Investor Presentaiton
IFRS 9 macro-economic scenario forecasts
•
For Investec plc, four macro-economic scenarios are used in the measurement of ECL. These scenarios incorporate a base case, an upside case and two
downside cases. The table below shows the key factors that form part of the macro-economic scenarios and their relative applied weightings as at 31 March
2022.
The scenario weightings have been calibrated to take into account the risks to the outlook as a result of developments in the Russian invasion of Ukraine,
considering the potential impact on key economic variables such as inflation and growth. Taking into account the current macro-economic environment,
adjustments have been made to the composition of the downside scenarios. In the first half of the financial year, an inflation scenario was introduced to
capture the emergence of risks related to rising prices which anticipates UK CPI inflation peaking at 11.1% in the forth quarter of 2022. This scenario
replaced the fiscal crisis scenario which was used at 31 March 2021. Additionally, since 30 September 2021 the L-shape has been replaced with a global
shock scenario encapsulating a synchronised worldwide economic downturn.
UK GDP forecast
£'bn
Macro-economic
scenarios
Upside
%
Base case
%
Downside 1
Inflation %
Downside 2
Global shock %
UK
UK GDP forecast
GDP growth
2.6
1.9
0.8
0.3
700
Unemployment rate
3.3
3.7
5.4
6.4
650
CPI inflation
2.4
3.1
3.2
1.6
600
House price growth
3.5
2.9
1.5
(3.6)
BoE bank rate
1.8
1.9
2.0
(0.2)
550
(end year)
Euro area
500
2022
2023
2024
2025
2026
2027
GDP growth
2.8
2.1
1.1
0.1
US
Upside
Base case
Downside 1 - Inflation
Downside 2 - Global shock
GDP growth
3.1
2.1
1.4
0.6
Scenario weightings
10
45
30
15
36
Investec 2022View entire presentation