‘Emerging from Covid shadow’
Capricorn posts stellar 2022 results
In the year that Bank Windhoek celebrates its 40th anniversary, and Bank Gaborone its 15th, Capricorn Group's strong annual financial results gave shareholders even more to celebrate.
Capricorn Group Limited’s agility and quick decision-making, which allowed it to swiftly sense and respond to ever-changing challenges, resulted in the Namibian financial services group delivering strong results through the solid performances of all its subsidiaries for the year ended 30 June 2022.
The group, with diversified operations and business interests in Namibia and Botswana, reported profit after tax increasing by 16.6% year-on-year (y/y) to N$1.15 billion.
Local analysts were impressed by the Capricorn’s performance and their initial thoughts were positive.
"Overall, CGP’s [Capricorn Group] diversified portfolio delivered impressive results given that the economic environment remained challenging, with earnings coming in in line with our forecasts, but advances and deposit growth ahead of expectations," said IJG Securities.
Cirrus Securities described the results as “very satisfactory”, while Simonis Storm commented: "We think the Capricorn Group is in good stead to continue riding the wave as we recover from a global pandemic and recession."
Capricorn is the third biggest group listed on the Local Index of the Namibian Stock Exchange (NSX), boasting a total market capitalisation of nearly N$5.56 billion.
‘STRONG FOUNDATION’
“2022 was a year of recovery as the group emerged from the shadow of Covid-19,” Capricorn commented on its latest annual results. The group last reported profit after tax exceeding N$1 billion in its 2019 book-year. Profit after tax in its 2022 financial year was nearly 12.9% higher compared to 2019, the year before the pandemic.
“All our subsidiaries performed well this financial year, giving the group a strong foundation to continue growing and expanding its leadership in the various markets,” said the group chief executive officer of Capricorn, Thinus Prinsloo.
Capricorn fully owns Bank Windhoek. Other subsidiaries in the group include Entrepo Holdings (55.5% stake) and Sanlam Namibia Holdings (29.5% shareholding). Capricorn Group also has a 84.8% interest in Capricorn Investment Holdings (Botswana) Ltd, which fully owns Bank Gaborone.
The group chief financial officer of Capricorn, Johan Maass, said the group delivered strong results in its past financial year, despite the economic pressures exacerbated by rising inflation on the back of increased global oil and food prices.
“Our region, fortunately, witnessed increased economic activity as Covid-19-related restrictions were eased,” he added.
INCOME
Capricorn’s net interest income (NII) before impairments increased by 3.6% y/y to N$2.34 billion. Bank Windhoek’s NII increased by 7.4% in 2022 thanks to y/y growth of 7.6% in interest earning assets.
Notwithstanding repo rate increases of 100 basis points between February and June 2022 by the Bank of Namibia (BoN), the bank’s average net interest margin remained relatively flat at 4.37% as average cost of funding increased over the period.
Non-interest income increased by 13.1% y/y to N$1.67 billion. Bank Windhoek increased its non-interest income by 10.3% and Bank Gaborone’s non-interest income grew by 33.3%.
“The increases in this revenue line were a direct consequence of increased transaction volumes and an increase in foreign exchange trading income on the back of higher transaction volumes, increased foreign exchange rate volatility and higher trading margins,” Capricorn said.
EXPENSES
It is Capricorn’s intent to support local industry as far as possible, the group stated. Nearly 88% of the group’s total operating expenses incurred in 2022 was paid to suppliers and employees located within the regions in which it operates.
Increases in operating expense lines were mostly contained to below inflation rate, according to Capricorn. Notable exceptions were staff cost and operational banking expenses. Operating expenses increased by 6.7% compared to the prior year’s 5.1% increase.
“The above inflation increase in staff cost of 7.7% is largely due to increasing capacity in information technology and cyber security to deliver on our strategic objectives on data and digitisation and to manage our general IT and cyber security risk,” Capricorn said.
Containing cost to only essential and value-adding spend will remain a focus area for 2023, it added. The group was able to contain its cost-to-income ratio at 51.1% (2021: 51.7%), below its target of 52%.
