Capricorn: Covid consumes millions in profit

At the end of 2020, Capricorn Group’s non-performing loans reached N$2.2 billion, up 12.7% compared to the six months ended 31 December 2019.

26 February 2021 | Business

Increased impairment provisions resulted from the extremely challenging economic and market conditions in the wake of imposed lockdowns and other responses to the pandemic. – Capricorn Group

Jo-Maré Duddy – An increase of more than N$100 million in impairment charges and a N$41-million loss suffered by Cavmont Bank in Zambia shrunk Capricorn Group’s profit for the six months ended 31 December 2020 by about 23% compared to the same half-year in 2019.

The locally-list group, which includes Bank Windhoek, yesterday reported a profit of about N$428.1 million for the six months under review, a drop of around N$129.1 million year-on-year.

The group’s profit from continuing operations decreased by N$118.8 million, or 20.2%, relative to the pre-Covid-19 comparable period. Capricorn concluded the sale of Cavmont Bank in January 2020.

Releasing its interim financial results on the Namibian Stock Exchange (NSX), Capricorn said the nearly 187%-increase in its impairment provisions “resulted from the extremely challenging economic and market conditions in the wake of imposed lockdowns and other responses to the pandemic”.

The group provided for impairment charges of more than N$155.6 million in its latest half-year results, compared to nearly N$54.3 million in the corresponding six months in 2019.


Capricorn, whose subsidiaries include the local lender Entrepo and Bank Gaberone in Botswana, said its non-performing loans (NPLs) increased by 12.7% year-on-year (y/y) to N$2.2 billion. A loan is regarded as an NPL when the borrower hasn’t made payments on the interest or principal debt for more than 90 days.

The group’s NPL ratio rose from 4.7% to 5.2% during the period under review, against the industry benchmark of 3%. “Due to the significant increase in provision for expected credit losses the NPL coverage ratio increased to 53.2% (December 2019: 44.8%),” Capricorn said.

The group reported net interest income of nearly N$856.6 million, a drop of 17% from the N$1.03 billion in its 2019 book-year.

“Net interest income and interest margins were negatively impacted during 2020 following significant interest rate cuts of 275 basis points by Bank of Namibia and 100 basis points by Bank of Botswana,” Capricorn said in a statement.

The group added: “Despite the interest rate cuts, net interest margin reductions of Bank Windhoek and Bank Gaborone were well contained at only 0.53% and 0.38% y/y respectively. This was achieved mainly through effective management of cost of funding. Entrepo had seen growth of 26.9% in net interest income.”


Non-interest income increased by 3.2% y/y to nearly N$706.4 million. This was achieved “despite the difficult operating environment and the material impact of the Covid-19 preventative regulations on financial activities across the regions where we operate,” Capricorn said.

The group attributed the growth mainly to a 5.6% increase in income from electronic channels and asset management fee income increasing by 13% to N$77.4 million. “This achievement highlights the positive impact of the group’s diversification strategy in cushioning the impact of the steep interest rate cuts experienced,” Capricorn said.

Growth in income from electronic channels and asset management fees were offset by a decline of 22.7% in trading revenue, it added.

Capricorn’s expenses were just above N$986 million, up 2.4% from the same half-year in 2019.

“Roughly 80% of the group’s operating expenses are fixed and could not be adjusted in line with lower expected income since the onset of the pandemic. In addition, a significant part of the group’s technology costs, which increased by 21.5% year-on-year, are denominated in US dollar and was severely impacted by a weakening of the Namibian dollar against the US dollar,” it said.


Capricorn’s gross loans and advances increased by 1.8% to N$41.8 billion during the past half-year.

According to the group, Bank Windhoek’s gross advances increased by 4.8% to N$34.7 billion, exceeding annualised private sector credit extension growth of 2.0%. “The growth was mainly attributable to commercial loans, overdrafts and mortgage loans reflecting how the bank supported the local economy,” Capricorn said.

Bank Gaborone increased gross advances by 2.3% to 4.8 billion pula. “Due to a deterioration of the pula, its loans and advances decreased by 4.7% in Namibian dollar terms,” Capricorn said. Entrepo’s loan book increased by 10.6%.

Capricorn said it remained well capitalised with a total risk-based capital adequacy ratio of 14.1%, well above the minimum regulatory capital requirement of 10%. “The strong capital position will stand the group in good stead whilst navigating the perfect storm brought about by the Covid-19 economic shock,” it added.

The group declared an interim dividend of 22c per ordinary share. The interim dividend per share for the period under review is 10% higher than the final dividend per share of 20c declared during September 2020.

Capricorn is listed on the Local Index of the NSX. It closed Wednesday at N$10.12 per share. It ended last year at N$12.97 per share.

