News24 | Capitec shares take a knock despite upbeat profit news

Capitec expects interim and headline earnings per share to increase by up to 20% in the first half of its financial year.

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Despite flagging a double-digit increase in profit, Capitec’s share price slipped by up to 6% on Thursday, and closed the day more than 4% lower.

The bank said in a trading statement that its interim and headline earnings per share would be between 18% and 20% higher for the six months to August 2026, compared with the same six months of 2025.

Higher inflation and the May interest rate increase supported growth across the group.

Capitec – SA’s biggest bank by client count, having reached more than 26 million – says the value of transactions is, on average, higher, especially card transactions.

Its business banking division “showed substantial growth in active clients as well as lending and transactional volumes.” Capitec acquired Mercantile Bank in 2019 and turned it into its business banking division.

The number of point-of-sale merchants and the use of Capitec Pay also continue to grow.

Despite conceding that consumers are under pressure, Capitec’s income from personal loans increased. The bank had to increase its provision for credit impairments in light of economic conditions, although it says book quality was maintained.

Income from business loans also increased, thanks to Capitec’s “robust scoring and intuitive credit granting”. The bank has been at the forefront of innovation in measuring the creditworthiness of informal sector businesses that do not necessarily have assets to borrow against, using artificial intelligence and algorithms to score risk based on daily earnings.

Meanwhile, lower claims and better investment income supported its credit life and funeral cover divisions.

Capitec’s interim results will be released on 30 September.

Its share closed more than 4% lower for the day, compared with the about 1% drop in the share prices of Standard Bank, Nedbank, and Absa. Only FirstRand – which released a decent set of interim results – saw its share price increase, closing just under 2% higher.

READ | FirstRand jumps on highest-ever dividend, UK exit – but R17bn provision clouds earnings

Capitec’s share is about 33% up on a one-year basis, valuing the bank at R535 billion. Its forward price-to-earnings (PE) ratio is close to 26, meaning investors are paying R26 for every R1 of expected earnings over the next 12 months – indicating they are prepared to pay a premium to own Capitec. By comparison, the forward PE ratio for Standard Bank and Nedbank is 9, FirstRand is 10, and Absa is seven.