‘Relentless’ focus on clients boosts Capitec profits by 26% | Fin24
 
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‘Relentless’ focus on clients boosts Capitec profits by 26%

Mar 30 2016 09:51
Matthew le Cordeur

Capitec bank has partnered with the department of home affairs to beat financial fraud. (Duncan Alfreds, Fin24)

Company Data

CAPITEC BANK HOLDINGS LIMITED [JSE:CPI]

Last traded 1326
Change -1
% Change 0
Cumulative volume 97506
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 – A “relentless focus on clients and service” saw Capitec increase profit by 26% for the year ended February 2016, increasing its client base by over a million new customers to 7.3 million people.

Earnings increased to R27.87 per share, the provider of unsecured loans said in a statement on Wednesday. Net  income also rose 26% to R3.2bn from R2.55bn in 2015 and R2bn in 2014.

Growing client numbers and an increased activity per client resulted in a 16% year-on-year increase in net transaction fee income to R3bn.

With a market cap of R65.82bn, Capitec [JSE:CPI] shares rose 1.24% to R569.22 on Wednesday at 09:40.

“This year has seen the largest growth in our client numbers since we started the bank,” Capitec said. “According to the comprehensive AMPS survey for the period to June 2015, 20.6% of South Africans regard Capitec Bank as their primary bank, up from 18.9% for the period to December 2014.”

The bank expects difficult economic conditions to persist, but sees it as an opportunity to gain more clients seeking better value and service from banks.

“Capitec has proven its ability to manage the impact of economic pressures while maintaining conservatism in our unsecured lending book, liquidity and capital,” André du Plessis, chief financial officer, said in a statement.

Ratings downgrade warning

Capitec, which terminated its credit ratings services with Moody’s in December 2015, said there is a risk of a downgrade in 2016 with Standard and Poor’s.

Capitec has a global BB+ long-term rating and B short-term rating, a national A long-term rating and A-2 short-term rating.

“The global scale long-term ratings have a negative outlook,” said Du Plessis. “This outlook was changed from stable in December 2015 due to the sovereign’s outlook being downgraded.

“The South African sovereign credit ratings are scheduled to be updated in June 2016 and the risk remains real that a downgrade may occur.

“This will place pressure on Capitec’s ratings, along with other financial institutions which could impact the volume and cost of funds to be sourced in the market.”

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