LAZARUS AMUKESHE and NGHIINOMENWA ERASTUSIN 2013, when Bank Windhoek listed on the Namibia Stock Exchange (NSX), the share price was N$10,09. On Friday, it was back in the same region, standing at N$10,12.
This is despite reaching an N$18,11 per share price mark sometime in 2017.
Now part of the Capricorn Group, Bank Windhoek still remains the company’s biggest contributor to revenue and profit – bringing in 73% of operating income, and 69% of group profits.
Covid-19 has, however, not been good news for the banking industry – neither in Namibia nor in Botswana where Capricorn has a footprint.
The central banks in the two countries have starved commercial banks by cutting the repo rate in an attempt to save the rest of the economy.
In Namibia, rates were cut by 275 basis points, while Botswana shaved off 100 basis points. Both countries now sit with a repo rate of 3,75%.
The Capricorn Group now blames these repo cuts for lower profits.
For the six months ending 31 December 2020, the company recorded a profit of N$428 million from a N$557 million in 2019 – a N$129-million drop.
Other than the repo rate cuts, Thinus Prinsloo, the group’s chief executive officer, said increased impairment provisions also sank profitability.
Reviewed financials released last week show an impairment charge of N$155 million eating into the net interest income, sinking it from just above N$1 billion to N$856 million.
More defaults and low interest are still expected in 2021, at least during the group’s financial period, which could result in less profits for the company.
The group is diversified though, which means while impairments and repo rate cuts lowered profits, the group’s microlending business boomed.
Entrepo Holdings (Pty) Ltd, the subsidiary which operates in the microlending space, saw a 26,9% increase in net interest income.
This and property-development units, the unit-trust management and asset-management businesses, which returned to profit of N$4,1 million after reporting a loss of N$15 million last year, managed to keep the group in check – all recording positive growth.
Financial services since the dawning of the pandemic complained heavily of high banking fees, but Capricorn walked away with an inflow of just above N$700 million – about 70% of net interest income.
Non-interest income last year was at N$684 million.
In the results commentary, the group attributed this increase to an increase in income from electronic channels and asset-management fees.
The gain was, however, short-lived, because the gain in income from electronic channels and asset-management fees were offset by a decline of 22,7% in trading revenue.
The bottom of it all is a lower comprehensive income of N$351 million from an all high N$541 million – a N$190 million difference.
Despite the lower profits, the group recorded assets growth during the six months, now boasting a balance sheet of N$56 billion – largely hanging on a N$40,7 billion loan book.
On the reverse, deposits of N$40,8 billion fund the assets and N$5,4 billion are sitting in distributable reserves.
During the six months, the group also raised N$317 million from a bond listed on the NSX and the Johannesburg Stock Exchange (JSE).
Reviewed financials show the group’s asset quality deteriorated heavily, approaching the stipulated benchmark of 6% in abnormal times, with the group citing the challenging economic environment, exacerbated by the Covid-19 pandemic.
As a result, non-performing loans (NPLs), have shot up by 12,7% to N$2,2 billion during the six-month period, the ratio relative to the loan book increasing from 4,7% to 5,2%.
In response, an increase in provision for expected credit losses emanating from NPL to a coverage ratio of 53,2% from December 2019’s 44,8% was seen.
The adequacy ratio indicates the group’s ability to absorb reasonable losses while navigating the perfect storm brought about by the pandemic’s economic shocks.
Going forward, the group expects the increase in customer defaults to continue, impairment charges to remain high and interest rates remaining at the current all-time lows.
It added the negative financial impact is expected to be offset by growth in non-interest income “largely from our non-banking subsidiaries and associates, which were not as negatively impacted by the pandemic”.
LAZARUS AMUKESHE and NGHIINOMENWA ERASTUSIN 2013, when Bank Windhoek listed on the Namibia Stock Exchange (NSX), the share price was N$10,09. On Friday, it was back in the same region, standing at N$10,12.
This is despite reaching an N$18,11 per share price mark sometime in 2017.
Now part of the Capricorn Group, Bank Windhoek still remains the company’s biggest contributor to revenue and profit – bringing in 73% of operating income, and 69% of group profits.
Covid-19 has, however, not been good news for the banking industry – neither in Namibia nor in Botswana where Capricorn has a footprint.
The central banks in the two countries have starved commercial banks by cutting the repo rate in an attempt to save the rest of the economy.
In Namibia, rates were cut by 275 basis points, while Botswana shaved off 100 basis points. Both countries now sit with a repo rate of 3,75%.
The Capricorn Group now blames these repo cuts for lower profits.
For the six months ending 31 December 2020, the company recorded a profit of N$428 million from a N$557 million in 2019 – a N$129-million drop.
Other than the repo rate cuts, Thinus Prinsloo, the group’s chief executive officer, said increased impairment provisions also sank profitability.
Reviewed financials released last week show an impairment charge of N$155 million eating into the net interest income, sinking it from just above N$1 billion to N$856 million.
More defaults and low interest are still expected in 2021, at least during the group’s financial period, which could result in less profits for the company.
The group is diversified though, which means while impairments and repo rate cuts lowered profits, the group’s microlending business boomed.
Entrepo Holdings (Pty) Ltd, the subsidiary which operates in the microlending space, saw a 26,9% increase in net interest income.
This and property-development units, the unit-trust management and asset-management businesses, which returned to profit of N$4,1 million after reporting a loss of N$15 million last year, managed to keep the group in check – all recording positive growth.
Financial services since the dawning of the pandemic complained heavily of high banking fees, but Capricorn walked away with an inflow of just above N$700 million – about 70% of net interest income.
Non-interest income last year was at N$684 million.
In the results commentary, the group attributed this increase to an increase in income from electronic channels and asset-management fees.
The gain was, however, short-lived, because the gain in income from electronic channels and asset-management fees were offset by a decline of 22,7% in trading revenue.
The bottom of it all is a lower comprehensive income of N$351 million from an all high N$541 million – a N$190 million difference.
Despite the lower profits, the group recorded assets growth during the six months, now boasting a balance sheet of N$56 billion – largely hanging on a N$40,7 billion loan book.
On the reverse, deposits of N$40,8 billion fund the assets and N$5,4 billion are sitting in distributable reserves.
During the six months, the group also raised N$317 million from a bond listed on the NSX and the Johannesburg Stock Exchange (JSE).
Reviewed financials show the group’s asset quality deteriorated heavily, approaching the stipulated benchmark of 6% in abnormal times, with the group citing the challenging economic environment, exacerbated by the Covid-19 pandemic.
As a result, non-performing loans (NPLs), have shot up by 12,7% to N$2,2 billion during the six-month period, the ratio relative to the loan book increasing from 4,7% to 5,2%.
In response, an increase in provision for expected credit losses emanating from NPL to a coverage ratio of 53,2% from December 2019’s 44,8% was seen.
The adequacy ratio indicates the group’s ability to absorb reasonable losses while navigating the perfect storm brought about by the pandemic’s economic shocks.
Going forward, the group expects the increase in customer defaults to continue, impairment charges to remain high and interest rates remaining at the current all-time lows.
It added the negative financial impact is expected to be offset by growth in non-interest income “largely from our non-banking subsidiaries and associates, which were not as negatively impacted by the pandemic”.
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