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Investec warns on Kensington’s profits

Investec has issued a profit warning for Kensington Group following the recent volatility in the money markets saying it expects lower profitability from its initial projections.

Investec’s pre-close briefing says Kensington will tighten it’s lending criteria, increase pricing and alter the mix if its product offering.

It says a consequence of this strategy will be lower volumes, an alignment of infrastructure and an improvement in margin.

“We would expect lower profitability from our initial projections for Kensington until market conditions normalise,” says the statement.

It says: that lines and facilities are in place to support this strategy including non-recourse warehousing lines from third party banks and committed forward flow agreements with other financial institutions.

The South African investment bank’s mortgages under management have fallen from £7 billion to £6.6 billion and weighted average LTV improving from 71 per cent to 69 per cent since March 31 this year.

Investec group managing director Bernard King says: “The growth momentum experienced in our markets over the last four to five years is likely to be tempered over the short term as the global financial services industry takes time to adjust to recent adversity. Our strategy will be to consolidate our position and create additional operational efficiencies while continuing to grow in areas where opportunities present themselves.”

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