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Capitec earnings rise on record client growth

Mar 28 2017 15:43
Capitec CEO Gerrie Fourie

Capitec CEO Gerrie Fourie. (Supplied)

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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] announced on Tuesday that it achieved a record growth of 1.3 million new clients for the financial year to February 2017, with active clients totalling 8.6 million by year-end (February 2016: 7.3 million). The bank reported 18% growth in headline earnings to R3.8bn (2016: R3.2bn).

Primary banking clients (those clients who make regular deposits – mainly salaries) grew in line with total client growth and represent 46% of all active clients.

Net transaction fee income, driven by a combination of the growth in Capitec’s active client base, expansion of the ATM and branch network and strong take-up of cellphone banking, increased by 30% year-on-year (y/y). The net transaction fee income covered 72% (February 2016: 66%) of the bank’s operating expenses and contributed 37% (February 2016: 33%) of its net income.

Over 1.8 million Capitec clients now use their banking app, and the bank reported that its strategy of increasing out-of-branch transacting continued to deliver strong results.

Self-service banking transactions increased 46% y/y to 728 million (February 2016: 499 million), while ATM and branch transactions lifted only 15% for the same period.

Capitec opened 76 new branches during its financial year, with 301 of the 796 branches trading seven days a week and all branches open for longer trading hours than the industry norm.

The bank created 1 629 new job opportunities and invested significantly in the training and development of its 13 069 employees.

Capitec reported a 10% increase in gross loans and advances to R45.1bn (February 2016: R40.9bn). Arrears as a percentage of gross loans and advances increased to 6.3%. The financial stress and economic difficulties experienced by clients during the year were evident and debt review applications and retrenchment letters received increased by 19% and 15% respectively y/y.

Capitec Bank CEO Gerrie Fourie said the bank has remained committed to its fundamentals of delivering simplified banking that is affordable and easy to access through personal service. “This resonates with most South Africans and is what sets us apart, especially in the current tough economic climate, giving clients a sense of value and allowing them to feel in control of their money."

In March 2017 Capitec Bank announced its investment in Cream Finance Holding Limited, a leading European online consumer loans company which offers multiple credit products across international markets. The bank will acquire an interest of 40% for €21m in three tranches at nine-month intervals, subject to specific agreed performance measures being met.

capitec  |  earnings reports  |  banking


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