated the design and tested the operating effectiveness of IT general controls in the access management and change management IT processes for key applications, operating systems and databases that are material to financial reporting. We tested the operating effectiveness of key automated controls for in-scope business processes, including automated calculations and, the completeness and accuracy of system and data feeds. Certain systems are outsourced to third party service providers. For these systems, we tested IT general controls through evaluating the relevant Service Organisation Controls reports. This included assessing the timing of the reporting, the controls tested by the service auditor and whether they address relevant IT risks. In response to control deficiencies identified during the year, where we could not rely on compensating IT controls, we performed substantive testing procedures, to address the resulting risk to the financial statements.
We have considered the impact of IT systems and controls impacting financial reporting throughout the audit.
Key observations communicated to the Audit Committee We identified certain control deficiencies predominately in relation to user access controls and the segregation of IT duties. However, based on the initial and additional testing outlined above, we concluded that the findings identified in relation to the IT control environment relevant to the financial statements did not give rise to a material misstatement.



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

INDEPENDENT AUDITOR’S REPORT TO THE MEMBER OF INVESTEC BANK PLC CONTINUED

115

Our application of materiality

We apply the concept of materiality in planning and performing

the audit, in evaluating the effect of identified misstatements

on the audit and in forming our audit opinion.

Materiality

The magnitude of an omission or misstatement that, individually

or in the aggregate, could reasonably be expected to influence

the economic decisions of the users of the financial statements.

Materiality provides a basis for determining the nature and

extent of our audit procedures.

We determined materiality for the Group to be £20.4 million

(2022: £14.4 million), which is 5% (2022: 5%) of operating profit

before impairment of goodwill and amortisation of acquired

intangibles and strategic actions (‘’operating profit’’) (£408.8

million). We believe that operating profit provides us with the

most appropriate measure to reflect the performance of the

Group, as this is also the level at which management considers

the financial performance of the Group when reporting

externally in profit announcements and pre-close meetings with

market analysts and shareholders.

We determined materiality for the Parent Company to be

£10.5 million (2022: £9.7 million), which is 0.50% (2022: 0.50%)

of distributable equity. There has been no change in the basis

from the prior year.

Performance materiality

The application of materiality at the individual account or

balance level. It is set at an amount to reduce to an

appropriately low level the probability that the aggregate of

uncorrected and undetected misstatements exceeds

materiality.

On the basis of our risk assessments, together with our

assessment of the Group’s overall control environment, our

judgement was that performance materiality was 50% (2022:

50%) of our planning materiality, namely £10.2 million (2022:

£7.2 million). We have set performance materiality at this

percentage based on our understanding of the Group and past

experience with the audit.

Audit work at component locations for the purpose of obtaining

audit coverage over significant financial statement accounts is

undertaken based on a percentage of total performance

materiality. The performance materiality set for each

component is based on the relative scale and risk of the

component to the Group as a whole and our assessment of the

risk of misstatement at that component. In the current year, the

range of performance materiality allocated to components was

£2.0 million to £5.6 million (2022: £1.4 million to £4.8 million).

Reporting threshold

An amount below which identified misstatements are

considered as being clearly trivial.

We agreed with the Audit Committee that we would report to

them all uncorrected audit differences in excess of £1.0 million

(2022: £0.7 million), which is set at 5% of planning materiality,

as well as differences below that threshold that, in our view,

warranted reporting on qualitative grounds.

We evaluate any uncorrected misstatements against both the

quantitative measures of materiality discussed above and in

light of other relevant qualitative considerations in forming our

opinion.

Other information

The other information comprises the information included in the

annual report including the strategic report (operations and

strategic overview set out on pages 2 to 20 and financial review

set out on pages 21 to 37), risk management and governance

(set out on pages 38 to 89), remuneration report (set out on

pages 90 to 104), directors’ report (set out on pages 86 to 89),

alternative performance measures (set out on page 276),

Definitions (set out on page 277), Glossary (set out on page 278

to 279), credit ratings (set out on page 280) and corporate

Information (set out on page 281), other than the financial

statements and our auditor’s report thereon. The directors are

responsible for the other information contained within the

annual report.

Our opinion on the financial statements does not cover the

other information and, except to the extent otherwise explicitly

stated in this report, we do not express any form of assurance

conclusion thereon.

Our responsibility is to read the other information and, in doing

so, consider whether the other information is materially

inconsistent with the financial statements or our knowledge

obtained in the course of the audit or otherwise appears to be

materially misstated. If we identify such material inconsistencies

or apparent material misstatements, we are required to

determine whether this gives rise to a material misstatement in

the financial statements themselves. If, based on the work we

have performed, we conclude that there is a material

misstatement of the other information, we are required to report

that fact.

We have nothing to report in this regard.



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

INDEPENDENT AUDITOR’S REPORT TO THE MEMBER OF INVESTEC BANK PLC CONTINUED

116

Opinions on other matters prescribed by

the Companies Act 2006

In our opinion, based on the work undertaken in the course of

the audit:

•the information given in the Strategic Report and the

Directors’ Report for the financial year for which the financial

statements are prepared is consistent with the financial

statements; and

•the Strategic Report and Directors’ Report have been

prepared in accordance with applicable legal requirements.

Matters on which we are required to

report by exception

In light of the knowledge and understanding of the Group and

the Parent Company and its environment obtained in the course

of the audit, we have not identified material misstatements in

the Strategic Report or the Directors’ Report.

We have nothing to report in respect of the following matters in

relation to which the Companies Act 2006 requires us to report

to you if, in our opinion:

•adequate accounting records have not been kept by the

Parent Company, or returns adequate for our audit have not

been received from branches not visited by us; or

•the Parent Company financial statements are not in

agreement with the accounting records and returns; or

•certain disclosures of directors’ remuneration specified by law

are not made; or

•we have not received all the information and explanations

we require for our audit.

Corporate Governance Statement

We have reviewed the directors’ statement in relation to going

concern, longer-term viability and that part of the Corporate

Governance Statement relating to the Group and Parent

Company’s voluntary compliance with the provisions of the UK

Corporate Governance Code specified for our review by the

Listing Rules.

Based on the work undertaken as part of our audit, we have

concluded that each of the following elements of the Corporate

Governance Statement is materially consistent with the financial

statements or our knowledge obtained during the audit:

•Directors’ statement with regards to the appropriateness of

adopting the going concern basis of accounting and any

material uncertainties identified;

•Directors’ explanation as to its assessment of the Group and

Parent Company’s prospects, the period this assessment

covers and why the period is appropriate;

•Directors’ statement on whether it has a reasonable

expectation that the Group will be able to continue in

operation and meets its liabilities;

•Directors’ statement on fair, balanced and understandable;

•Board’s confirmation that it has carried out a robust

assessment of the emerging and principal risks;

•The section of the annual report that describes the review

of effectiveness of risk management and internal control

systems; and;

•The section describing the work of the audit committee.

Responsibilities of directors

As explained more fully in the directors’ responsibilities

statement set out on page 89, the directors are responsible for

the preparation of the financial statements and for being

satisfied that they give a true and fair view, and for such internal

control as the directors determine is necessary to enable the

preparation of financial statements that are free from material

misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are

responsible for assessing the Group and Parent Company’s

ability to continue as a going concern, disclosing, as applicable,

matters related to going concern and using the going concern

basis of accounting unless the directors either intend to

liquidate the Group or the Parent Company or to cease

operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of

the financial statements

Our objectives are to obtain reasonable assurance about

whether the financial statements as a whole are free from

material misstatement, whether due to fraud or error, and to

issue an auditor’s report that includes our opinion. Reasonable

assurance is a high level of assurance but is not a guarantee

that an audit conducted in accordance with ISAs (UK) will

always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered

material if, individually or in the aggregate, they could

reasonably be expected to influence the economic decisions of

users taken on the basis of these financial statements.



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

INDEPENDENT AUDITOR’S REPORT TO THE MEMBER OF INVESTEC BANK PLC CONTINUED

117

Explanation as to what extent the audit

was considered capable of detecting

irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance

with laws and regulations. We design procedures in line with our

responsibilities, outlined above, to detect irregularities, including

fraud. The risk of not detecting a material misstatement due to

fraud is higher than the risk of not detecting one resulting from

error, as fraud may involve deliberate concealment by, for

example, forgery or intentional misrepresentations, or through

collusion. The extent to which our procedures are capable of

detecting irregularities, including fraud is detailed below.

However, the primary responsibility for the prevention and

detection of fraud rests with both those charged with

governance of the company and management.

•We obtained an understanding of the legal and regulatory

frameworks that are applicable to the Group and determined

that the most significant are those that relate to the reporting

framework (UK-adopted IAS and IFRS), the Companies Act

2006 and the UK Corporate Governance Code, the FCA

Listing Rules, regulations and supervisory requirements of the

PRA, FRC, FCA and other overseas regulatory requirements,

and the relevant tax compliance regulations in the

jurisdictions in which the Group operates.

•We understood how the Group and Parent are complying with

these legal and regulatory frameworks by making enquiries of

management, internal audit, and those responsible for legal

and compliance matters. We also reviewed correspondence

between the Group and Parent Company and UK regulatory

bodies; reviewed minutes of the Board, Audit Committee and

Risk and Capital Committee; and gained an understanding of

the Group and Parent Company’s approach to governance.

•For laws and regulations, we considered the extent of

compliance with those laws and regulations as part of our

procedures on the related financial statement items.

•Based on this understanding, we designed our audit

procedures to identify non-compliance with such laws and

regulations. Our procedures involved: making enquiry of

those charged with governance and senior management for

their awareness of any non-compliance of laws or

regulations, inquiring about the policies that have been

established to prevent non-compliance with laws and

regulations by officers and employees and inspecting

correspondence with the PRA and FCA.

•The Group and Parent Company operate in the banking

industry which is a highly regulated environment. As such the

Senior Statutory Auditor considered the experience and

expertise of the engagement team to ensure that the team

had the appropriate competence and capabilities, which

included the use of specialists where appropriate.

•We assessed the susceptibility of the Group’s financial

statements to material misstatement, including how fraud

might occur by considering the controls that the Group and

Parent Company has established to address risks identified

by the Group and Parent Company, or that otherwise seek

to prevent, deter, or detect fraud. We also considered

performance incentives and their potential to influence

management to manage earnings.

•Based on this understanding we designed our audit

procedures to identify non-compliance with such laws and

regulations. Our procedures involved inquiries of

management, internal audit and those responsible for legal

and compliance matters; as well as focused testing referred

to in the Key Audit Matters section above. In addition, we

tested journal entries using a risk based approach analysing

the general ledger data, with the focus on nonstandard

journals.

A further description of our responsibilities for the audit of the

financial statements is located on the Financial Reporting

Council’s website at https://www.frc.org.uk/

auditorsresponsibilities. This description forms part of our

auditor’s report.

Other matters we are required to address

•Following the recommendation from the audit committee we

were appointed by the Group on 8 November 1996 to audit

the financial statements for the year ending 31 March 1997

and subsequent financial periods.

•The period of total uninterrupted engagement including

previous renewals and reappointments is 27 years, covering

the years ending 31 March 1997 to 31 March 2023.

•The non-audit services prohibited by the FRC’s Ethical

Standard were not provided to the Group or the Parent

Company and we remain independent of the Group and the

Parent Company in conducting the audit.

•The audit opinion is consistent with the additional report

to the audit committee.

Use of our report

This report is made solely to the company’s members, as a

body, in accordance with Chapter 3 of Part 16 of the Companies

Act 2006. Our audit work has been undertaken so that we might

state to the company’s members those matters we are required

to state to them in an auditor’s report and for no other purpose.

To the fullest extent permitted by law, we do not accept or

assume responsibility to anyone other than the company and

the company’s members as a body, for our audit work, for this

report, or for the opinions we have formed.

Chris Brouard (Senior statutory auditor)

for and on behalf of Ernst & Young LLP, Statutory Auditor

London

27 June 2023



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

INDEPENDENT AUDITOR’S REPORT TO THE MEMBER OF INVESTEC BANK PLC CONTINUED

118


For the year to 31 March		2023	2022
£’000	Notes	2023	2022
Interest income	2	1 445 322	719 538
Interest income calculated using effective interest method		1 117 078	619 498
Other interest income		328 244	100 040
Interest expense	2	(696 297)	(223 230)
Net interest income		749 025	496 308
Fee and commission income	3	456 215	508 929
Fee and commission expense	3	(15 372)	(14 697)
Investment income	4	5 003	10 579
Share of post-taxation profit of associates and joint venture holdings	28	660	1 988
Trading income/(loss) arising from
– customer flow		87 366	60 372
– balance sheet management and other trading activities		13 060	(1 305)
Other operating income	5	12 620	11 158
Total operating income before expected credit loss impairment charges		1 308 577	1 073 332
Expected credit loss impairment charges	6	(66 740)	(25 363)
Operating income		1 241 837	1 047 969
Operating costs	7	(833 061)	(760 286)
Operating profit before goodwill, acquired intangibles and strategic actions		408 776	287 683
Impairment of goodwill	32	(805)	—
Amortisation of acquired intangibles	33	(12 625)	(12 936)
Closure and rundown of the Hong Kong direct investments business		(480)	(1 203)
Profit before taxation		394 866	273 544
Taxation on operating profit before goodwill, acquired intangibles and strategic actions	10	(83 288)	(42 174)
Taxation on goodwill, acquired intangibles and strategic actions	10	2 031	1 511
Profit after taxation		313 609	232 881
Loss attributable to non-controlling interests		—	—
Earnings attributable to shareholder		313 609	232 881



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

CONSOLIDATED INCOME STATEMENT

119


For the year to 31 March		2023	2022
£’000	Notes	2023	2022
Profit after taxation		313 609	232 881
Other comprehensive income/(loss):
Items that may be reclassified to the income statement:
Fair value movements on cash flow hedges taken directly to other comprehensive income		27 635	—
Gains on realisation of debt instruments at FVOCI recycled through the income statement*	10	(313)	(307)
Fair value movements on debt instruments at FVOCI taken directly to other comprehensive income*	10	217	(2 276)
Foreign currency adjustments on translating foreign operations		5 615	5 401
Effect of rate change on deferred taxation relating to adjustment for IFRS 9	10	(7)	617
Items that will not be reclassified to the income statement:
Gains attributable to own credit risk*		—	11 059
Movement in post-retirement benefit liabilities		75	40
Total comprehensive income		346 831	247 415
Total comprehensive loss attributable to non-controlling interests		—	—
Total comprehensive income attributable to ordinary shareholder		329 956	230 540
Total comprehensive income attributable to perpetual preferred securities and Additional Tier 1 securities		16 875	16 875
Total comprehensive income		346 831	247 415

*Net of £0.2 million tax credit (31 March 2022: £4.2 million tax credit), except for the impact of rate changes on deferred taxation relating to adjustment for IFRS 9

as shown separately above.



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME

120


		Group
At 31 March		2023	2022
£’000	Notes	2023	2022
Assets
Cash and balances at central banks	17	5 400 401	5 379 994
Loans and advances to banks	18	892 791	1 467 039
Reverse repurchase agreements and cash collateral on securities borrowed	19	1 338 699	1 447 473
Sovereign debt securities	20	1 221 744	1 165 777
Bank debt securities	21	204 691	61 714
Other debt securities	22	697 275	437 649
Derivative financial instruments	23	680 262	717 457
Securities arising from trading activities	24	127 537	163 165
Investment portfolio	25	311 618	333 221
Loans and advances to customers	26	15 567 809	14 426 475
Other loans and advances	26	172 087	147 025
Other securitised assets	27	78 231	93 087
Interests in associated undertakings and joint venture holdings	28	10 851	11 444
Deferred taxation assets	29	111 513	109 542
Current taxation assets		9 890	15 727
Other assets	30	993 385	1 161 549
Property and equipment	31	121 014	155 055
Goodwill	32	249 503	244 072
Software	33	9 415	7 066
Other acquired intangible assets	33	43 887	44 145
		28 242 603	27 588 676
Liabilities
Deposits by banks		2 172 170	2 026 573
Derivative financial instruments	23	704 816	863 295
Other trading liabilities	35	28 184	42 944
Repurchase agreements and cash collateral on securities lent	19	139 529	154 828
Customer accounts (deposits)		19 251 399	18 616 233
Debt securities in issue	36	1 140 879	1 120 841
Liabilities arising on securitisation of other assets	27	81 609	95 885
Current taxation liabilities		4 813	2 082
Other liabilities	37	1 198 267	1 360 071
		24 721 666	24 282 752
Subordinated liabilities	38	731 483	758 739
		25 453 149	25 041 491
Equity
Ordinary share capital	39	1 280 550	1 280 550
Share premium		199 538	199 538
Capital reserve		153 177	153 177
Other reserves		34 814	1 667
Retained income		870 424	661 420
Shareholder’s equity excluding non-controlling interests		2 538 503	2 296 352
Additional Tier 1 securities in issue	40	250 000	250 000
Non-controlling interests in partially held subsidiaries	41	951	833
Total equity		2 789 454	2 547 185
Total liabilities and equity		28 242 603	27 588 676

Ruth Leas

Chief Executive

27 June 2023



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

BALANCE SHEETS

121


		Company
At 31 March		2023	2022
£’000	Notes	2023	2022
Assets
Cash and balances at central banks	17	5 380 346	5 326 533
Loans and advances to banks	18	237 897	535 738
Reverse repurchase agreements and cash collateral on securities borrowed	19	1 338 699	1 447 473
Sovereign debt securities	20	372 741	323 494
Bank debt securities	21	200 590	57 844
Other debt securities	22	1 404 253	1 144 024
Derivative financial instruments	23	625 897	672 124
Securities arising from trading activities	24	127 537	163 165
Investment portfolio	25	46 534	70 229
Loans and advances to customers	26	11 827 489	10 930 443
Other loans and advances	26	3 199 833	3 027 162
Other securitised assets	27	4 005	5 083
Interests in associated undertakings and joint venture holdings	28	2 301	2 167
Deferred taxation assets	29	59 833	70 214
Current taxation assets		36 006	28 997
Other assets	30	446 286	615 033
Property and equipment	31	58 577	70 514
Software	33	238	34
Investment in subsidiaries	53	872 829	827 599
		26 241 891	25 317 870
Liabilities
Deposits by banks		2 524 081	2 214 555
Derivative financial instruments	23	665 600	828 405
Other trading liabilities	35	28 184	42 944
Repurchase agreements and cash collateral on securities lent	19	289 529	197 903
Customer accounts (deposits)		17 953 810	17 290 014
Debt securities in issue	36	1 139 696	1 119 658
Other liabilities	37	564 441	676 409
		23 165 341	22 369 888
Subordinated liabilities	38	731 483	758 739
		23 896 824	23 128 627
Equity
Ordinary share capital	39	1 280 550	1 280 550
Share premium		199 538	199 538
Capital reserve		153 177	153 177
Other reserves		24 904	(2 901)
Retained income		436 898	308 879
Shareholder’s equity excluding non-controlling interests		2 095 067	1 939 243
Additional Tier 1 securities in issue	40	250 000	250 000
Total equity		2 345 067	2 189 243
Total liabilities and equity		26 241 891	25 317 870

The Company's profit for the year, determined in accordance with the Companies Act 2006, was £234.7 million

(2022: £240.1 million).

