Capitec is South Africa’s biggest lender to consumers. Photographer: Armand Hough. African News Agency (ANA)
Capitec’s share price lifted close to its 12-month high on Friday after it said headline earnings a share would increase sharply by between 25% and 35% for the six months to August 31, 2024.
The share price closed 1.42% higher at R2732.24 on Friday, just shy of the 12-month highest price of R2799.50 per share. The price has gained a whopping 69.97% over 12 months, and by 32.8% since the start of the year.
The bank, formed in 1997 and which spear-headed paperless banking in South Africa, and which is now the country’s biggest lender in terms of its about 22 million customers, said Friday it expected headline earnings a share to be between 5 090 cents and 5 497 cents per share.
This would represent an increase of between 25% and 35% when compared to the 4 072 cents per share for six months to August 31, 2023.
Group earnings per share were expected to by between 5 085 cents and 5 492 cents, an increase of between 25% and 35% over the same time a year before.
The bank’s directors said the prior six months were characterised by high credit impairment charges due to the impact of high inflation, high interest rates, load shedding and the tough economic climate.
This had caused the subdued single digit year-on-year growth in earnings and headline earnings for the six months to August 31, 2023.
During the next six months to February 29, 2024, however, there was an improvement in both the credit impairment charge and credit loss ratios (CLRs).
This contributed to the 22% year-on-year growth in earnings and headline earnings for the second half of the 2024 financial year.
Earnings and headline earnings during the second half of the 2025 financial year would therefore be compared against a higher base.
The lower CLRs had persisted into the 2025 financial year, and the net transaction and commission income, including value-added services, had continued to contribute to strong growth in non-lending income.
Furthermore, from May 1, 2024, Capitec acquired an additional shareholding in Avafin Holding (Avafin), an international online consumer lending group. Analysts said at the time that this transaction was done by Capitec as a precursor for further international expansion.
As a result of the acquisition, Avafin was treated as a subsidiary and 97.075% of its profit for the period was included in the group’s income statement. Prior to May 1, 2024, only 40.66% of Avafin’s profit for the period had been included as Capitec’s share of income from an associate.
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