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Capitec boosts profit, to raise R2.25bn

Sep 26 2012 08:43
Reuters & I-Net Bridge

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Last traded 909
Change -4
% Change 0
Cumulative volume 88836
Market cap 0

Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

Johannesburg - Mass-market lender Capitec Bank Holdings [JSE:CPI] aims to raise R2.25bn through a rights issue to boost lending and fund growth in its branch network, it said on Wednesday.

Capitec, which also reported a 35% surge first-half profit, said in a statement it planned to offer over 14 million new shares at R160 each, a discount of over 22% on Tuesday’s closing price.

“The bank's focus has been to acquire more transacting clients‚ reduce the cost of credit and maintain stringent credit criteria‚” Capitec said in a statement.

Capitec’s active clients increased to 4.2 million during the period‚ from the 3.2 million recorded last year.

“The focus remains on acquiring clients that will use Capitec as their primary bank. Many clients have accounts at a number of banks but choose one as the account into which their salaries are deposited and from which payments are made‚” Capitec said.

The bank said it will expand its branches by between 50 and 75 branches per year for the next three years.

“Opportunities exist to broaden our market to include higher income clients that are increasingly exposed to our simplified‚ low-cost offer and are finding that the Global One solution is perfect for their needs‚” Capitec said.

“In anticipation of the growth prospects in the market in which Capitec operates and of the new Basel III capital requirements‚ Capitec's board of directors and executive management believe it is responsible to proactively optimise the capital base and provide the financial flexibility needed to support the group's growth prospects by raising capital through the rights offer‚” Capitec said.

The bank said it will offer 7 new shares for every 50 currently held.

“The R2.25bn in proceeds from the rights issue will be utilised to fund growth in the loan book as well as expansion of the branch network by between 50 and 75 branches per year for the next 3 years,” it said.

Capitec said its headline earnings per share for the six months to the end-August rose 35% to 702 cents, the top end of the range it had flagged to the market.

Capitec’s interim dividend also increased by 35% to 169 cents.

Shares of the bank are up 16% so far this year, compared with a 13% increase in the All Share [JSE:J203] index.

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