South African lender Capitec Bank reported a 16% rise in full-year profit on Tuesday, helped by a strong performance during the second half as its net transaction and commission income grew by 30%.

The group's headline earnings per share -- the main profit measure in South Africa -- rose to 9,171 cents in the year ended on Feb. 29, from a restated 7,938 cents a year earlier.

Capitec said transaction and commission income, including value added services (VAS), increased to 13.9 billion rand ($724 million), driven by growth in clients transacting digitally and client adoption of its VAS and new payment channels.

The company said credit impairment charges rose by 38% to 8.7 billion rand, which increased its credit loss ratio -- a measure of bad loans as a percentage of total loans -- to 87 basis points (bps) from 70 bps.

Capitec said it began relaxing its credit-granting criteria in late 2021 as certain clients began showing signs of recovery after the COVID-19 pandemic, but as the Russia-Ukraine conflict pushed inflation and interest rates higher, the lender started tightening again in June 2022.

"By the end of February 2023, there had been an increase in clients going into debt review and rolling into arrears and default," Capitec said.

Insurance profit after tax increased by 12% to 3.1 billion rand, while profit after tax in its business banking unit increased by 23% to 478 million rand. ($1 = 19.1871 rand) (Reporting by Nqobile Dludla; Editing by Tom Hogue and Savio D'Souza)