Ruth Leas

Chief Executive

27 June 2023



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

BALANCE SHEETS CONTINUED

122


		Group		Company
For the year to 31 March		2023	2022	2023	2022
£’000	Notes	2023	2022	2023	2022
Profit before taxation adjusted for non-cash items	43	509 014	350 162	298 709	178 254
Taxation paid		(74 998)	(53 294)	(55 652)	(17 732)
Dividends received from subsidiaries		—	—	88 873	147 848
Increase in operating assets	43	(1 268 534)	(823 132)	(1 165 730)	(424 376)
Increase in operating liabilities	43	435 513	3 076 202	768 779	2 608 741
Net cash (outflow)/inflow from operating activities		(399 005)	2 549 938	(65 021)	2 492 735
Cash flow on acquisition of Group operations and subsidiaries, net of cash acquired		(9 720)	—	—	(21 984)
Cash flow on disposal of Group operations and subsidiaries		12	14 274	—	3 016
Derecognition of cash on disposal of subsidiaries		—	(4 152)	—	—
Cash flow on net disposal of non-controlling interest		118	443	—	—
Cash flow on net disposal/(acquisition) of associates and joint venture holdings		565	(8 780)	—	—
Cash flow on acquisition of property, equipment, software and other intangible assets		(11 712)	(4 931)	(1 973)	(1 573)
Cash flow on disposal of property, equipment, software and other intangible assets		23 975	4 273	—	(677)
Injection of capital to subsidiary		—	—	(75 795)	—
Return of capital by subsidiary		—	—	5 676	24 280
Net cash inflow/(outflow) from investing activities		3 238	1 127	(72 092)	3 062
Dividends paid to ordinary shareholder		(95 000)	(56 500)	(95 000)	(56 500)
Dividends paid to other equity holders		(16 875)	(16 875)	(16 875)	(16 875)
Proceeds from issue of subordinated debt		345 590	347 536	345 590	347 536
Redemption of subordinated debt		(347 925)	(307 962)	(347 925)	(307 962)
Lease liabilities paid		(44 089)	(43 253)	(7 518)	(8 375)
Net cash outflow from financing activities		(158 299)	(77 054)	(121 728)	(42 176)
Effects of exchange rate changes on cash and cash equivalents		773	(607)	—	(279)
Net (decrease)/increase in cash and cash equivalents		(553 293)	2 473 404	(258 841)	2 453 342
Cash and cash equivalents at the beginning of the year		6 841 039	4 367 635	5 856 277	3 402 935
Cash and cash equivalents at the end of the year		6 287 746	6 841 039	5 597 436	5 856 277
Cash and cash equivalents is defined as including:
Cash and balances at central banks		5 400 401	5 379 994	5 380 346	5 326 533
On demand loans and advances to banks		887 345	1 461 045	217 090	529 744
Cash and cash equivalents at the end of the year		6 287 746	6 841 039	5 597 436	5 856 277

Cash and cash equivalents have a maturity profile of less than three months. Loans and advances to banks with a maturity profile

of greater than three months are £5.4 million (31 March 2022: £6.0 million) for Group. Company £5.4 million (31 March 2022:

£6.0 million).

The Group is required to maintain reserve deposits with central banks and other regulatory authorities and these amounted to

£50.5 million (31 March 2022: £43.2 million). These deposits are not available to finance the Group's day-to-day operations.



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

CASH FLOW STATEMENTS

123



£’000	Ordinary share capital	Share premium	Capital reserve account
Group
At 1 April 2021	1 280 550	199 538	153 177
Movement in reserves 1 April 2021 – 31 March 2022
Profit after taxation	—	—	—
Effect of rate change on deferred taxation relating to adjustment for IFRS 9	—	—	—
Gains on realisation of debt instruments at FVOCI recycled through the income statement	—	—	—
Fair value movements on debt instruments at FVOCI taken directly to other comprehensive income	—	—	—
Foreign currency adjustments on translating foreign operations	—	—	—
Gains attributable to own credit risk	—	—	—
Movement in post-retirement benefit liabilities	—	—	—
Total comprehensive income for the year	—	—	—
Share-based payments adjustments	—	—	—
Employee benefit liability recognised	—	—	—
Dividends paid to ordinary shareholder	—	—	—
Dividends declared to Additional Tier 1 security holders	—	—	—
Dividends paid to Additional Tier 1 security holders	—	—	—
Net equity impact of non-controlling interest movements	—	—	—
At 31 March 2022	1 280 550	199 538	153 177
Movement in reserves 1 April 2022 – 31 March 2023
Profit after taxation	—	—	—
Effect of rate change on deferred taxation relating to adjustment for IFRS 9	—	—	—
Gains on realisation of debt instruments at FVOCI recycled through the income statement	—	—	—
Fair value movements on cash flow hedges taken directly to other comprehensive income	—	—	—
Fair value movements on debt instruments at FVOCI taken directly to other comprehensive income	—	—	—
Foreign currency adjustments on translating foreign operations	—	—	—
Movement in post-retirement benefit liabilities	—	—	—
Total comprehensive income for the year	—	—	—
Share-based payments adjustments	—	—	—
Employee benefit liability recognised	—	—	—
Dividends paid to ordinary shareholder	—	—	—
Dividends declared to Additional Tier 1 security holders	—	—	—
Dividends paid to Additional Tier 1 security holders	—	—	—
Net equity impact of non-controlling interest movements	—	—	—
At 31 March 2023	1 280 550	199 538	153 177



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

STATEMENT OF CHANGES IN EQUITY

124


Other reserves
Fair value reserve	Cash flow hedge reserve	Foreign currency reserves	Own credit reserve	Retained income	Shareholder’s equity excluding non- controlling interests	Additional Tier 1 securities in issue	Non- controlling interests	Total equity

3 043	—	(4 147)	(11 723)	494 092	2 114 530	250 000	390	2 364 920

—	—	—	—	232 881	232 881	—	—	232 881
(47)	—	—	664	—	617	—	—	617
(307)	—	—	—	—	(307)	—	—	(307)
(2 276)	—	—	—	—	(2 276)	—	—	(2 276)
—	—	5 401	—	—	5 401	—	—	5 401
—	—	—	11 059	—	11 059	—	—	11 059
—	—	—	—	40	40	—	—	40
(2 630)	—	5 401	11 723	232 921	247 415	—	—	247 415
—	—	—	—	3 637	3 637	—	—	3 637
—	—	—	—	4 145	4 145	—	—	4 145
—	—	—	—	(56 500)	(56 500)	—	—	(56 500)
—	—	—	—	(16 875)	(16 875)	16 875	—	—
—	—	—	—	—	—	(16 875)	—	(16 875)
—	—	—	—	—	—	—	443	443
413	—	1 254	—	661 420	2 296 352	250 000	833	2 547 185
	—
—	—	—	—	313 609	313 609	—	—	313 609
(7)	—	—	—	—	(7)	—	—	(7)
(313)	—	—	—	—	(313)	—	—	(313)
—	27 635	—	—	—	27 635	—	—	27 635
217	—	—	—	—	217	—	—	217
—	—	5 615	—	—	5 615	—	—	5 615
—	—	—	—	75	75	—	—	75
(103)	27 635	5 615	—	313 684	346 831	—	—	346 831
—	—	—	—	(295)	(295)	—	—	(295)
—	—	—	—	7 490	7 490	—	—	7 490
—	—	—	—	(95 000)	(95 000)	—	—	(95 000)
—	—	—	—	(16 875)	(16 875)	16 875	—	—
—	—	—	—	—	—	(16 875)	—	(16 875)
—	—	—	—	—	—	—	118	118
310	27 635	6 869	—	870 424	2 538 503	250 000	951	2 789 454



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

STATEMENT OF CHANGES IN EQUITY CONTINUED

125



£’000	Ordinary share capital	Share premium	Capital reserve account
Company
At 1 April 2021	1 280 550	199 538	153 177
Movement in reserves 1 April 2021 – 31 March 2022
Profit after taxation	—	—	—
Effect of rate change on deferred taxation relating to adjustment for IFRS 9	—	—	—
Gains on realisation of debt instruments at FVOCI recycled through the income statement	—	—	—
Fair value movements on debt instruments at FVOCI taken directly to other comprehensive income	—	—	—
Foreign currency adjustments on translating foreign operations	—	—	—
Gains attributable to own credit risk	—	—	—
Total comprehensive income for the year	—	—	—
Share-based payments adjustments	—	—	—
Employee benefit liability recognised	—	—	—
Dividends paid to ordinary shareholder	—	—	—
Dividends declared to Additional Tier 1 security holders	—	—	—
Dividends paid to Additional Tier 1 security holders	—	—	—
At 31 March 2022	1 280 550	199 538	153 177
Movement in reserves 1 April 2022 – 31 March 2023
Profit after taxation	—	—	—
Effect of rate change on deferred taxation relating to adjustment for IFRS 9	—	—	—
Gains on realisation of debt instruments at FVOCI recycled through the income statement	—	—	—
Fair value movements on cash flow hedges taken directly to other comprehensive income	—	—	—
Fair value movements on debt instruments at FVOCI taken directly to other comprehensive income	—	—	—
Foreign currency adjustments on translating foreign operations	—	—	—
Total comprehensive income for the year	—	—	—
Share-based payments adjustments	—	—	—
Employee benefit liability recognised	—	—	—
Dividends paid to ordinary shareholder	—	—	—
Dividends declared to Additional Tier 1 security holders	—	—	—
Dividends paid to Additional Tier 1 security holders	—	—	—
At 31 March 2023	1 280 550	199 538	153 177



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

STATEMENT OF CHANGES IN EQUITY CONTINUED

126


Other reserves
Fair value reserve	Cash flow hedge reserve	Foreign currency reserves	Own credit reserve	Retained income	Shareholder’s equity excluding non- controlling interests	Additional Tier 1 securities in issue	Total equity

3 489	—	(4 681)	(11 723)	135 605	1 755 955	250 000	2 005 955

—	—	—	—	240 131	240 131	—	240 131
(47)	—	—	664	—	617	—	617
(329)	—	—	—	—	(329)	—	(329)
(1 365)	—	—	—	—	(1 365)	—	(1 365)
—	—	32	—	—	32	—	32
—	—	—	11 059	—	11 059	—	11 059
(1 741)	—	32	11 723	240 131	250 145	—	250 145
—	—	—	—	3 477	3 477	—	3 477
—	—	—	—	3 041	3 041	—	3 041
—	—	—	—	(56 500)	(56 500)	—	(56 500)
—	—	—	—	(16 875)	(16 875)	16 875	—
—	—	—	—	—	—	(16 875)	(16 875)
1 748	—	(4 649)	—	308 879	1 939 243	250 000	2 189 243

—	—	—	—	234 695	234 695	—	234 695
(7)	—	—	—	—	(7)	—	(7)
(315)	—	—	—	—	(315)	—	(315)
—	27 635	—	—	—	27 635	—	27 635
675	—	—	—	—	675	—	675
—	—	(183)	—	—	(183)	—	(183)
353	27 635	(183)	—	234 695	262 500	—	262 500
—	—	—	—	(207)	(207)	—	(207)
—	—	—	—	5 406	5 406	—	5 406
—	—	—	—	(95 000)	(95 000)	—	(95 000)
—	—	—	—	(16 875)	(16 875)	16 875	—
—	—	—	—	—	—	(16 875)	(16 875)
2 101	27 635	(4 832)	—	436 898	2 095 067	250 000	2 345 067



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

STATEMENT OF CHANGES IN EQUITY CONTINUED

127

Basis of presentation

These Group and Company annual financial statements have

been prepared in accordance with UK adopted international

accounting standards and with International Financial Reporting

Standards (IFRS) adopted pursuant to Regulation (EC)

No. 1606/2002 as it applies in the European Union (EU).

The Group and Company annual financial statements have been

prepared on a historical cost basis, except for debt instruments

at FVOCI, derivative financial instruments, financial assets and

financial liabilities held at fair value through profit or loss or

subject to hedge accounting.

As stated on page 86, the directors consider that it is

appropriate to continue to adopt the going concern basis

in preparing the financial statements.

The accounting policies adopted by the Group are consistent

with the prior year.

Presentation of information

Disclosure under IFRS 7 Financial Instruments: Disclosures

and IAS 1 Presentation of Financial Statements: relating to

the nature and extent of risks have been included in the notes

to risk and capital management on pages 232 to 275.

Certain disclosures required under IAS 24 Related Party

Disclosures have been included in the section marked as

audited in the remuneration report on pages 92 to 104.

Basis of consolidation

All subsidiaries or structured entities are consolidated when the

Group controls an investee. The Group controls an investee if it

is exposed to, or has rights to variable returns from its

involvement with the investee and has the ability to affect those

returns through its power over the investee. The financial

results of subsidiaries are included in the consolidated annual

financial statements of the Group from the date on which

control is obtained until the date the Group can no longer

demonstrate control.

The Group performs a reassessment of control whenever there

is a change in the substance of the relationship between the

Group and an investee. A change in the ownership interest of

a subsidiary, without a loss of control, is accounted for as an

equity transaction.

If the Group loses control over a subsidiary, it derecognises the

related assets (including goodwill), liabilities, non-controlling

interest and other components of equity, while any resultant

gain or loss is recognised in profit or loss. Any investment

retained is recognised at fair value.

The Group also holds investments, for example, in private equity

investments, which give rise to significant, but not majority,

voting rights. Assessing these voting rights and whether the

Group controls these entities requires judgement that affects

the date at which subsidiaries are consolidated

or deconsolidated.

Entities, other than subsidiary undertakings, in which the Group

exercises significant influence or joint control over operating

and financial policies, are treated as interests in associated

undertakings and joint venture holdings. Interests in associated

undertakings and joint venture holdings are accounted for using

the equity method from the date that significant influence or

joint control commences until the date that significant influence

or joint control ceases. In circumstances where interests in

associated undertakings and joint venture holdings arise in

which the Group has no strategic intention, these investments

are classified as ‘venture capital’ holdings and are designated as

held at fair value through profit or loss.

For equity accounted associates and joint venture holdings, the

consolidated annual financial statements include the

attributable share of the results and reserves of associated

undertakings and joint venture holdings. The Group’s interests

in associated undertakings and joint venture holdings are

included in the consolidated balance sheet at cost plus the

post-acquisition changes in the Group’s share of the net assets

of the associated undertakings and joint venture holdings.

The consolidated balance sheet reflects the associated

undertakings and joint venture holdings net of accumulated

impairment losses.

Investments in subsidiaries and interests in associated

undertakings and joint venture holdings are carried at their cost

less any accumulated impairment in the Company financial

statements.

All intergroup balances, transactions and unrealised gains

or losses within the Group that do not reflect an impairment

to the asset are eliminated in full regarding subsidiaries and

to the extent of the interest in associated undertakings and joint

venture holdings.

Segmental reporting

An operating segment is a component of the Group that

engages in business activities from which it may earn revenues

and incur expenses, including revenues and expenses that

relate to transactions with any of the Group’s other

components, where operating results are reviewed regularly

by chief operating decision-makers who are considered to be

executive members of the Board and for which discrete

financial information is available.

The Group’s segmental reporting is presented in the form

of a business analysis. The business analysis is presented in

terms of the Group’s three principal business divisions namely,

Wealth & Investment, Private Banking and Corporate,

Investment Banking, and Other.

For further detail on the Group's segmental basis, refer to the

divisional review section of the integrated annual report.



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

ACCOUNTING POLICIES

128

Business combinations and goodwill

Business combinations are accounted for using the acquisition

method. The cost of an acquisition is measured as the

aggregate of the consideration transferred, at the acquisition

date fair value and the amount of any prior non-controlling

interest in the acquiree. For each business combination, the

Group measures the non-controlling interest in the acquiree

either at fair value or at the proportionate share of the

acquiree’s identifiable net assets. Acquisition costs incurred are

expensed immediately in the income statement.

When the Group acquires a business, it assesses the financial

assets and liabilities assumed for appropriate classification and

the designation in accordance with the contractual terms,

economic circumstances and pertinent conditions at the

acquisition date. This includes the separation of embedded

derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the

acquisition date fair value of the Group’s previously held equity

interest in the acquiree is remeasured to fair value at each

acquisition date through the income statement.

Any contingent consideration to be transferred by the Group

will be recognised at fair value at the acquisition date.

Subsequent changes to the fair value of the contingent

consideration, which is deemed to be an asset or liability, will be

recognised in accordance with IFRS 9, either in the income

statement or as a change to other comprehensive income. If the

contingent consideration is classified as equity, it will not be

remeasured until it is finally settled within equity.

Goodwill is initially measured at cost, being the excess of the

aggregate of the consideration transferred and the amount

recognised for non-controlling interest over the net identifiable

assets acquired and liabilities assumed. If this consideration and

amount recognised for non-controlling interest is less than the

fair values of the identifiable net assets acquired, the discount

on acquisition is recognised directly in the income statement as

a gain in the year of acquisition.

After initial recognition, goodwill is measured at cost less

any accumulated impairment losses. The Group tests goodwill

acquired in a business combination for impairment annually,

irrespective of whether an indication of impairment exists and in

accordance with IAS 36.

For the purpose of impairment testing, goodwill acquired in a

business combination is, from the acquisition date, allocated to

each of the Group’s cash-generating units that are expected to

benefit from the combination.

Where goodwill forms part of a cash-generating unit, and part of

the operation within that unit is disposed of, the goodwill

associated with the operation disposed of is included in the

carrying amount of the operation when determining the gain

or loss on disposal of the operation.

Goodwill disposed of in these circumstances is measured based

on the relative values of the operation disposed of and the

portion of the cash-generating units retained.

Share-based payments to employees

The Group engages in equity-settled share-based payments

in respect of services received from employees. These are

the shares of the Company's parent, Investec plc, and are

accounted for as equity-settled share-based payments as

at Investec plc level but, in accordance with IFRS 2, as cash-

settled share-based payment transactions by subsidiaries

of Investec plc.

The fair value of the services received in respect of equity-

settled share-based payments is determined by reference

to the fair value of the shares or share options on the date

of grant to the employee. The cost of the share-based

payment, together with a corresponding increase in equity,

is recognised in the income statement over the period the

service conditions of the grant are met, with the amount

changing according to the number of awards expected to vest.

The cumulative expense recognised for equity-settled

transactions at each reporting date until the vesting date

reflects the extent to which the vesting period has expired and

the Group’s best estimate of the number of equity instruments

that will ultimately vest.

Fair value measurements are based on option pricing models,

taking into account the risk-free interest rate, volatility of the

underlying equity instrument, expected dividends and share

prices at grant date.

Where the terms of an equity-settled award are modified,

the minimum expense recognised in staff costs is the expense

as if the terms had not been modified. An additional expense is

recognised for any modification which increases the total fair

value of the share-based payment arrangement, or is otherwise

beneficial to the employee as measured at the date of

modification.

Employee benefits

The Group operates various defined contribution schemes.

In respect of the defined contribution schemes, all employer

contributions are charged to the income statement as incurred,

in accordance with the rules of the scheme, and included under

staff costs.

Short-term employee benefits are expensed as the related

service is provided. A liability is recognised for the amount

expected to be paid if the Group has a present legal or

constructive obligation to pay this amount as a result of past

service provided by the employee and the obligation can be

estimated reliably.

The long-term employment benefits liability relates to the

obligation of the Investec Group to deliver ordinary shares

of Ninety One plc and Ninety One Limited to employees over

a predetermined vesting period. The fair value of this liability

is calculated by applying the Black-Scholes option pricing

model at each reporting date. The changes in fair value will

be recognised as an employee benefit expense. The liability

is included in other liabilities on the balance sheet.

The Group has no liabilities for other post-retirement benefits.



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

ACCOUNTING POLICIES CONTINUED

129

Foreign currency transactions and foreign

operations

The presentation currency of the Group is Pound Sterling, being

the functional currency of Investec Bank plc.

Foreign operations are subsidiaries, interests in associated

undertakings and joint venture holdings or branches of the

Group, the activities of which are based in a functional currency

other than that of the reporting entity. The functional currency

of Group entities is determined based on the primary economic

environment in which the entity operates.

Foreign currency transactions are translated into the functional

currency of the entity in which the transactions arise based on

rates of exchange ruling at the date of the transactions.

At each balance sheet date foreign currency items are

translated as follows:

•Monetary items (other than monetary items that form part

of the net investment in a foreign operation) are translated

using closing rates, with gains or losses recognised in the

income statement

•Exchange differences arising on monetary items that form

part of the net investment in a foreign operation are

determined using closing rates and recognised as a separate

component of equity (foreign currency translation reserve)

upon consolidation and are reclassified to the income

statement upon disposal of the net investment

•Non-monetary items that are measured at historical cost

are translated using the exchange rates ruling at the date

of the transaction.

On consolidation, the results and financial position of foreign

operations are translated into the presentation currency

of the Group, as follows:

▪Assets and liabilities for each balance sheet presented

are translated at the closing rate at the date of

the balance sheet

▪Income and expense items are translated at exchange rates

ruling at the date of the transaction

▪All resulting exchange differences are recognised in other

comprehensive income (foreign currency translation reserve),

which is recognised in the income statement on disposal of

the foreign operation

▪Cash flow items are translated at the exchange rates ruling at

the date of the transactions.

On loss of control or disposal of a foreign operation, the

cumulative amount of the exchange differences relating to that

foreign operation recognised in other comprehensive income is

reclassified from equity to profit or loss and included in the

profit on loss of control.

Revenue recognition

Revenue consists of interest income, fee and commission

income, investment income, trading income arising from

customer flow, trading income arising from balance sheet

management and other trading activities, share of post-taxation

profit of associates and joint venture holdings and other

operating income.

Interest income on debt instruments at amortised cost or FVOCI

is recognised in the income statement using the effective

interest method. Calculation of the effective interest rate takes

into account fees payable or receivable that are an integral part

of the instruments’ yield, premiums or discounts on acquisition

or issue, early redemption fees and transaction costs.

