Capitec expects profits to surge 500%

Capitec, South Africa’s largest bank by customer numbers, said on Friday it expects a dramatic surge of 500% in headline earnings per share to more than 3 372 cents in the half-year to end-August 2021 from 562c per share reported in the previous comparable period.

Earnings per share are seen to be more than 3 372c, which is an increase of at least 528% compared with the EPS of 537c reported in the six months to August last year, the bank said.

Headline earning per share is widely used as a profit gauge in South Africa.

The retail bank said its earnings are expected to be more than R3.3bn, up 292% from the R841m recorded in the previous period ended 31 August 2020 when earnings were severely impacted by the advent of the Covid-19 pandemic and tight lockdown restrictions. Headline earnings per share and earnings per share, then down 78% and 79% respectively on the half-year to 31 August 2019, clearly reflected the lockdown’s negative impact on the economy.

In a note, to shareholders, the bank said the significant increase in HEPS and EPS for the current six-month period represents compound growth of 15.1% and 15% respectively compared to the six months ended 31 August 2019.

The bank said the transfer of its shareholding in its insurance cell structures to a wholly-owned subsidiary of Capitec effective of 31 March 2021 does not impact headline earnings and earnings per share at group level, but does impact the bank’s earnings.

The share price erased earlier losses to trade up 0.05% at R1 627.64 by 13:57 on the JSE.

The bank reported in April this year that digital transactions by its customers rose by 35% over the year to 1.1 billion, representing more than a fifth of total transactions. By the end of February, customers actively using its banking app reached 5.3 million. In total, the number of customers at the bank rose by 14% to 15.8 million as it added an average 160 000 new clients a month.

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