IMPROVED CREDIT QUALITY
Asset quality remains a key focus for the group, Capricorn said.
Despite the challenging economic conditions, the group’s non-performing loans (NPLs) decreased marginally to N$2.44 billion compared to N$2.46 billion the previous book-year. This resulted in the NPL ratio (excluding interest in suspense) decreasing to 4.8% (2021: 5.2%).
“Our loan loss rate decreased from 1.07% to 0.85% and remains low against current industry norms,” Capricorn said.
Impairment charges decreased by 17.2% or N$76.4 million to N$367.3 million, mainly as a result of Capricorn’s “pro-active approach to credit risk management and an improved operating environment for our customers as Covid-19 restrictions were eased”.
Gross loans and advances increased by 6.1% to N$44.7 billion.
“This is well above annualised Namibian private sector credit extension growth of 3.4% and confirms our ability and intention to continue extending financing to support clients during difficult times. This growth was mainly attributable to increases in commercial loans, mortgage loans and article finance,” Capricorn said.
STRONG LIQUIDITY POSITION
“Covid-19 underlined the importance of having sufficient liquidity to withstand a crisis,” Capricorn said.
The group maintained a sound liquidity position with liquid assets increasing by 14.3% y/y. Liquid assets exceeded regulatory requirements in Namibia and Botswana by 107.5% and 121.1%, respectively. Additionally, Capricorn’s loan-to-funding ratio improved to 87.2% (2021: 88.6%).
“Notwithstanding these surpluses, the group maintains N$1 billion contingency funding, which is available to the two banking subsidiaries within three to seven days,” Capricorn said.
CAPITAL DEPTH, DIVIDENDS
Capricorn remains well capitalised, with a total risk-based capital adequacy ratio of 15.8% (2021: 15.0%), well above the minimum regulatory capital requirement of 10%.
“This strong capital position has supported the group through the difficulties brought about by the pandemic,” Capricorn said.
The group declared a final dividend of 40 cents per ordinary share, which will be paid to shareholders on 26 October 2022. Considering the interim dividend of 32 cents per ordinary share, this represents a total dividend of 72 cents per ordinary share, 20% higher than the total dividend for 2021.
“The group believes that the dividend offers our investors solid cash returns in difficult economic conditions where earnings and income are under pressure, while also preserving the capital and liquid asset position of the group during these uncertain economic times,” Capricorn said.
MILESTONES
Capricorn said its outlook is for improved economic conditions in Namibia and Botswana, albeit from a lower base.
“The Russia-Ukraine war and resulting sanctions have accelerated inflation, placing additional pressure on the local environment. Yet, the group’s results demonstrate how Capricorn Group used our advantage of being local, agile, and responsive. As a result, the group was able to preserve and grow value for our stakeholders despite the difficult economic circumstances.”
Prinsloo highlighted two important milestones Capricorn Group celebrates this year: Bank Windhoek’s 40th anniversary and Bank Gaborone’s 15th.
“These milestones would not have been possible without our talented employees’ hard work and dedication. I am proud of these sustainable businesses and look forward to many more years of growth,” he said.
According to Maass: “Despite difficult conditions, Capricorn Group delivered strong shareholder returns. We will maintain this position by building on the strength of our diversified operations and revenue streams while investing in our digital customer experience.”
Prinsloo said Capricorn remains committed to its purpose of improving lives through leadership in financial services by being Connectors of Positive Change.
BLOKKIE
Shared financial value
Capricorn Group created financial value through its strong performance and as a result, a number of stakeholders directly benefits as follows:
• Employees: N$1.2 billion (up 7.4% y/y)
• Government and regulators: N$678 million (up 8.6% y/y) in taxes, duties and license fees in territories where Capricorn operates
• Local suppliers: N$530 million (up 3.3% y/y) in procurement of goods and services
• Shareholders: N$354 million (up 72.5% y/y) in dividends to almost 4 000 shareholders
• Communities: N$15.4 million (up 26.9% y/y) through the Capricorn Foundation and the group’s corporate social responsibility programmes
• Retained for future expansion: N$928 million (up 1.1% y/y) in funds retained for future expansion and growth opportunities
The group, with diversified operations and business interests in Namibia and Botswana, reported profit after tax increasing by 16.6% year-on-year (y/y) to N$1.15 billion.
