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- Capitec has revised its overall expected earnings and earnings per share decrease from 70% to something between 78% and 82%.
- This will make Capitec the second biggest loser in terms of lower earnings after Absa.
- The bank will detail what contributed to the falls on September 30.
Capitec now warns that it will record earnings declines much larger than it initially forecast in July with both earnings per share and earnings per share plummeting as much as 82%.
The country’s largest bank by number of clients warned in early July that the lockdown had increased credit deterioration and some consumers were unable to pay their debts. On the other hand, social distancing that prevented people from frequently transacting or visiting bank branches as usual before Covid-19 saw the bank collecting lower bank charges and selling fewer credit products.
As a result, between March and May, Capitec incurred a loss of R404 million for the quarter. At that time, Capitec’s credit impairment charge was already 145% higher than expected.
In Monday’s business update, Capitec said that now that it is busy finalizing results for the six-month period ending August 31, there is “… a reasonable degree of certainty” that earnings will decline by more than the 70% it forecast in July. . . “
The bank expects overall earnings per share to be between R458.10 and R559.90 per share. This would represent a decrease of between 82% and 78% compared to August 2019. Earnings per share will also decrease between 78% and 82%.
Capitec, whose shares are down more than 40% this year, will detail what contributed to the additional drops on September 30 when it presents its interim results.
All of the large banks that reported their results had more than doubled the credit impairments they had in the first half of 2019. However, Capitec’s expected drops are still better than those of Absa, which reported a 93% drop in overall earnings last month after choosing to extend credit. impairment provisions for the remainder of 2020 in advance.
