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Yesterday banking group Capitec posting interim results towards the upper end of its recent trading update with headline earnings per share rising 19% to 1,517c per share. The bank’s active client numbers rose to 7.9 million in the first half (6.7-million a year earlier) as the group expands its local geographical footprint with 31 new branches.
Local economic concerns with a constrained consumer will put the consumer's ability to qualify for credit under pressure and the group has seen an increase of arrears as a percentage of gross loans and advances rise to 6%, from 4.7% a year earlier. The group announced an interim dividend of 450c per share, which is 20% bigger than last year’s interim dividend.
This morning we highlight a bearish flag pattern in a downtrend on Capitec, the pattern looks like an inverted flag on a pole and the flag is a small rectangle pattern that slopes against the previous trend. The height of the flagpole may be subtracted from the breakout area at the end of the flag to determine the expected price target (55200c). Wait for a break and day close below 60000c. Short term stochastic oscillator has reversed, overbought and giving a bearish signal.
The price closing above the top parallel line of the flag would consider the formation to have failed.