Capricorn Group profits down N$118.8 million

Staff Writer

Capricorn Group released its interim financial results for the six months ended 31 December 2020 on Thursday, where it reported a N$118.8 million decrease in the group’s profit from continuing operations, relative to the pre-COVID-19 comparable period.

“This year-on-year decrease is mainly due to interest margin compression and increased impairment provisions. Lower interest margins are a result of unprecedented interest rate decreases enacted by central banks to counter the slowdown in the economy. Increased impairment provisions resulted from the extremely challenging economic and market conditions in the wake of imposed lockdowns and other responses to the pandemic”, said Thinus Prinsloo, Group CEO.

During the period under review, net interest income and interest margins were negatively impacted during 2020 following significant interest rate cuts of 275 basis points by Bank of Namibia and 100 basis points by Bank of Botswana.

“Despite the interest rate cuts, net interest margin reductions of Bank Windhoek and Bank Gaborone were well contained at only 0.53 percent and 0.38 percent year-on-year respectively. This was achieved mainly through effective management of cost of funding. Entrepo had seen a growth of 26.9 percent in net interest income. On a consolidated level, net interest income before impairment charges decreased by 6.8 percent year-on-year mainly as a result of reduced margins.”

The Group’s Impairment charges increased to N$155.6 million.

“This is a direct result of the economic impact related to the COVID-19 pandemic, compared to the period before the pandemic. Given the current uncertainty the group applied a prudent forward-looking approach, consistent with the requirements of IFRS 9, in determining expected credit losses given the current economic conditions.”

Non-interest income for the group, increased by 3.2 percent year-on-year despite the difficult operating environment and the material impact of the COVID-19 preventative regulations on financial activities across the regions where we operate.

“Growth was mainly attributable to a 5.6 percent increase in income from electronic channels and asset management fee income increasing by 13 percent to N$77.4 million. This achievement highlights the positive impact of the group’s diversification strategy in cushioning the impact of the steep interest rate cuts experienced. Growth in income from electronic channels and asset management fees were offset by a decline of 22.7 percent in trading revenue.”

Gross loans and advances increased by 1.8 percent to N$41.8 billion during the six months ended 31 December 2020, with Bank Windhoek’s gross advances increased by 4.8 percent to N$34.7 billion during the same period.

“The growth was mainly attributable to commercial loans, overdrafts and mortgage loans reflecting how the bank supported the local economy. Bank Gaborone increased gross advances by 2.3 percent to BWP4.8 billion, but due to a deterioration of the Pula, its loans and advances decreased by 4.7 percent in Namibian dollar terms. Entrepo’s loan book increased by 10.6 percent.”

Related Posts