CAPITEC customers are under pressure from
the frail economy, with many rescheduling payments, the bank’s results
showed on Wednesday.
The bank said loans rescheduled during the
second half of the financial year to February soared 75% to R1.5bn —
from just R884m in the year-earlier period — as it gave customers
experiencing "cash-flow stress" the opportunity to reschedule payments.
These loans were in arrears.
It attributed the increase to the expansion of its short-term loan book, where it charges higher interest rates.
"(It) is also an indication of the economic challenges faced by clients," chairman Michiel le Roux and CEO Gerrie Fourie said.
Up-to-date loans to the tune of R1.8bn were also rescheduled, compared with R1.1bn previously.
The Reserve Bank raised interest rates by 100 basis points during the bank’s financial year, to 6.75% by the end of February.
Capitec executives said cash-flow stress was evident in the rescheduling of up-to-date loans.
The rescheduled accounts did not do much to damp its bottom-line results, however, as the bank unveiled a 26% increase to R3.2bn in headline earnings for the year, boosted by growth in loan and transaction fee income, which increased 38% and 16% respectively. Headline earnings per share (HEPS) rose by the same margin, to R27.87.
The bank also declared a final dividend of 680c, up 15% on the previous year.
Analysts warn that the road ahead may be a difficult one for the company in light of a rising inflation outlook and tightening monetary policy in South Africa.
Credit Suisse’s equity research team said Capitec’s low-income clients could struggle to service existing debt due to the tough macroeconomic climate.
"The broader backdrop may also affect the bank (in) its earnings diversity when compared with that of its rivals, making it more vulnerable to rising consumer loan losses."
Arrears increased from R2bn in 2015 to R2.3bn in 2016, an increase of 17%, while arrears to gross loans and advances increased from 5.4% to 5.6%.
It attributed the increase to the expansion of its short-term loan book, where it charges higher interest rates.
"(It) is also an indication of the economic challenges faced by clients," chairman Michiel le Roux and CEO Gerrie Fourie said.
Up-to-date loans to the tune of R1.8bn were also rescheduled, compared with R1.1bn previously.
The Reserve Bank raised interest rates by 100 basis points during the bank’s financial year, to 6.75% by the end of February.
Capitec executives said cash-flow stress was evident in the rescheduling of up-to-date loans.
The rescheduled accounts did not do much to damp its bottom-line results, however, as the bank unveiled a 26% increase to R3.2bn in headline earnings for the year, boosted by growth in loan and transaction fee income, which increased 38% and 16% respectively. Headline earnings per share (HEPS) rose by the same margin, to R27.87.
The bank also declared a final dividend of 680c, up 15% on the previous year.
Analysts warn that the road ahead may be a difficult one for the company in light of a rising inflation outlook and tightening monetary policy in South Africa.
Credit Suisse’s equity research team said Capitec’s low-income clients could struggle to service existing debt due to the tough macroeconomic climate.
"The broader backdrop may also affect the bank (in) its earnings diversity when compared with that of its rivals, making it more vulnerable to rising consumer loan losses."
Arrears increased from R2bn in 2015 to R2.3bn in 2016, an increase of 17%, while arrears to gross loans and advances increased from 5.4% to 5.6%.
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