Capitec’s profits slump after it tightens lending criteria
The bank says economic conditions are expected to improve in the short term but the full effect of the lockdown will be seen only in the medium term
Banking group Capitec says a fall-off in loan disbursements and provisions for clients who are unable to pay helped prompt a more than three-quarter fall in profits during its six months to end-August.
Headline earnings fell 78% to R650m in the six months, with the group saying the Covid-19 lockdown contributed R4.2bn of a R6.3bn gross impairment charge, which was more than double the year-earlier period.
The group tightened its lending criteria as SA headed towards lockdown, with loan sales to end-August down 35% compared with the year-earlier period.
Capitec’s gross loan book decreased from R65.4bn at end-February to R63.4bn at end-August, as repayments exceeded loan sales and disbursements.
Despite the effect of Covid-19, the number of active retail banking clients grew by 6% to 14.6-million, the group said.
Economic conditions are expected to improve in the short term but the full effect of the lockdown will be seen only in the medium term, Capitec said.
“The payment performance of the Covid-19 rescheduled loans is encouraging but payment success rates going forward will reveal the medium- to long-term impact of the lockdown on our clients,” the group said.
“We expect that this impact will be softened by the clients employed in essential services, that comprise 60% of our performing loan book,” the statement reads.
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