Reflecting on the 2019 financial year

Our previous chairman, Koos Brandt, said a bank should be there for customers in the good and bad times. Building on this philosophy, we have supported our customers in the past financial year during sometimes very difficult circumstances, and we can now see the positive impact it had. We anticipate the tough conditions to persist, amplified by economic challenges and the widespread impact of the drought, resulting in consumers, including our customers, remaining under pressure and in need of innovative solutions that will address their unique challenges. This calls for finding ways to mitigate risk for all.

Despite challenging conditions, the group saw solid performance from Bank Windhoek and Bank Gaborone, an encouraging albeit slow turnaround at Cavmont Bank and a stellar performance from newly acquired Entrepo. Capricorn Asset Management (CAM) continued growing market share and returned good results notwithstanding lower rates of fee income. As a result, group operating profit increased by 13.5% compared to the previous year.

This can be ascribed to a few specific value drivers:

  • Significant progress has been made with the implementation of the Agile methodology in technology change since the beginning of the 2019 financial year. We can now build a solution for one bank and roll it out quickly to others. We are creating a culture of experimentation, quick decisions and fewer rollover projects.
  • Our ability to detect increased credit risk early and our efforts to proactively engage with customers showing signs of financial distress helped us to manage non-performing loans (NPLs) – a pervasive and growing challenge across the region. By preventing loans from defaulting, we can improve the chances of recovery. Where accounts became non-performing despite our preventative measures, good collateral security ensured that we could contain impairment provisions.
  • Our leadership teams have managed their respective businesses well. Key appointments were made: a new chief information officer (CIO) joined the group executive leadership team, a new managing director was appointed for Cavmont Bank, and several other skilled and experienced employees joined the group.

“Despite challenging conditions, the group saw solid performance from Bank Windhoek and Bank Gaborone, an encouraging albeit slow turnaround at Cavmont Bank and a stellar performance from newly acquired Entrepo.”

2019 performance summary

Bank Windhoek

Bank Windhoek, our largest contributor to group profit after tax, returned a very solid performance with an increase of 1% to N$797.7 million (2018: N$796.8 million). As the largest lender in Namibia with a 32.4% market share, Bank Windhoek is exposed to local industry and economic conditions, but delivered better interest margins, improved liquidity and better cost management. Operating profit (excluding exceptional items of 2018) improved by 10.6% to N$1,124.5 million (2018: N$1,017.0 million).

Through the acquisitions of new transactional accounts, especially in our corporate and Private Wealth segments, new solar plants, renewable energy initiatives and companies with resilient business models, Bank Windhoek achieved moderate growth despite the challenging economic environment.

Bank Windhoek competes by providing outstanding client service at affordable levels, and by empowering branch managers to use their local knowledge and client relationships to enhance the client experience. Through our easy-to-use, convenient and highly reliable digital channels, clients are provided with 24/7/365 transactional banking services.

Capricorn Private Wealth performed exceptionally well over the past year. The success of Capricorn Private Wealth, albeit growing off a small base, can be attributed to an offering that is flexible, personalised and offers the highest service levels.

Given the prolonged drought in Namibia, the agricultural sector remains under immense pressure. Bank Windhoek has joined efforts with clients and the agricultural sector to provide much-needed support. The bank contributed N$500,000 to the Dare to Care Fund in support of farmers and has also proactively established a focus group to assist and manage the bank’s clients operating in this sector.

Our platform approach

Capricorn Group identified eight platforms to implement strategic choices through operational excellence:

  1. Digital platform
  2. Core banking platform
  3. Process automation platform
  4. Information and analytics platform
  5. Legal compliance and risk platform
  6. Human resources platform
  7. Finance platform
  8. Infrastructure platform

The platform approach delivered the following benefits:

  • Increased execution traction due to better focus on realistic outputs within properly planned timeframes
  • Higher levels of alignment between business and platforms with improved communication
  • Changed behaviours: higher energy levels, higher engagement levels
  • Increased transparency about execution progress
  • Satisfactory levels of adoption of the Agile methodology

Concerns that are being addressed in terms of this approach relate to capacity, measuring the impact and retaining momentum.

