Capitec, South Africa’s largest retail bank, experienced a significant jump in its share price, rising by nearly 8%.
- The bank foresees a positive growth in its earnings, with group headline earnings per share expected to increase between 8% and 10% for the six months ending August 2023.
- Capitec attributed the anticipated earnings growth to tightened credit extension criteria implemented during the same period, in response to adverse economic conditions characterized by high inflation rates and increased interest rates.
- The South African Reserve Bank had raised its benchmark repo rate to 8.25% in May, aiming to curb inflation that had surpassed the target range for over a year.
- Despite the positive news, Capitec’s shares have faced a decline of nearly 12% over the past year.
- The bank emphasized that its provisions for expected credit losses remained conservative, considering recent improvements in GDP and inflation data.
- Capitec’s net transaction fee income and funeral plan income were significant contributors to its earnings growth, driven by transactional volume growth, new product lines, sales growth, and client retention in its funeral insurance business.