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Johannesburg - South African mass-market lender Capitec Bank
Holdings [JSE:CPI] reported a 50% surge in first-half earnings, lifted by
strong demand for loans, and said it would open 55 new branches this year.
Capitec has carved out a profitable niche by targeting
consumers traditionally neglected by South Africa's major banks. The lender
offers higher-margin, unsecured loans usually over a short term.
Capitec's bigger rivals have started to follow suit, and
analysts now worry that debt-to-income ratios - already at a staggering 75% in
South Africa - could worsen further.
The bank said diluted headline earnings per share totalled
1,099 cents in the year to end-February, from 730 cents a year earlier.
Headline earnings, the main measure of profit in South
Africa, exclude some one-time items.
Loan revenue grew by 49% to R5.7bn.
Even after that surge in lending, Capitec said it saw
further growth potential.
"There is a perception that a credit bubble is
developing in the unsecured credit market as a result of continuing growth in
the term and value of credit granted," it said in a statement.
"We believe that growth will continue and that there is
not a significant threat to the market as long as affordability and client
behaviour is considered when granting credit."
Capitec also said it would add 55 new branches in the
current year.
Shares of the bank are up 13% so far this year, compared with a 5.3% rise in the broad All Share [JSE:J203] index.
