By Daisy Ku

LONDON (Reuters) - South African investment banking and asset management group Investec said business looked challenging this year as it reported a 6.8 percent rise in adjusted earnings per share on Thursday.

Investec (INVP.L: Quote, Profile, Research) (INLJ.J: Quote, Profile, Research) posted adjusted earnings per share of 56.9p for the fiscal year ended March 31 -- 4 percent above the 54.74p consensus of five analysts polled by Reuters.

"I think we still have a tough operating environment, I don't see the problems just going away," Chief Executive Officer Stephen Koseff told Reuters in a phone interview.

"I think it will be some while at least. Probably this whole year we'll see a tough operating environment."

Investec's London-listed shares rose 3.7 percent to trade at 374p by 12:31 p.m. and is on a price-to-earnings ratio of 6.6 times compared with a sector average ratio of 11.4.

London-listed Investec shares fell 47.8 percent over its fiscal year, while its Johannesbury-listed stock dropped 38.4 percent, underperforming JSE Securities Exchange's blue chip Top-40 index's 10.9 percent loss over that period.

Investec proposes an increased final dividend of 13.5p per share, equating to a full year dividend of 25p to maintain a dividend cover of 2.3 times.

Operating profit before goodwill and non-operating items rose 15.2 percent to 537.7 million pounds, thanks to 27 percent growth in South Africa, compensating for a 1.6 percent decline in its business in Britain.