Capitec Bank Holdings has predicted strong earnings growth in its 2025 financial year. The bank that was founded in 2001 has reported 18 consecutive years of earnings growth. Picture: Supplied
Capitec Bank Holdings once again vindicated the strength of its share price after predicting a strong 28% to 32% rise in headline earnings for the year to February 28, 2025, boosted by lower credit losses.
The bank, formed in 2001 and which revolutionised banking at the time with its paperless bank products, anticipates headline earnings will be between 11 739 cents and 12 106 cents a share, compared to 171 cents a share for the comparative year ending February 28, 2024.
The forecast percentage increase, although strong, is slightly below the 36% rise in interim headline earnings per share to 5 544 cents reported for the six months to August 3, 2024. The bank has increased headline earnings per share for 18 consecutive years.
The share price nudged up 0.7% to R2 966.00 by Friday afternoon, bringing the share price gain over 12 months to a strong 49.2%. It closed the day at R2 645. If you bought the share five years ago, you have gained more than 120% in the value of the share price.
Capitec’s earnings increase is in line with the forecasts of credit rating agency S&P Global, which two weeks ago predicted that South African banks’ profitability would likely remain strong this year, supported by higher credit growth, non-interest income, and lower provisioning.
South African banks generally traded through tough conditions last year; for instance, the average headline earnings growth for major banks was only 2.5% in the first half of 2024.
Capitec group earnings per share are expected to be between 11 720 cents and 12 086 cents, representing an increase of between 28% and 32% compared to the 9 156 cents per share for the comparative year ended February 28, 2024.
The bank stated that an improvement in the credit impairment charge and credit loss ratios (CLRs) seen in the second half of the 2024 financial year has continued into the 2025 financial year.
This aligns with other economic data, which in previous BR reports, indicate an improvement in consumer disposable incomes in the second half of last year.
Capitec directors said in the trading statement that net transaction and commission income (including value-added services and Capitec Connect) was a significant driver of growth during the financial year.
Active and fully banked client numbers, along with client acceptance of new and maturing products, continued to grow, they said. The financial results for the year ending February 28, 2025, are expected to be published on or about April 23, 2025.
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