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Capitec earnings up on client growth

Mar 24 2015 09:27

(Duncan Alfreds, Fin24)

Company Data

CAPITEC BANK HOLDINGS LIMITED [JSE:CPI]

Last traded 1288
Change -9
% Change -1
Cumulative volume 241419
Market cap 0

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

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TIMELINE: Story of an African Bank

 

Johannesburg - Capitec Bank's [JSE: CPI] new strategy of targeting wealthier clients in addition to its core low-income customers helped boost the lender’s 2014 earnings by 27%, sending its shares to a record high on Tuesday.

The bank, which lends to borrowers without asking for collateral, said transaction fee revenue climbed 35% after it added nearly one million more customers to take the total to 6.2 million.

Capitec is setting up branches in affluent neighbourhoods, including high-end shopping malls, to sign up wealthier clients who make more transactions, usually of higher value.

"It looks like they will continue to gain in the middle to upper end of the markets where they are rolling out branches targeting higher income people," one banking sector analyst who did not want to be named said.

Capitec's shares rose 7% to 14:10 GMT, having earlier hit a record high, bringing gains this year to 47%.

Chief executive Gerrie Fourie said more than two in five Capitec clients now held a bank account. Customers do not have to an account with the bank to take out a loan.

Capitec also said borrowing from the bank rose slightly, as it benefited from the demise of main unsecured lending rival African Bank Investments (Abil) last year.

Abil was hammered as its core market of low-income borrowers failed to repay their debts.

"African Bank didn't have an impact on us, it's more on market sentiment," Fourie said, adding that Abil's failure had briefly led to higher funding costs across the industry.

While Abil was almost entirely funded through bonds, Capitec relies partially on customers' deposits.

It also has a conservative provisioning policy, writing off any debt after 90 days of arrears.

Capitec said interest income rose 14% to R10.8bn while loan impairments ticked up 1% to R4bn following prolonged strikes in the mining sector.

*This story has been updated.

capitec  |  earnings reports  |  banking
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