On Wednesday, Capricorn’s market capitalisation by total shares in issue was N$5.254 billion, making it the third biggest company on the Local Index after FirstRand Namibia (N$6.173 billion) and Namibia Breweries (N$6.404 billion).

Similar News


Zimbabwe seeks new investors for ZISCO

1 day - 15 April 2021 | Business

Zimbabwe's state-controlled iron and steel company ZISCO has invited new investors to help revive operations at the company that has been the target of interest...


1 day - 15 April 2021 | Business

Tesco reports 2 billion pounds profit Tesco, Britain's biggest retailer beat its guidance by reporting total adjusted retail operating profit of 1.99 billion pounds (US$2.74...

Namibia’s new vehicle sales speeding

2 days ago - 14 April 2021 | Business

PHILLEPUS UUSIKUFor the first quarter of 2021, Namibia’s new vehicles sales increase by 12.3% when compared the first quarter of 2020 amounting to 2494 units.Similarly,...

PwC Business School launches new programme

2 days ago - 14 April 2021 | Business

Carlin Schumann – As part of PwC’s efforts to expand its Business School initiatives, we’ve joined forces with Unmatched Potential (Pty) Ltd and the founder...

Bourse Briefs

2 days ago - 14 April 2021 | Business

FirstRand Namibia (FNB)FNB reported a profit of about N$564.9 million for the six months ended 31 December 2020, a drop of 9.4% year-on-year (y/y). Operating...

Bull of a month for Capricorn

2 days ago - 14 April 2021 | Business

Jo-Maré Duddy – A jump of nearly 31% in its share price in March catapulted Capricorn Group (CGP) to the biggest company on the Local...

AMTA to create capacity for //Kharas farmers

2 days ago - 14 April 2021 | Business

Agro-Marketing and Trade Agency (AMTA) Managing Director, Lucas Lungameni has urged farmers in the //Kharas Region to register with the Ministry of Agriculture, Water and...


2 days ago - 14 April 2021 | Business

Discovery signs licensing deal with Sanofi Drug developer C4X Discovery said on Monday it has signed an exclusive licensing deal worth up to 414 million...

Insurance in the ‘new normal’

2 days ago - 14 April 2021 | Business

B7: Tell us about your life in Namibia: where you were born, your childhood and early years as a young adult.WK: I was born and...

Uganda, Tanzania, oil firms sign accords

3 days ago - 13 April 2021 | Business

ELIAS BIRYABAREMAUganda, Tanzania and oil firms Total and CNOOC signed agreements that will kickstart the construction of a US$3.5 billion crude pipeline to help ship...

Latest News

Credit uptake unresponsive to low...

1 day - 15 April 2021 | Economics

PHILLEPUS UUSIKUDespite the repo rate being at a historical low of 3.75% to making borrowing attractive, credit uptake by businesses and households remain weak.Private sector...

GIPF increases pension benefits by...

1 day - 15 April 2021 | Economics

PHILLEPUS UUSIKUThe Government Institutions Pension Fund (GIPF) announced a 3% pension benefit increase, effective 01 April 2021 for all GIPF pensioners.In the current volatile economic...

Clearing agents fail Namra test

1 day - 15 April 2021 | Economics

OGONE TLHAGEWINDHOEKLess than 20% of the clearing agents who sat for the mandatory competency test to obtain certification passed the test.There are currently 343 active...

Villagers retaliate by eating locusts

1 day - 15 April 2021 | Agriculture

TUYEIMO HAIDULAOSHAKATIThe arrival of massive swarms of locusts in northern Namibia, especially in the Kavango West and East, Ohangwena and Oshikoto regions, has been a...


1 day - 15 April 2021 | Justice

OGONE TLHAGEWINDHOEKRape accused healthcare worker Dennis Noa will be moved to the Seeis police holding cells outside Windhoek, Magistrate Johannes Shuuveni ordered yesterday at the...

Otjiwarongo Municipality's budget approved

1 day - 15 April 2021 | Economics

The Otjiwarongo Municipality’s local authority councillors on Tuesday approved the municipality’s 2021/22 capital and expenditure budget of more than N$131 million during a special council...

Our conflict diamonds

1 day - 15 April 2021 | Opinion

Our diamonds have become conflict diamonds. Conflict in the local definition which implies the scramble to enrich well-connected people.The tender to valuate Namdia diamonds was...

Child-slapping boy in Outapi court...

1 day - 15 April 2021 | Crime

TUNOHOLE MUNGOBAONGWEDIVAOmusati police have confirmed the arrest of a 17-year-old who was seen in a video clip assaulting a five-year-old girl.The video has gone viral...

Vivo Energy Namibia rewards top...

1 day - 15 April 2021 | Transport

Staff reporter Vivo Energy Namibia, the marketer and distributor of Shell branded petroleum and lubricant products in Namibia, recognised and rewarded top performing retailers...

Load More