Capitec: ‘Our consumers are under increasing financial pressure’
Capitec consumers are experiencing significant financial strain, which has a negative impact on the banker’s business.
According to a recent statement by Capitec, consumers are experiencing significant financial strain, which has a negative impact on the banker’s business.
In a brief statement regarding the projected numbers. The group stated that consumers had been under pressure over the previous six months. That had an impact on retail bank loans and advances and led to a greater credit impairment charge and credit loss ratio.
WHY ARE CAPITEC CONSUMERS UNDER FINANCIAL STRAIN?
Comparing Capitec to the other big four banks, which also have sizable corporate client portfolios, Capitec has a majority of retail clients.
“The economic climate in South Africa was characterised by an inflation rate in excess of the government’s target and increases in interest rates until June 2023,” which had hurt the financial position of consumers, the bank said.
To address the risk in the loan book caused by the unfavorable economic conditions. The bank’s credit-granting standards were tightened further during the six-month period.
The board of Capitec stated that as of 31 August 2023, the provisions for anticipated credit losses were “conservative”. In addition, they noted that recent figures on GDP and inflation indicated progress.
On 1 March, 2023, the group began using the IFRS 17 Insurance contracts standard. Insurance Contracts under IFRS 4 were replaced by IFRS 17 for year periods starting on or after 1 January 2023.
The restatement of the group results and headline earnings per share for the six-month period was necessary due to the implementation of IFRS 17.
WHEN ARE THE HALF-YEAR FINANCIAL RESULTS GOING TO BE RELEASED?
On 28 September 2023, the half-year financial results are anticipated to be released.