Headline earnings per share were up 15 per cent to 1, 752 cents, and headline earnings also increased 27 per cent to two billion rand.
“This year has seen deterioration in the quality of our loan book as reflected in the performance ratios. Our loan impairment expense (bad debts plus provisions less recoveries) increased from 2.7 billion rand last year to 4 billion rand this year,” Capitec said in a statement.
“The net loan impairment expense to loan revenue increased from 33 per cent in 2013 to 40 per cent this year. The net loan impairment expense to average gross loans and advances increased from 10.8 per cent in 2013 to 12.4 per cent this year.”
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[DATA CPI:Capitec Bank] is a relatively young commercial bank based in South Africa, with 629 branches and 5.3 million active clients.
Loan revenue increased to 9.8 million rand from 7.9 million rand in the previous comparative year, but loans in arrears however increased to 2.1 million rand in 2014 from 1.7 million rand.
The number of loans sold decreased 19 per cent to 3 billion and the average loan size is now smaller at 6,003 rand from 6,756 rand in 2013. The average term for loans sold was 37 months against 48 months previously.
Income from banking operations increased to 10 million rand from 7.9 million rand in the previous comparative period.
“An increase in arrears and loan impairment expense was foreseen at the launch of our fixed term credit product in May 2012 and the pricing of the product took this into consideration,” Capitec explained.
“Loans written in 2012 are however performing worse than expected but on average are still within our original risk appetite.”
Active clients increased to 5.3 million from 4.6 million in 2013, and branches took a similar path, increasing to 629 in 2014 from 560 in 2013
The return on equity however remained at the 23 per cent reported at August 2013, lower than the 27 per cent reported for 2013. This was due to the rights issue dilution and weaker credit performance.
The total annual dividend increased by 16 per cent from 574 cents per share to 663 cents per share.
“In the year ahead the retail credit market will remain tough. We will continue to create value while limiting risk,” said Capitec.