Robust profit growth for Capricorn
Capricorn Group, a proud Namibian financial services group listed on the Namibian Stock Exchange with diversified operations and business interests in Namibia and Botswana, released its interim financial results for the six months ended 31 December 2023 today.
Capricorn Group, holding company of among others, Bank Windhoek, achieved solid results with profit after tax for the six months ended 31 December 2023 of N$827.6 million, 18.5% more than the same half-year in 2022.
This represents an increase of 19.4% in earnings per share to 152.4 cents. Annualised return on equity at half-year increased from 16.6% to 16.8% year-on-year (y/y).
“The Group’s strong performance is attributable to loan book growth and increased transaction volumes, offset to some extent by escalated credit impairment charges,” said Capricorn Group CEO Thinus Prinsloo.
The group’s positive financial performance enabled it to create value of N$2.42 billion for all stakeholders, contributing to the socio-economic development of Namibia and Botswana.
Main stakeholders shared in the value creation as follows: employees (N$563 million), government through taxes (N$574 million), ordinary shareholders (N$314 million), suppliers (N$515 million), and communities (N$19.8 million).
Value retained for future expansion amounted to N$438 million.
Interest, impairment
Capricorn experienced a 12.0% y/y increase in net interest income, driven by higher interest rates, an 8.5% y/y growth in the loan book and prudent management of cost of funding.
The lending businesses managed their cost of funding very effectively, leading to a 23 basis point enhancement of the net interest margin to 5.1% for Bank Windhoek, while the net interest margin at Bank Gaborone increased from 3.1% to 4.1%.
Impairment charges increased by N$98 million to N$252.8 million y/y.
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, Capricorn said in a statement. The group continues to hold prudent provisions for expected credit losses, it added.
Non-interest income
Non-interest income for the half-year increased by N$177.5 million or 19% y/y, mainly attributable to an increase in fee and commission income of N$67 million and net trading income of N$57.1 million.
Asset management fees from Capricorn Asset Management increased by 13.4% due to strong growth in unit trusts, exceptional growth and satisfactory growth in Capricorn Private Wealth - a joint venture between Capricorn Asset Management and Bank Windhoek - and satisfactory growth in pension fund assets, the group said.
Operating expenses
Operating expenses registered an 11.5% y/y increase, totalling N$137.1 million.
This rise can be attributed to an increase of N$48.8 million or 42.7% in variable operational banking expenses, directly linked to increased transaction and trading volumes.
Excluding these operational banking expenses, the growth in overall expenses was contained at 8.1% or N$88.3 million.
The majority of this growth is associated with an increase in staff costs, amounting to N$61.2 million, which grew 9.4% y/y, primarily driven by annual increases and the filling of key vacancies, particularly in respect of IT resources.
Loans
Gross loans and advances increased by N$3.9 billion y/y, mainly driven by growth in term loans of N$2.4 billion or 16.3%, instalment finance of N$750 million and overdrafts of N$423 million.
Asset quality remained a key focus area for the group, Capricorn said.
“Despite the challenging economic environment, the group’s total non-performing loans (NPLs) were contained to N$2.66 billion (June 2023: N$2.46 billion) as the group continues to manage credit risk on a pro-active basis. This increased the NPL ratio from 5.2% to 5.4% over the six months ending 31 December 2023. The NPL ratio remains below the industry average,” according to Capricorn.
Liquidity
Capricorn maintained a healthy liquidity position as at 31 December 2023 as the group’s liquid assets increased by 10.9% or N$1.56 billion y/y.
Liquid assets exceeded minimum regulatory requirements in Namibia and Botswana by 135% and 114%, respectively, as at 31 December 2023.
The group enhanced its already robust capital position with a total risk-based capital adequacy ratio of 17.6% as at 31 December 2023 (June 2023: 16.9%).
Capricorn declared an interim dividend of 48 cents per ordinary share, 23.1% higher than the same six months in 2022.
Capricorn Group, holding company of among others, Bank Windhoek, achieved solid results with profit after tax for the six months ended 31 December 2023 of N$827.6 million, 18.5% more than the same half-year in 2022.
This represents an increase of 19.4% in earnings per share to 152.4 cents. Annualised return on equity at half-year increased from 16.6% to 16.8% year-on-year (y/y).
“The Group’s strong performance is attributable to loan book growth and increased transaction volumes, offset to some extent by escalated credit impairment charges,” said Capricorn Group CEO Thinus Prinsloo.
The group’s positive financial performance enabled it to create value of N$2.42 billion for all stakeholders, contributing to the socio-economic development of Namibia and Botswana.
Main stakeholders shared in the value creation as follows: employees (N$563 million), government through taxes (N$574 million), ordinary shareholders (N$314 million), suppliers (N$515 million), and communities (N$19.8 million).
Value retained for future expansion amounted to N$438 million.
Interest, impairment
Capricorn experienced a 12.0% y/y increase in net interest income, driven by higher interest rates, an 8.5% y/y growth in the loan book and prudent management of cost of funding.
The lending businesses managed their cost of funding very effectively, leading to a 23 basis point enhancement of the net interest margin to 5.1% for Bank Windhoek, while the net interest margin at Bank Gaborone increased from 3.1% to 4.1%.
Impairment charges increased by N$98 million to N$252.8 million y/y.
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, Capricorn said in a statement. The group continues to hold prudent provisions for expected credit losses, it added.
Non-interest income
Non-interest income for the half-year increased by N$177.5 million or 19% y/y, mainly attributable to an increase in fee and commission income of N$67 million and net trading income of N$57.1 million.
Asset management fees from Capricorn Asset Management increased by 13.4% due to strong growth in unit trusts, exceptional growth and satisfactory growth in Capricorn Private Wealth - a joint venture between Capricorn Asset Management and Bank Windhoek - and satisfactory growth in pension fund assets, the group said.
Operating expenses
Operating expenses registered an 11.5% y/y increase, totalling N$137.1 million.
This rise can be attributed to an increase of N$48.8 million or 42.7% in variable operational banking expenses, directly linked to increased transaction and trading volumes.
Excluding these operational banking expenses, the growth in overall expenses was contained at 8.1% or N$88.3 million.
The majority of this growth is associated with an increase in staff costs, amounting to N$61.2 million, which grew 9.4% y/y, primarily driven by annual increases and the filling of key vacancies, particularly in respect of IT resources.
Loans
Gross loans and advances increased by N$3.9 billion y/y, mainly driven by growth in term loans of N$2.4 billion or 16.3%, instalment finance of N$750 million and overdrafts of N$423 million.
Asset quality remained a key focus area for the group, Capricorn said.
“Despite the challenging economic environment, the group’s total non-performing loans (NPLs) were contained to N$2.66 billion (June 2023: N$2.46 billion) as the group continues to manage credit risk on a pro-active basis. This increased the NPL ratio from 5.2% to 5.4% over the six months ending 31 December 2023. The NPL ratio remains below the industry average,” according to Capricorn.
Liquidity
Capricorn maintained a healthy liquidity position as at 31 December 2023 as the group’s liquid assets increased by 10.9% or N$1.56 billion y/y.
Liquid assets exceeded minimum regulatory requirements in Namibia and Botswana by 135% and 114%, respectively, as at 31 December 2023.
The group enhanced its already robust capital position with a total risk-based capital adequacy ratio of 17.6% as at 31 December 2023 (June 2023: 16.9%).
Capricorn declared an interim dividend of 48 cents per ordinary share, 23.1% higher than the same six months in 2022.
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