Local analysts were impressed by the Capricorn’s performance and their initial thoughts were positive.
"Overall, CGP’s [Capricorn Group] diversified portfolio delivered impressive results given that the economic environment remained challenging, with earnings coming in in line with our forecasts, but advances and deposit growth ahead of expectations," said IJG Securities.
Cirrus Securities described the results as “very satisfactory”, while Simonis Storm commented: "We think the Capricorn Group is in good stead to continue riding the wave as we recover from a global pandemic and recession."
Capricorn is the third biggest group listed on the Local Index of the Namibian Stock Exchange (NSX), boasting a total market capitalisation of nearly N$5.56 billion.
‘STRONG FOUNDATION’
“2022 was a year of recovery as the group emerged from the shadow of Covid-19,” Capricorn commented on its latest annual results. The group last reported profit after tax exceeding N$1 billion in its 2019 book-year. Profit after tax in its 2022 financial year was nearly 12.9% higher compared to 2019, the year before the pandemic.
“All our subsidiaries performed well this financial year, giving the group a strong foundation to continue growing and expanding its leadership in the various markets,” said the group chief executive officer of Capricorn, Thinus Prinsloo.
Capricorn fully owns Bank Windhoek. Other subsidiaries in the group include Entrepo Holdings (55.5% stake) and Sanlam Namibia Holdings (29.5% shareholding). Capricorn Group also has a 84.8% interest in Capricorn Investment Holdings (Botswana) Ltd, which fully owns Bank Gaborone.
The group chief financial officer of Capricorn, Johan Maass, said the group delivered strong results in its past financial year, despite the economic pressures exacerbated by rising inflation on the back of increased global oil and food prices.
“Our region, fortunately, witnessed increased economic activity as Covid-19-related restrictions were eased,” he added.
INCOME
Capricorn’s net interest income (NII) before impairments increased by 3.6% y/y to N$2.34 billion. Bank Windhoek’s NII increased by 7.4% in 2022 thanks to y/y growth of 7.6% in interest earning assets.
Notwithstanding repo rate increases of 100 basis points between February and June 2022 by the Bank of Namibia (BoN), the bank’s average net interest margin remained relatively flat at 4.37% as average cost of funding increased over the period.
Non-interest income increased by 13.1% y/y to N$1.67 billion. Bank Windhoek increased its non-interest income by 10.3% and Bank Gaborone’s non-interest income grew by 33.3%.
“The increases in this revenue line were a direct consequence of increased transaction volumes and an increase in foreign exchange trading income on the back of higher transaction volumes, increased foreign exchange rate volatility and higher trading margins,” Capricorn said.
EXPENSES
It is Capricorn’s intent to support local industry as far as possible, the group stated. Nearly 88% of the group’s total operating expenses incurred in 2022 was paid to suppliers and employees located within the regions in which it operates.
Increases in operating expense lines were mostly contained to below inflation rate, according to Capricorn. Notable exceptions were staff cost and operational banking expenses. Operating expenses increased by 6.7% compared to the prior year’s 5.1% increase.
“The above inflation increase in staff cost of 7.7% is largely due to increasing capacity in information technology and cyber security to deliver on our strategic objectives on data and digitisation and to manage our general IT and cyber security risk,” Capricorn said.
Containing cost to only essential and value-adding spend will remain a focus area for 2023, it added. The group was able to contain its cost-to-income ratio at 51.1% (2021: 51.7%), below its target of 52%.
IMPROVED CREDIT QUALITY
Asset quality remains a key focus for the group, Capricorn said.
