Staff Writer
Simonis Storm forecasts Capricorn Group’s 2027 financial year (FY27) headline earnings at N$1.626 billion, with Headline Earning Per Share (HEPS) expected to decline 6.8% to 320.4 cents.
The forecast assumes gross advances growth of 3%, net interest income growth of 1.1%, non-interest income growth of 3.3% and operating cost growth of 6%. The research assumes a credit loss ratio of 105 basis points.
For FY28, Simonis Storm forecasts HEPS to recover to 355.0 cents, based on 5% loan growth, 7.3% net interest income growth and a lower credit loss ratio of 95 basis points.
The research said the FY28 recovery assumption is based on an expected normalisation of funding costs in Botswana and is not management guidance.
Simonis Storm also noted that Capricorn Group’s capital position remained strong, with capital exceeding the 12.5% requirement by N$4.021 billion.
The research report places a 12-month target price of 2 649 cents on the group. It said the rating is sensitive to the pace of recovery in Botswana, funding costs and the group’s operating leverage.
Capricorn Group’s headline earnings fell 6.7% to N$1.74 billion for the financial year ended June 2026, with Simonis Storm Research attributing the decline largely to weaker performance in Botswana.
HEPS declined 7.0% to 343.7 cents, while return on average equity fell to 15.6% from 18.2%, its lowest level since FY22.
The research said group income increased 2.3%, while operating expenses rose 7.6%, resulting in negative operating leverage of 530 basis points. The cost-to-income ratio consequently increased to 52% from 49.5%.
Botswana was the main contributor to the deterioration, with operating profit swinging from N$223 million to a N$105 million loss.
Net interest income in Botswana declined 36.6%, while impairments increased 80.6%. Botswana accounted for 57% of the group’s credit charge despite representing about 16% of net advances.
In Namibia, banking operating profit declined 1.6% to N$1.92 billion, while non-performing loans remained broadly flat, according to Simonis Storm.
The research also highlighted a 21.1% contraction in Entrepo’s gross loan book as a separate risk to loan origination and future growth.
Despite the weaker net interest income, Capricorn Group’s non-interest income increased 8.3% to N$2.62 billion. Fee income rose 4.3% to N$1.62 billion, while fee expenses increased 14.0% to N$359 million, resulting in net fee income growth of 1.9%.
Trading income increased 21.6% to N$417 million, while asset management fees rose 28.4% to N$335 million.
The insurance service result was broadly unchanged at N$184 million, while other operating income declined 12.6%.
Non-interest income accounted for 44% of total income before impairments, compared with 41.6% in FY25.