The effective interest method is based on the estimated life

of the underlying instrument and, where this estimate is not

readily available, the contractual life. Interest on instruments

at fair value through profit or loss is recognised based on

the contractual rates.

Fee and commission income includes revenue from contracts

with customers earned from providing advisory services as well

as portfolio management.

Revenue from contracts with customers is recognised in

accordance with five steps to: identify the contract; identify the

performance obligations; determine the transaction price;

allocate the transaction price to the performance obligations;

and recognise revenue when the performance obligations

are satisfied.

Investment advisory and management fees are earned over the

period in which the services are provided. Performance fees

can be variable and recognition is constrained until such time as

it is highly probable that a significant reversal in the amount of

cumulative revenue recognised will not occur and the services

related to the transactions have been completed under the

terms of the contract.

Investment income includes income, other than margin from

securities held for the purpose of generating interest yield,

dividends and capital appreciation.

Customer flow trading income includes income from trading

activities arising from making and facilitating client activities.

Trading income arising from balance sheet management and

other trading activities consists of proprietary trading income

and other gains or losses arising from balance sheet

management.

Trading profit includes the unrealised profit on trading

portfolios, which are marked-to-market daily. Equity

investments received in lieu of corporate finance fees are

included in investment portfolio and valued accordingly.

Dividend income is recognised when the Group’s right to

receive payment is established and the cash is received.

Included in other operating income is incidental rental income,

gains on realisation of properties, operating lease income,

income from interests in associated undertakings and revenue

from other investments. Operating costs associated with

these investments are included in operating costs in the income

statement.



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

ACCOUNTING POLICIES CONTINUED

130

Fair value measurement

Fair value is the price that would be received to sell an asset or

paid to transfer a liability in an orderly transaction between

market participants at the measurement date in the principal or,

in its absence, the most advantageous market to which

the Group has access at that date. The fair value of an asset

or a liability reflects its non-performance risk.

When available, the Group measures the fair value of an

instrument using the quoted price in an active market for

that instrument.

A market is regarded as active if transactions for the asset

or liability take place with sufficient frequency and volume

to provide pricing information on an ongoing basis.

If there is no quoted price in an active market, then the Group

uses valuation techniques that maximise the use of relevant

observable inputs and minimise the use of unobservable inputs.

The chosen valuation technique incorporates all of the factors

that market participants would take into account in pricing a

transaction.

If an asset or a liability measured at fair value has a bid price

and an ask price, then the Group measures assets and long

positions at a bid price and liabilities and short positions

at an ask price.

The Group classifies disclosed fair values according to a

hierarchy that reflects the significance of observable market

inputs.

A transfer is made between the hierarchy levels when the

inputs have changed or there has been a change in the

valuation method. Transfers are deemed to occur at the end

of each semi-annual reporting period.

Financial instruments

Financial instruments are initially recognised at their fair value.

For financial assets or financial liabilities not held at fair value

through profit or loss, transaction costs that are directly

attributable to the acquisition or issue of the financial assets

or financial liabilities are included in the initial measurement. All

other transaction costs are recorded in the income statement

immediately. Regular way purchase and sales transactions in

respect of financial assets that require delivery of a financial

instrument within the time frame established by market

convention are recorded at trade date.

Business model assessment

For financial assets, IFRS 9 requires that a business model

assessment is carried out which reflects how the Group

manages the assets in order to generate cash flows. The

assessment is at a portfolio level, being the level at which the

portfolio is managed. Factors considered by the Group in

determining the business model for a Group of assets include

past experience on how the cash flows for these assets were

collected, how the assets’ performance is evaluated and

reported and how risks are assessed and managed.

The standard sets out different types of business models:

▪Hold to collect: it is intended to hold the asset to maturity to

earn interest, collecting repayments of principal and interest

from the customer. These assets are accounted for at

amortised cost

▪Hold to collect and sell: this model is similar to the hold to

collect model, except that the entity may elect to sell some or

all of the assets before maturity to achieve the objectives of

the business model. These assets are accounted for at FVOCI

▪Hold to sell/managed on a fair value basis: the entity

originates or purchases an asset with the intention of

disposing of it in the short or medium term to benefit from

capital appreciation or the portfolio is managed on a fair value

basis. These assets are accounted for at FVPL.

However, the Group may make the following irrevocable

election/designation at initial recognition of a financial asset

on an asset-by-asset basis:

▪Elect to present subsequent changes in fair value of an equity

investment that is neither held for trading nor contingent

consideration recognised by an acquirer in a business

combination to which IFRS 3 applies, in OCI

▪A debt instrument that meets the amortised cost or FVOCI

criteria as measured at FVPL if doing so eliminates or

significantly reduces an accounting mismatch (referred to

as the fair value option).

The classification into one of these categories is based on

the Group’s business model for managing the assets and the

contractual cash flow characteristics of the assets.

Solely payments of principal and interest (SPPI)

Where the business model is to hold assets to collect

contractual cash flows or to collect contractual cash flows and

sell, the Group assesses whether the assets’ cash flows

represent solely payments of principal and interest (the SPPI

test). In making this assessment, the Group considers whether

the contractual cash flows are consistent with a basic lending

arrangement (i.e. interest includes only consideration for the

time value of money, credit risk, other basic lending risks

and a profit margin that is consistent with a basic lending

arrangement). Where the contractual terms introduce exposure

to risk or volatility that are inconsistent with a basic lending

arrangement, the related asset is classified and measured at

FVPL.

Financial assets with embedded derivatives are considered

in their entirety when determining whether their cash flows

are solely payments of principal and interest.

Financial assets and liabilities measured at

amortised cost

Financial assets that are held to collect the contractual

cash flows and that contain contractual terms that give rise

to cash flows that are solely payments of principal and interest,

such as most loans and advances to banks and customers and

some debt securities, are measured at amortised cost. In

addition, most financial liabilities are measured at amortised

cost.

The Group may commit to provide a loan which has not yet

been drawn. When the loan that arises from the lending

commitment is expected to meet the criteria to be measured at

amortised cost, the undrawn commitment is also considered to

be and is included in the impairment calculation.

The carrying value of these financial assets at initial recognition

includes any directly attributable transaction costs. If the initial

fair value is lower than the cash amount advanced, such as in

the case of some leveraged finance and syndicated lending

activities, the difference is deferred and recognised over the life

of the loan through the recognition of interest income, unless

the loan is credit impaired.



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

ACCOUNTING POLICIES CONTINUED

131

Financial assets measured at fair value through

other comprehensive income (FVOCI)

Financial assets held for a business model that is achieved

by both collecting contractual cash flows and selling and that

contain contractual terms that give rise on specified dates to

cash flows that are solely payments of principal and interest are

measured at FVOCI. They are recognised on the trade date

when the Group enters into contractual arrangements

to purchase and are normally derecognised when they are

either sold or redeemed.

They are subsequently remeasured at fair value and changes

therein (except for those relating to impairment, interest income

and foreign currency exchange gains and losses)

are recognised in other comprehensive income until the assets

are sold. Upon disposal, the cumulative gains or losses in

other comprehensive income are recognised in the income

statement as ‘Gains less losses arising from derecognition

of debt instruments measured at fair value through other

comprehensive income’.

Financial assets measured at FVOCI are included in the

impairment calculations set out below and impairment

is recognised in profit or loss.

Impairment of financial assets held at amortised

cost or FVOCI

At each balance sheet date, each financial asset or portfolio

of advances categorised at amortised cost or at FVOCI, issued

financial guarantee and loan commitment is measured for ECL

impairment.

The costs of loss allowances on assets held at amortised

cost and at FVOCI are presented as impairments in the income

statement. Allowances in respect of financial guarantees

and loan commitments are presented as other liabilities

and charges recorded within income statement impairments.

Financial assets held at amortised cost are presented net

of allowances, except where the asset has been wholly

or partially written off.

Stage 1

Financial assets that are considered performing and have not

had a significant increase in credit risk are reported as Stage 1

assets. Stage 1 financial assets have loss allowances measured

at an amount equal to a 12-month ECL.

Stage 2

Financial assets are considered to be in Stage 2 when their

credit risk has increased significantly since initial recognition.

A loss allowance equivalent to a lifetime ECL is required

to be held.

The Group’s primary indicator for Stage 2 assets are distressed

loans, potential problem loans and exposures in arrears that

require additional attention and supervision from watchlist

committees and are under management review.

Assets in forbearance are considered to be, at a minimum,

Stage 2. Forbearance measures refer to concessions such

as modification of the terms and conditions or refinancing

that has been granted to a debtor in financial difficulty.

These exposures are assessed on a case-by-case basis

to determine whether the proposed modifications will be

considered as forbearance. Where the Credit Committee

considers it likely that the client will be able to return to perform

against the original contractual obligations within a reasonable

time frame these assets will be considered performing and

in Stage 2. Forbearance is distinguished from commercial

renegotiations which take place as part of normal business

activity and standard banking practice.

In addition to loans under management review, an asset may

also move from Stage 1 to Stage 2 if the model calculated

probability of default (PD) has significantly increased since

origination. This is tested on both a relative and absolute basis

to assess whether a significant deterioration in lifetime risk of

default has occurred. There is a common definition across the

Bank’s exposures regarding what constitutes a significant PD

movement. The test involves both an absolute and relative

movement threshold. An asset is considered to have been

subjected to a significant increase in credit risk if the

appropriate PD has doubled relative to the value at origination

and on an absolute basis has increased by more than 1%. Any

asset with an original rating that is classified as investment

grade will be judged to have had a significant movement if the

new PD would classify it as sub-investment grade and the

equivalent rating has moved by more than three notches.

The Group adopts the view that all financial assets that are

more than 30 days past due have experienced a significant

increase in credit risk.

Exposures move back to Stage 1 once they no longer meet the

criteria above for a significant increase in credit risk and as cure

periods (specifically relating to forborne exposures) are met.

Stage 3

Financial assets are included in Stage 3 when there is objective

evidence of credit impairment. The Group assesses a loan as

Stage 3 when contractual payments of either principal or

interest are past due for more than 90 days, the debtor is

assessed as unlikely to pay and credit impaired, or the loan is

otherwise considered to be in default, for example, due to the

appointment of an administrator or the client is in receivership.

Forborne loans that are considered non-performing, for

example, if a loan is not expected to meet the original

contractual obligations in a reasonable time frame, the loan will

be classified as Stage 3. Loans which are 90 days or more past

due are considered to be in default.

The Group calculates the credit adjusted effective interest rate

on Stage 3 assets, which is calculated based on the amortised

cost of the financial asset (i.e. gross carrying amount less ECL

allowance) instead of its gross carrying amount and

incorporates the impact of the ECLs in estimated future cash

flows.

Definition of default

The Group has aligned the IFRS 9 and regulatory definitions of

default, credit impaired and non-performing exposure. Assets

that are more than 90 days past due, or considered by

management as unlikely to pay their obligations in full without

realisation of collateral are considered as exposures in default.



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ECL

The assessment of credit risk and the estimation of ECL

are required to be unbiased, probability-weighted and

should incorporate all available information relevant to the

assessment, including information about past events, current

conditions and reasonable and supportable forecasts of

economic conditions at the reporting date. In addition, the

estimation of ECL should take into account the time value

of money. As a result, the recognition and measurement of

impairment is intended to be forward‑looking and therefore,

potentially volatile.

Write-offs

The Group has developed specific guidelines on write-off aimed

at granting full compliance with IFRS 9 and the document

'Guidance to banks on non-performing loans' issued by the

European Central Bank.

A loan or advance is normally written off in full against the

related ECL impairment allowance when the proceeds from

realising any available security have been received or there is a

reasonable amount of certainty that the exposure will not be

recovered. This is assessed on a case-by-case basis with

considerations to indicators such as whether the exposure

has been restructured or the given financial position of

the borrower and guarantors. Any recoveries of amounts

previously written off decrease the amount of

impairment losses.

Process to determine ECL

ECLs are calculated using three main components:

•A probability of default (PD)

•A loss given default (LGD)

•The exposure at default (EAD).

The 12-month and lifetime PDs represent the probability of a

default occurring over the next 12 months or the lifetime of the

financial exposures, respectively, based on conditions existing

at the balance sheet date and future forecast macro-economic

conditions that affect credit risk.

The LGD represents losses expected on default, taking into

account the mitigating effect of collateral, its expected value

when realised and the time value of money. The forecast value

for the collateral is also affected by the range of forward-

looking probability-weighted macro-economic scenarios.

The EAD represents the expected balance at default, taking into

account the repayment of principal and interest from the

balance sheet date to the default event together with any

expected drawdown of a committed facility.

The calculation of the 12-month ECL is based on the 12-month

PD and LGD along with the EAD and EIR for the asset. Lifetime

ECL is calculated using the lifetime PD curve, and the

appropriate LGDs and EADs and discount rates derived from

the EIR based on the remaining life of the financial asset.

Expert judgement models or appropriate proxies for PD’s are

also utilised for certain portfolios where the ECL is found to be

minimal, either due to the portfolio’s small relative size or the

low default nature of these portfolios, such as cash and

balances held at central banks.

Management adjustments are made to modelled output to

account for situations where additional information and known

or expected risk factors have not been captured in the

modelling process.

Financial assets and liabilities held at fair value

through profit or loss (FVPL)

Financial instruments held at fair value through profit or loss

include all instruments classified as held for trading, those

instruments designated as held at fair value through profit

or loss and those financial assets which do not meet the criteria

for amortised cost or FVOCI.

Financial instruments classified as FVPL are initially recorded at

fair value on the balance sheet with changes in fair value

subsequently recognised in the income statement. Financial

instruments are classified as held for trading when they are held

with the intention of short-term disposal, held with the intention

of generating short-term profit, or are derivatives which are not

designated as part of effective hedges. Financial instruments

designated as held at fair value through profit or loss are

designated as such on initial recognition of the instrument and

remain in this classification until derecognition.

Financial assets and liabilities are designated as held at fair

value through profit or loss only if:

•They eliminate or significantly reduce a measurement or

recognition inconsistency that would otherwise arise from

measuring assets or liabilities or recognising the gains

and losses on them on different bases; or

•A Group of financial liabilities or both financial assets

and financial liabilities is managed and their performances

evaluated on a fair value basis in accordance with a

documented risk management or investment strategy and

information about the Group is provided internally on that

basis to the Group’s key management personnel; or

•A financial liability contract contains one or more embedded

derivatives (which significantly modifies the cash flows

that would be required by the contract and is not clearly

prohibited from separation from the host contract) and

the Group has designated the entire hybrid contract as

a financial instrument at fair value through profit or loss.

Changes in own credit risk on financial liabilities designated

at fair value are recognised in other comprehensive income. Any

other changes are recognised in the income statement.

Securitisation/credit investment and trading

activities exposures

The Group makes use of securitisation vehicles as a source

of finance, as a means of risk transfer and to leverage returns

through the retention of equity tranches in low default

rate portfolios. The Group predominantly focuses on the

securitisation of residential and commercial mortgages

and lease receivables. The Group also trades in structured

credit investments.

The structured entities are consolidated under IFRS 10

Consolidated Financial Statements when the Group has

exposure to, or rights to, variable returns from its involvement

with the investee and has the ability to affect those returns

through its power over the investee.

Loans and advances that are originated are transferred

to structured entities, and the structured entities issue debt

securities to external investors to fund the purchase of

the securitised assets. When the Group consolidates the

structured entity, the Group recognises the assets and liabilities

on a gross basis. When the Group does not consolidate the

structured entity, the securitised assets are derecognised and

only any position still held by the Group in the structured entity

is reflected.



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Day-one profit or loss

When the transaction price differs from the fair value of other

observable current market transactions in the same instrument

or based on the valuation technique whose variables include

only data from observable markets, the difference between the

transaction price and fair value is recognised immediately in the

income statement.

In cases where fair value is determined using data which is not

observable, the difference between the transaction price and

model value is only recognised in the income statement when

the inputs become observable, or when the instrument is

derecognised or over the life of the transaction.

Derecognition of financial assets and liabilities

A financial asset, or a portion thereof, is derecognised when the

Group’s rights to cash flows have expired or when the Group

has transferred its rights to cash flows relating to the financial

assets and either (a) the Group has transferred substantially all

the risks and rewards associated with the financial assets or

(b) the Group has neither transferred nor retained substantially

all the risks and rewards associated with the financial assets but

has transferred control of the assets.

The treatment of a renegotiation or modification of the

contractual cash flows of a financial asset depends upon

whether the modification is done for commercial reasons, in

which case if they are significant the old asset is derecognised

and a new asset recognised, or because of financial difficulties

of the borrower. Where such modifications are solely due to

IBOR reform and result in an interest rate which is economically

equivalent, they are treated as a change to the floating rate of

interest and so do not result in any adjustment to the carrying

value of the asset.

A financial liability is derecognised when it is extinguished, that

is when the obligation is discharged, cancelled or expired. When

an existing financial liability is replaced or modified

with substantially different terms, such a replacement or

modification is treated as a derecognition of the original liability

and the recognition of a new liability. The difference in the

respective carrying amounts is recognised in the

income statement.

Reclassification of financial instruments

Financial assets are only reclassified where there has been

a change in business model. Financial liabilities cannot

be reclassified.

Derivative instruments

All derivative instruments of the Group are recorded on the

balance sheet at fair value positive and negative fair values are

reported as assets and liabilities, respectively.

Derivative positions are entered into either for trading purposes

or as part of the Group’s asset and liability management

activities to manage exposures to interest rate and foreign

currency risks. Both realised and unrealised profit or losses

arising on derivatives are recognised in the income statement

as part of trading income (other than circumstances in which

cash flow hedging is applied as detailed in the hedge

accounting section below).

Derivative instruments entered into as economic hedges which

do not qualify for hedge accounting and derivatives that are

entered into for trading purposes are treated in the same way

as instruments that are held for trading.

Credit derivatives are entered into for trading purposes. Credit

derivatives are initially recognised at their fair values, being the

transaction price of the derivative. Subsequently the derivatives

are carried at fair value, with movements in fair value through

the income statement, based on the current market price or

remeasured price. The counterparty risk from derivative

transactions is taken into account when reporting the fair value

of derivative positions. The adjustment to the fair value is

known as the credit value adjustment (CVA).

Hedge accounting

When the Group first implemented IFRS 9, it made an election to

continue to apply the hedge accounting requirements of IAS 39

as an accounting policy.

The Group applies either fair value or cash flow hedge or hedge

accounting of net investments in foreign operations accounting

when the transactions meet the specified hedge accounting

criteria.

To qualify for hedge accounting treatment, the Group ensures

that all of the following conditions are met:

•At inception of the hedge, the Group formally documents the

relationship between the hedging instrument(s) and hedged

item(s) including the risk management objectives and the

strategy in undertaking the hedge transaction. Also at the

inception of the hedge relationship, a formal assessment is

undertaken to ensure the hedging instrument is expected

to be highly effective in offsetting the designated risk in

the hedged item. A hedge is expected to be highly effective if

the changes in fair value or cash flows attributable to the

hedged risk during the period for which the hedge is

designated are expected to offset in a range of 80% to 125%

•For cash flow hedges, a forecasted transaction that is the

subject of the hedge must be highly probable and must

present an exposure to variations in cash flows that could

ultimately affect the income statement

▪The effectiveness of the hedge can be reliably measured, i.e.

the fair value or cash flows of the hedged item that are

attributable to the hedged risk and the fair value of the

hedging instrument can be reliably measured

▪The hedge effectiveness is assessed on an ongoing basis

and determined actually to have been highly effective

throughout the financial reporting periods for which the

hedge was designated.

For qualifying fair value hedges, the change in fair value of

the hedging instrument is recognised in the income statement.

Changes in fair value of the hedged item that is attributable to

the hedged risk are also recognised in the income statement.

For qualifying cash flow hedges in respect of non-financial

assets and liabilities, the change in fair value of the hedging

instrument relating to the effective portion is initially recognised

directly in other comprehensive income in the cash flow hedge

reserve and is included in the initial cost of any asset/liability

recognised or in all other cases released to the income

statement when the hedged firm commitment or forecasted

transaction affects net profit. If the forecast transaction or firm

commitment is no longer expected to occur, the balance

included in other comprehensive income is reclassified to the

income statement immediately and recognised in trading

income from balance sheet management and other trading

activities.



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For qualifying cash flow hedges in respect of financial assets

and liabilities, the change in fair value of the hedging

instrument, which represents an effective hedge, is initially

recognised in other comprehensive income and is reclassified

to the income statement in the same period during which the

relevant financial asset or liability affects the income statement.

Any ineffective portion of the hedge is immediately recognised

in the income statement.

