Capitec has revised its earnings forecast upward, signalling a strong financial performance for the six months to end-August.
The bank attributes this positive outlook to lower credit loss ratios and robust growth in non-lending income, primarily driven by net transaction and commission income, including value-added services.
In a trading update released on Monday, Capitec said it expected headline earnings per share (HEPS) to rise 35%-37% to 5,497c-5,579c.
“The drivers of the increase in group headline earnings and earnings per share are consistent with the drivers mentioned in the trading statement issued on July 12,” Capitec said.
Capitec’s revision signals positive prospects for shareholders. With financial results expected to be released in early October, investors are likely to be encouraged by the bank’s performance and strategic manoeuvres.
Capitec’s earnings growth comes after a difficult first half of 2023, when high inflation, elevated interest rates and persistent load-shedding drove credit impairment charges.
These factors dampened earnings growth, which remained in the single digits year on year for the six months to end-August 2023.
However, improving credit loss ratios and a lower credit impairment charge led to growth of 22% in earnings during the second half of the financial year, setting the stage for the upward revision in earnings, Business Day previously reported.
Capitec’s performance was also boosted by its acquisition of a majority stake in Avafin, an international online consumer lending group.
Effective from May 1, Capitec began treating Avafin as a subsidiary, incorporating 97.075% of its profit into the group’s income statement. Previously, the bank held a 40.66% stake in the company, recognising it as an associate.
That acquisition supported Capitec’s strategy of diversifying income streams and expanding its presence, it said.
Over the past six months, Capitec’s share price has surged by 40%, reaching a value of R2,961 by 12.50pm on Monday. The share price is up 2.93% in intraday trade.
BusinessLIVE
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