Martin Endjala
Capricorn Group has recorded solid results with profit after tax for the six months ended 31 December 2023, increasing by 18.5 percent to N$827.6 million, compared to a profit after tax of N$698.2m that was reported in the comparative period in the prior year.
This represents an increase of 19.4 percent in earnings per share to 152.4 cents. The annualised return on equity at half year increased from 16.6 percent to 16.8 percent.
This announcement was made by Capricorn Group Chief Executive Officer Thinus Prinsloo this week.
Prinsloo said the Group’s strong performance is attributable to loan book growth and increased transaction volumes, offset to some extent by escalated credit impairment charges.
Furthermore, the group’s profitability benefitted from implementing the International Financial Reporting Standard (IFRS 17) insurance contracts.
“This improvement primarily stems from reduced discretionary policyholder reserves following the application of IFRS 17.
Excluding the positive impact of IFRS 17 on the Group’s capital reserves, return on equity would have been 17.3 percent for the 6 months ended 31 December 2023,” said Prinsloo.
IFRS 17 requires a full retrospective application for disclosure purposes. Consequently, the comparative figures for the six-month period ended on 31 December 2022 were restated.
Following this restatement of the comparative period figures, the Group’s profit after tax for the six months ended 31 December 2023 represents an increase of 7.5 percent.
Before the IFRS 17 restatement of the preceding period, the Group recorded a substantial 95.3 percent increase in income from associates, amounting to N$46.7 million.
Similarly, both headline earnings and earnings per share for the same period experienced a year-on-year growth of 7.2 percent.
All comparisons to figures from the prior period further in the announcement are based on the restated amounts.
Additionally, the Group experienced a noteworthy 12.0 percent increase in net interest income, driven by higher interest rates, an 8.5 percent growth in the loan book, and prudent management of the cost of funding.
The lending businesses managed their cost of funding effectively, leading to a 23 basis point enhancement of the net interest margin to 5.1 percent for Bank Windhoek, while the net interest margin at Bank Gaborone commendably increased from 3.1 percent to 4.1 percent.
Impairment charges increased by N$98.0 million to N$252.8 million. The ongoing economic impact of increased inflation rates caused by geopolitical instability combined with higher interest rates continued to pressure key credit risk indicators, with non-performing loans increasing from N$2.46 billion in June 2023 to N$2.66 billion in December 2023.
The Group continues to hold prudent provisions for expected credit losses. Gross loans and advances increased by N$3.9 billion, mainly driven by growth in term loans of N$2.4 billion (16.3 percent), instalment finance of N$750 million (18.9 percent), and overdrafts of N$423 million representing a 6.8 percent.
Non-interest income for the half year increased by N$177.5 million (19.0 percent), mainly attributable to an increase in fee and commission income of N$67.0 million (10.1 percent) and net trading income of N$57.1 million (62.4 percent).
Meanwhile, operating expenses registered an 11.5 percent increase, totalling N$137.1 million. This rise is attributed to an increase of N$48.8 million (42.7 percent) in variable operational banking expenses, directly linked to the increased transaction and trading volumes.
Excluding these operational banking expenses, the growth in overall expenses was contained at 8.1 percent (N$88.3 million).
The Group declared an interim dividend of 48 cents per ordinary share.
The interim dividend per share for the period under review is 23.1 percent higher than the interim dividend per share of 39 cents declared in the comparative period.