The platforms further contribute by improving the quality, predictability and visibility of project delivery, by increasing product capabilities and enabling us to discover business opportunities.

Following the revision of the customer value proposition in Bank Windhoek’s target segments and in response to the voice of the customer, a number of features, enhancements and new products have been introduced. Additional features on the Women in Business offering, the introduction of the HeyJude App, credit SMS notifications, an integrated point-of-sale solution and free life and legal cover on most personal transactional accounts are a few of the notable offerings introduced.

The HeyJude App was successfully launched to market in May 2019. This is a first-of-its-kind offering in the Namibian banking environment where a unique, value-added digital service is being coupled with our banking offering to try to cement our brand promise of “Connectors of Positive Change”. The app is a digital personal assistant that sources products and services, negotiates discounts and arranges payment and delivery on the customer’s behalf.

“Bank Windhoek shares the responsibility to protect our country for future generations by actively contributing to and facilitating the transition to a low-carbon and climate-resilient economy.” – Baronice Hans, Bank Windhoek’s managing director

Bank Gaborone

Bank Gaborone delivered good results, with 15.7% growth in revenue (2018: 6.7%) and a 11.4% improvement in operating profit (2018: 17.3%). This follows significant growth in customer sales, partly owing to the launch of a new unsecured lending product. The new product requires customers to deposit their salaries into a Bank Gaborone transactional account.

We also launched bulk payment services, which enabled us to start offering payroll services and capturing more employee accounts.

Several enhancements to digital banking functionality and network stability increased Bank Gaborone’s online uptake. This is driving transactional income growth and included:

  • the launch of point-of-sale (POS) devices
  • the fast-branch-of-the-future concept was built and launched at the new head office
  • a state-of-the-art data centre was established and is being run at the bank’s new head office
  • infrastructure, including lines, servers, switches, routers and firewalls, was upgraded
  • a complete national overhaul of the PABX system was completed
  • three new retail and five new lending products were launched
  • three new branches and six new ATMs were rolled out
  • the front and back ends of the core banking and digital channels systems and interfaces were upgraded

Our biggest challenge in Botswana remains continued downward pressure on interest margins with the central bank continuing to reduce the bank rate and cost of funding increasing. The upward pressure on cost of funding was partly due to the uncertainty and volatility of liquidity levels in the market, as investors explored other investment opportunities yielding higher returns both inside and outside Botswana. The bank also has relatively high exposure to price-sensitive treasury funding, limited retail depositor funding and is reliant on term deposits. To address this, term deposits have been repriced and our digital offering – including POS and bulk payment capabilities – has been used to grow current account deposits.

In the short term, Bank Gaborone’s focus remains on growing its loan book, containing its cost of funding, optimising liquidity and stemming the rising trend in NPLs. We further explain our mitigation efforts in the risk report.

Cavmont Bank

Notwithstanding an increasingly difficult operating environment in Zambia, Cavmont Bank significantly reduced losses during the year. The business recorded a loss after tax of N$19.8 million (2018: loss after tax of N$46.6 million).

Group support and oversight for the turnaround plan continues, with remediating actions driven by the executive management team. Focus areas in the past year were:

  • sourcing of cheaper deposits to reduce the funding gap and improve cost of funds
  • increasing interest income through investment in government securities or loans and advances depending on availability of liquidity
  • continued cost management efforts
  • increasing foreign exchange trading volumes and margins

Branch rationalisation and the streamlining of head office support functions are key initiatives to reduce an unsustainable cost base. After engagements, the Bank of Zambia approved the restructure, which includes the closure or downsizing of a number of branches and support functions.

The restructure follows a strategic shift away from predominantly retail customers to business banking, repositioning Cavmont Bank to focus particularly on SMEs – a targeted fit with our service and relationship strengths.