For qualifying hedges of a net investment in a foreign operation,

including a hedge of a monetary item that is accounted for as

part of the net investment, changes in the fair value of the

hedging instrument relating to the effective portion of the

hedge are recognised in other comprehensive income while any

gains or losses relating to the ineffective portion are recognised

in the income statement. On disposal of the foreign operation,

the cumulative value of any such gain or loss recorded in

other comprehensive income is reclassified to the

income statement.

Hedge accounting is discontinued when it is determined

that the instrument ceases to be highly effective as a hedge;

when the derivative expires, or is sold, terminated or exercised;

when the hedged item matures or is sold or repaid; when a

forecasted transaction is no longer deemed highly probable or

when the designation as a hedge is revoked.

Sources of hedge ineffectiveness may arise from basis risk,

including but not limited to the discount rates used for calculating

the fair value of derivatives, hedges using instruments with a

non-fair value, and notional and timing differences between the

zero hedged items and hedging instruments.

The Group applies the IBOR reform Phase 1 reliefs to hedging

relationships directly affected by IBOR reform. A hedging

relationship is affected if IBOR reform gives rise to uncertainties

about the timing and/or amount of benchmark-based cash

flows of the hedged item or the hedging instrument. The reliefs

require that for the purpose of determining whether a forecast

transaction is highly probable, it is assumed that the IBOR

on which the hedged cash flows are based is not altered as a

result of IBOR reform.

IBOR reform Phase 1 requires that for hedging relationships

affected by IBOR reform, the Group must assume that for the

purpose of assessing expected future hedge effectiveness, the

interest rate is not altered as a result of IBOR reform. Also, the

Group is not required to discontinue the hedging relationship

if the results of the assessment of retrospective hedge

effectiveness fall outside the range of 80% to 125%, although

any hedge ineffectiveness must be recognised in profit or loss,

as normal.

The reliefs cease to apply once certain conditions are met.

These include when the uncertainty arising from IBOR reform

is no longer present with respect to the timing and amount of

the benchmark-based cash flows of the hedged item, if the

hedging relationship is discontinued or once amounts in the

cash flow hedge reserve have been released.

The Group also applies the IBOR reform Phase 2. IBOR reform

Phase 2 provides temporary reliefs that allow the Group’s

hedging relationships to continue upon the replacement of an

existing interest rate benchmark with an RFR. The reliefs require

the Group to amend the hedge designations and hedge

documentation and are set out above.

Refer to page 265 for more detail on the impact of IBOR reform

in the prior period.

Offsetting of financial assets and liabilities

Financial assets and liabilities are offset when there is both

an intention to settle on a net basis (or simultaneously) and

a currently enforceable legal right to offset exists.

Issued debt and equity financial instruments

Financial instruments issued by the Group are classified as

liabilities if they contain a contractual obligation to deliver

cash or another financial asset.

Financial instruments issued by the Group are classified as

equity where they confer on the holder a residual interest in the

Group, and the Group has no obligation to deliver either cash or

another financial asset to the holder. The components of

compound issued financial instruments are accounted for

separately with the liability component separated first and any

residual amount being allocated to the equity component.

Equity instruments issued by subsidiaries of Investec Bank plc

are recorded as non-controlling interests on the balance sheet.

Equity instruments are initially measured net of directly

attributable issue costs.

Dividends on ordinary shares are recognised as a deduction

from equity at the earlier of payment date or the date that it

is approved by Investec Bank plc shareholders.

Sale and repurchase agreements

(including securities borrowing and

lending)

Securities sold subject to a commitment to repurchase, at

a fixed price or a selling price plus a lender’s return, remain

on-balance sheet. Proceeds received are recorded as a liability

on the balance sheet under ‘repurchase agreements and cash

collateral on securities lent’. Securities that are purchased under

a commitment to resell the securities at a future date are not

recognised on the balance sheet. The consideration paid is

recognised as an asset under ‘reverse repurchase agreements

and cash collateral on securities borrowed’.

Where sovereign debt securities have been purchased at the

same time as derivatives with the same counterparty, such that

the combined position has the economic substance similar to

secured lending, an asset is recognised under ‘reverse

repurchase agreements and cash collateral on securities

borrowed’.

The difference between the sale and repurchase prices

is treated as interest expense and is accrued over the life of the

agreement using the effective interest method.

Securities borrowing transactions that are not cash

collateralised are not included on the balance sheet.

Securities lending and borrowing transactions which are

cash collateralised are accounted for in the same manner

as securities sold or purchased subject to repurchase

commitments.

Financial guarantees

Financial guarantee contracts issued by the Group are those

contracts that require a payment to be made to reimburse the

holder for a loss it incurs because the specified debtor fails to

make a payment when due, in accordance with the terms of a

debt instrument. Financial guarantees are initially recognised at

fair value, adjusted for the transaction costs that are directly

attributable to the issuance of the guarantee.



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Subsequent to initial recognition, the liability under each

guarantee is measured at the higher of the amount recognised

less cumulative amount of income recognised in accordance

with IFRS 15 and the best estimate of expected credit loss

calculated for the financial guarantee. Subsequent to initial

measurement, all changes in the balance sheet carrying value

are recognised in the income statement.

Property and equipment

Property and equipment are recorded at cost less accumulated

depreciation and impairments.

Cost is the cash equivalent paid or the fair value of the

consideration given to acquire an asset and includes other

expenditures that are directly attributable to the acquisition

of the asset.

Depreciation is provided on the depreciable amount of each

component on a straight-line basis over the expected useful life

of the asset.

The depreciable amount related to each asset is determined as

the difference between the cost and the residual value of the

asset. The residual value is the estimated amount, net of

disposal costs that the Group would currently obtain from the

disposal of an asset in similar age and condition as expected at

the end of its useful life.

The current and comparative annual depreciation rates for each

class of property and equipment are as follows:

•Computer and related equipment20% to 33%

•Motor vehicles20% to 25%

•Furniture and fittings10% to 20%

•Freehold buildings2%

•Right-of-use assets*

•Leasehold property and improvements*

*Leasehold improvements depreciation rates are determined by reference to the

appropriate useful life of its separate components, limited to the period of the

lease. Leasehold property and right-of-use asset depreciation rates are

determined by reference to the period of the lease.

Routine maintenance and service costs for Group assets

are expensed as incurred. Subsequent expenditure is only

capitalised if it is probable that future economic benefits

associated with the item will flow to the Group.

Leases

At inception of a contract the Group assesses whether a

contract is, or contains, a lease. A contract is, or contains, a

lease if the contract conveys the right to control the use of an

identified asset for a period of time in exchange for

consideration. To assess whether a contract conveys the right

to control the use of an identified asset, the Group assesses

whether:

•The Group has the right to obtain substantially all of the

economic benefits from use of the asset throughout the

period of use, and

•The Group has the right to direct the use of the asset.

As a lessee, the Group recognises a right-of-use (ROU) asset

and a lease liability at the lease commencement date.

The lease liability is initially measured at the present value of

the lease payments that are not paid at the commencement

date, discounted at the rate implicit in the lease, or, where that

is not available, at the Group’s incremental borrowing rate.

The lease liability will increase for the accrual of interest, and

will result in a constant rate of return throughout the life of the

lease, and reduce when payments are made.

The ROU asset is initially measured at cost, which comprises

the initial amount of the lease liability adjusted for any lease

payments made at or before the commencement date, plus any

indirect costs incurred and an estimate of costs to dismantle

and remove the underlying asset or to restore the underlying

asset or the site on which it is located, less any lease incentives

received.

The ROU asset is subsequently depreciated using the straight-

line method from the commencement date to the end of the

lease term. In addition, the ROU asset is periodically reduced by

impairment losses, if any, and adjusted for certain re-

measurements of the lease liability.

The lease liability is subsequently remeasured when there

is a change in future lease payments arising from a change

in index or rate, if there is a change in the Group’s estimate

of the amount expected to be payable under a residual value

guarantee, or if the Group changes its assessment of whether it

will exercise a purchase, extension or termination option.

Where the lease liability is remeasured, a corresponding

adjustment is made to the carrying amount of the ROU asset, or

is recorded in the income statement if the carrying amount of

the ROU asset has been reduced to zero.

The Group has elected not to recognise ROU assets and lease

liabilities for low value assets and short-term leases that have a

lease term of 12 months or less. The Group recognises the lease

payments associated with these leases as an expense on a

straight-line basis over the lease term.

When the Group is the lessor, the lease must be classified

as either a finance lease or an operating lease. A finance lease

is a lease which confers substantially all the risks and rewards

of the leased assets on the lessee. An operating lease is a lease

where substantially all of the risks and rewards of the leased

asset remain with the lessor.

When the lease is deemed a finance lease, the leased asset

is not held on the balance sheet; instead a finance lease

receivable is recognised representing the minimum lease

payments receivable under the terms of the lease, discounted

at the rate of interest implicit in the lease.

When the lease is deemed an operating lease, the lease income

is recognised on a straight-line basis over the period of the

lease unless another systematic basis is more appropriate.

For the balance sheet, the ROU assets are included

within property and equipment, finance lease receivables

are included within loans and advances to customers and other

assets and the lease liabilities are included within

other liabilities.

Where the Group has a head lease and sublease arrangement

with external partners, the finance lease receivable is

recognised in other assets on the balance sheet.

Trading properties

Trading properties are carried at the lower of cost and net

realisable value.

Software and intangible assets

Software and intangible assets are recorded at cost less

accumulated amortisation and impairments. Software and

intangible assets with a finite life are amortised over the useful

economic life on a straight-line basis. Amortisation of each



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asset starts when it becomes available for use. The depreciable

amount related to each asset is determined as the difference

between the cost and the residual value of the asset.

The current and comparative annual amortisation rates for each

class of intangible assets are as follows:

•Client relationships12 to 20 years

•Acquired software3 to 7 years

•Internally generated software5 years

Impairment of non-financial assets

At each balance sheet date, the Group reviews the carrying

value of non-financial assets. The recoverable amount, being

the higher of fair value less cost of disposal and value-in-use, is

determined for any assets for which an indication of impairment

is identified. If the recoverable amount of an asset is less than

its carrying value, the carrying value of the asset is reduced to

its recoverable amount.

Impairment losses are recognised as an expense in the income

statement in the period in which they are identified. Reversals

of impairment losses are recognised in income in the period

in which the reversals are identified, to the extent that the

carrying value of the asset does not exceed the amount that

would have been calculated without impairment.

Trust and fiduciary activities

The Group acts as a trustee or in other fiduciary capacities

that result in the holding, placing or managing of assets for

the account of and at the risk of clients. As these are not assets

of the Group, they are not recognised on the balance sheet

but are included at market value as part of third party assets

under management.

Taxation and deferred taxation

Current taxation payable is provided for based on the amount

expected to be payable on taxable profit at rates that are

enacted or substantively enacted and applicable to the relevant

period.

Deferred taxation is provided on temporary differences

between the carrying amount of an asset or liability in the

balance sheet and its tax base, except where such temporary

differences arise from:

•The initial recognition of goodwill

•The initial recognition of an asset or liability in a transaction

which is not a business combination and at the time of the

transaction has no effect on the income statement or taxable

profit

•Temporary differences associated with the investments

in subsidiaries and interests in associated undertakings

and joint venture holdings, where the timing of the reversal of

the temporary differences can be controlled and it is probable

that the temporary differences will not reverse in the

foreseeable future.

Deferred taxation assets or liabilities are measured using

the taxation rates that have been enacted or substantively

enacted at the balance sheet date.

Deferred taxation assets are recognised to the extent that it

is probable that future taxable profit will be available against

which the deferred taxation assets can be utilised.

Items recognised directly in other comprehensive income

are net of related current and deferred taxation.

Borrowing costs

Borrowing costs that are directly attributable to property

developments which take a substantial period of time to

develop are capitalised to qualifying properties.

Provisions, contingent liabilities and

contingent assets

Provisions are recognised when the Group has a present legal

or constructive obligation as a result of a past event; it is

probable that an outflow of resources embodying economic

benefits will be required to settle the obligation and a reliable

estimate can be made of the amount of the obligation. The

expense relating to a provision is presented in the income

statement net of any reimbursement. Contingent assets and

contingent liabilities are not recognised on the balance sheet.

Standards and interpretations issued but

not yet effective

The following significant standards and interpretations, which

have been issued but are not yet effective, are applicable to the

Group. These standards and interpretations have not been

applied in these annual financial statements. The Group intends

to comply with these standards from the effective dates.

IFRS 17 Insurance Contracts

IFRS 17 Insurance Contracts was issued in May 2017 and sets

out the requirements that an entity should apply in accounting

for insurance contracts it issues and reinsurance contracts it

holds. It applies to all types of insurance contracts, regardless

of the type of entities that issue them, as well as to certain

guarantees and financial instruments with discretionary

participation features. A few scope exceptions will apply.

IFRS 17 is effective for the Group for the year starting 1 April

2023 and has not been early adopted. The Standard will bring

significant changes to the accounting for insurance and

reinsurance contracts but is not expected to have a material

impact on the Group.

All other standards and interpretations issued but not yet

effective are not expected to have a material impact on the

Group.

Key management assumptions

In preparation of the annual financial statements, the Group

makes estimations and applies judgement that could affect the

reported amount of assets and liabilities within the next financial

year.

Key areas in which estimates are made include:

•In accordance with IFRS 13 Fair Value Measurement, the

Group categorises financial instruments carried on the

balance sheet at fair value using a three level hierarchy.

Financial instruments categorised as level 1 are valued

using quoted market prices and therefore there is minimal

judgement applied in determining fair value. However, the fair

value of financial instruments categorised as level 2 and, in

particular, level 3 are determined using valuation techniques

including discounted cash flow analysis and valuation models.

The valuation techniques for level 3 financial instruments

involve management judgement and estimates the extent of

which depends on the complexity of the instrument and the

availability of market observable information. In particular,

significant uncertainty exists in the valuation of unlisted

investments and fair value loans in the private equity and



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direct investments portfolios. Key valuation inputs are based

on the most relevant observable market information and can

include expected cash flows, discount rates, earnings

multiples and the underlying assets within a business,

adjusted where necessary for factors that specifically apply

to the individual investments and recognising market

volatility. Further details of the Group’s level 3 financial

instruments and the sensitivity of the valuation including the

effect of applying reasonably possible alternative

assumptions in determining their fair value are also set out in

note 14.

Details of unlisted investments can be found in note 25

with further analysis contained in the notes to risk and capital

management on page 254.

•The determination of ECL against assets that are carried

at amortised cost and ECL relating to debt instruments at

FVOCI involves a high degree of uncertainty as it involves

using assumptions that are highly subjective and sensitive to

risk factors. The most significant judgements relate to

defining what is considered to be a significant increase in

credit risk; determining the probability of default (PD),

exposure at default (EAD) and loss given default (LGD) and

future cash flows; incorporating information about forecast

economic conditions and the weightings to be applied to

economic scenarios. More detail relating to the methodology,

judgements and estimates and results of the Group’s

assessment of ECLs, including our assessment of the impact

of the Russian invasion of Ukraine, can be found on pages

249 to 251.

•The measurement of ECL has reliance on expert credit

judgement. Key judgemental areas are highlighted below and

are subject to robust governance processes. Key drivers of

measurement uncertainty include:

–The assessment of a significant increase in credit risk;

–A range of forward-looking probability weighted macro-

economic scenarios; and

–Estimations of probabilities of default, loss given default

and exposures at default using models.

In addition to these drivers, some initial judgements and

assumptions were required in the design and build of the

Group’s ECL methodology, which are not considered to have a

material impact. These include the use of income recognition

effective interest rates (EIRs), in accordance with accounting

standards, as the discount factor in the ECL calculation as well

as the use of contractual maturity to assess behavioural lives. In

addition, where we have experienced limitations on the

availability of probability of default origination data for the

historic book, a portfolio average has been used in some

instances.

Following a detailed review of the outcome of the ECL models,

management continue to hold an additional overlay provision in

the UK of £4.9 million (31 March 2022: £16.8 million). Detail of

the approach followed and management’s assumptions are set

out on page 249 of section 3.

▪The Group’s income tax charge and balance sheet

provision are judgemental in nature. This arises from certain

transactions for which the ultimate tax treatment can only

be determined by final resolution with the relevant local tax

authorities. The Group has recognised in its current tax

provision certain amounts in respect of taxation that involve

a degree of estimation and uncertainty where the tax

treatment cannot finally be determined until a resolution has

been reached by the relevant tax authority and whether the

proposed tax treatment will be accepted by the authorities.

The carrying amount of this provision is sensitive to the

resolution of issues, which is often dependent on the

timetable and progress of discussion and negotiations with

the relevant tax authorities, arbitration process and legal

proceedings in the relevant tax jurisdictions in which the

Group operates. Issues can take many years to resolve and

assumptions on the likely outcome would therefore have

to be made by the Group in order to determine if an exposure

should be measured based on the most likely amount or

expected value.

•In making any estimates, management’s judgement has been

based on various factors, including:

–The current status of tax audits and enquiries;

–The current status of discussions and negotiations with the

relevant tax authorities;

–The results of any previous claims; and

–Any changes to the relevant tax environments.

•The Group operates in a legal and regulatory environment

that exposes it to litigation risks. As a result, the Group is

involved in disputes and legal proceedings which arise in the

ordinary course of business. The Group evaluates all facts,

the probability of the outcome of legal proceedings,

commercial outcomes and advice from internal and external

legal counsel when considering the accounting implications

•The Group makes use of reasonable and supportable

information to make accounting judgments and estimates

related to climate change. This includes information about the

observable impact of climate change on the current credit

risk of clients and the valuation of assets. Many of the effects

arising from climate change will be longer term in nature, with

an inherent level of uncertainty and have limited effect on

accounting judgments and estimates for the current period.

The following items represent the most significant effects:

–The measurement of expected credit loss considers the

ability of borrowers to make contractual payments as and

when they become due. Investec performed an

assessment of specific sectors that could be most

impacted by climate risk in all jurisdictions, specifically

focusing on the ability of the clients in these sectors to

meet their financing needs. The assessment further

included a review of Investec’s appetite to fund clients in

the respective sectors

–The assessment of asset impairment, based on value in

use, and the ability to recognise deferred tax assets are

based on future expected cash flows. The expected cash

flows are based on management’s best estimate of the

operational results, including the near-term impact of

climate risk. The Group did not consider any additional

adjustments to the cash flows to account for this risk given

the time frame of the cash flows that were considered

–The use of market indicators as inputs to fair value is

assumed to include current information and knowledge

regarding the effect of climate risk



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

ACCOUNTING POLICIES CONTINUED

138

Key areas in which judgement is applied include:

•The Group derecognises financial assets and financial

liabilities if there has been a substantial modification of their

terms and conditions. For financial instruments measured at

amortised cost, the Group first applies the practical expedient

as described in the hedge accounting policy, to reflect the

change in the referenced interest rate from an IBOR to a RFR.

Secondly, for any changes not covered by the practical

expedient, the Group applies judgement to assess whether

the changes are substantial and if they are, the financial

instrument is derecognised and a new financial instrument is

recognised. If the changes are not substantial, the Group

adjusts the gross carrying amount of the financial instrument

by the present value of the changes not covered by the

practical expedient, discounted using the revised effective

interest rate

•The effective interest method as applied by the Group, as

explained in the hedge accounting policy, recognises interest

income using a rate of return that represents the best

estimate of a constant rate of return over the expected

behavioural life of loans and deposits and recognises the

effect of potentially different interest rates charged at various

stages and other characteristics of the product life cycle

(including prepayments and penalty interest and charges).

