Staff Writer
Namibian Stock Exchange listed Capricorn Group Limited released its annual financial results for the period ending 30 June 2020, where the Group’s profit after tax from continuing operations, excluding our Zambian banking operation, amounts to N$1,01 billion, which is 2.2 percent lower than the prior year.
“Capricorn Group started the 2020 financial year with confidence and delivered positive half year results, despite continuing difficult economic conditions in Namibia and Zambia. Capricorn Group’s operating profits were significantly impacted by the Covid-19 pandemic during the last quarter of the financial year, with full-year profit after tax contracting by 15.6 percent to N$856.4 million. The Group’s profit after tax from continuing operations, excluding our Zambian banking operation, amounts to N$1, and 01 billion, which is 2.2 percent lower than the prior year”, said Capricorn Group CEO Thinus Prinsloo said.
He said despite the negative economic conditions, the group was pleased with the performance.
“Overall, Capricorn Group’s response to a challenging year showed resilience and sustainability in our operations and people. We are proud of the performance delivered by our business units and associates. By ensuring the well-being of the business, our employees and clients as a priority during the pandemic, Capricorn Group endured and performed well under extremely challenging conditions. Bank Windhoek, our flagship brand, delivered strong results. Profitability was under pressure in the last three months of the financial year. The significant reduction in Namibia’s repo rate by 225 basis points impacted Bank Windhoek’s profits directly, declining by 9.8 percent compared to last year”, Prinsloo said.
Commenting on the exclusion of Cavmont Bank from its continuing operations, Jaco Esterhuyse, Financial Director of the Group said: “Following three years of losses reported by the Bank in deteriorating market conditions in Zambia, Capricorn Group accepted the offer by Access Bank Zambia to acquire Cavmont Bank. Agreements for the sale and subsequent merger of the two banks has been concluded subject to the requisite regulatory approvals.”
This comes as Capricorn Group last month announced that it was set to directly disinvest from Zambia, after concluding a purchase agreement with Access Bank Plc for its entire interest in Cavmont Capital Holdings Zambia PLC.
Under the terms of the agreement which is still subject to regulatory approval, Access Bank Zambia will acquire the entire issued ordinary share capital, assets and liabilities of Cavmont Bank, and on completion, Cavmont Bank will become part of Access Bank Zambia and operate under the Access Bank brand.
In the period under review, gross loans and advances increased by 5.6 percent to N$41.1 billion, while Bank Windhoek’s gross advances increased by 4.9 percent to N$33.4 billion.
“The growth was mainly in commercial loans. Bank Gaborone increased gross advances by 11.5 percent to Pula 4.7 billion as the bank continued to grow its market share, mainly in commercial and mortgage loans.”
The Group’s total non-performing loans increased by 19 percent to N$1.9 billion during the financial year.
“The group’s non-performing loans (NPL) ratio increased from 4.1 percent to 4.7 percent. Due to the significant increase in provision for expected credit losses the NPL coverage ratio increased from 47.3 percent to 49 percent.”
“The global economic outlook is bleak with most economies projecting significant contraction. Namibia and Botswana have revised their forecasted contraction in GDP for the current fiscal year to 8.5 percent and 8.9 percent respectively. Unemployment rates are reaching new highs and business closures continue unabatedly, increasing the financial distress of individuals and businesses alike. As a result, we expect an increase in customer defaults with impairment charges remaining high.Net interest revenue, especially in the case of Bank Windhoek will be significantly lower in the next year following the aggressive cuts in interest rates. Bank Gaborone is expected to be less impacted and the expected appreciation of the Pula against the Namibia dollar will also contribute positively to earnings. Non-banking subsidiaries are not expected to be negatively impacted and should cushion the overall negative impact on the group’s results”, said Jaco Esterhuyse on the outlook for the Group.
