Capitec is confident that it will see a substantial boost in earnings, with the group benefitting from an improvement in credit losses.<\/p>\n\n\n\n
In a trading statement for the period ended 31 August 2024 (H1 25), Capitec’s board advised that a reasonable degree of certainty exists that:<\/p>\n\n\n\n
<\/p>\n\n\n\n
The group said that the major drivers of the increases were consistent with those mentioned in a trading statement issued on 12 July 2024. <\/p>\n\n\n\n
In the previous update, the group said that high credit impairment was a main feature in H1 2023 due to elevated inflation, interest rates, a challenging economic climate, and load shedding, which led to weak single-digit earnings growth for the period.<\/p>\n\n\n\n
However, in the six months ended 29 February 2024 (H2 24), the credit impairment charge and credit loss ratios (CLRs) improved after the bank tightened its lending criteria.<\/p>\n\n\n\n
This was a primary factor in the 22% year-on-year growth in earnings and headline earnings for the second half of H2 2024.<\/p>\n\n\n\n
Thus, the earnings and headline earnings during the second half of FY25 will be compared against a far higher base.
\u201cThe lower CLRs have persisted into the 2025 financial year, and the net transaction and commission income, including value-added services, has continued to contribute to strong growth in non-lending income,” said Capitec in its previous update.<\/p>\n\n\n\n
Moreover, since 1 May 2024, Capitec increased its shareholding in international consumer lending group Avafin to 97.075%, and Avafin’s profit for H1 25 was included in the group\u2019s income statement.<\/p>\n\n\n\n
Before 1 May 2024,40.66% of Avafin\u2019s profit was included as Capitec\u2019s share of income from an associate.<\/p>\n\n\n\n
Capitec said its interim results for the six months ending 31 August 2024 will be published on roughly 1 October 2024.<\/p>\n\n\n\n
Business Plan <\/strong><\/p>\n\n\n\n Capitec believes it is no longer simply a bank but a fully-fledged financial powerhouse in South Africa, with it set to bring its “disruptive” business model seen in the retail banking sector to the business banking and insurance industries.<\/p>\n\n\n\n For Capitec Business, the group aims to bring the same simplicity and low-fee banking services it has offered retail clients for years to the business sector.<\/p>\n\n\n\n When it comes to insurance, the group said that it has the huge advantage of having a ‘captive audience’ of roughly 23 million potential clients and a plethora of data on how they transact, which gives the group insights into how to structure its products.<\/p>\n\n\n\n Capitec offers life and credit cover, with the former launching in June and having a better-than-expected take-up. <\/p>\n\n\n\n That said, the group’s expansion is not limited to business banking and insurance, as it sees huge potential in the value-add segment.<\/p>\n\n\n\n This includes partnerships with Cell C to launch Capitec Connect and a recently launched tie-up with Showmax, with a similar partnership with DStv on the way. <\/p>\n\n\n\n