This estimation, by nature, requires an element of judgement

regarding the expected behaviour and life cycle of the

instruments, as well as expected changes to the base rate

and other fee income/expense that are integral parts of the

instrument. The Group applies IBOR reform Phase 2 which

requires as a practical expedient for changes to the basis for

determining contractual cash flows that are necessary as a

direct consequence of IBOR reform, to be treated as a

change to a floating rate of interest provided the transition

from IBOR to RFR takes place on a basis that is economically

equivalent. For changes that are not required by IBOR reform,

the Group applies judgement to determine whether they

result in the financial instrument being derecognised or adjust

its carrying value as described in the hedge accounting

policy. Therefore, as financial instruments transition from

IBOR to RFRs, the Group applies judgement to assess

whether the transition has taken place on an economically

equivalent basis. In making this assessment, the Group

considers the extent of any changes to the contractual cash

flows as a result of the transition and the factors that have

given rise to the changes, with consideration of both

quantitative and qualitative factors

•The Group has designated micro hedge relationships as fair

value hedges. The Group applies temporary reliefs which

enable its hedge accounting to continue during the period of

uncertainty, before the replacement of an existing interest

rate benchmark with an alternative nearly risk-free interest

rate. The Group applies IBOR reform Phase 2, which provides

temporary reliefs to enable the Group’s hedge accounting to

continue upon the replacement of an IBOR with a risk-free

rate (RFR). Under one of the reliefs, the Group may elect for

individual RFRs designated as hedging the fair value of the

hedged item for changes due to a non-contractually specified

component of interest rate risk, to be deemed as meeting the

IAS 39 requirement to be separately identifiable. For each

RFR to which the relief has been applied, the Group judges

that both the volume and market liquidity of financial

instruments that reference the RFR and are priced using the

RFR will increase during the 24-month period with the result

that the hedged RFR risk component will become separately

identifiable in the change in fair value of the hedged item

•On the basis of current financial projections and having made

appropriate enquiries, the directors have a reasonable

expectation that the Group has adequate resources to

continue in operational existence up to 31 March 2026, which

is a period greater than twelve months from the date of issue

of the financial statements that aligns with internal budgeting

processes. Accordingly, the going concern basis is adopted in

the preparation of the financial statements.



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

ACCOUNTING POLICIES CONTINUED

139

1. Segmental business analysis – income statement


		Specialist Banking		Total Group
	Private Client		Corporate, Investment Banking and Other
For the year to 31 March 2023	Wealth & Investment	Private Banking
£’000	Wealth & Investment	Private Banking
Net interest income	28 150	128 945	591 930	749 025
Fee and commission income	333 192	2 120	120 903	456 215
Fee and commission expense	(691)	(174)	(14 507)	(15 372)
Investment income	7	141	4 855	5 003
Share of post-taxation profit of associates and joint venture holdings	—	—	660	660
Trading income/(loss) arising from
–customer flow	1 252	4 449	81 665	87 366
–balance sheet management and other trading activities	10	13	13 037	13 060
Other operating income	—	—	12 620	12 620
Total operating income before expected credit loss impairment charges	361 920	135 494	811 163	1 308 577
Expected credit loss impairment charges	2	(6 344)	(60 398)	(66 740)
Operating income	361 922	129 150	750 765	1 241 837
Operating costs	(270 195)	(58 996)	(503 870)	(833 061)
Operating profit before goodwill, acquired intangibles and strategic actions	91 727	70 154	246 895	408 776
Loss attributable to other non-controlling interests	—	—	—	—
Adjusted operating profit after non-controlling interests	91 727	70 154	246 895	408 776
Selected returns and key statistics
Cost to income ratio	74.7%	43.5%	62.1%	63.7%
Total assets (£’mn)	1 061	5 202	21 979	28 242



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

NOTES TO THE FINANCIAL STATEMENTS

140

1. Segmental business analysis – income statement (continued)


		Specialist Banking
	Private Client		Corporate, Investment Banking and Other
For the year to 31 March 2022	Wealth & Investment	Private Banking
£’000	Wealth & Investment	Private Banking		Total Group
Net interest income	2 268	70 692	423 348	496 308
Fee and commission income	344 685	1 579	162 665	508 929
Fee and commission expense	(656)	(23)	(14 018)	(14 697)
Investment income	(2)	816	9 765	10 579
Share of post-taxation profit of associates and joint venture holdings	—	—	1 988	1 988
Trading income/(loss) arising from
–customer flow	1 194	2 228	56 950	60 372
–balance sheet management and other trading activities	(307)	2	(1 000)	(1 305)
Other operating income	—	—	11 158	11 158
Total operating income before expected credit loss impairment charges	347 182	75 294	650 856	1 073 332
Expected credit loss impairment charges	(5)	(2 432)	(22 926)	(25 363)
Operating income	347 177	72 862	627 930	1 047 969
Operating costs	(259 496)	(42 034)	(458 756)	(760 286)
Operating profit before goodwill, acquired intangibles and strategic actions	87 681	30 828	169 174	287 683
Profit attributable to other non-controlling interests	—	—	—	—
Adjusted operating profit after non-controlling interests	87 681	30 828	169 174	287 683
Selected returns and key statistics
Cost to income ratio	74.7%	55.8%	70.5%	70.8%
Total assets (£’mn)	1 137	4 528	21 924	27 589



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

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141

2. Net interest income


		2023			2022
For the year to 31 March	Notes	Average balance sheet value	Interest income	Average yield	Average balance sheet value	Interest income	Average yield
£’000	Notes	Average balance sheet value	Interest income	Average yield	Average balance sheet value	Interest income	Average yield
Cash, near cash and bank debt and sovereign debt securities	1	9 322 491	213 554	2.29%	8 070 458	24 438	0.30%
Loans and advances	2	15 268 494	915 989	6.00%	13 423 611	623 975	4.65%
Private client		5 085 272	214 368	4.22%	4 013 304	123 740	3.08%
Corporate, institutional and other clients		10 183 222	701 621	6.89%	9 410 307	500 235	5.32%
Other debt securities and other loans and advances		758 352	38 862	5.12%	652 331	18 047	2.77%
Other#	3	225 900	276 917	n/a	233 801	53 078	n/a
Total interest-earning assets		25 575 237	1 445 322	5.65%	22 380 201	719 538	3.22%


		2023			2022
For the year to 31 March		Average balance sheet value	Interest expense	Average yield	Average balance sheet value	Interest expense	Average yield
£’000	Notes	Average balance sheet value	Interest expense	Average yield	Average balance sheet value	Interest expense	Average yield
Deposits by banks and other debt-related securities	4	3 435 368	41 557	1.21%	2 813 105	18 114	0.64%
Customer accounts (deposits)		19 192 531	383 189	2.00%	17 035 633	93 229	0.55%
Subordinated liabilities		753 269	34 548	4.59%	870 954	49 467	5.68%
Other#	5	352 681	237 003	n/a	363 193	62 420	n/a
Total interest-bearing liabilities		23 733 849	696 297	2.93%	21 082 885	223 230	1.06%
Net interest income			749 025			496 308
Net interest margin			2.93%			2.22%

Notes:

1Comprises (as per the balance sheet) cash and balances at central banks; loans and advances to banks; reverse repurchase agreements and cash collateral on

securities borrowed; sovereign debt securities; and bank debt securities.

2Comprises (as per the balance sheet) loans and advances to customers.

3Comprises (as per the balance sheet) lease receivables (housed in other assets on the balance sheet) as well as interest income from derivative financial instruments

and off-balance sheet assets where there is no associated balance sheet value.

4Comprises (as per the balance sheet) deposits by banks; debt securities in issue; repurchase agreements and cash collateral on securities lent.

5Comprises (as per the balance sheet) liabilities arising from lease liabilities (housed in other liabilities on the balance sheet) as well as interest expense from derivative

financial instruments where there is no associated balance sheet value.

#Includes interest income and interest expense on derivative assets and liabilities used for hedging purposes. This results in interest income and interest expense being

recognised with no associated balance sheet value.

3. Net fee and commission income


For the year to 31 March	2023	2022
£’000	2023	2022
Wealth & Investment businesses net fee and commission income	332 501	344 029
Fund management fees/fees for assets under management	294 468	301 950
Private client transactional fees	38 724	42 735
Fee and commission expense	(691)	(656)
Specialist Banking net fee and commission income	108 342	150 203
Specialist Banking fee and commission income	123 023	164 244
Specialist Banking fee and commission expense	(14 681)	(14 041)
Net fee and commission income	440 843	494 232
Annuity fees (net of fees payable)	309 758	317 990
Deal fees	131 085	176 242



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

142

4. Investment income


For the year to 31 March	2023	2022
£’000	2023	2022
Realised	13 158	28 988
Unrealised*	(15 566)	(26 994)
Dividend income	6 546	6 917
Funding and other net related income	865	1 668
	5 003	10 579


For the year to 31 March	Listed equities	Unlisted equities	Warrants and profit shares	Total investment portfolio	Debt securities (sovereign, bank and other)	Investment and trading properties	Other asset categories	Total
£’000	Listed equities	Unlisted equities	Warrants and profit shares	Total investment portfolio	Debt securities (sovereign, bank and other)	Investment and trading properties	Other asset categories	Total
2023
Realised	(994)	53 495	1 062	53 563	(528)	(1 118)	(38 759)	13 158
Unrealised*	1 147	(51 333)	(1 281)	(51 467)	(5 649)	(2 325)	43 875	(15 566)
Dividend income	—	6 313	—	6 313	—	—	233	6 546
Funding and other net related income	—	—	—	—	—	865	—	865
	153	8 475	(219)	8 409	(6 177)	(2 578)	5 349	5 003
2022
Realised	2 414	18 028	552	20 994	512	(4 383)	11 865	28 988
Unrealised*	(4 169)	2 082	1 176	(911)	(457)	4 274	(29 900)	(26 994)
Dividend income	37	6 667	—	6 704	—	—	213	6 917
Funding and other net related income	—	—	—	—	—	1 668	—	1 668
	(1 718)	26 777	1 728	26 787	55	1 559	(17 822)	10 579

*In a year of realisation, any prior period mark-to-market gains/(losses) recognised are reversed in the unrealised line item and recognised in the realised line item.

5. Other operating income


For the year to 31 March	2023	2022
£’000	2023	2022
Unrealised gains on other investments	1 968	1 786
Income from operating leases	4 468	1 539
Income from government grants*	6 184	7 833
	12 620	11 158

*Government grants income includes Research and Development Expenditure Credits and income from the Capability and Innovation Fund from the Banking

Competition Remedies Limited.

6. Expected credit loss impairment charges


For the year to 31 March	2023	2022
£’000	2023	2022
Expected credit losses have arisen on the following items:
Loans and advances to customers	54 396	22 024
Other loans and advances	57	14
Other balance sheet assets	3 648	3 824
Undrawn commitments and guarantees	8 639	(499)
	66 740	25 363



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

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143

7. Operating costs


For the year to 31 March	2023	2022
£’000	2023	2022
Staff compensation costs	588 032	541 781
Salaries and wages (including directors’ remuneration)**	482 899	442 766
Share-based payment expense	19 871	21 476
Social security costs	53 624	49 335
Pensions and provident fund contributions	31 638	28 204
Training and other costs	13 784	11 986
Staff costs	601 816	553 767
Premises expenses	40 299	40 813
Premises expenses (excluding depreciation and impairments)	19 853	16 675
Premises depreciation and impairments	20 446	24 138
Equipment expenses (excluding depreciation)	64 390	54 266
Business expenses*	103 065	90 407
Marketing expenses	17 113	13 028
Depreciation, amortisation and impairment of equipment, software and intangibles	6 378	8 005
	833 061	760 286
The following amounts were paid by the Group to the auditors in respect of the audit of the financial statements and for other services provided to the Group:
Ernst & Young fees
Total audit fees	5 750	5 156
Audit of the Group’s accounts	3 438	2 891
Audit of the Group’s subsidiaries	2 312	2 265
Total non-audit fees	1 230	1 236
Audit related assurance services1	655	590
Other assurance services2	423	512
Other non-audit services	152	134

Total auditor’s remuneration	6 980	6 392

*Business expenses mainly comprise insurance costs, consulting and professional fees, travel expenses and subscriptions.

**Details of the directors’ emoluments, pensions and their interests are disclosed in the remuneration report on pages 92 to 104.

1.Audit related assurance fees consist of reviews of interim financial information.

2.Other assurance services relate to services required by law or regulation (including agreed-upon-procedures relating to statutory and regulatory filings and reporting

to regulators on client assets).

During the year, the average number of permanent employees was 3 545 (2022: 3 432).



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

144

8. Share-based payments

The Investec Group operates share option and long-term share incentive plans for employees, the majority of which are on an

equity-settled basis in Investec plc but in accordance with IFRS 2 are cash-settled in the Company as set out in the accounting

policies on pages 128 to 139. The purpose of the staff share schemes is to promote an esprit de corps within the organisation,

create an awareness of Investec Group’s performance and provide an incentive to maximise individual and Group performance

by allowing all staff to share in the risks and rewards of the Investec Group.

Further information on the Investec Group share options and long-term incentive plans is provided on the Investec Group

website.


For the year to 31 March	2023	2022
£’000	2023	2022
Share-based payment expense:
Cash-settled (equity-settled at Investec plc)	19 871	21 476

Group


For the year to 31 March	2023	2022
£’000	2023	2022
Weighted average fair value of awards granted in the year
UK schemes	22 734	39 856


	2023		2022
Details of awards outstanding during the year	Number of share awards	Weighted average exercise price £	Number of share awards	Weighted average exercise price £
Outstanding at the beginning of the year	24 941 009	0.02	18 416 191	0.02
Sale of business	—	0.00	(94 076)	0.00
Transfer of employees during the year	4 861	0.00	(68 376)	0.00
Granted during the year	4 848 800	0.00	13 332 426	0.00
Exercised during the year^	(4 569 397)	0.01	(4 835 026)	0.00
Awards forfeited during the year	(1 558 256)	0.00	(1 810 130)	0.04
Outstanding at the end of the year	23 667 017	0.00	24 941 009	0.02
Exercisable at the end of the year	697 225	—	481 443	—

^The weighted average share price during the year was £4.59 (2022: £3.40).



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

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145

8. Share-based payments (continued)


Additional information relating to awards:	2023	2022
Options with strike prices
Exercise price range	n/a	£3.58 – £4.18
Weighted average remaining contractual life	n/a	0.22 years
Long-term incentive grants with no strike price
Exercise price range	£nil	£nil
Weighted average remaining contractual life	1.90 years	2.15 years
Weighted average fair value of awards and long-term grants at measurement date	£4.69	£2.99
The fair values of awards granted were calculated using a Black-Scholes option pricing model. For awards granted during the year, the inputs into the model were as follows:
– Share price at date of grant	£4.70 – £4.81	£3.06 – £3.80
– Exercise price	£nil	£nil
– Expected volatility	n/a	n/a
– Award life	3 – 7.01 years	3 – 7.01 years
– Expected dividend yields	n/a	n/a
– Risk-free rate	n/a	n/a

Expected volatility was determined based on the implied volatility levels quoted by the derivatives trading desk. The expected

volatility is based on the respective share price movement over the last six months but also includes an element of forward

expectation.

The expected attrition rates used were determined based on historical Group data with an adjustment to actual attrition

on final vesting.

Company


For the year to 31 March	2023	2022
£’000	2023	2022
UK schemes	19 164	34 627


	2023		2022
Details of awards outstanding during the year	Number of share awards	Weighted average exercise price £	Number of share awards	Weighted average exercise price £
Outstanding at the beginning of the year	19 379 880	0.00	11 556 757	0.00
Transfer of employees during the year	(108 133)	0.00	25 014	0.00
Granted during the year	4 081 612	0.00	11 612 608	0.00
Exercised during the year^	(2 966 401)	0.00	(2 308 461)	0.00
Awards forfeited during the year	(610 437)	0.00	(1 506 038)	0.01
Outstanding at the end of the year	19 776 521	0.00	19 379 880	0.00
Exercisable at the end of the year	358 402	—	217 307	—

^The weighted average share price during the year was £4.59 (2022: £3.40).



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

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146

8. Share-based payments (continued)


Additional information relating to awards:	2023	2022
Company
Options with strike prices
Exercise price range	n/a	n/a
Weighted average remaining contractual life	n/a	n/a
Long-term incentive grants with no strike price
Exercise price range	£nil	£nil
Weighted average remaining contractual life	1.93 years	2.28 years
Weighted average fair value of awards and long-term grants at measurement date	£4.70	£3.00
The fair values of awards granted were calculated using a Black-Scholes option pricing model. For awards granted during the year, the inputs into the model were as follows:
– Share price at date of grant	£4.70 – £4.81	£3.06 – £3.80
– Exercise price	£nil	£nil
– Expected volatility	n/a	n/a
– Award life	3 – 7.01 years	3 – 7.01 years
– Expected dividend yields	n/a	n/a
– Risk-free rate	n/a	n/a

Expected volatility was determined based on the implied volatility levels quoted by the derivatives trading desk. The expected

volatility is based on the respective share price movement over the last six months, but also includes an element of forward

expectation.

The expected attrition rates used were determined based on historical Group data with an adjustment to actual attrition on final

vesting.

9. Long-term employment benefits

Group

In March 2020, as part of the Investec Asset Management Limited (IAM) demerger, each participant of the Investec Group share

option and long-term share incentive plans received the right to receive one Ninety One plc share award for every two Investec plc

share awards they held. The Ninety One plc share awards were granted on the same terms and vesting period as the Investec plc

awards they related to.

DLC has an obligation to deliver Ninety One plc shares to the holders of Investec plc share awards. Accordingly, this obligation was

classified and measured as an other long-term liability in terms of IAS 19 Employee Benefits (IAS 19). The initial liability of £5 354

000 was calculated as the fair value of the liability at the date of demerger for the portion of the awards already vested. The total

value of the liability represented past service cost and as a result was accounted for in retained income. The liability was

subsequently measured at fair value through profit and loss.

In the current year, on 30 May 2022, DLC’s 15% shareholding in Ninety One DLC was distributed to ordinary shareholders. Each

participant of the Investec share option and long-term share incentive plans for employees, received the right to receive 0.13751

Ninety One shares for each Investec share option they had.

In addition, management approved the acceleration of certain remaining Ninety One awards. Participants had 90 days to exercise

the acceleration. The acceleration excluded awards made to senior management.

IAS 19 long-term employment benefit liability fair value movement recognised in the income statement for the year ended

31 March 2023 was £2.5 million (31 March 2022: £3.0 million).


	2023		2022
Details of awards outstanding during the year	Number of Ninety One awards	Weighted average exercise price £	Number of Ninety One awards	Weighted average exercise price £
Outstanding at the beginning of the year	3 620 311	0.01	5 600 071	0.00
Sale of business	—	0.00	(30 412)	0.00
Transfer of employees during the year	(56)	0.00	(14 039)	0.00
Grant linked to Ninety One Distribution	3 656 998	0.00	—	0.00
Exercised during the year	(5 520 503)	0.00	(1 677 112)	0.00
Awards forfeited during the year	(189 052)	0.17	(258 197)	0.12
Outstanding at the end of the year	1 567 698	0.00	3 620 311	0.01
Exercisable at the end of the year	875 600	—	234 104	—



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

147

9. Long-term employment benefits (continued)

For the liability calculated, the inputs into the model were as follows:


Additional information relating to awards:	2023	2022
The fair value of the liability was calculated by using the Black-Scholes option pricing model.
– Listed share price at 31 March	£1.85	£2.55
– Exercise price	Nil	Nil, £2.90 – £3.39
– Expected volatility	37.7%	35.0%
– Award life	0 – 5.41 years	0 – 4.42 years
– Expected dividend yields	0% – 9.82%	0% – 7.41%
– Risk-free rate	3.67% – 4.45%	0.69% - 2.03%

Company

In March 2020, as part of the Investec Asset Management Limited (IAM) demerger, each participant of the Investec Group share

option and long-term share incentive plans for employees, received the right to receive one Ninety One plc share award for every

two Investec plc share awards they held. The Ninety One plc share awards were granted on the same terms and vesting period

as the Investec plc awards they related to.

DLC has an obligation to deliver Ninety One plc shares to the holders of Investec plc share awards, accordingly this obligation was

classified and measured as another long-term liability in terms of IAS 19 Employee Benefits (IAS 19). The initial liability of £3 987

000 was calculated as the fair value of the liability at the date of demerger for the portion of the awards already vested. The total

value of the liability represented past service cost and as a result was accounted for in retained income. The liability was

subsequently measured at fair value through profit or loss.

In the current year, on 30 May 2022, DLC’s 15% shareholding in Ninety One DLC was distributed to ordinary shareholders. Each

participant of the Investec share option and long-term share incentive plans for employees, received the right to receive 0.13751

Ninety One shares for each Investec share option they had.

In addition, management approved the acceleration of certain remaining Ninety One awards. Participants had 90 days to exercise

the acceleration. The acceleration excluded awards made to senior management.

