CAPITEC BANK HOLDINGS LIMITED - Trading Statement

Evidence from the filing

• The group forecasts a significant increase of 20% to 25% in both headline earnings per share and earnings per share for the year ending 28 February 2026, indicating strong financial performance and shareholder value creation.

  “group headline earnings per share will be between 14 294 cents and 14 890 cents per share, representing an increase of between 20% and 25% compared to the 11 912 cents per share for the comparative year ended 28 February 2025.”

• Capitec continues to demonstrate robust operational momentum through sustained growth in its client base, increased transaction volumes, and successful adoption of value-added services like Capitec Connect, despite fee structure adjustments.

  “The bank delivered continued growth in its client base and an increase in transaction volumes. This strong operational momentum partially offset the effect of the new reduced fee structure, resulting in net transaction and commission income growing in line with expectations. Income from value-added services and Capitec Connect continued to grow, supported by sustained growth in client adoption of these offerings.”

• An improved macroeconomic environment, coupled with the introduction of new credit offerings and expansion in the credit card client base, has led to increased lending activity and income in both Personal and Business banking segments.

  “An improvement in the macroeconomic environment contributed to increased lending activity in Personal and Business banking. The introduction of new credit offerings, including purpose loans and loans designed for clients with multiple sources of income, together with continued growth in the credit card client base, led to an increase in loan disbursements and lending income in Personal banking.”

• Strategic decisions implemented during the 2026 financial year, aimed at strengthening the group's long-term value proposition and positioning for sustainable growth, are yielding positive results as evidenced by diversified income streams from increased insurance products and business banking expansion.

  “The 2026 financial year was characterised by strategic decisions aimed at strengthening the group's long-term value proposition and positioning the business for sustainable growth. As loan disbursements grew, the income generated from associated credit life insurance products increased accordingly. In addition, there was an increase in the number of active funeral and life cover policies taken up, which contributed to higher sums assured and an increase in net insurance income. This momentum reflects greater client engagement with the group's insurance offerings.”

• The market's high valuation (Forward P/E of 26.5x) is priced for perfection, implying little margin for error, particularly if the 20-25% EPS growth forecast for the year ending 28 February 2026 comes in at the lower end or misses expectations, risking a significant de-rating.

  “group headline earnings per share will be between 14 294 cents and 14 890 cents per share, representing an increase of between 20% and 25% compared to the 11 912 cents per share for the comparative year ended 28 February 2025.”

• The strategic decision to implement a simplified fee structure with "reductions in transaction fees and lower prices for merchant POS devices" directly impacts revenue per transaction, with increased operational momentum only "partially offset[ting]" this effect, indicating inherent margin pressure even with client growth.

  “In March 2025, Personal and Business banking implemented a simplified fee structure, which included reductions in transaction fees and lower prices for merchant POS devices. The bank delivered continued growth in its client base and an increase in transaction volumes. This strong operational momentum partially offset the effect of the new reduced fee structure, resulting in net transaction and commission income growing in line with expectations.”

• The explicitly stated fact that the financial information for this trading statement "has not been reviewed or reported on by Capitec's auditors" introduces significant uncertainty and reduces the reliability and credibility of the 20-25% growth forecast for institutional investors.

  “The financial information on which this trading statement is based has not been reviewed or reported on by Capitec's auditors.”

• The dependence of "increased lending activity" on "an improvement in the macroeconomic environment" exposes the group to heightened sensitivity to external, uncontrollable factors, making future performance vulnerable to any potential deterioration in the broader economic climate.

  “An improvement in the macroeconomic environment contributed to increased lending activity in Personal and Business banking.”

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