Capricorn’s interim profit up 20%
Locally-listed Capricorn Group Limited achieved solid results with profit after tax of about N$698.2 million for the six months ended 31 December 2022 – an increase of 20.3% compared to the prior period.
Capricorn declared an interim dividend of 39 cents per ordinary share. The interim dividend per share for the period under review is 21.9% higher than the interim dividend per share of 32 cents declared in the comparative period.
“The Group’s strong performance is due to a better operating environment with dedicated and committed staff, with Bank Windhoek and Bank Gaborone reporting marked improvement in their results compared to the previous Covid-19 affected period,” said Thinus Prinsloo, Group CEO.
According to Prinsloo, the Group expects further economic recovery and improved economic conditions within the Group’s operating regions in the medium to long term. “Covid-19 has “edged” closer to endemic status, while the severity of the initial economic fall-out from global geo-political tensions spawned by the war in Ukraine has reduced. The significant pressures from increased energy and food costs, high inflation and high-interest rates will continue to have a negative impact for the foreseeable future,” added Prinsloo.
“The Bank of Namibia's December 2022 Economic Outlook predicts that the country's real gross domestic product (GDP) growth will rise to 3.9% in 2022 and 2.7% in 2023, but this depends on successful government reforms and investments. Like the global economy, domestic economic growth is faced with challenges such as increased energy and food costs. Maintaining stability and ensuring the success of the Capricorn Group for all stakeholders remains the Group’s top priority,” said Prinsloo.
Net interest income increased by 14.9% year-on-year, aided by year-on-year increases in the repo rate in Namibia and Botswana of 300 basis points and 151 basis points, respectively. Bank Windhoek managed its cost of funding effectively, which resulted in a 54-basis point improvement in the net interest margin to 4.88%.
Impairment
In addition, impairment charges decreased by 14.9% in credit impairment charges. Despite the global economic difficulties attributable to the geopolitical instability in the wake of the war in Ukraine, the region saw an improved operating environment compared to the prior period impacted by Covid-19, which positively impacted the key credit risk indicators.
Moreover, non-interest income increased by N$103.1 million (12.3%), mainly attributable to a 23.3% increase in transaction-based fees, driven by increased transaction volumes specifically using digital channels, particularly EasyWallet, digital fund transfers, ATM withdrawals and point-of-sale transactions.
Operating expenses increased by 16.1% (N$165.3 million) year-on-year from a low base environment attributable to Covid-related economic restrictions in the comparative period.
Furthermore, income from associates increased by 34.6% year-on-year, following a significant reduction in volume and value of life insurance claims received by Sanlam Life relative to the comparative period, which was impacted by the Covid-19 3rd wave in Namibia during the months of July and August 2021.
Capricorn Group retained a healthy liquidity position as at 31 December 2022 as the Group’s liquid assets increased by 8.7% (N$1.1 billion) year-on-year. Liquid assets exceeded minimum regulatory requirements in Namibia and Botswana by 139% and 119%, respectively, as at 31 December 2022.
Lastly, gross loans and advances increased by N$1.4 billion year-on-year, mainly driven by mortgage loan growth of N$460.8 million (2.4%), commercial loan growth of N$453.6 million (4.2%) and article finance growth of N$388.0 million (10.8%).
Capricorn declared an interim dividend of 39 cents per ordinary share. The interim dividend per share for the period under review is 21.9% higher than the interim dividend per share of 32 cents declared in the comparative period.
“The Group’s strong performance is due to a better operating environment with dedicated and committed staff, with Bank Windhoek and Bank Gaborone reporting marked improvement in their results compared to the previous Covid-19 affected period,” said Thinus Prinsloo, Group CEO.
According to Prinsloo, the Group expects further economic recovery and improved economic conditions within the Group’s operating regions in the medium to long term. “Covid-19 has “edged” closer to endemic status, while the severity of the initial economic fall-out from global geo-political tensions spawned by the war in Ukraine has reduced. The significant pressures from increased energy and food costs, high inflation and high-interest rates will continue to have a negative impact for the foreseeable future,” added Prinsloo.
“The Bank of Namibia's December 2022 Economic Outlook predicts that the country's real gross domestic product (GDP) growth will rise to 3.9% in 2022 and 2.7% in 2023, but this depends on successful government reforms and investments. Like the global economy, domestic economic growth is faced with challenges such as increased energy and food costs. Maintaining stability and ensuring the success of the Capricorn Group for all stakeholders remains the Group’s top priority,” said Prinsloo.
Net interest income increased by 14.9% year-on-year, aided by year-on-year increases in the repo rate in Namibia and Botswana of 300 basis points and 151 basis points, respectively. Bank Windhoek managed its cost of funding effectively, which resulted in a 54-basis point improvement in the net interest margin to 4.88%.
Impairment
In addition, impairment charges decreased by 14.9% in credit impairment charges. Despite the global economic difficulties attributable to the geopolitical instability in the wake of the war in Ukraine, the region saw an improved operating environment compared to the prior period impacted by Covid-19, which positively impacted the key credit risk indicators.
Moreover, non-interest income increased by N$103.1 million (12.3%), mainly attributable to a 23.3% increase in transaction-based fees, driven by increased transaction volumes specifically using digital channels, particularly EasyWallet, digital fund transfers, ATM withdrawals and point-of-sale transactions.
Operating expenses increased by 16.1% (N$165.3 million) year-on-year from a low base environment attributable to Covid-related economic restrictions in the comparative period.
Furthermore, income from associates increased by 34.6% year-on-year, following a significant reduction in volume and value of life insurance claims received by Sanlam Life relative to the comparative period, which was impacted by the Covid-19 3rd wave in Namibia during the months of July and August 2021.
Capricorn Group retained a healthy liquidity position as at 31 December 2022 as the Group’s liquid assets increased by 8.7% (N$1.1 billion) year-on-year. Liquid assets exceeded minimum regulatory requirements in Namibia and Botswana by 139% and 119%, respectively, as at 31 December 2022.
Lastly, gross loans and advances increased by N$1.4 billion year-on-year, mainly driven by mortgage loan growth of N$460.8 million (2.4%), commercial loan growth of N$453.6 million (4.2%) and article finance growth of N$388.0 million (10.8%).
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