IAS 19 long-term employment benefit liability fair value movement recognised in the income statement for the year ended

31 March 2023 was £2.4 million (31 March 2022: £2.0 million).


	2023		2022
Details of awards outstanding during the year	Number of Ninety One awards	Weighted average exercise price £	Number of Ninety One awards	Weighted average exercise price £
Outstanding at the beginning of the year	2 420 600	0.00	3 739 502	0.00
Transfer of employees during the year	(27 836)	0.00	64 071	0.00
Distributed during the year	2 890 562	0.00	—	0.00
Exercised during the year^	(4 084 589)	0.00	(1 186 885)	0.00
Awards forfeited during the year	(49 612)	0.00	(196 088)	0.00
Outstanding at the end of the year	1 149 125	0.00	2 420 600	0.00
Exercisable at the end of the year	507 068	—	121 535	—

For the liability calculated, the inputs into the model were as follows:


Additional information relating to awards:	2023	2022
The fair value of the liability was calculated by using the Black-Scholes option pricing model.
– Listed share price at 31 March	£1.85	£2.55
– Exercise price	£nil	£nil
– Expected volatility	37.7%	35.0%
– Award life	0 – 5.41 years	0 – 4.42 years
– Expected dividend yields	0% – 9.82%	0% – 6.97%
– Risk-free rate	3.67% – 4.45%	0.85% – 2.03%



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

148

10. Taxation


For the year to 31 March	2023	2022
£’000	2023	2022
Income statement taxation charge
Current taxation
UK
Current taxation on income for the year	92 899	60 793
Adjustments in respect of prior years	(8 035)	73
Corporation tax before double tax relief	84 864	60 866
Double tax relief	(335)	(436)
	84 529	60 430
Europe	5 229	1 202
Australia	438	329
Other*	638	3 055
	6 305	4 586
Total current taxation	90 834	65 016
Deferred taxation
UK	(9 674)	(22 138)
Europe	102	(2 447)
Australia	—	1 008
Other	(5)	(776)
Total deferred taxation	(9 577)	(24 353)
Total taxation charge for the year	81 257	40 663
Total taxation charge for the year comprises:
Taxation on operating profit before goodwill	83 288	42 174
Taxation on acquired intangibles, goodwill and disposal of subsidiaries	(2 031)	(1 511)
	81 257	40 663
Deferred taxation comprises:
Origination and reversal of temporary differences	(1 956)	(9 387)
Changes in taxation rates	(6 914)	(12 655)
Adjustment in respect of prior years	(707)	(2 311)
	(9 577)	(24 353)
The deferred taxation (credit)/charge in the income statement arose from:
Deferred capital allowances	(11 616)	(8 371)
Income and expenditure accruals	(4 190)	(2 644)
Asset in respect of unexpired options	(2 025)	(13 385)
Unrealised fair value adjustment on financial instruments	220	(2 987)
Movement in deferred tax assets related to assessed losses	6 087	4 120
Liability/(asset) in respect of pension surplus	11	(68)
Deferred tax on acquired intangibles	1 805	(1 149)
Other temporary differences	131	131
	(9 577)	(24 353)
The deferred taxation charge in OCI/equity arose from:
Asset in respect of unexpired options	(491)	(4 538)
Unrealised fair value adjustment on financial instruments	5 229	8 215
	4 738	3 677

*Where Other largely includes India and North America.



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

149

10. Taxation (continued)


For the year to 31 March	2023	2022
£’000	2023	2022
The rates of corporation tax for the relevant years are:	%	%
UK	19	19
Europe (average)	10	10
Australia	30	30
Profit before taxation	394 866	273 544
Taxation on profit before taxation	81 257	40 663
Effective tax rate	20.6%	14.9%
The taxation charge on activities for the year is different from the standard rate as detailed below:
Taxation on profit on ordinary activities before taxation at UK rate of 19% (2022: 19%)	75 025	51 973
Taxation adjustments relating to foreign earnings	(4 377)	(1 778)
Taxation relating to prior years	(8 742)	(2 238)
Impairment of goodwill and non-operating items	224	(199)
Share options accounting expense/(income)	385	(4 285)
Non-taxable income	(824)	(865)
Net other permanent differences	1 900	1 090
Bank surcharge*	17 068	10 481
Capital gains – non-taxable/covered by losses	2 178	(2 160)
Movement in unrecognised trading losses	5 335	1 299
Change in tax rate**	(6 915)	(12 655)
Total taxation charge as per income statement	81 257	40 663
Other comprehensive income taxation effects
Gains on realisation of debt instruments at FVOCI recycled through the income statement	(313)	(307)
Pre-taxation	(430)	(429)
Taxation effect	117	122
Fair value movements on debt instruments at FVOCI taken directly to other comprehensive income	217	(2 276)
Pre-taxation	486	(2 657)
Taxation effect	(269)	381
Own credit risk	—	11 059
Pre-taxation	—	15 792
Taxation effect	—	(4 733)
Statement of changes in equity taxation effects
Additional Tier 1 capital	(16 875)	(16 875)
Pre-taxation	(16 875)	(16 875)
Taxation effect	—	—
Share-based payment adjustment	491	4 538
Pre-taxation	—	—
Taxation effect	491	4 538
IFRS 9 transitional adjustments	(7)	617
Pre-taxation	—	—
Taxation effect	(7)	617

*The bank surcharge rate of 8% was reduced to 3% and the surcharge allowances available for the banking group was increased to £100 million from £25 million with

effect from 1 April 2023. This increases the combined rate of corporation tax applicable to banking entities from 27% to 28% with effect from 1 April 2023.

** The UK rate of corporation tax increased to 25% from 19% from 1 April 2023.

Global Minimum Tax

To address concerns about uneven profit distribution and the tax contributions of large multinational corporations, various

agreements have been reached at the global level, including an agreement by over 135 countries to introduce a global minimum tax

rate of 15% for certain of the Group’s subsidiaries. In December 2021, the Organisation for Economic Co-operation and

Development (OECD) released a draft legislative framework, followed by detailed guidance in March 2022. This is expected to be

used by individual jurisdictions that signed the agreement to amend their local tax laws. Enactment is currently expected to occur

with effect from 1 January 2024. We are closely monitoring these developments.



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

150

11. Dividends


For the year to 31 March	2023	2022
£’000	2023	2022
Ordinary dividends
Dividends for current year	95 000	56 500
Total dividends attributable to ordinary shareholder	95 000	56 500


For the year to 31 March	2023	2022
£’000	2023	2022
Dividend attributable to Additional Tier 1 securities	16 875	16 875

The £200 000 000 Fixed Rate Reset Perpetual Additional Tier 1 Write Down Capital Securities (AT1 securities), issued

on 16 October 2018, pay a distribution rate of 6.75% per annum quarterly.

A further £50 000 000 Fixed Rate Reset Perpetual Additional Tier 1 Write Down Capital Securities issued on 22 January 2019, pay

a distribution rate of 6.75% per annum quarterly after the initial short period distribution paid on 5 March 2019. These notes were

consolidated to form a single series and are fungible with the £200 000 000 2024 notes issued on 16 October 2018.



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

151

12. Analysis of income and impairments by category of financial instrument


	At fair value through profit or loss
	IFRS 9 mandatory
For the year to 31 March	Trading**	Non-trading**	Designated at inception
£’000	Trading**	Non-trading**	Designated at inception
2023
Net interest income	7 620	70 562	—
Fee and commission income	15 457	1 054	—
Fee and commission expense	—	—	—
Investment income	(8 096)	18 565	(396)
Share of post-taxation profit of associates and joint venture holdings	—	—	—
Trading income/(loss) arising from
– customer flow	87 721	(1 573)	1 218
– balance sheet management and other trading activities	624	20 914	(6 116)
Other operating income	—	—	—
Total operating income/(expense) before expected credit loss	103 326	109 522	(5 294)
Expected credit loss impairments charges*	—	—	—
Operating income/(expense)	103 326	109 522	(5 294)


For the year to 31 March	Trading**	Non-trading**	Designated at inception
£’000	Trading**	Non-trading**	Designated at inception
2022
Net interest income	(17 200)	54 104	(26 472)
Fee and commission income	16 822	1 407	—
Fee and commission expense	—	—	—
Investment income	1 728	25 682	584
Share of post-taxation profit of associates and joint venture holdings	—	—	—
Trading income/(loss) arising from
– customer flow	34 630	30 413	(4 671)
– balance sheet management and other trading activities	(102)	(6 580)	7 344
Other operating income	—	—	—
Total operating income/(expense) before expected credit loss	35 878	105 026	(23 215)
Expected credit loss impairments charges*	—	—	—
Operating income/(expense)	35 878	105 026	(23 215)

*Includes off-balance sheet items.

**Fair value through profit and loss income statement items have been split as trading and non-trading, as defined by regulatory rules for the trading book and banking

book requirements respectively. Trading consists of income and expenses from positions held for trading intent or to hedge elements of the trading book. Non-trading

consists of income and expenses from positions that are expected to be held to maturity.



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

152


At fair value through comprehensive income

Debt instruments with a dual business model	Amortised cost	Non-financial instruments	Other fee income and expenses	Total
Debt instruments with a dual business model	Amortised cost	Non-financial instruments	Other fee income and expenses	Total

83 370	567 437	(63)	20 099	749 025
—	68 381	—	371 323	456 215
—	(2 594)	—	(12 778)	(15 372)
1 001	484	(6 555)	—	5 003
—	—	660	—	660

—	—	—	—	87 366
—	(2 362)	—	—	13 060
—	4 468	—	8 152	12 620
84 371	635 814	(5 958)	386 796	1 308 577
—	(66 740)	—	—	(66 740)
84 371	569 074	(5 958)	386 796	1 241 837


Debt instruments with a dual business model	Amortised cost	Non-financial instruments	Other fee income and expenses	Total
Debt instruments with a dual business model	Amortised cost	Non-financial instruments	Other fee income and expenses	Total

36 558	446 055	1 538	1 725	496 308
—	68 661	—	422 039	508 929
—	(2 162)	—	(12 535)	(14 697)
1 134	1 214	(19 763)	—	10 579
—	—	1 988	—	1 988

—	—	—	—	60 372
—	(1 967)	—	—	(1 305)
—	1 539	—	9 619	11 158
37 692	513 340	(16 237)	420 848	1 073 332
—	(25 363)	—	—	(25 363)
37 692	487 977	(16 237)	420 848	1 047 969



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

153

13. Analysis of financial assets and liabilities by category of financial instruments


	At fair value through profit or loss
	IFRS 9 mandatory
At 31 March	Trading*	Non–trading*	Designated at initial recognition
£’000	Trading*	Non–trading*	Designated at initial recognition
Group
2023
Assets
Cash and balances at central banks	—	—	—
Loans and advances to banks	—	—	—
Reverse repurchase agreements and cash collateral on securities borrowed	—	345 869	—
Sovereign debt securities	—	24 077	—
Bank debt securities	—	—	—
Other debt securities	—	93 992	—
Derivative financial instruments	680 262	—	—
Securities arising from trading activities	110 619	4 002	12 916
Investment portfolio	—	311 618	—
Loans and advances to customers	—	550 515	—
Other loans and advances	—	—	—
Other securitised assets	—	—	78 231
Interests in associated undertakings and joint venture holdings	—	—	—
Deferred taxation assets	—	—	—
Current taxation assets	—	—	—
Other assets	10 327	—	—
Property and equipment	—	—	—
Goodwill	—	—	—
Software	—	—	—
Other acquired intangible assets	—	—
	801 208	1 330 073	91 147
Liabilities
Deposits by banks	—	—	—
Derivative financial instruments	704 816	—	—
Other trading liabilities	28 184	—	—
Repurchase agreements and cash collateral on securities lent	—	—	—
Customer accounts (deposits)	—	—	—
Debt securities in issue	—	—	21 554
Liabilities arising on securitisation of other assets	—	—	81 609
Current taxation liabilities	—	—	—
Other liabilities	—	6 324	—
	733 000	6 324	103 163
Subordinated liabilities	—	—	—
	733 000	6 324	103 163

*Fair value through profit and loss balance sheet positions have been split as trading and non-trading, as defined by regulatory rules for the trading book and banking

book requirements respectively. Trading consists of positions held for trading intent or to hedge elements of the trading book. Non-trading consists of positions that

are expected to be held to maturity.

For more information on hedges, please refer to note 47 on pages 209 to 212.



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

154


At fair value through comprehensive income

Debt instrument with dual business model	Total instruments at fair value	Amortised cost	Non-financial instruments or scoped out of IFRS 9	Total
Debt instrument with dual business model	Total instruments at fair value	Amortised cost	Non-financial instruments or scoped out of IFRS 9	Total



—	—	5 400 401	—	5 400 401
—	—	892 791	—	892 791
—	345 869	992 830	—	1 338 699
1 141 745	1 165 822	55 922	—	1 221 744
199 737	199 737	4 954	—	204 691
—	93 992	603 283	—	697 275
—	680 262	—	—	680 262
—	127 537	—	—	127 537
—	311 618	—	—	311 618
843 428	1 393 943	14 173 866	—	15 567 809
—	—	172 087	—	172 087
—	78 231	—	—	78 231
—	—	—	10 851	10 851
—	—	—	111 513	111 513
—	—	—	9 890	9 890
—	10 327	612 197	370 861	993 385
—	—	—	121 014	121 014
—	—	—	249 503	249 503
—	—	—	9 415	9 415
—	—	—	43 887	43 887
2 184 910	4 407 338	22 908 331	926 934	28 242 603

—	—	2 172 170	—	2 172 170
—	704 816	—	—	704 816
—	28 184	—	—	28 184
—	—	139 529	—	139 529
—	—	19 251 399	—	19 251 399
—	21 554	1 119 325	—	1 140 879
—	81 609	—	—	81 609
—	—	—	4 813	4 813
—	6 324	622 337	569 606	1 198 267
—	842 487	23 304 760	574 419	24 721 666
—	—	731 483	—	731 483
—	842 487	24 036 243	574 419	25 453 149



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

155

13. Analysis of financial assets and liabilities by category of financial instruments

(continued)


	At fair value through profit or loss
	IFRS 9 mandatory
At 31 March	Trading*	Non–trading*	Designated at initial recognition
£’000	Trading*	Non–trading*	Designated at initial recognition
Group
2022
Assets
Cash and balances at central banks	—	—	—
Loans and advances to banks	—	—	—
Reverse repurchase agreements and cash collateral on securities borrowed	89 889	540 570	38 649
Sovereign debt securities	—	33 658	—
Bank debt securities	—	—	—
Other debt securities	—	144 048	—
Derivative financial instruments	717 457	—	—
Securities arising from trading activities	138 032	4 780	20 353
Investment portfolio	—	333 221	—
Loans and advances to customers	—	609 083	—
Other loans and advances	—	—	—
Other securitised assets	—	—	93 087
Interests in associated undertakings and joint venture holdings	—	—	—
Deferred taxation assets	—	—	—
Current taxation assets	—	—	—
Other assets	9 606	—	—
Property and equipment	—	—	—
Goodwill	—	—	—
Software	—	—	—
Other acquired intangible assets	—	—
	954 984	1 665 360	152 089
Liabilities
Deposits by banks	—	—	—
Derivative financial instruments	863 295	—	—
Other trading liabilities	42 944	—	—
Repurchase agreements and cash collateral on securities lent	—	—	—
Customer accounts (deposits)	—	—	—
Debt securities in issue	—	—	46 192
Liabilities arising on securitisation of other assets	—	—	95 885
Current taxation liabilities	—	—	—
Other liabilities	—	—	—
	906 239	—	142 077
Subordinated liabilities	—	—	—
	906 239	—	142 077

*Fair value through profit and loss balance sheet positions have been split as trading and non-trading, as defined by regulatory rules for the trading book and banking

book requirements respectively. Trading consists of positions held for trading intent or to hedge elements of the trading book. Non-trading consists of positions that

are expected to be held to maturity.

For more information on hedges, please refer to note 47 on pages 209 to 212.



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

156


At fair value through comprehensive income

Debt instrument with dual business model	Total instruments at fair value	Amortised cost	Non-financial instruments or scoped out of IFRS 9	Total
Debt instrument with dual business model	Total instruments at fair value	Amortised cost	Non-financial instruments or scoped out of IFRS 9	Total



—	—	5 379 994	—	5 379 994
—	—	1 467 039	—	1 467 039
—	669 108	778 365	—	1 447 473
1 132 119	1 165 777	—	—	1 165 777
61 714	61 714	—	—	61 714
—	144 048	293 601	—	437 649
—	717 457	—	—	717 457
—	163 165	—	—	163 165
—	333 221	—	—	333 221
685 386	1 294 469	13 132 006	—	14 426 475
—	—	147 025	—	147 025
—	93 087	—	—	93 087
—	—	—	11 444	11 444
—	—	—	109 542	109 542
—	—	—	15 727	15 727
—	9 606	822 300	329 643	1 161 549
—	—	—	155 055	155 055
—	—	—	244 072	244 072
—	—	—	7 066	7 066
—	—	—	44 145	44 145
1 879 219	4 651 652	22 020 330	916 694	27 588 676

—	—	2 026 573	—	2 026 573
—	863 295	—	—	863 295
—	42 944	—	—	42 944
—	—	154 828	—	154 828
—	—	18 616 233	—	18 616 233
—	46 192	1 074 649	—	1 120 841
—	95 885	—	—	95 885
—	—	—	2 082	2 082
—	—	805 880	554 191	1 360 071
—	1 048 316	22 678 163	556 273	24 282 752
—	—	758 739	—	758 739
—	1 048 316	23 436 902	556 273	25 041 491



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

157

13. Analysis of financial assets and liabilities by category of financial instruments

(continued)


	At fair value through profit or loss
	IFRS 9 mandatory
At 31 March	Trading*	Non–trading*	Designated at initial recognition
£’000	Trading*	Non–trading*	Designated at initial recognition
Company
2023
Assets
Cash and balances at central banks	—	—	—
Loans and advances to banks	—	—	—
Reverse repurchase agreements and cash collateral on securities borrowed	—	345 869	—
Sovereign debt securities	—	24 077	—
Bank debt securities	—	—	—
Other debt securities	—	93 753	1 094
Derivative financial instruments	625 897	—	—
Securities arising from trading activities	110 619	4 002	12 916
Investment portfolio	—	46 534	—
Loans and advances to customers	—	449 618	—
Other loans and advances	—	—	—
Other securitised assets	—	—	4 005
Interests in associated undertakings and joint venture holdings	—	—	—
Deferred taxation assets	—	—	—
Current taxation assets	—	—	—
Other assets	10 327	—	—
Property and equipment	—	—	—
Software	—	—	—
Investment in subsidiaries	—	—	—
	746 843	963 853	18 015
Liabilities
Deposits by banks		—	—
Derivative financial instruments	665 600	—	—
Other trading liabilities	28 184	—	—
Repurchase agreements and cash collateral on securities lent	—	—	—
Customer accounts (deposits)	—	—	—
Debt securities in issue	—	—	21 554
Other liabilities	—	—	—
	693 784	—	21 554
Subordinated liabilities	—	—	—
	693 784	—	21 554

*Fair value through profit and loss balance sheet positions have been split as trading and non-trading, as defined by regulatory rules for the trading book and banking

book requirements respectively. Trading consists of positions held for trading intent or to hedge elements of the trading book. Non-trading consists of positions that

are expected to be held to maturity.

For more information on hedges, please refer to note 47 on pages 209 to 212.



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

158


At fair value through comprehensive income

Debt instrument with dual business model	Total instruments at fair value	Amortised cost	Non-financial instruments or scoped out of IFRS 9	Total
Debt instrument with dual business model	Total instruments at fair value	Amortised cost	Non-financial instruments or scoped out of IFRS 9	Total



—	—	5 380 346	—	5 380 346
—	—	237 897	—	237 897
—	345 869	992 830	—	1 338 699
338 799	362 876	9 865	—	372 741
195 636	195 636	4 954	—	200 590
—	94 847	1 309 406	—	1 404 253
—	625 897	—	—	625 897
—	127 537	—	—	127 537
—	46 534	—	—	46 534
843 428	1 293 046	10 534 443	—	11 827 489
—	—	3 199 833	—	3 199 833
—	4 005	—	—	4 005
—	—	—	2 301	2 301
—	—	—	59 833	59 833
—	—	—	36 006	36 006
—	10 327	366 195	69 764	446 286
—	—	—	58 577	58 577
—	—	—	238	238
—	—	—	872 829	872 829
1 377 863	3 106 574	22 035 769	1 099 548	26 241 891

—	—	2 524 081	—	2 524 081
—	665 600	—	—	665 600
—	28 184	—	—	28 184
—	—	289 529	—	289 529
—	—	17 953 810	—	17 953 810
—	21 554	1 118 142	—	1 139 696
—	—	384 410	180 031	564 441
—	715 338	22 269 972	180 031	23 165 341
—	—	731 483	—	731 483
—	715 338	23 001 455	180 031	23 896 824



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

159

13. Analysis of financial assets and liabilities by category of financial instruments

(continued)


	At fair value through profit or loss
	IFRS 9 mandatory
At 31 March	Trading*	Non–trading*	Designated at initial recognition
£’000	Trading*	Non–trading*	Designated at initial recognition
Company
2022
Assets
Cash and balances at central banks	—	—	—
Loans and advances to banks	—	—	—
Reverse repurchase agreements and cash collateral on securities borrowed	89 889	540 570	38 649
Sovereign debt securities	—	33 658	—
Bank debt securities	—	—	—
Other debt securities	—	143 866	1 261
Derivative financial instruments	672 124	—	—
Securities arising from trading activities	138 032	4 780	20 353
Investment portfolio	—	70 229	—
Loans and advances to customers	—	508 076	—
Other loans and advances	—	572	—
Other securitised assets	—	—	5 083
Interests in associated undertakings and joint venture holdings	—	—	—
Deferred taxation assets	—	—	—
Current taxation assets	—	—	—
Other assets	9 606	—	—
Property and equipment	—	—	—
Software	—	—	—
Investment in subsidiaries	—	—
	909 651	1 301 751	65 346
Liabilities
Deposits by banks	—	—	—
Derivative financial instruments	828 405	—	—
Other trading liabilities	42 944	—	—
Repurchase agreements and cash collateral on securities lent	—	—	—
Customer accounts (deposits)	—	—	—
Debt securities in issue	—	—	46 192
Other liabilities	—	—	—
	871 349	—	46 192
Subordinated liabilities	—	—	—
	871 349	—	46 192

*Fair value through profit and loss balance sheet positions have been split as trading and non-trading, as defined by regulatory rules for the trading book and banking

book requirements respectively. Trading consists of positions held for trading intent or to hedge elements of the trading book. Non-trading consists of positions that

are expected to be held to maturity.

