(RTTNews) - Investec plc (INVP.L: News ), a specialist banking and asset management group, Thursday reported a decline in profit for the first half of the fiscal, hurt largely by higher impairment losses on loans and advances.

The company's profit before taxation slipped to GBP 203.90 million from GBP 227.03 million last year. Earnings attributable to shareholders declined to GBP 178.53 million or 21.2 pence per share from GBP 189.50 million or 24.5 pence per share in the prior year.

Earnings attributable to shareholders before goodwill and non-operating items decreased to GBP 160.42 million from GBP 165.63 million in the previous year. Adjusted earnings per share declined to 22.9 pence from 25.2 pence, due to lower average activity levels and asset valuations and the weaker credit cycle.

Net interest income declined to GBP 297.36 million from GBP 343.63 million, as interest income decreased sharply from last year, despite a drop in interest expense. The company cited the endowment impact as the main cause for the decline, with a lower return generated on excess cash held due to the declining rate environment.

Other income rose to GBP 544.40 million from GBP 417.85 million, helped by an increase in principal transactions as well as investment income on assurance activities.

Operating income slipped to GBP 638.68 million from GBP 646.95 million. Operating profit, before non-operating items and goodwill and after minorities before tax, dropped to GBP 216.0 million from GBP 241.8 million. In Private Client Activities, operating profit decreased 62.4% to GBP 28.7 million. The company noted in Private Banking, activity levels have declined and impairment losses on loans and advances have increased in all geographies.
In Capital Markets, operating profit increased 2.1% to GBP 73.6 million, with the division experiencing reasonable levels of activity across the advisory businesses. Investment Banking reported a 6.2% decline in operating profit to GBP 26.8 million. According to the company, the Agency divisions closed fewer transactions and commissions were impacted by lower volumes in the first half of the current fiscal.

At Asset Management, the decline in operating profit was 14.1% to GBP 28.9 million largely as a result of lower average funds under management. Property Activities reported first-half operating profit increase of 5.4% at GBP 11.7 million supported by a satisfactory performance from the investment property portfolio.

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