- Capitec released its annual results on Tuesday, which showed 18% profit growth.
- Its share price rose sharply.
- The bank now has 9.9 million active clients, and is launching a new funeral policy product backed by Sanlam.
Capitec’s share price rose by 3% to R922.29 on Tuesday morning after the company released its results for the year to end-February.
Growth in headline earnings (+18% to R4.461 billion) came in slightly below expectations, and its operating expenses rose by 17% to R6.364 billion.
Still, the market was clearly reassured by the growth in Capitec loans and credit (+6% to R47.6 billion, largely due to its new credit cards), and the decline in the percentage of loans in arrears – from 6.3% to 5.7%.
Net income from transaction fees rose 31% to R5.1 billion.
Capitec has been under fire after the shortselling firm Viceroy accused it of concealing loan losses, underestimating bad debts and being an irresponsible lender.
This triggered large losses in Capitec’s share price, which is still 16% lower than before the first Viceroy report. But despite some initial uncertainty and customer withdrawals amid Viceroy's accusations, Capitec saw strong growth in client numbers in the past year. It gained 1.3 million clients.
The bank now has 9.9 million active clients – equal to almost 25% of South Africa’s adult population. The average loan size is R2,621 (for loans over six months or less) and R36,302 (for six months and longer). There are some 289,000 active Capitec credit cards, with a book value of R2 billion.
Depositors earned more than R3.4 billion in interest from Capitec in the past year.
The market is reassured by the fact that Capitec has made a provision of R5.3 billion for bad debts – while loans that are currently in arrears or that have been rescheduled total some R4 billion, says Cassie Treurnicht, portfolio manager at Gryphon Asset Management.
“From the numbers, it looks like its bad debts are under control.”
“Viceroy is asking, however, how reliable the numbers from Capitec are,” he says. “And who knows whether that is a valid concern.”
The group on Tuesday announced that the Capitec Funeral Plan, underwritten by Sanlam, will be launched in May. (Sanlam's share price gained almost a percent to R92.63.) The new funeral policy can benefit to up to 21 dependents, and may be paused if a policy holder is under financial strain. Should an unnatural death or accident occur, the life assured will be covered immediately at twice the amount.
Credit cards, which offer high margins, and funeral policies, which could get new customers in the door, may provide some support for Capitec growth in coming years, Treurnicht added. Still, he thinks Capitec, trading at 5.6 times its book value, is currently expensive.
- These are South Africa's favourite life insurance scams, ranked by how often they fail
- Heineken under fire for 'racist' ad that declares 'lighter is better'
- How much money to ask for in a salary negotiation
- The latest figures show a fivefold increase in the number of South Africans trying to scam funeral insurers
- A tattoo can cost up to R42,000. Here's how to make sure you don't regret it later.
- German billionaire to own half of Gautrain operator as Murray & Roberts receives takeover bid
- This successful SA CEO does regular dance routines with his staff. Here's how it helps his business
- In 2017 medical aids lost at least R300 million to fraud. Medical professionals who overcharged paid 0.05% of that in fines – and kept working
- There’s a new Aromat on shelves minus all that tasty MSG – but with a catch
- China's space station is about to fall from the sky — and no one is sure where it will land
- Elon Musk’s dad has had a baby with his stepdaughter, who is 42 years younger than him - report
- SA's most popular drone is way ahead of its competitors. Here are the 5 reasons why
- South African knights – in full shiny armour – are fighting it out over weekends
- SA just dodged a R167 billion bullet – here’s what it means for you
- These are some of South Africa's most brazen medical aid scams and schemes
- These online courses (from as little as R140) can land you a hot job in tech
- Le Creuset, which is owned by a South African, has apologised for angering its black fans
- The closest thing you can find to Wakanda in the real world is Wits, according to the world's biggest news agency
- We tried KFC's new 'mojito' - and one ingredient was a bit overpowering
- 34 years of hard slog, and then 2 big promotions in 6 days: what we know about new acting Sars boss Mark Kingon
- Amazon is selling fake Basotho blankets in the middle of the Black Panther craze – and they are really ugly
- Cyril Ramaphosa is backing the Afro – but a single African currency may only work if it is pegged to the rand, says an economist
- A medium at Woolworths? You’re actually a XXL at Mr Price. Why SA’s clothing sizes are crazy