Despite the challenging economic conditions, the group’s non-performing loans (NPLs) decreased marginally to N$2.44 billion compared to N$2.46 billion the previous book-year. This resulted in the NPL ratio (excluding interest in suspense) decreasing to 4.8% (2021: 5.2%).
“Our loan loss rate decreased from 1.07% to 0.85% and remains low against current industry norms,” Capricorn said.
Impairment charges decreased by 17.2% or N$76.4 million to N$367.3 million, mainly as a result of Capricorn’s “pro-active approach to credit risk management and an improved operating environment for our customers as Covid-19 restrictions were eased”.
Gross loans and advances increased by 6.1% to N$44.7 billion.
“This is well above annualised Namibian private sector credit extension growth of 3.4% and confirms our ability and intention to continue extending financing to support clients during difficult times. This growth was mainly attributable to increases in commercial loans, mortgage loans and article finance,” Capricorn said.
STRONG LIQUIDITY POSITION
“Covid-19 underlined the importance of having sufficient liquidity to withstand a crisis,” Capricorn said.
The group maintained a sound liquidity position with liquid assets increasing by 14.3% y/y. Liquid assets exceeded regulatory requirements in Namibia and Botswana by 107.5% and 121.1%, respectively. Additionally, Capricorn’s loan-to-funding ratio improved to 87.2% (2021: 88.6%).
“Notwithstanding these surpluses, the group maintains N$1 billion contingency funding, which is available to the two banking subsidiaries within three to seven days,” Capricorn said.
CAPITAL DEPTH, DIVIDENDS
Capricorn remains well capitalised, with a total risk-based capital adequacy ratio of 15.8% (2021: 15.0%), well above the minimum regulatory capital requirement of 10%.
“This strong capital position has supported the group through the difficulties brought about by the pandemic,” Capricorn said.
The group declared a final dividend of 40 cents per ordinary share, which will be paid to shareholders on 26 October 2022. Considering the interim dividend of 32 cents per ordinary share, this represents a total dividend of 72 cents per ordinary share, 20% higher than the total dividend for 2021.
“The group believes that the dividend offers our investors solid cash returns in difficult economic conditions where earnings and income are under pressure, while also preserving the capital and liquid asset position of the group during these uncertain economic times,” Capricorn said.
MILESTONES
Capricorn said its outlook is for improved economic conditions in Namibia and Botswana, albeit from a lower base.
“The Russia-Ukraine war and resulting sanctions have accelerated inflation, placing additional pressure on the local environment. Yet, the group’s results demonstrate how Capricorn Group used our advantage of being local, agile, and responsive. As a result, the group was able to preserve and grow value for our stakeholders despite the difficult economic circumstances.”
Prinsloo highlighted two important milestones Capricorn Group celebrates this year: Bank Windhoek’s 40th anniversary and Bank Gaborone’s 15th.
“These milestones would not have been possible without our talented employees’ hard work and dedication. I am proud of these sustainable businesses and look forward to many more years of growth,” he said.
According to Maass: “Despite difficult conditions, Capricorn Group delivered strong shareholder returns. We will maintain this position by building on the strength of our diversified operations and revenue streams while investing in our digital customer experience.”
Prinsloo said Capricorn remains committed to its purpose of improving lives through leadership in financial services by being Connectors of Positive Change.
BLOKKIE
Shared financial value
Capricorn Group created financial value through its strong performance and as a result, a number of stakeholders directly benefits as follows:
• Employees: N$1.2 billion (up 7.4% y/y)
• Government and regulators: N$678 million (up 8.6% y/y) in taxes, duties and license fees in territories where Capricorn operates
• Local suppliers: N$530 million (up 3.3% y/y) in procurement of goods and services
• Shareholders: N$354 million (up 72.5% y/y) in dividends to almost 4 000 shareholders
• Communities: N$15.4 million (up 26.9% y/y) through the Capricorn Foundation and the group’s corporate social responsibility programmes
• Retained for future expansion: N$928 million (up 1.1% y/y) in funds retained for future expansion and growth opportunities
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