Capitec revises earnings outlook lower

Banking group Capitec has revised its earnings outlook for the first half of the year even lower, now projecting an 80% drop because of the Covid-19 pandemic and its impact on the South African economy.

The group told shareholders that it expects headline earnings will be between 78% and 82% lower than the same period last year. This is a bigger knock than the previous guidance which saw earnings 70% lower.

It projects that headline earnings per share will be between 559.9 cents and 458.1 cents per share, compared to the R2,545 cents per share reported for the period ending August 2019.

Similarly, earnings per share are expected to be between 560.8 cents and 458.8 cents per share, reflecting the same range (78% to 82% lower than previously).

In July, Capitec Bank reported that it incurred a loss of R404 million for the quarter ended May 2020, after the Covid-19 national lockdown resulted in increased credit impairment charges and lower loan sales and transaction volumes.

At the time, the bank warned of a 70% decline in headline earnings for the first half of the year, spooking investors. However, it said that the results for the second half of the 2021 financial year could return to normal levels.

Capitec said that banking client behaviour shifted to fewer, higher value transactions during the quarter and was most severely impacted during level 5 of the lockdown. Subsequent to level 5 lockdown, volumes improved but had not recovered to pre-lockdown levels.

Capitec’s results are expected to be published on 30 September 2020.

Read: Capitec earnings warning spooks investors

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Capitec revises earnings outlook lower