House price stability lifts Investec arm

Investec, the Anglo-South African financial group, has started to see improvement at the buy-to-let mortgage business Kensington, which it acquired with a low-ball £283 million takeover bid two years ago.

Updating investors on its first half, Investec said that Kensington has begun to benefit from the stability of UK house prices in recent months.

The group revealed that the total mortgage book had decreased from £5.2 billion to £4.9 billion over the last five months, while arrears had risen slightly as the book matures. Overall, Investec said that its first-half operating profit would be lower than was achieved in the first half of the previous year, but better than those during the second half.

However, defaults on bad debts are continuing to rise, the bank said.

UK and European profits are ahead of last year but those from South Africa and Australia are down.

After two years of being on the defensive, the group said that now there are signs the financial system seems to be stabilising, it could "turn its attention to moving onto the front foot and taking advantage of opportunities to strengthen its market position."