Capitec update fails to impress

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Capitec update fails to impress

Published Date: 2017-09-07 | Source: Stephen Gunnion | Author: Stephen Gunnion | Comments

Capitec update fails to impress

Capitec's earnings growth slows, sending shares in the low-cost bank as much as 4% lower yesterday.

In a voluntary trading statement ahead of the release of half-year results later this month, Capitec said earnings per share and headline earnings per share for the six months to end August were likely to be 15% to 18% higher than a year ago. While that may seem impressive, it compares with growth of 19% for the first half of its 2017 financial year and well over 20% in the years preceding that.

Capitec is the highest rated South African bank, with a price-to-earnings ratio of 27. That compares with Barclays Africa's P/E multiple of 8, Nedbank's P/E of 9 and P/E of 11 for Standard Bank and 13 for FirstRand.

Analysts said earnings growth of 15%-18% wasn't enough to support Capitec's rating and there could be more downside to its share price. Ashburton's Wayne McCurrie tweeted that this is the first time since the bank's listing that growth will come in lower than expectations. "Not good," he said.

After falling as much as 4%, Capitec's shares closed 2.7% down at R873.75, paring this year's gains to 26%.



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