Capitec moves in on bigger money

Johannesburg - Having been perceived as a banking offering for low-income earners, Capitec has worked hard to attract higher income groups, said its CEO.

"There has been a definite change in the income level base of the Capitec client - a move which has been intentional on our behalf," said group CEO Riaan Stassen on Tuesday, following the release of Capitec's interim results to end-August. The strategy included the opening of more branches in high-end shopping centres.

In eight years the bank has managed to scoop up over two million customers and grow its branch network to 371.

Management at Capitec regularly emphasise they focus on simplicity in their business model. The bank has opted to offer just three types of bank account and has very clear guidelines in terms of lending criteria for clients.

"It is simple - if we can't take a photo of you, we won't open an account," explained Stassen when asked about expansion into other financial services products.

The group reported a rise in headline earnings of 48% to 215c per share, and 55c/share dividend (30c in the comparative period).

Gross loans and advances grew by 37% year-on-year and by 22% from February 2009 to reach R4bn.

Transactional revenue from debit card transactions and the group's internet banking offering increased 70% to R212m.

"There has been a noticeable change in customer behaviour," said Stassen, pointing out that Capitec clients were becoming more comfortable using their cards to transact.

He said that since the group had introduced a longer-term savings product - an account which aims to provide competitive interest rates for savers - they had attracted over R800m from clients.

This strategy is likely to assist the group to bring down its long-term cost of funding. A similar move was made by investment banking group Investec earlier this year.

By midday Capitec was down 1% (60c) to 6 190c.

- Fin24.com

*Author holds shares in Capitec