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SA’s most popular bank expects to rake in profit

Mar 07 2017 12:27
Matthew le Cordeur

Cape Town – South Africa’s most popular bank – Capitec – said it expects profits for the year ended 28 February 2017 to be between 16% and 19% higher than the previous year.

Capitec said in a statement on Monday that it expected its headline earnings per share – the measure of profit in South Africa – to rise by between R32.33 and R33.17 a share from R27.87 a share in the prior year.

Capitec’s financial results will be published on 28 March, when the exact profit will be officially endorsed by auditors.

The low-cost bank was ranked as the most popular bank by consumer research group Nielsen in February.

It revealed the bank has significantly increased its lead as South Africa’s most popular bank, with over 120 000 customers opening accounts every month.

Capitec’s rise as South Africa’s leading bank with the middle to lower end of the consumer LSM has translated in massive rewards for shareholders.

The share price has increased by 7.6% in the last month, 38.8% in the last year and 277% in the last five years. It was up 0.41% at 11:15 on Tuesday at R740.06.

"Capitec posted strong guidance at the top end of expectations of close to 19% growth," said Patrice Rassou, head of equities at Sanlam Investment Management in Cape Town.

"As we have seen from other banks, credit quality in South Africa remains fairly benign and there is strong demand for credit with the bottom end of the market having been impacted by the new NCA regulations. Capitec have launched a credit card, which is targeting a more wealthy segment of the market which would have boosted growth in this reporting period."

Responding to the Nielsen report, Capitec spokesperson Charl Nel said the results are “testament to the success of our vision and values, keeping our costs low, giving customers the freedom to pay as they transact as well as offering the highest interest of 5.35% on a positive bank balance”.

“Capitec is also the most affordable bank in South Africa,” said Nel.

More than 5.5 million of Capitec clients pay less than R50 per month in bank costs.

While Capitec is seen as the most popular bank, it doesn’t make the cut as one of the top five banks, all of whom (Standard Bank, Nedbank, FirstRand, Barclays Africa and Investec) have higher market capitalisation on the Johannesburg Stock Exchange. (See graph below)

Read Fin24's top stories trending on Twitter:

barclays africa  |  nedbank  |  capitec  |  standard bank  |  firstrand


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