Capitec’s rapid expansion continues

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Capitec’s rapid expansion continues

Published Date: 2017-09-28 | Source: Stephen Gunnion | Author: Stephen Gunnion | Comments

Capitec’s rapid expansion continues

Arrears as a percentage of loans and advances are down, but it wrote off more bad debt.

Capitec's customer numbers are rising fast - and so are the so-called "quality banking clients" that it is increasingly focusing on for stable inflows into their accounts and regular use of its product range. Capitec's active customer base now totals 9.2 million and it's grown its quality clients by 21% in the six months to end August from a year ago.

This focus has resulted in average deposit growth of R1 billion a month, reducing its reliance on the market for funding. It says the increase in fixed retail deposits helped reduce wholesale funding requirements to R7 billion from R8.4 billion last year. It's not turning its back on wholesale funding though and says a R500 million bond issue in May was 4.2 times oversubscribed.

The bank increased net lending and investment income by 10%, despite applying a stricter credit-granting strategy. Arrears and rescheduled loans fell 14%, while the net loan impairment expense increased by 8%. Arrears as a percentage of gross loans and advances decreased from 6% to 5.4%. However, the bank wrote off R3.4 billion in bad loans, 42% more than the same period last year. It says this was as a result of the increased number of clients under debt review and the change in rescheduling policy provided for in the previous financial year which materialised in the current period. Net transaction fee income rose by 29% and operating expenses increased 20% as it spent on new growth initiatives.

That all left headline earnings per share 17% higher at 1 769c. It's declared an interim dividend of 525c, also up 17%.

Capitec says the drive to get more customers onto its self-service channels means they now wait less than 15 minutes in a branch to be served. Self-service banking transaction volume hit 231 million in the six months, up 43% from last year. It's still investing in its branch network, but at a slower pace. It opened 15 new branches over the period, after opening 31 last year.

Capitec ended trade 1.4% lower yesterday at R877.



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