CAPITEC Bank is considering a R1 billion broad-based black economic empowerment (B-BBEE) deal for its employees as it issued a trading update forecasting higher annual profit.
Shares in Capitec, which is the second largest bank in South Africa by both number of customers, at roughly almost 16.8 million, and by value, with a market cap of R228.41bn, on Wednesday closed 2.62 percent higher at R1 974.89 on the announcement.
“Capitec is considering a specific issue of ordinary Capitec shares to the value of R1bn to employees with the aim of improving its B-BBEE ownership status,” it said on Wednesday.
The Employee Empowerment Scheme would enable all permanent employees who had worked for the group for at least three years to become direct shareholders of the group. In terms of the proposed employee empowerment scheme, employees would be offered the opportunity to subscribe for Capitec shares at a discount.
Capitec said it would finance the difference between the issue price and the discount of the subscription for the Capitec shares, secured by such shares.
A five-year trade restriction would be imposed to ensure that Capitec retained its B-BBEE ownership status for an appropriate period.
The company said that further details of the proposed deal would be announced in the next two months and a circular would be distributed to shareholders, requesting their approval in accordance with the JSE Listings Requirements.
Capitec’s board also flagged that for the financial year ending February, 28, 2022, it expected headline earnings per share (heps) would be more than 6 940 cents, a hike of roughly 75 percent compared to the 3 966 cents per share reported in the previous period ended February, 28, 2021.
It said the trading statement was premised on the results of the first three quarters of this financial year ending February, 28, 2022.
“The country is experiencing a fourth wave of the Covid-19 pandemic and the economic environment is challenging. More specific guidance will be provided when there is reasonable certainty of the range of the increase in heps and earnings per share (eps),” Capitec said.
The eps would be more than 6 930 cents, an increase of at least 80 percent compared to the 3 850 cents per share reported in the previous comparable period.
It said its earnings would be up 20 percent to more than R5.5bn, compared to R4.59bn in the comparable period.
Capitec said the current reporting period had been knocked by the Covid-19 pandemic and lockdown restrictions.
Expected heps reflected the lockdown’s negative impact on the economy and declined by 27 percent and 29 percent respectively, compared to the year ended February, 29, 2020. Capitec added that an increase of 75 percent in heps for the current year represented compound annual growth of 14.9 percent from the year ended February, 28, 2019.
An increase of 80 percent in eps for the current year represented compound annual growth of 14.9 percent from the previous year.
As the group indicated on April 13, its shareholding in the insurance cell structures, previously held by Capitec Bank had been transferred to a wholly-owned subsidiary of Capitec in March, but this did not effect its heps or eps, it said.
In the six months to August 31, Capitec had lifted headline earnings a share 513 percent to 3 447 cents and shareholders will undoubtedly also cheer the R12 per share dividend declaration.
BUSINESS REPORT ONLINE