Products and solutions for customers have been rationalised to ensure that only profitable options are made part of the product offering. Instant cards are now being issued at the point of account opening, and improved uptime of Cavmont Bank’s ATMs made the Cavmont Bank Visa Classic debit card more attractive to customers.

Liquidity risk currently poses the greatest challenge to the bank attaining its turnaround objectives. Issues related to connectivity, payment platform functioning and network downtime are being addressed. Mitigating actions include the migration to a new data centre. This also resulted in improvements in the quality of data, which means improved performance tracking and significantly better focus on short-term business performance owing to clear key performance indicators and regular reporting.

Capricorn Asset Management

Capricorn Asset Management (CAM) launched its digital platform, Capricorn Online, in September 2018. This allows investors to manage their investment portfolios and provides access to a wide range of investment options, including the Capricorn Unit Trusts. With a 0% fee, which is unique in Namibia, the platform pricing is highly competitive.

Despite a fiercely competitive market, CAM increased its market share in unit trusts from 29% to 31%. Most of the growth originated from investment short-term interest-bearing funds. The Capricorn Investment Fund passed the N$9 billion mark while the Capricorn Corporate Fund grew to over N$5 billion. A further highlight was the significant growth in the Capricorn High Yield Fund and Enhanced Cash Fund, which grew by more than 175% and 40% to N$1.8 billion and N$1.3 billion respectively. The Capricorn Private Wealth client base grew to over 500 during the year.

Unfortunately, equity and listed property markets underperformed. This resulted in market value reductions, disinvestments and clients seeking the safer haven of cash and bonds. Consequently, the Capricorn Equity Fund decreased by 38% and the Capricorn Property Fund by 37%. This had a significant fee impact on CAM due to money shifting from higher-fee-earning funds to lower-fee-earning money and capital market funds.

During the year, CAM employees created their own impact fund to which they contribute in their personal capacity to support their nominated projects, acting as true Connectors of Positive Change.

“Capricorn Group is proud to have a team of willing, extraordinary individuals who are living The Capricorn Way behaviours and displaying the attributes of being Connectors of Positive Change. This is facilitating a shift in mindset within all Capricorn Group employees to a more future-focused, open, collaborative way of thinking about strategy.” – Thinus Prinsloo, Group CEO

Capricorn Capital

Capricorn Capital launched its brand and service offering in September 2018. The 2019 financial year was a formative period where key relationships were forged with new clients and collaborative partners. We continued to build the team that is required to implement a pipeline of transactions and opportunities successfully. Our strategy was refined to include the following initiatives:

  • The current economic climate in southern Africa resulted in numerous entities requiring restructuring or business rescue. As this trend is likely to continue, we are establishing a reputation with key banks and other lenders as an effective restructuring team.
  • We have identified large family businesses across the region with limited succession planning, where we can assist in providing corporatisation support and sell-side advisory services. With the commodity cycle expected to turn in the near to medium term, we are positioning ourselves to advise international mining houses looking to invest in or acquire local productive assets as well as assets for exploration.
  • We are assisting businesses that have limited access to liquidity in the current market to access capital by divesting their non-core assets. This includes assisting businesses in varying stages of restructuring and turnaround to raise equity.
  • We are well positioned as an advisory partner to inward investors such as offshore impact funds, development finance institutions and small to mid-size private equity with a southern Africa mandate. This includes providing transaction support, such as due diligence and valuation services.

Namib Bou

The symptoms of a severely depressed economy were visible in the drastic slowdown in property developments and sales. This included the development of houses at Ondangwa Extension 20 (Phase 3) and downward pressure on property valuations in most price categories on a national level.

As a result, we focused on more affordable designs while attempting to address the needs of home buyers better.

The valuation business improved its financial contribution following the conclusion of service level agreements, streamlined operations and the gathering of critical market information in a vulnerable time for the property sector.