For more information on hedges, please refer to note 47 on pages 209 to 212.



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At fair value through comprehensive income

Debt instrument with dual business model	Total instruments at fair value	Amortised cost	Non-financial instruments or scoped out of IFRS 9	Total
Debt instrument with dual business model	Total instruments at fair value	Amortised cost	Non-financial instruments or scoped out of IFRS 9	Total



—	—	5 326 533	—	5 326 533
—	—	535 738	—	535 738
—	669 108	778 365	—	1 447 473
289 836	323 494	—	—	323 494
57 844	57 844	—	—	57 844
—	145 127	998 897	—	1 144 024
—	672 124	—	—	672 124
—	163 165	—	—	163 165
—	70 229	—	—	70 229
685 386	1 193 462	9 736 981	—	10 930 443
—	572	3 026 590	—	3 027 162
—	5 083		—	5 083
—	—	—	2 167	2 167
—	—	—	70 214	70 214
—	—	—	28 997	28 997
—	9 606	531 429	73 998	615 033
—	—	—	70 514	70 514
—	—	—	34	34
—	—	—	827 599	827 599
1 033 066	3 309 814	20 934 533	1 073 523	25 317 870

—	—	2 214 555	—	2 214 555
—	828 405	—	—	828 405
—	42 944	—	—	42 944
—	—	197 903	—	197 903
—	—	17 290 014	—	17 290 014
—	46 192	1 073 466	—	1 119 658
—	—	482 028	194 381	676 409
—	917 541	21 257 966	194 381	22 369 888
—	—	758 739	—	758 739
—	917 541	22 016 705	194 381	23 128 627



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14. Fair value hierarchy

The table below analyses recurring fair value measurements for financial assets and financial liabilities. These fair value

measurements are categorised into different levels in the fair value hierarchy based on the inputs to the valuation technique used.

The different levels are identified as follows:

Level 1 – quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2 – inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly

(i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 –inputs for the asset or liability that are not based on observable market data (unobservable inputs).


		Fair value category
At 31 March	Total instruments at fair value	Level 1	Level 2	Level 3
£’000	Total instruments at fair value	Level 1	Level 2	Level 3
Group
2023
Assets
Reverse repurchase agreements and cash collateral on securities borrowed	345 869	—	345 869	—
Sovereign debt securities	1 165 822	1 165 822	—	—
Bank debt securities	199 737	199 737	—	—
Other debt securities	93 992	—	60	93 932
Derivative financial instruments	680 262	—	627 078	53 184
Securities arising from trading activities	127 537	123 475	60	4 002
Investment portfolio	311 618	1 666	885	309 067
Loans and advances to customers*	1 393 943	—	90 297	1 303 646
Other securitised assets	78 231	—	—	78 231
Other assets	10 327	10 327	—	—
	4 407 338	1 501 027	1 064 249	1 842 062
Liabilities
Derivative financial instruments	704 816	—	645 358	59 458
Other trading liabilities	28 184	28 184	—	—
Debt securities in issue	21 554	—	21 554	—
Liabilities arising on securitisation of other assets	81 609	—	—	81 609
Other liabilities	6 324	—	—	6 324
	842 487	28 184	666 912	147 391
Net assets at fair value	3 564 851	1 472 843	397 337	1 694 671

*Loans and advances to customers at fair value include instruments where the business model is either to sell the loan or where the business model is to hold to collect

the contractual cash flows but the loan has failed the SPPI test.

Transfers between level 1 and level 2

During the current and prior year there were no transfers between level 1 and level 2.



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14. Fair value hierarchy (continued)


		Fair value category
At 31 March	Total instruments at fair value	Level 1	Level 2	Level 3
£’000	Total instruments at fair value	Level 1	Level 2	Level 3
Group
2022
Assets
Reverse repurchase agreements and cash collateral on securities borrowed	669 108	—	669 108	—
Sovereign debt securities	1 165 777	1 165 777	—	—
Bank debt securities	61 714	61 714	—	—
Other debt securities	144 048	—	39 017	105 031
Derivative financial instruments	717 457	19	673 488	43 950
Securities arising from trading activities	163 165	158 213	172	4 780
Investment portfolio	333 221	2 034	6 552	324 635
Loans and advances to customers*	1 294 469	—	82 621	1 211 848
Other securitised assets	93 087	—	—	93 087
Other assets	9 606	9 606	—	—
	4 651 652	1 397 363	1 470 958	1 783 331
Liabilities
Derivative financial instruments	863 295	—	817 526	45 769
Other trading liabilities	42 944	42 944	—	—
Debt securities in issue	46 192	—	46 192	—
Liabilities arising on securitisation of other assets	95 885	—	—	95 885
	1 048 316	42 944	863 718	141 654
Net assets at fair value	3 603 336	1 354 419	607 240	1 641 677

*Loans and advances to customers at fair value include instruments where the business model is either to sell the loan or where the business model is to hold to collect

the contractual cash flows but the loan has failed the SPPI test.

Transfers between level 1 and level 2

During the current and prior year there were no transfers between level 1 and level 2.



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14. Fair value hierarchy (continued)

Level 3 instruments

The following table is a reconciliation of the opening balances to the closing balances for the fair value measurements in level 3

of the fair value hierarchy:


For the year to	Investment portfolio	Loans and advances to customers	Other securitised assets	Other balance sheet assets1	Total
£’000	Investment portfolio	Loans and advances to customers	Other securitised assets	Other balance sheet assets1	Total
Group
Assets
Balance as at 1 April 2021	336 951	1 045 663	107 259	135 369	1 625 242
Total gains or (losses)	22 677	63 202	(657)	19 577	104 799
In the income statement	22 677	63 768	(657)	19 577	105 365
In the statement of comprehensive income	—	(566)	—	—	(566)
Purchases	33 602	1 845 044	—	59 165	1 937 811
Sales	(66 682)	(1 079 005)	—	(19 783)	(1 165 470)
Settlements	(8 498)	(695 450)	(13 515)	(49 392)	(766 855)
Transfers into level 3	621	—	—	—	621
Foreign exchange adjustments	5 964	32 394	—	8 825	47 183
Balance as at 31 March 2022	324 635	1 211 848	93 087	153 761	1 783 331
Total gains or (losses)	6 228	100 832	1 000	5 252	113 312
In the income statement	6 228	101 088	1 000	5 252	113 568
In the statement of comprehensive income	—	(256)	—	—	(256)
Purchases	23 416	1 692 584	—	26 056	1 742 056
Sales	(43 653)	(762 668)	—	(12 565)	(818 886)
Settlements	(13 648)	(981 996)	(15 856)	(31 148)	(1 042 648)
Transfers into level 3	6 304	—	—	4 746	11 050
Foreign exchange adjustments	5 785	43 046	—	5 016	53 847
Balance as at 31 March 2023	309 067	1 303 646	78 231	151 118	1 842 062

1.Comprises level 3 other debt securities, derivative financial instruments and securities arising from trading.

The Group transfers between levels within the fair value hierarchy when the observability of inputs change, or if the valuation

methods change. Transfers are deemed to occur at the end of each semi-annual reporting period.

For the year to 31 March 2023, investment portfolio of £6.3 million and derivatives financial instruments assets of £4.7 million were

transferred from level 2 to level 3 and derivative financial instruments liabilities of £8 000 were transferred from level 3 to level 2.

In the prior year, investment portfolio of £0.6 million was transferred from level 2 to level 3. The valuation methodologies were

reviewed and unobservable inputs were used to determine the fair value.


For the year to	Liabilities arising on securitisation of other assets	Other balance sheet liabilities2	Total
£’000	Liabilities arising on securitisation of other assets	Other balance sheet liabilities2	Total
Group
Liabilities
Balance as at 1 April 2021	108 281	28 034	136 315
Total (gains) or losses	(2 094)	16 148	14 054
In the income statement	(2 094)	16 148	14 054
Settlements	(10 303)	(270)	(10 573)
Foreign exchange adjustments	1	1 857	1 858
Balance as at 31 March 2022	95 885	45 769	141 654
Total losses	1 384	11 770	13 154
In the income statement	1 384	11 770	13 154
Purchases	—	6 324	6 324
Settlements	(15 660)	—	(15 660)
Transfers out of level 3	—	(8)	(8)
Foreign exchange adjustments	—	1 927	1 927
Balance as at 31 March 2023	81 609	65 782	147 391

2Comprises level 3 derivative financial instruments and other liabilities.



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14. Fair value hierarchy (continued)

The following table quantifies the gains or (losses) included in the income statement and other comprehensive income recognised

on level 3 financial instruments:


For the year to 31 March	Total	Realised	Unrealised
£’000	Total	Realised	Unrealised
Group
2023
Total gains or (losses) included in the income statement for the year
Net interest income	98 185	86 191	11 994
Investment income*	2 069	2 502	(433)
Trading income arising from customer flow	160	1	159
	100 414	88 694	11 720
Total gains or (losses) included in other comprehensive income for the year
Gains on realisation on debt instruments at FVOCI recycled through the income statement	433	433	—
Fair value movements on debt instruments at FVOCI taken directly to other comprehensive income	(256)	—	(256)
	177	433	(256)
2022
Total gains or (losses) included in the income statement for the year
Net interest income	65 943	57 918	8 025
Investment income*	27 562	52 666	(25 104)
Trading loss arising from customer flow	(2 194)	(491)	(1 703)
	91 311	110 093	(18 782)
Total gains or (losses) included in other comprehensive income for the year
Gains on realisation on debt instruments at FVOCI recycled through the income statement	440	440	—
Fair value movements on debt instruments at FVOCI taken directly to other comprehensive income	(566)	—	(566)
	(126)	440	(566)

*In the prior year, included within the investment income statement balance are unrealised gains of £0.7 million presented within operational items in the income

statement.



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165

14. Fair value hierarchy (continued)

Level 2 financial assets and financial liabilities

The following table sets out the Group’s principal valuation techniques as at 31 March 2023 used in determining the fair value of its

financial assets and financial liabilities that are classified within level 2 of the fair value hierarchy:


	VALUATION BASIS/TECHNIQUES		MAIN INPUTS
Assets

Reverse repurchase agreements and cash collateral on securities borrowed		Discounted cash flow model		Discount rates


Other debt securities		Discounted cash flow model		Discount rates, swap curves and negotiable certificate of deposit curves, external prices and broker quotes


Derivative financial instruments		Discounted cash flow model, Hermite interpolation and industry standard derivative pricing models including Black- Scholes and Local Volatility		Discount rate, risk-free rate, volatilities, forex forward points and spot rates, interest rate swap curves and credit curves


Securities arising from trading activities		Discounted cash flow model, Hermite interpolation and industry standard derivative pricing models including Local Volatility		Discount rate, risk-free rate, volatilities, forex forward points and spot rates, interest rate swap curves and credit curves


Investment portfolio		Discounted cash flow model and net asset value model		Discount rate and net assets
		Comparable quoted inputs		Discount rate and fund unit price

Loans and advances to customers		Discounted cash flow model		Yield curves

Liabilities

Derivative financial instruments		Discounted cash flow model, Hermite interpolation and industry standard derivative pricing models including Black- Scholes and Local Volatility		Discount rate, risk-free rate, volatilities, forex forward points and spot rates, interest rate swap curves and credit curves


Other trading liabilities		Discounted cash flow model, Hermite interpolation and industry standard derivative pricing models including Local Volatility		Discount rate, risk-free rate, volatilities, forex forward points and spot rates, interest rate swap curves and credit curves


Debt securities in issue		Discounted cash flow model, Hermite interpolation and industry standard derivative pricing models including Local Volatility		Discount rate, risk-free rate, volatilities, forex forward points and spot rates, interest rate swap curves and credit curves



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14. Fair value hierarchy (continued)

Sensitivity of fair values to reasonably possible alternative assumptions by level 3 instrument type

The fair value of financial instruments in level 3 are measured using valuation techniques that incorporate assumptions that are not

evidenced by prices from observable market data. The table below shows the sensitivity of these fair values to reasonably possible

alternative assumptions, determined at a transactional level:


At 31 March 2023	Balance sheet value £’000	Significant unobservable input	Range of unobservable input used	Favourable changes £’000	Unfavourable changes £’000
Group
Assets
Other debt securities	93 932	Potential impact on income statement		2 702	(5 253)
		Credit spreads	1.05%–1.87%	108	(254)
		Cash flow adjustments	CPR 14.81%	10	(10)
		Other	^	2 584	(4 989)

Derivative financial instruments	53 184	Potential impact on income statement		5 260	(5 136)
		Volatilities	7.5%–18.9%	13	(25)
		Cash flow adjustments	CPR 14.81%	6	(5)
		Underlying asset value	^^	3 999	(4 100)
		Other	^	1 242	(1 006)

Securities arising from trading activities	4 002	Potential impact on income statement
Securities arising from trading activities		Cash flow adjustments	CPR 14.17%	206	(235)

Investment portfolio	309 067	Potential impact on income statement		32 599	(65 295)
		Price earnings multiple	5.5x–11.2x	11 718	(21 695)
		Underlying asset value	^^	9 378	(20 883)
		Other	^	11 503	(22 717)

Loans and advances to customers	1 303 646	Potential impact on income statement		21 222	(40 572)
Loans and advances to customers		Credit spreads	0.28%–5.2%	10 994	(22 971)
		Price earnings multiple	3.5x-4x	4 276	(7 083)
		Underlying asset value	^^	1 564	(1 742)
		Other	^	4 388	(8 776)

		Potential impact on other comprehensive income		15 756	(31 758)
		Credit spreads	0.29%–5.5%	15 753	(31 751)
		Other	^	3	(7)

Other securitised assets	78 231	Potential impact on income statement
		Cash flow adjustments	CPR 14.81%	701	(669)
Total level 3 assets	1 842 062			78 446	(148 918)
Liabilities
Derivative financial instruments	59 458	Potential impact on income statement		(4 098)	4 099
		Volatilities	9%–18.9%	(1)	2
		Underlying asset value	^^	(4 097)	4 097

Liabilities arising on securitisation of other assets*	81 609	Potential impact on income statement
Liabilities arising on securitisation of other assets*		Cash flow adjustments	CPR 14.81%	(351)	363
Other liabilities	6 324	Potential impact on income statement
		Other	^	(632)	632
Total level 3 liabilities	147 391			(5 081)	5 094
Net level 3 assets	1 694 671

*The sensitivity of the fair value of liabilities arising on securitisation of other assets has been considered together with other securitised assets.

^Other – The valuation sensitivity has been assessed by adjusting various inputs such as expected cash flows and earnings multiples rather than a single input. It is

deemed appropriate to reflect the outcome on a portfolio basis for the purposes of this analysis as the sensitivity of the assets cannot be determined through the

adjustment of a single input.

^^Underlying asset values are calculated by reference to a tangible asset, for example, property, aircraft or shares.



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14. Fair value hierarchy (continued)


At 31 March 2022	Balance sheet value £’000	Significant unobservable input	Range of unobservable input used	Favourable changes £’000	Unfavourable changes £’000
Group
Assets
Other debt securities	105 031	Potential impact on income statement		3 199	(5 851)
		Credit spreads	0.74%–2.75%	141	(286)
		Cash flow adjustments	CPR 8.4%	6	(8)
		Other	^	3 052	(5 557)

Derivative financial instruments	43 950	Potential impact on income statement		4 643	(5 266)
		Volatilities	5%–18.9%	15	(29)
		Cash flow adjustments	CPR 8.4%	—	(6)
		Underlying asset value	^^	4 026	(4 028)
		Other	^	602	(1 203)

Securities arising from trading activities	4 780	Potential impact on income statement
Securities arising from trading activities		Cash flow adjustments	CPR 11%	481	(635)

Investment portfolio	324 635	Potential impact on income statement		34 225	(68 234)
		Price earnings multiple	5.5x–15x	9 505	(18 206)
		Underlying asset value	^^	9 636	(20 897)
		Other	^	15 084	(29 131)

Loans and advances to customers	1 211 848	Potential impact on income statement		24 838	(40 047)
		Credit spreads	0.15%–34.3%	10 656	(27 586)
		Price earnings multiple	3.5x–4.2x	7 824	(1 136)
		Underlying asset value	^^	3 528	(5 665)
		Other	^	2 830	(5 660)

		Potential impact on other comprehensive income
		Credit spreads	0.14%–6.17%	8 440	(15 725)

Other securitised assets	93 087	Potential impact on income statement
		Cash flow adjustments	CPR 8.4%	988	(1 057)
Total level 3 assets	1 783 331			76 814	(136 815)

Liabilities
Derivative financial instruments	45 769	Potential impact on income statement		(4 046)	4 060
		Volatilities	5%–18.9%	(21)	35
		Underlying asset value	^^	(4 025)	4 025

Liabilities arising on securitisation of other assets*	95 885	Potential impact on income statement
Liabilities arising on securitisation of other assets*		Cash flow adjustments	CPR 8.4%	(292)	299
Total level 3 liabilities	141 654			(4 338)	4 359
Net level 3 assets	1 641 677

*The sensitivity of the fair value of liabilities arising on securitisation of other assets has been considered together with other securitised assets.

^Other – The valuation sensitivity has been assessed by adjusting various inputs such as expected cash flows and earnings multiples rather than a single input. It is

deemed appropriate to reflect the outcome on a portfolio basis for the purposes of this analysis as the sensitivity of the assets cannot be determined through the

adjustment of a single input.

^^Underlying asset values are calculated by reference to a tangible asset, for example, property, aircraft or shares.



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14. Fair value hierarchy (continued)

In determining the value of level 3 financial instruments, the following are the principal inputs that can require judgement:

Credit spreads

Credit spreads reflect the additional yield that a market participant would demand for taking exposure to the credit risk

of an instrument. The credit spread for an instrument forms part of the yield used in a discounted cash flow calculation. In general,

a significant increase in a credit spread in isolation will result in a movement in fair value that is unfavourable for the holder

of a financial instrument. It is an unobservable input into a discounted cash flow valuation.

Discount rates

Discount rates are used to adjust for the time value of money when using a discounted cash flow valuation method. Where

relevant, the discount rate also accounts for illiquidity, market conditions and uncertainty of future cash flows.

Volatilities

Volatility is a key input in the valuation of derivative products containing optionality. Volatility is a measure of the variability

or uncertainty in returns for a given derivative underlying. It represents an estimate of how much a particular underlying instrument,

parameter or index will change in value over time.

Cash flows

Cash flows relate to the future cash flows that can be expected from the instrument and requires judgement. Cash flows are input

into a discounted cash flow valuation.

Price earnings multiple

The price-to-earnings ratio is an equity valuation multiple used in the adjustment of underlying market prices. It is a key driver in the

valuation of unlisted investments.

Underlying asset value

In instances where cash flows have links to referenced assets, the underlying asset value is used to determine the fair value.

The underlying asset valuation is derived using observable market prices sourced from broker quotes, specialist valuers or other

reliable pricing sources.



