Johannesburg — SINCE Monday morning, investment bank Investec has shed up to 14% of the value of its share price, but yesterday the dual-listed banking stock emphasised its stability and the size of its cash reserves.

The only big bank in SA that has taken more share price pain this year has been Nedbank.

Investec's exposure to the London market and global sentiment has not stood it in good stead, particularly after its acquisition of mortgage lender Kensington Group last year. The acquisition opened Investec up to subprime worries.

At its preclose briefing yesterday, just ahead of the company's closed period starting at the end of this month, Investec CE Stephen Koseff said Kensington had put in a stable performance in the six months to September and that the head count had been reduced "significantly".

Bad debt provisions at Kensington were based on the assumption that house prices in the UK would fall about 35% from this year to next year.

Kensington's total book had decreased from £6,1bn to £5,5bn and arrears had increased "marginally".

Investec said the bank's first-half profit would match last year's interim figures.

The normalised total operating profit figures at the half-year stage last year came in at £254,3m.

It was the Australian operations that had held Investec back. According to Koseff, the SA and UK operations recorded increases in operating profit.

In Australia, there were reasonable levels of activity and a reasonable pipeline of work, but few deals were closed.

Private banking work in Australia declined and there was a weaker performance from some of the underlying investments and fair value adjustments.

Since Investec's year-end in march this year, the group's core loans and advances grew 14% to £14,8bn, customer deposits rose 15% to £13,9bn and third-party assets under management increased with 10% to £58bn.

"The group expects to record strong growth in net interest income, growth in net fees and commissions receivable, and a marginal decline in principal transaction income."

Loan impairments rose in the five months to August, following the trend shown by SA's big four banks, but Investec said bad debts would probably be lower than they were over the corresponding period last year.

At Investec Asset Management, assets under management grew 14% to £32,8bn, but its earnings growth was under pressure from the tough unit trust environment.

Investec had more capital than was required via regulations and it said it was maintaining a stock of "high-quality" liquid assets with more than R51bn available in cash in southern Africa.

Investec concluded that conditions remained uncertain and markets volatile.

It said the environment was not conducive to growth.