Capitec adds over 100 000 clients a month | Fin24
 
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Capitec adds over 100 000 clients a month

Sep 27 2016 12:07

(Duncan Alfreds, Fin24)

Company Data

CAPITEC BANK HOLDINGS LIMITED [JSE:CPI]

Last traded 1350
Change -10
% Change -1
Cumulative volume 202795
Market cap 0

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

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Cape Town - Capitec Bank [JSE:CPI] said on Tuesday that 648 000 new clients joined the bank in the past six months, compared to 561 000 in the previous six months.

In its unaudited financial results for the six months to end-August 2016, the bank attributed this growth largely to a combination of increased branch distribution in key malls, and a strong brand proposition of simplified banking and value for money. It now has 7.9 million active clients.

Headline earnings per share rose 19% to 1 517 cents. Earnings went up 19.4% to R1.8bn from R1.5bn a year ago. Solid growth from loan fee income and transaction fee income contributed to the strong year-on-year (y/y) increase.

Net transaction fee income increased by 31%, with transactional banking showing rapid growth in line with increased client numbers and increased transactions by clients. Net transaction fee income contributed 37% (six months to August 2015: 32%; year ended February 2016: 33%) of Capitec's net income.

  • Headline earnings increased 19% to R1.754bn, while the interim dividend per share was 20% up to 450 cents. Return on equity was 26%, while the company created 1 445 new jobs in the six-month period.

  • Given the challenging economic conditions, Capitec continued to tighten credit granting criteria. According to the bank, this resulted in reducing credit risk by lending to better quality clients and granting fewer loans. "Fewer high-risk, low value, shorter-term loans were granted, resulting in a 5% y/y decrease in the number of loans granted and an increase in the average size of new loans to R7 487 (August 2015: R6 157; February 2016: R6 577)," said the bank.

  • Active clients continued to grow, with 648 000 new clients joining Capitec in the past six months compared to 561 000 in the previous six months. The bank attributed this largely to a combination of increased branch distribution in key malls, and a strong brand proposition of simplified banking and value for money. The bank has 7.9 million active clients.

  • Capitec opened 31 new branches during the reporting period, bringing the total branches to 751.

  • Credit client growth and the total book remained flat due to strict affordability guidelines and prudent credit assessments, said the bank. "Based on continuous market assessment, we have limited credit extension to lower income earners, employees in particular industries and more specifically to particular business units which we believe are at high risk of having unstable income," said Capitec. It believes that its conservative approach will ensure long-term sustainability.

  • Strong brand loyalty evident in banking client growth, reported Capitec. The number of primary banking clients (those clients who make regular deposits - mainly salaries) has grown in line with total client growth and represents 46% of all active clients.

  • Operating costs for the six-month period were R2.6n, a 13% y/y increase of  (six months to August 2015: R2.3bn).

  • Gross loans and advances grew by 13% y/y and by 5% from February 2016 to R42.8bn (August 2015: R37.9bn; February 2016: R40.9bn). Net loan impairment expense to average gross loans and advances increased to 6.2% for the six-month period ended August 2016 from 5.7% a year ago and 5.8% for the six-month period ended February 2016.

  • Capitec shares were changing hands at R610.50 at 11:00 on the JSE, an increase of 1.02%.

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