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14. Fair value hierarchy (continued)


		Fair value category
At 31 March	Total instruments at fair value	Level 1	Level 2	Level 3
£’000	Total instruments at fair value	Level 1	Level 2	Level 3
Company
2023
Assets
Reverse repurchase agreements and cash collateral on securities borrowed	345 869	—	345 869	—
Sovereign debt securities	362 876	362 876	—	—
Bank debt securities	195 636	195 636	—	—
Other debt securities	94 847	—	60	94 787
Derivative financial instruments	625 897	—	615 603	10 294
Securities arising from trading activities	127 537	123 475	60	4 002
Investment portfolio	46 534	525	884	45 125
Loans and advances to customers*	1 293 046	—	—	1 293 046
Other securitised assets	4 005	—	—	4 005
Other assets	10 327	10 327	—	—
	3 106 574	692 839	962 476	1 451 259
Liabilities
Derivative financial instruments	665 600	—	643 602	21 998
Other trading liabilities	28 184	28 184	—	—
Debt securities in issue	21 554	—	21 554	—
	715 338	28 184	665 156	21 998
Net assets at fair value	2 391 236	664 655	297 320	1 429 261

*Loans and advances to customers at fair value include instruments where the business model is either to sell the loan or where the business model is to hold to collect

the contractual cash flows but the loan has failed the SPPI test.

Transfers between level 1 and level 2

During the current year and prior year there were no transfers between level 1 and level 2



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14. Fair value hierarchy (continued)


		Fair value category
At 31 March	Total instruments at fair value	Level 1	Level 2	Level 3
£’000	Total instruments at fair value	Level 1	Level 2	Level 3
Company
2022
Assets
Reverse repurchase agreements and cash collateral on securities borrowed	669 108	—	669 108	—
Sovereign debt securities	323 494	323 494	—	—
Bank debt securities	57 844	57 844	—	—
Other debt securities	145 127	—	39 018	106 109
Derivative financial instruments	672 124	19	664 781	7 324
Securities arising from trading activities	163 165	158 213	172	4 780
Investment portfolio	70 229	449	836	68 944
Loans and advances to customers*	1 193 462	—	1 889	1 191 573
Other loans and advances	572	—	—	572
Other securitised assets	5 083	—	—	5 083
Other assets	9 606	9 606	—	—
	3 309 814	549 626	1 375 804	1 384 385
Liabilities
Derivative financial instruments	828 405	—	813 587	14 818
Other trading liabilities	42 944	42 944	—	—
Debt securities in issue	46 192	—	46 192	—
	917 541	42 944	859 779	14 818
Net assets at fair value	2 392 273	506 682	516 025	1 369 567

*Loans and advances to customers at fair value include instruments where the business model is either to sell the loan or where the business model is to hold to collect

the contractual cash flows but the loan has failed the SPPI test.

Transfers between level 1 and level 2

During the current year and prior year there were no transfers between level 1 and level 2



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14. Fair value hierarchy (continued)

Level 3 instruments

The following table is a reconciliation of the opening balances to the closing balances for the fair value measurements in level 3

of the fair value hierarchy:


For the year to	Investment portfolio	Loans and advances to customers	Other securitised assets	Other balance sheet assets1	Total
£’000	Investment portfolio	Loans and advances to customers	Other securitised assets	Other balance sheet assets1	Total
Company
Assets
Balance as at 1 April 2021	64 456	1 019 358	5 774	170 852	1 260 440
Total gains or (losses)	8 804	66 129	1 170	(6 241)	69 862
In the income statement	8 804	66 695	1 170	(6 241)	70 428
In the statement of comprehensive income	—	(566)	—	—	(566)
Purchases	19 748	1 838 154	—	40 312	1 898 214
Sales	(26 176)	(1 066 692)	—	(19 783)	(1 112 651)
Settlements	—	(697 388)	(1 861)	(74 715)	(773 964)
Foreign exchange adjustments	2 112	32 012	—	8 360	42 484
Balance as at 31 March 2022	68 944	1 191 573	5 083	118 785	1 384 385
Total gains or (losses)	12 890	90 069	(389)	1 079	103 649
In the income statement	12 890	90 325	(389)	1 079	103 905
In the statement of comprehensive income	—	(256)	—	—	(256)
Purchases	7 153	1 685 015	—	27 286	1 719 454
Sales	(38 150)	(739 499)	—	(12 565)	(790 214)
Settlements	(7 336)	(977 612)	(688)	(32 599)	(1 018 235)
Transfers into level 3	—	—	—	4 746	4 746
Foreign exchange adjustments	1 624	43 498	(1)	2 352	47 473
Balance as at 31 March 2023	45 125	1 293 046	4 005	109 083	1 451 259

1.Comprises level 3 other debt securities, derivative financial instruments, other loans and advances and securities arising from trading.


For the year to	Derivative financial instruments	Total
£’000	Derivative financial instruments	Total
Company
Liabilities
Balance as at 1 April 2021	11 956	11 956
Total losses	2 304	2 304
In the income statement	2 304	2 304
Foreign exchange adjustments	558	558
Balance as at 31 March 2022	14 818	14 818
Total losses	6 516	6 516
In the income statement	6 516	6 516
Transfers out of level 3	(8)	(8)
Foreign exchange adjustments	672	672
Balance as at 31 March 2023	21 998	21 998

The Group transfers between levels within the fair value hierarchy when the observability of inputs change, or if the valuation

methods change. Transfers are deemed to occur at the end of each semi-annual reporting period.

For the year to 31 March 2023, derivative financial instruments assets of £4.7 million were transferred from level 2 to level 3,

and derivative financial instruments liabilities of £8 000 were transferred from level 3 to level 2. The valuation methodologies were

reviewed and unobservable inputs were used to determine the fair value.



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

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172

14. Fair value hierarchy (continued)

The following table quantifies the gains or (losses) included in the income statement and other comprehensive income recognised

on level 3 financial instruments:


For the year to 31 March	Total	Realised	Unrealised
£’000	Total	Realised	Unrealised
Company
2023
Total gains or (losses) included in the income statement for the period
Net interest income	96 393	84 418	11 975
Investment income*	837	20 380	(19 543)
Trading income arising from customer flow	159	—	159
	97 389	104 798	(7 409)
Total gains or (losses) included in other comprehensive income for the period
Gains on realisation on debt instruments at FVOCI recycled through the income statement	433	433	—
Fair value movements on debt instruments at FVOCI taken directly to other comprehensive income	(256)	—	(256)
	177	433	(256)
2022
Total gains or (losses) included in the income statement for the period
Net interest income	64 888	57 047	7 841
Investment income	5 056	18 462	(13 406)
Trading loss arising from customer flow	(1 819)	—	(1 819)
	68 125	75 509	(7 384)
Total gains or (losses) included in other comprehensive income for the period
Gains on realisation on debt instruments at FVOCI recycled through the income statement	440	440	—
Fair value movements on debt instruments at FVOCI taken directly to other comprehensive income	(566)	—	(566)
	(126)	440	(566)

*In the prior year, included within the investment income statement balance are unrealised gains of £0.7 million presented within operational items in the income

statement.

Level 2 financial assets and financial liabilities

The Company follows the Group’s principal valuation techniques set out on page 166 in determining the fair value of its financial

assets and financial liabilities that are classified within level 2 of the fair value hierarchy.



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

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173

14. Fair value hierarchy (continued)

Sensitivity of fair values to reasonably possible alternative assumptions by level 3 instrument type

The fair value of financial instruments in level 3 are measured using valuation techniques that incorporate assumptions that are not

evidenced by prices from observable market data. The table below shows the sensitivity of these fair values to reasonably possible

alternative assumptions, determined at a transactional level:


At 31 March 2023	Balance sheet value £’000	Significant unobservable input	Range of unobservable input used	Favourable changes £’000	Unfavourable changes £’000
Company
Assets
Other debt securities	94 787	Potential impact on income statement		2 693	(5 251)
		Credit spreads	1.05%–1.87%	107	(253)
		Cash flow adjustments	CPR 14.81%	2	(9)
		Other	^	2 584	(4 989)

Derivative financial instruments	10 294	Potential impact on income statement		1 256	(1 034)
		Volatilities	7.5%–18.9%	13	(25)
		Underlying asset value	^^	1	(3)
		Other	^	1 242	(1 006)

Securities arising from trading activities	4 002	Potential impact on income statement
		Cash flow adjustments	CPR 14.17%	206	(235)

Investment portfolio	45 125	Potential impact on income statement		4 670	(9 318)
		Underlying asset value	^^	2 367	(4 900)
		Other	^	2 303	(4 418)

Loans and advances to customers	1 293 046	Potential impact on income statement		16 642	(32 880)
		Credit spreads	0.28%–5.2%	10 994	(22 971)
		Underlying asset value	^^	1 293	(1 200)
		Other	^	4 355	(8 709)

		Potential impact on other comprehensive income		15 756	(31 758)
		Credit spreads	0.29%–5.5%	15 753	(31 751)
		Other	^	3	(7)

Other securitised assets	4 005	Potential impact on income statement
Other securitised assets		Cash flow adjustments	CPR 14.81%	336	(310)


Total level 3 assets	1 451 259			41 559	(80 786)
Liabilities
Derivative financial instruments	21 998	Potential impact on income statement		(424)	1 040
		Discount rate	12.28%	(423)	1 038
		Volatilities	9%–18.9%	(1)	2

Total level 3 liabilities	21 998			(424)	1 040
Net level 3 assets	1 429 261

^Other – The valuation sensitivity has been assessed by adjusting various inputs such as expected cash flows and earnings multiples rather than a single input. It is

deemed appropriate to reflect the outcome on a portfolio basis for the purposes of this analysis as the sensitivity of the assets cannot be determined through the

adjustment of a single input.

^^Underlying asset values are calculated by reference to a tangible asset, for example, property, aircraft or shares.



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

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174

14. Fair value hierarchy (continued)


At 31 March 2022	Balance sheet value £’000	Significant unobservable input	Range of unobservable input used	Favourable changes £’000	Unfavourable changes £’000
Company
Assets
Other debt securities	106 109	Potential impact on income statement		3 195	(5 845)
		Credit spreads	0.74%–2.75%	140	(284)
		Cash flow adjustments	CPR 4.4%	3	(4)
		Other	^	3 052	(5 557)

Derivative financial instruments	7 324	Potential impact on income statement		618	(1 235)
		Volatilities	5%–18.9%	15	(29)
		Underlying asset value	^^	1	(3)
		Other	^	602	(1 203)

Securities arising from trading activities	4 780	Potential impact on income statement
		Cash flow adjustments	CPR 11%	481	(635)

Investment portfolio	68 944	Potential impact on income statement		7 358	(14 871)
		Underlying asset value	^^	1 450	(4 351)
		Other	^	5 908	(10 520)

Loans and advances to customers	1 191 573	Potential impact on income statement		15 910	(36 633)
		Credit spreads	0.15%–34.3%	10 656	(27 586)
		Underlying asset value	^^	3 183	(4 905)
		Other	^	2 071	(4 142)
		Potential impact on other comprehensive income
		Credit spreads	0.14%–6.17%	8 440	(15 725)

Other securitised assets	5 083	Potential impact on income statement
		Cash flow adjustments	CPR 8.4%	390	(490)

Other loans and advances	572	Potential impact on income statement
		Underlying asset value	^^	152	—

Total level 3 assets	1 384 385			36 544	(75 434)
Liabilities
Derivative financial instruments	14 818	Potential impact on income statement		(388)	820
		Discount rate	10.0%	(367)	785
		Volatilities	5%–18.9%	(21)	35

Total level 3 liabilities	14 818			(388)	820
Net level 3 assets	1 369 567

^Other – The valuation sensitivity has been assessed by adjusting various inputs such as expected cash flows and earnings multiples rather than a single input. It is

deemed appropriate to reflect the outcome on a portfolio basis for the purposes of this analysis as the sensitivity of the assets cannot be determined through the

adjustment of a single input.

^^Underlying asset values are calculated by reference to a tangible asset, for example, property, aircraft or shares.



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

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175

15. Fair value of financial instruments at amortised cost


					Level within the fair value hierarchy
At 31 March	Carrying amount	Fair value approximates carrying amount	Balances where fair values do not approximate carrying amounts	Fair value of balances that do not approximate carrying amounts	Level 1	Level 2	Level 3
£’000	Carrying amount	Fair value approximates carrying amount			Level 1	Level 2	Level 3
Group
2023
Assets
Cash and balances at central banks	5 400 401	5 400 401	—	—	—	—	—
Loans and advances to banks	892 791	892 791	—	—	—	—	—
Reverse repurchase agreements and cash collateral on securities borrowed	992 830	807 046	185 784	185 503	—	185 503	—
Sovereign debt securities	55 922	4 370	51 552	51 494	51 494	—	—
Bank debt securities	4 954	—	4 954	4 952	4 952	—	—
Other debt securities	603 283	42 611	560 672	554 892	—	554 892	—
Loans and advances to customers	14 173 866	611 611	13 562 255	13 426 192	—	1 016 299	12 409 893
Other loans and advances	172 087	99 188	72 899	72 976	—	72 976	—
Other assets	612 197	612 197	—	—	—	—	—
	22 908 331	8 470 215	14 438 116	14 296 009
Liabilities
Deposits by banks	2 172 170	373 944	1 798 226	1 804 116	—	1 804 116	—
Repurchase agreements and cash collateral on securities lent	139 529	85 070	54 459	52 486	—	52 486	—
Customer accounts (deposits)	19 251 399	10 556 163	8 695 236	8 654 686	—	8 654 686	—
Debt securities in issue	1 119 325	1 183	1 118 142	1 093 330	621 480	471 850	—
Other liabilities	622 337	619 707	2 630	1 572	—	—	1 572
Subordinated liabilities	731 483	—	731 483	713 119	713 119	—	—
	24 036 243	11 636 067	12 400 176	12 319 309

For the year ended 31 March 2023, there were insignificant disposals of financial instruments measured at amortised cost.

For financial assets and financial liabilities that are liquid or have a short-term maturity (less than three months) it is assumed that

the carrying amounts approximate their fair value. These assets and liabilities include demand deposits, savings accounts without

a specific maturity, which are included in customer accounts (deposits), and variable rate instruments.

Financial instruments for which fair value does not approximate carrying value

Differences in amortised cost and fair value occur in fixed rate instruments. The fair value of fixed rate financial assets and financial

liabilities carried at amortised cost are estimated by comparing spreads earned on the transactions with spreads earned on similar

new transactions entered into by the Group. The estimated fair value of fixed interest-bearing deposits is based on discounted

cash flows, using prevailing money market interest rates for debts with similar credit risk and maturity. For quoted subordinated

debt issued, the fair values are calculated based on quoted market prices. For those notes issued where quoted market prices are

not available, a discounted cash flow model is used based on a current interest rate yield curve appropriate for the remaining term

to maturity.



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

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176

15. Fair value of financial instruments at amortised cost (continued)


					Level within the fair value hierarchy
At 31 March	Carrying amount	Fair value approximates carrying amount	Balances where fair values do not approximate carrying amounts	Fair value of balances that do not approximate carrying amounts	Level 1	Level 2	Level 3
£’000	Carrying amount	Fair value approximates carrying amount			Level 1	Level 2	Level 3
Group
2022
Assets
Cash and balances at central banks	5 379 994	5 379 994	—	—	—	—	—
Loans and advances to banks	1 467 039	1 467 039	—	—	—	—	—
Reverse repurchase agreements and cash collateral on securities borrowed	778 365	662 151	116 214	115 088	—	115 088	—
Other debt securities	293 601	7 601	286 000	285 840	12 961	272 879	—
Loans and advances to customers	13 132 006	521 321	12 610 685	12 593 362	—	1 022 302	11 571 060
Other loans and advances	147 025	85 782	61 243	61 253	—	61 253	—
Other assets	822 300	822 300	—	—	—	—	—
	22 020 330	8 946 188	13 074 142	13 055 543
Liabilities
Deposits by banks	2 026 573	280 386	1 746 187	1 654 635	—	1 654 635	—
Repurchase agreements and cash collateral on securities lent	154 828	103 729	51 099	49 243	—	49 243	—
Customer accounts (deposits)	18 616 233	12 001 165	6 615 068	6 616 337	—	6 616 337	—
Debt securities in issue	1 074 649	1 183	1 073 466	1 076 817	483 649	593 168	—
Other liabilities	805 880	802 453	3 427	2 419	—	—	2 419
Subordinated liabilities	758 739	—	758 739	767 436	767 436	—	—
	23 436 902	13 188 916	10 247 986	10 166 887

For the year ended 31 March 2022, there were insignificant disposals of financial instruments measured at amortised cost.



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

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177

15. Fair value of financial instruments at amortised cost (continued)

Fixed rate financial instruments

The fair value of fixed rate financial assets and financial liabilities carried at amortised cost are estimated by comparing spreads

earned on the transactions with spreads earned on similar new transactions entered into by the Group. The estimated fair value

of fixed interest-bearing deposits is based on discounted cash flows, using prevailing money market interest rates for debts

with similar credit risk and maturity.

For quoted subordinated debt issued, the fair values are calculated based on quoted market prices. For those notes issued where

quoted market prices are not available, a discounted cash flow model is used based on a current interest rate yield curve

appropriate for the remaining term to maturity.

Certain financial instruments that would normally be carried at fair value continue to be recognised at transaction price. This occurs

when the fair value would normally be determined using valuation techniques which cannot be relied on due to insufficient external

inputs. This results in gains or losses which have not been recognised on-balance sheet.

The following table sets out the Group’s principal level 2 and 3 valuation techniques used in determining the fair value of its

financial assets and financial liabilities:


Loans and advances to banks	Calculation of the present value of future cash flows, discounted as appropriate.
Other debt securities	Priced with reference to similar trades in an observable market.
Reverse repurchase agreements and cash collateral on securities borrowed	Calculation of the present value of future cash flows, discounted as appropriate.
Loans and advances to customers	Calculation of the present value of future cash flows, discounted as appropriate.
Other loans and advances	Calculation of the present value of future cash flows, discounted as appropriate.
Other assets	Calculation of the present value of future cash flows, discounted as appropriate.
Deposits by banks	Calculation of fair value using appropriate funding rates.
Repurchase agreements and cash collateral on securities lent	Calculation of the present value of future cash flows, discounted as appropriate.
Customer accounts (deposits)	Where the deposits are short-term in nature, carrying amounts are assumed to approximate fair value. Where deposits are of longer-term maturities, they are valued using a cash flow model discounted as appropriate.
Debt securities in issue	Where the debt securities are fully collateralised, fair value is equal to the carrying value. Other debt securities are valued using a cash flow model discounted as appropriate to the securities for funding and interest rates.
Other liabilities	Where the other liabilities are short term in nature, carrying amounts are assumed to approximate fair value.



05	Annual financial statements	Investec Bank plc Annual Financial Statements 2023

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178

15. Fair value of financial instruments at amortised cost (continued)


					Level within the fair value hierarchy
At 31 March	Carrying amount	Fair value approximates carrying amount	Balances where fair values do not approximate carrying amounts	Fair value of balances that do not approximate carrying amounts	Level 1	Level 2	Level 3
£’000	Carrying amount	Fair value approximates carrying amount			Level 1	Level 2	Level 3
Company
2023
Assets
Cash and balances at central banks	5 380 346	5 380 346	—	—	—	—	—
Loans and advances to banks	237 897	237 897	—	—	—	—	—
Reverse repurchase agreements and cash collateral on securities borrowed	992 830	807 046	185 784	185 503	—	185 503	—
Sovereign debt securities	9 865	—	9 865	9 862	9 862	—	—
Bank debt securities	4 954	—	4 954	4 952	4 952	—	—
Other debt securities	1 309 406	748 734	560 672	554 892	—	554 892	—
Loans and advances to customers	10 534 443	290 669	10 243 774	10 207 579	—	—	10 207 579
Other loans and advances	3 199 833	3 126 934	72 899	72 976	—	72 976	—
Other assets	366 195	366 195	—	—	—	—	—
	22 035 769	10 957 821	11 077 948	11 035 764
Liabilities
Deposits by banks	2 524 081	725 854	1 798 227	1 804 116	—	1 804 116	—
Repurchase agreements and cash collateral on securities lent	289 529	235 070	54 459	52 486	—	52 486	—
Customer accounts (deposits)	17 953 810	9 455 841	8 497 969	8 457 413	—	8 457 413	—
Debt securities in issue	1 118 142	—	1 118 142	1 093 330	621 480	471 850	—
Other liabilities	384 410	381 780	2 630	1 572	—	—	1 572
Subordinated liabilities	731 483	—	731 483	713 119	713 119	—	—
	23 001 455	10 798 545	12 202 910	12 122 036