Following the retirement of Johan Nienaber, who was executive director at Namib Bou for 13 years, we appointed Bernard Minnaar as managing director, effective 1 January 2019.

Associates and other subsidiaries

Santam and Sanlam

Income from associates Santam and Sanlam decreased by 18.9% (2018: 6.6% increase).

Santam maintained its leading market position with strong underwriting performance under difficult economic conditions. This resulted from diversified income streams such as bancassurance, digital solutions and a new core underwriting platform. Growth challenges included negative GDP growth that resulted in policy cancellation and clients adjusting policy scope to reduce premiums. Claims resulted mainly from the drought and large commercial property fires. Unfortunately, Santam received a N$15 million fine in July 2019 from the Namibian Competition Commission due to anti-competitive behaviour.

The key highlights for Sanlam Namibia were the exceptional performance in the entry-level market business unit and effective cost management. Challenges included the effective turnaround of the affluent business unit which has been struggling for the past few years, negative risk experience on the group business side and increased lapses due to larger new business volumes taken on in the entry-level market business.

Both Santam and Sanlam continue to focus on synergies with key stakeholders, optimised efficiencies and stringent cost management.


Entrepo operates in the Namibian lending and long-term insurance markets, with a specific focus on the government employee segment as a deduction code holder. It exceeded expectations in its first year as part of the group. At the time of making the 55.5% acquisition, we envisaged a 17% contribution to group profit after tax, with the actual contribution being 15%. Entrepo’s excellent performance is attributable to:

  • Good new business inflows resulting from a distinct competitive edge in the speed and effectiveness whereby new loans are approved and disbursed, high levels of customer satisfaction, two new branches opened in Oshakati and Katima Mulilo and a shift in emphasis towards loan consolidations and client retention
  • Increasing net interest margins at Entrepo Finance and underwriting profits at Entrepo Life
  • Low loan write-offs at Entrepo Finance
  • Low cost-to-income ratios
  • Reducing debt-to-equity ratios
  • Good investment income at Entrepo Life

Net premium income at Entrepo Life increased by 5.7% to N$103.5, with new business largely derived from the sales at Entrepo Finance. The claims experience remained within the actuarial assumptions and guidance. The capital adequacy ratio improved further and is well above the statutory requirements. Good investment income was gained from the growing shareholder and policyholder reserves, which are invested in terms of regulatory requirements.


Although Nimbus did not meet our performance expectations and did not declare any dividends, we remain committed to this 30% investment. It supports our intent to diversify through partnerships and facilitates operational growth through expanded access to infrastructure. Through Nimbus, we contribute positively to SADC development as the region benefits from higher internet speed and improved connectivity.

The Trans-Kalahari Fibre (TKF) line running between Swakopmund and Buitepos (on the Botswana border) was completed during September 2018. The TKF network extends 4,160 kilometres from the West Africa Cable System (WACS) cable landing station in Swakopmund to the EASSY cable landing station in Dar es Salaam, connecting the east and the west coast. This enables the export of bandwidth to other African countries.

Nimbus was admitted to the NSX Main Board in June 2018 and subsequently increased its interest in Paratus Namibia to 51.4%. It also concluded a rights issue, raising N$103,444,792.

Connections for Positive Change

Capricorn Group employees, business units, teams and board members all acted individually and collectively as Connectors of Positive Change. Some examples of the outcomes include:

We appointed a millennial board The NeXtGen board was established in March 2019 to promote a culture of collaboration within the group, to help leaders recognise outdated conventions and to provide input into new or existing projects. This brings a fresh perspective that speaks to the millennials and Generation Zs who make up more than 60% of the workforce and a large portion of our clients. The NeXtGen board is chaired by Bank Windhoek’s chief financial officer and comprises a group of 12 young employees, mandated to contribute to the Capricorn Group strategy.
Bank Windhoek issued Namibia’s first green bond

Bank Windhoek is the first commercial bank to issue a green bond in the southern African region. The green bond is listed on the Namibian Stock Exchange and complies with the Sustainable Stock Exchanges (SSE) Initiative, a UN Partnership Programme of the UN Conference on Trade and Development (UNCTAD) and the UN Global Compact. Bank Windhoek aims to become the green financier of choice for sustainability projects in Namibia and in other countries in which the group operates. Proceeds from the bond will be used to finance eligible green projects and assets, which include renewable energy, energy and resource efficiency, green buildings, sustainable waste management, clean transportation and sustainable water management.

