VENTURES: Capitec Continues To Attract Clients
Recent Western Cape Business News
When Cape Town-based Capitec announced the results, CEO Riaan Stassen attributed the bank’s sustained success largely to client growth. The bank has been acquiring about 70 000 new clients every month, since September 2009, increasing its active client base to over 2.1 million clients – a growth of 37% in numbers year-on-year.
Capitec Bank’s profit grew to R435 million for the year ending 28 February 2010 – an impressive 45% growth year-on-year given the recessionary market conditions.
Headline earnings per share grew by 44% to 527 cents and a final dividend of 155 cents per share will be proposed.
Operating expenses grew by 29%, year-on-year, as a result of ongoing distribution expansion. The bank increased its distribution footprint by opening 38 new branches and now has over 400 branches throughout South Africa.
“Capitec Bank’s simplified solution to money management has found great appeal with the cost-conscious consumer looking for value, accessibility and easy to use banking products. Particularly in the light of the recent recession and relatively slow economic recovery, our appeal has grown across all income groups,” Stassen said. “Given the improvement in current economic conditions, we will continue to grow from our solid base.”
Capitec Bank’s net transaction income has grown by 84% to R295 million and represents 15% of our total revenue.
The total value of loans granted increased by 38% to R8.6 billion. This was a result of more clients opting for longer term loans, as the maximum loan term and loan size were increased respectively to 48 months and R100 000. The average value of a loan is currently R2 239.
At the end of February 2010, Capitec Bank had R1.7 billion in equity and R6.9 billion in assets, excluding cash.
When asked how Capitec Bank had weathered the international banking crisis so well, Stassen replied: “Capitec Bank was founded during the small banking crisis in 2001 and gained invaluable lessons from the crisis. It influenced our business model and approach to funding. Our approach entails contractual borrowing on a long-term basis and lending out money on a short-term basis. This ensures a stable liquidity position. Our conservative approach to gearing has helped us to comfortably weather the last few months' dismal economic conditions in the financial markets. It costs a little more, but we prefer the conservative approach.”
Capitec Bank has been able to obtain long-term corporate deposits, now amounting to R3 billion of which R2 billion was raised through the bank’s listed bond programme. These bonds are for three, five and seven years. The bank also obtained a R250 million 12 year subordinated loan that is regarded as secondary capital, during the first 7 years. This is a great achievement for Capitec Bank, signifying the trust that international financiers have in the group.
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