Capitec warns of earnings drop, with caveats

Capitec, South Africa’s largest retail lender when measured by its customer base, is expecting a big earnings decline for the financial year ended February 2021, in line with its competitors.

The group said in a trading statement on Monday (8 March), that it expects headline earnings per share will be between 3,855 cents and 4,073 cents per share, representing a decrease of between 29% and 25% from 5,428 cents per share reported in the prior year.

Earnings per share will be between 3,741 cents and 3,957 cents per share, representing a decrease of between 31% and 27% compared to the 5,400 cents per share reported in the prior year.

Capitec advised that the year must be viewed from the following perspective: For the first six months of the financial year to 31 August 2020, headline earnings per share and earnings per share declined by 78% and 79% respectively compared to the six months to 31 August 2019.

It said that appropriate credit impairments were raised in the first half of the financial year based on the information available at the time.

Given the relaxation of the lockdown restrictions and the resultant opening up of the economy, the second half of the financial year that ended on 28 February 2021, saw headline earnings per share increasing by between 14% and 22% compared to the six months to 29 February 2020, Capitec said.

Last week, FirstRand, which includes FNB in its portfolio, reported normalised earnings down 21% with the normalised return on equity (ROE) reducing from 21.2% to 15.6%.

Basic and diluted headline earnings per share dropped 20% to 198.9 cents per share.

FNB’s normalised profit before tax declined by 19% over the six months and the bank delivered a 30.1% ROE.

The bank said it is encouraged by the ‘green shoots’ evident in its customer data which reflects that FNB Retail’s new and existing customer incomes are showing progressive signs of recovery.

Standard Bank, Africa’s biggest lender by assets, meanwhile also warned last week that it expects to report a substantial decline in earnings for the year ended December 2020 as it struggles with unsecured loans.

The lender said it expects headline earnings per share to be between 40% and 50% lower, while earnings per share are anticipated to be between 45% and 55% lower than in 2019.

Capitec said said it will publish its results on or about 13 April 2021.


Read: Capitec earnings decimated by Covid-19 fallout

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Capitec warns of earnings drop, with caveats