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Capitec trailblazing its way to the top

Cape Town - Capitec Bank [JSE:CPI] is poised to become the country's third-largest bank in terms of customer numbers by end-2017 as it turns the banking industry on its head, according to Standard and Poor's.

In a report published on Thursday, the rating agency warned that South African banks are facing growing credit risks as the economy worsens. However, it also pointed out that Capitec has disrupted the banking sector landscape in recent years to become a "serious challenger in the mass and middle market retail banking space".

Capitec started out as a microlender and then secured a banking licence before positioning itself as a low-cost operator that made banking easier, faster and cheaper to low-income consumers.

"As of February 29, 2016, the bank reported 7.3 million active retail clients (approximately 17.5% of the total market), up from 1.5 million in 2009," stated S&P in the report.

"We expect the bank's rate of customer acquisition will slow down, but we still believe it could become the country's third-largest bank in terms of customer numbers by end-2017," it said.

S&P added that the way in which banks offer products and services to retail sector is likely to become increasingly competitive, especially in the transactional space, over the next few years.

Spokesperson Charl Nel told Fin24 Capitec Bank is focused on simplicity that is delivered transparently and which puts clients in control of their money.

"This approach means that our clients know what they get and know what they pay, giving them the freedom to manage their money in a way that benefits them," he said.

"Our philosophy is to create banking products and services that give clients this freedom to better manage their money. If we get this right, the growth to become the third, second or largest retail bank in South Africa will follow naturally."

Analysts have pointed out that for Capitec to fully threaten the territory of the big four banks, it would need to do far more than grow the number of transactional customers. The bank would need to focus on diversifying its revenue streams to include vehicle finance and credit card offerings, as well as branching into corporate investment banking.

Fin24 reported earlier this month that Capitec was ranked the best bank in South Africa for the fourth year running by the SA Customer Satisfaction Index (SACsi). Last month, Capitec was rated the best bank in the world in the global Lafferty Bank Rating and came out tops among a group of top 100 global banks, based on a combination of financial and non-financial criteria related to the quality of the organisation and its business model including strategy, culture, customer satisfaction and living the brand promise.

The Solidarity Report also recently named Capitec Bank as the best priced bank and the Ask Afrika Orange Index rated it tops for customer service.

Capitec reported a 26% rise in full-year profit for the fiscal year ended February 29, reported Fin24 in March. Earnings increased to R27.87 per share, while net income rose 26% to R3.2bn from R2.55bn in 2015 and R2bn in 2014.

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