Capricorn Group yesterday delivered a solid, and perhaps hard-earned, set of interim results, posting profit after tax of N$920 million for the six months ended 31 December 2025, as Namibia’s flagship financial services group navigates a tightening margin environment and rising credit impairments.
The result reflects resilient performance in a period marked by interest rate cuts, higher non-performing loans, and rising operating costs. Return on average equity came in at 15%, underlining Capricorn management’s focus on preserving shareholder returns despite mounting headwinds.
The N$920 million interim profit marks a moderate increase from the corresponding period in December 2024, when profit after tax stood at approximately N$882 million, translating into growth of just over 4%.
“Our disciplined execution and commitment to long-term strategic investments allowed us to maintain strong operational momentum despite the challenges posed by the current interestratecutting cycle,” said David Nuyoma, Group CEO.
“We remain focused on strengthening our diversified business model and supporting our clients.”
Over the past five years, Capricorn has largely maintained an upward profit trajectory, though the pace has fluctuated with economic cycles. In 2024, Capricorn’s profit growth moderated as funding costs rose and impairments began edging higher, while in 2023, continued expansion was driven by balance sheet growth and improving asset quality. In 2022, the group posted stronger profitability as interest rates began climbing, boosting net interest margins, and 2021 was a recovery phase following pandemic disruptions, with earnings rebounding as credit conditions stabilised.
While the Group has avoided any sharp earnings reversals in the past half-decade, the latest numbers show a clear shift, that profitability is no longer being driven by widening margins, but by diversification and cost discipline.
Margin pressure
Capricorn’s net interest income grew a modest 2.1% to N$1.69 billion, supported by 2.6% year-on-year growth in gross loans and advances.
In a rate-cutting cycle, that expansion is notable but not explosive.
The stronger story lies in non-interest income, which climbed 3.6% to N$1.34 billion. A 29.6% surge in net trading income and a 35% rise in asset management fees, with assets under management reaching N$63 billion, helped push non-interest income to 48.8% of total income, up from 46.8% a year earlier.
That shift for the group is strategic as nearly half of its income now comes from sources less exposed to interest rate cycles.
This is a critical buffer as the easing phase compresses lending margins.
However, beneath the top-line resilience lies growing credit stress. Credit impairment charges jumped to N$286 million from N$187 million in December 2024, signalling a steep 53% increase. Non-performing loans rose 9%, pushing the NPL ratio up to 4.9% from 4.6%. The deterioration reflects pressure in both Namibia and Botswana, where household and business borrowers continue to adjust to previous rate hikes and uneven economic conditions.
Capricorn’s management insists provisioning remains prudent and forward-looking. Still, if impairments continue rising into the second half of the financial year, they could weigh more heavily on full-year earnings.
Meanwhile, operating expenses rose 11.2% to N$1.66 billion, outpacing income growth. Staff costs increased 5.3%, while technology-related expenditure surged 20.8% as the group doubled down on digital capabilities.
The spending reflects a longer-term bet that modernisation now will protect competitiveness later. But in the short-term, it compresses operating leverage and narrows the room for profit acceleration.
Despite these pressures, Capricorn’s balance sheet remains robust. Liquid assets increased to N$18.9 billion, and the total risk-based capital adequacy ratio stands at a comfortable 18.3%, well above regulatory thresholds.
However, the board trimmed the interim dividend to 58 cents per share, down 4.9% from 61 cents previously. The reduction signals a cautionary approach and a desire to preserve capital flexibility amid uncertain credit conditions.
As part of their outlook, the group points to improving macroeconomic signals.
Namibia’s GDP is projected to grow by 3.8% in 2026, while Botswana is expected to expand by around 3.1%, supported by stabilising diamond demand and structural reforms. If growth materialises and inflation remains contained, Capricorn could see relief on the credit front and renewed lending momentum.
“These macroeconomic trends provide a more favourable environment for our markets and support our expectations for improved performance in the year ahead,” Nuyoma added.
For now, the message is clear: profit is still growing, but the era of easy margin-driven expansion is over. The N$920 million interim result demonstrates resilience, not exuberance. As rate cycles turn and impairments climb, Capricorn’s next chapter could depend less on interest spreads and more on diversification, digital execution and disciplined risk management.