Capitec hits a 52-week high

Stellenbosch-headquartered Capitec Bank’s share price hit a 52-week high on Monday, after the group posted a trading update that forecasts an even bigger jump in its headline earnings per share (Heps) for the six months ending 31 August than previously reported.

The group flagged an earnings jump of up to 37% for the half-year, which saw its share price firm 2.7% to close at R2 954.25 a share.

Capitec is one of SA’s top-performing stocks this year, and has surged over 40% for the year to date.

Over the past 12 months, the stock is up around 68%.

The retail bank says it now expects group Heps to be between 5 497 cents and 5 579 cents per share, representing an increase of between 35% and 37% compared to the 4 072 cents per share for the corresponding six months in 2023.

In a July trading statement, Capitec said it expected earnings to be between 25% and 35% higher.

It ascribes the expected double-digit increase to a consistent improvement in credit loss ratios into the 2025 financial year and growth in net transaction and commission income, including value-added services.

Capitec’s value-added offering includes licence disc renewals, prepaid airtime and electricity, cash send, and voucher purchases.

In the six-month period in 2023, Capitec experienced high credit impairment charges due to high inflation, high interest rates, load shedding, and a tough economic climate.

However, in the period ended 29 February this year, credit impairment charge and credit loss ratios improved.

Capitec’s acquisition of extra shares in Avafin Holdings – an international online consumer lender – is also expected to boost its income statement.

Avafin is a Cyprus-based lender with operations in Poland, Latvia, Spain, the Czech Republic, and Mexico. On 11 March, the South African Reserve Bank (Sarb) approved the transaction, which saw Capitec increase its shareholding in Avafin from 40.66% to 97.69%.

The additional shareholding was effective 1 May, and Avafin is now treated as a subsidiary of Capitec. Therefore, 97.075% of Avafin’s profit for the period under review was included in Capitec’s income statement.

Read: Capitec has its sights on the overseas market 

Before 1 May 2024, 40.66% of Avafin’s profit for the period was included as Capitec’s share of income from an associate.

Capitec is expected to publish its financial results for the six months to 31 August 2024 on Sens on or around 1 October 2024.

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