MegaBanner-Right

MegaBanner-Left

LeaderBoad-Right

LeaderBoard-Left

Home » Industry News » Whopping 70% drop in earnings forecast for Capitec Bank

Whopping 70% drop in earnings forecast for Capitec Bank

The impact of the pandemic is hitting the bank, particularly when it comes to loan repayments. But management predicts better days ahead.

High-flying Capitec Bank has announced that it expects a massive 70% drop in first-half earnings due to the impact of the coronavirus.
The bank said on Friday in a report to the Stock Exchange News Service that this was due to a rise in bad loans, as well as lower transaction volumes as the economy all but ground to a halt.

CAPITEC IS FIRST BIG BANK TO QUANTIFY PANDEMIC’S IMPACT

Capitec is the first of the big South Africa banks to give details of the impact of the lockdown and resulting business slowdown. Other banks will likely have broadly similar results when they make their reports to the stock exchange.
“The COVID-19 national lockdown resulted in increased credit impairment charges and lower loan sales and transaction volumes and, as a result, Capitec incurred a loss of R404-million for the quarter ended 31 May 2020,” the bank said its Trading Statement And Quarterly Disclosure.

LOANS WERE RESCHEDULED AND PAYMENT BREAKS GRANTED

The bank said its credit impairment charge was 145% higher than forecast, mainly due to R5.75-billion and R236-million in retail and business credit balances being rescheduled or granted payment breaks due to the lockdown.
However, it noted that those clients which had been granted rescheduled payment terms “were in good standing at the end of February 2020 (i.e. before the effects of the pandemic) and we believe the increased risk is not as high as normally associated with rescheduled balances.”

BETTER TIMES AHEAD IN 2021, MANAGEMENT PREDICTS

Capitec noted that it does not expect to return to pre-lockdown levels of credit sales before the start of its next financial year.
“We do, however, believe that the results for the second half of the 2021 financial year could return to normal levels,” it added.

MORE DIGITAL INNOVATION AND NEW PRODUCT LAUNCHES

“There will be continued focus on digital innovation. As the country exits the lockdown we expect transaction volume and revenue to increase, supported by growth in quality banking clients in both the business and retail banks.

To enquire about Cape Business News' digital marketing options please contact sales@cbn.co.za

Related articles

Why South Africa’s Bottled Water Industry Stands by PET

At first glance, “biodegradable” water bottles may seem like the obvious eco-friendly upgrade. But dig deeper, and the story shifts. In SA, where infrastructure...

Looming Eskom tariff hike: Making sense of energy independence for South African businesses.

As businesses grapple with escalating electricity costs and a shifting energy landscape, IMPOWER Solar & Storage, a leading renewable energy provider, issued a guide...

MUST READ

Strategic co-location of IFAT Africa and analytica Lab Africa to boost...

IFAT Africa and analytica Lab Africa will be co-located at the Gallagher Convention Centre this year to optimise the synergies across the laboratories, science...

RECOMMENDED

Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.

Strictly Necessary Cookies

Strictly Necessary Cookie should be enabled at all times so that we can save your preferences for cookie settings.

If you disable this cookie, we will not be able to save your preferences. This means that every time you visit this website you will need to enable or disable cookies again.