Capricorn Group profit dips to N$1.87b amid economic pressures

Capricorn Group reported a profit after tax of N$1.87 billion for the financial year ended 30 June 2026, down 6.4% from the previous year.

This is as the financial services group faced higher funding costs, economic challenges in Botswana, and increased credit impairments.

Despite the decline in earnings, the group said its diversified business model, stronger balance sheet and growing income streams helped it remain resilient in a challenging operating environment.

The group’s total assets rose 3.9% to N$75.3 billion, while deposits grew 6.3% to N$56.2 billion.

Its capital position also improved, with the total risk-based capital adequacy ratio rising to 19.4% from 18.1% in 2025, remaining above the regulatory minimum of 12.5%.

Capricorn Group CEO David Nuyoma said the results demonstrated the strength of the group’s financial foundation and its ability to navigate difficult market conditions.

“Our 2026 performance demonstrates the resilience of our diversified business model, the quality of our people and the strength of our financial foundation. In a challenging operating environment, we strengthened our balance sheet, invested in future capabilities and continued to create meaningful value for our stakeholders,” Nuyoma said.

The group’s basic earnings per share fell 6.4% to 343.7 cents, while return on equity fell to 15.6% from 18.2% in the previous year.

However, Capricorn highlighted that its long-term performance remained strong, recording a compound annual growth rate of 13.7% in profit after tax over the past five years.

The group’s diversification strategy continued to support its performance, with non-interest income increasing by 8.3% to N$2.62 billion.

Non-interest income contributed 47.7% of operating income, exceeding the group’s target of 45%. Capricorn said this growth was supported by transactional income, trading revenue and asset-management fees, reducing reliance on interest-rate-driven earnings.

Net interest income, which remains a major contributor to earnings, declined by 1.9% to N$3.33 billion due to changes in the interest-rate environment.

“The continued growth in diversified income streams provided stability through the economic cycle and demonstrated progress in the group’s diversification strategy,” Capricorn said.

The group’s operating expenses increased by 7.6% to N$3.27 billion as it continued investing in technology, digital transformation, skills development and improving customer experience.

The cost-to-income ratio increased to 52% from 49.5% in the previous year, partly due to lower interest rates and continued investment in future growth.

Credit quality remained one of the biggest challenges during the year, with credit impairment charges rising to N$457 million from N$315 million.

Capricorn said the increase was mainly linked to weaker economic conditions in Botswana and financial pressure experienced by a limited number of large clients.

Gross loans and advances decreased to N$51.5 billion from N$52.5 billion.

The group attributed the decline to lower loan demand in Botswana and reduced lending at Entrepo after discontinuing the automated payroll deduction management system.

Despite these challenges, Capricorn maintained that its disciplined lending approach would allow it to support customers and pursue growth opportunities when market conditions improve.

The group’s liquidity position strengthened during the year, with liquid assets increasing by 18.9% to N$22.1 billion.

The loan-to-funding ratio improved from 88.8% to 83.6%, providing the group with additional flexibility to manage economic uncertainty.

Capricorn also continued creating value for its stakeholders, generating N$5.8 billion during the financial year.

Of this amount, N$1.4 billion went towards employee costs, N$1.3 billion was paid to suppliers, and N$1.3 billion was contributed through direct and indirect taxes.

Shareholders received N$857 million, while N$29.7 million was invested in communities.

A further N$868 million was retained to support future growth.

The group said 86% of its operating expenses were spent locally, supporting economic activity in the markets where it operates.

Capricorn said Namibia’s emerging oil and gas sector, renewable energy developments and other growth industries could provide new opportunities.

The group said it remains focused on supporting customers and communities while using its strong capital position and diversified portfolio to respond to changing economic conditions.

The board declared a final ordinary dividend of 77 cents per share.

Together with the interim dividend of 58 cents per share, shareholders will receive a total ordinary dividend of 135 cents per share for the 2026 financial year, unchanged from 2025.

The last day to trade cum dividend is 2 October 2026, with payment scheduled for 22 October 2026.

-pmukokobi@nepc.com.na

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