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Repo Rate Increases Help Capricorn Rise To Pre-Pandemic Pofits

By:Staff writer
Capricorn Group’s profit after tax has increased by 28.7% to N$1.47 billion for the year ended 30 June 2023 , the Group has announced.
According to the Group Chief Executive Officer, Thinus Prinsloo, this is due to improved net interest margins, reduced credit impairment losses, strong growth in non-interest income and efficient operations.
Its 2022 profit after tax stood at N$1.15 billion, itself a 16.6% increase from the previous financial year.
The latest results now mean the revenue growth for the Group now exceeds pre-pandemic levels, which indicates that the group, which owns Bank Windhoek, has moved past the recovery phase into the growth phase.
The increase in the repo rate over the last year or so, which the Group has attributed as a contributor to its profits, has also led to significant profit increases across the commercial banking sector in the last financial year.
“This positive financial performance enabled the Group to create value for all its stakeholders, contributing to the socio-economic development of Namibia and Botswana. The Group increased its value created by N$728 million to N$4.4 billion compared to the previous financial year,” Prinsloo said.
He added that 26.4% of the value created is represented by staff remuneration and benefits, 18.3% was paid to suppliers, and 22.6%, which amounts to N$1 billion, was contributed to the government in the form of direct and indirect taxes.

Meanwhile, the Group’s Chief Financial Officer, Johan Maass, argued that the increased injection into the economies of the countries Capricorn Group operates can be attributed to the satisfactory growth of the banking subsidiaries as the banking sector continued its recovery post-Covid-19, an improvement in net-interest income largely due to the endowment effect of higher interest rates, and a growing loan book.
“We have also experienced lower credit impairment charges on the back of an improving operating environment and prudent and proactive credit risk management,” Maass said
“We expect further economic recovery and improved operating conditions in our region in the medium to long term. Namibia and Botswana have exciting prospects, some linked to natural resources and others to developing industries, including agriculture, logistics, manufacturing and tourism,” he said.
According to the Group’s reportfor the year ended 30 June 2023, its net interest income before impairments increased by 16.3% to N$2.72 billion from the N$2.38 billion last year which was mainly because of Bank Windhoek’s net-interest income (a 17.8% increase). This was a result of the repo rate, which totalled 300 basis points over the financial year.
Bank Windhoek’s cost of funding only increased by 208 basis points over the financial year.
“Bank Gaborone’s net interest income increased by 12.0% off the back of loan book growth of 10.4%, while their net interest margin improved from 2.91% to 3.81% following an effective asset repricing strategy and effective cost of funding management in a volatile market,” the Group reported.
In comparison, the Group’s non-interest income increased by 13.1% to N$1.89 billion (2021: N$1.67 billion), mainly driven by transaction-based fee income increasing by N$197.8 million (18.2%) mainly as a result of higher transactional volumes, particularly through electronic channels.
“Non-interest income was significantly bolstered by diversified income streams, including asset management fee income of N$187.3 million (2022: N$164.6 million) and net insurance premium income of N$179.1 million (2022: N$161.3 million).”
Meanwhile the group has disbursed $95.5 million in SME Economic Recovery Loans since the relaunch of the Scheme at the end of February 2023.
“The SME Economic Recovery Loan Scheme is aimed at stimulating economic growth and job creation by providing additional funding to SME businesses and is a partnership initiative between the Government of Namibia and several local banking institutions, including Bank Windhoek and the Bank of Namibia”.
Gross loans and advances increased by 5.2% to N$47.2 billion this year.
This growth, the Group observed, can be attributed to growth in term loans, residential mortgages and article finance.

Staff Writer

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