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Johannesburg - The credit rating agency Moody's has changed its outlook on Capitec Bank Holdings [JSE:CPI] to positive from stable.
Moody's said in a statement that the change in the outlook reflects "Capitec's ongoing success in growing its franchise, diversifying its business base and maintaining good financial fundamentals, while successfully navigating through the financial crisis and macroeconomic slowdown".
Capitec had increased its client base to 2.8 million in February 2011 from 1.0 million in February 2007. Over the same period has successfully converted from essentially a micro-finance institution to a retail bank offering affordable banking, according to Moody's.
Capitec's profitability and capital levels remain robust, with bottom line profits for the financial year ending February 2011 amounting to 6.0% of risk-weighted assets and its equity-to-assets ratio standing at 22%.
"It has also successfully built up its retail deposit base, which currently contributes around 60% of total funding."
Moody's also noted that its loan quality appears well controlled. Impaired loans - defined as loans overdue by more than one day - represent 5.7% of gross loans and the bank maintains conservative accounting policies whereby loans with three missed instalments are fully provisioned and written-off.
An upgrade could follow if Capitec successfully manage both the balance sheet growth and credit risks and grows its market share, Moody's said.
Also, the group needs to further broaden and diversify both its funding base and revenue sources - primarily its transactional banking fee income.
The country's youngest and fastest growing banking group recently reported a 43% increase in diluted headline earnings per share from 511 cents to 730 cents for the year ended February 2011.
The earnings fell just a hair breadth short of an I-Net Bridge consensus forecast which saw earnings growing at 46% to 747.5 cents.
The group declared a final dividend of 205 cents versus 155 cents previously (up 32%).
Moody's said in a statement that the change in the outlook reflects "Capitec's ongoing success in growing its franchise, diversifying its business base and maintaining good financial fundamentals, while successfully navigating through the financial crisis and macroeconomic slowdown".
Capitec had increased its client base to 2.8 million in February 2011 from 1.0 million in February 2007. Over the same period has successfully converted from essentially a micro-finance institution to a retail bank offering affordable banking, according to Moody's.
Capitec's profitability and capital levels remain robust, with bottom line profits for the financial year ending February 2011 amounting to 6.0% of risk-weighted assets and its equity-to-assets ratio standing at 22%.
"It has also successfully built up its retail deposit base, which currently contributes around 60% of total funding."
Moody's also noted that its loan quality appears well controlled. Impaired loans - defined as loans overdue by more than one day - represent 5.7% of gross loans and the bank maintains conservative accounting policies whereby loans with three missed instalments are fully provisioned and written-off.
An upgrade could follow if Capitec successfully manage both the balance sheet growth and credit risks and grows its market share, Moody's said.
Also, the group needs to further broaden and diversify both its funding base and revenue sources - primarily its transactional banking fee income.
The country's youngest and fastest growing banking group recently reported a 43% increase in diluted headline earnings per share from 511 cents to 730 cents for the year ended February 2011.
The earnings fell just a hair breadth short of an I-Net Bridge consensus forecast which saw earnings growing at 46% to 747.5 cents.
The group declared a final dividend of 205 cents versus 155 cents previously (up 32%).
