Capricorn expects profit drop

Jo-Maré Duddy – Locally-listed Capricorn Group, with Bank Windhoek as its flagship brand, expects its profit after tax for the six months ended 31 December 2020 to be between 17% and 22% lower than the same half-year in 2019.
Profit after tax, including discontinued operations, is expected to drop between 20% and 25% year-on-year, Capricorn said today in a trading statement on the Namibian Stock Exchange (NSX).
The group attributes the reduction mainly to lower interest margins as a result of the “unprecedented” interest rate cuts by central banks in Namibia and Botswana, as well as higher impairment charges.
“Both the reduced interest margins and the higher impairment charge for the period under review are largely due to the economic impact of the Covid-19 pandemic,” Capricorn said.
It added: “Lockdowns and other restrictions were only imposed in Namibia and Botswana from March 2020 onwards. The comparative six-month period ended 31 December 2019 was therefore not affected by Covid-19, while the results for the six-month period to 31 December 2020 reflect the full impact of the pandemic.”
Capricorn expects earnings per share (EPS) and headline earnings per share (HEPS) to be lower than the prior year by between 22% and 27%.
The group’s latest interim results are expected to be published on or about 25 February.
FirstRand Namibia last week said it expected its earnings for the six months ended 31 December 2020 to be between 5% and 10% lower than the same half-year in 2019.
The Bank of Namibia (BoN) last year slashed rates in response to the impact of the Covid-19 pandemic which ravaged the economy. The BoN’s repo rate at the end of June 2019 was 6.75%. A year later, the rate was 4.0%. The prime lending rate dropped from 10.5% to 7.75%. At the end of 2020, the repo was 3.75% and the prime 7.5%.
Both Capricorn and FirstRand Namibia are listed on the Local Index of the NSX.