Banking group Capitec has not declared a final dividend after the Reserve Bank recommended SA banks shore up their balance sheets due to the Covid-19 outbreak.
The group, whose policy is to pay 40% of headline earnings to shareholders, was due to distribute about R2.5bn to shareholders in its 2019 financial year, but has paid about R870m in an interim dividend payment.
Capitec said on Tuesday headline earnings rose 19% to R6.28bn during the year to end-February, and while its balance sheet remained healthy, the ultimate effect of the outbreak remained uncertain.
Headline earnings is a widely used profit measure in SA that strips out one-off items to give a better indication of underlying performance of a business.
Capitec would not declare a dividend for the first time in the company’s 20-year history and would also not pay cash bonuses to executives, CEO Gerrie Fourie said.
Director fees and executive salaries would also not be increased in the current financial year, he said.
The group’s clients grew 22% to 13.9-million. On average, 200,000 clients joined every month, the group said, but the Covid-19 outbreak had led to a sharp fall in new clients.
The group usually added about 7,000 to 8,000 clients a day, but due to Covid-19 this had dropped to about 800, Fourie said.
The group took a cautious approach to extending credit, while a number of clients had asked for payment breaks, he said.
If anything, giving payment breaks to businesses was the easy part, and the question now shifted to how to support businesses as they attempt to restart operations after the lockdown ends, Fourie said.
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