Since issuing the bond, Bank Windhoek was awarded a Green Bonds Pioneer Award from Climate Bonds.

Bank Windhoek co-financed a new Debmarine vessel Bank Windhoek, in partnership with four financial institutions, financed a new diamond recovery vessel for Debmarine Namibia – one of our largest commercial transactions to date. The state-of-the-art semi-submersible multirole vessel will be the world’s largest diamond recovery vessel and will enhance Debmarine Namibia’s ability to recover diamonds off Namibia’s Atlantic coastline. The N$5.6 billion asset financing facility constitutes 80% of the vessel cost and will be financed by Bank Windhoek and four other banks.
We provided finance to alleviate housing shortages To support the Namibian government’s efforts to alleviate the shortage and backlog in housing, Bank Windhoek offered financing to potential buyers of PolyCare houses. These houses are aimed at medium- to low-income earners who are unable to afford conventional housing at current market prices and interest rates. PolyCare houses are constructed without having to use water and can be built within ten working days.
Improving well-being, health and productivity Bank Gaborone launched the Diabetes Apple Project to raise funds to help support and care for people with diabetes in Botswana. The partnership with the Diabetes Association of Botswana follows the success of
Bank Windhoek’s flagship Cancer Apple Project.
Sharing investor expertise Capricorn Group co-hosted a workshop to share investor reporting best practice with peers listed on the Namibian Stock Exchange. The workshop provided input on starting a reporting journey, integrating governance reporting and understanding what investors look for.
Cavmont Bank gives practical money advice Cavmont Bank supports and participates in the Smart Money show, a half-hour weekly magazine programme that gives viewers in Zambia an in-depth look at current money and business topics. It allows Cavmont Bank to offer practical and inspirational financial advice on topics such as renting vs buying a house, monetary policy and scams to avoid.
CAM employees making an impact Capricorn Asset Management’s staff launched the CAM Impact Fund to which they contribute weekly through fundraisers in the office and, in turn, donate the funds collected or essential goods to different social responsibility projects. The staff nominated and selected their top six social responsibility projects which they support over the calendar year, enabling them to be Connectors of Positive Change.
Caliber Capital Trust supporting Harambee objectives Caliber Capital Trust, managed by Capricorn Asset Management, has extended debt to Namibian companies that support 1,129 families. In support of the Harambee objectives, the debt financing has assisted in modernising healthcare, improving food security as well as increasing the country’s energy capacity, which in turn reduces its reliance on imported energy.


The operating environment is expected to remain challenging. Interest rate cuts in Namibia are almost certain, which will negatively impact the interest margin of Bank Windhoek. Consumers are expected to remain under pressure, with very little economic growth anticipated.

This calls for enhanced engagement with our clients on all aspects of their financial needs and finding ways to mitigate risk for all – really putting the customer at the centre of everything we do. Building on the speed of execution and adaptability that we ingrained in the business this year, we will exploit opportunities and further improve our offerings.

We are positive that the group will maintain its resilience and continue to deliver positive results. By delivering on our strategy, diversifying investment and keeping our focus on operational excellence, we will be able to continue creating value and contributing to positive change. As stated by our chairman, the recent Economic Growth Summit in Namibia was a very positive sign and hopefully the beginning of even more collaborative initiatives and discussions to address our national challenges.

Thinus Prinsloo
Group chief executive officer