BANKING: Capitec Defies Market Trends
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Stellenbosch-based Capitec Bank again achieved rapid growth in its client base, as evidenced by the bank’s outstanding interim results announced yesterday. In the current economic climate, with consumers being more cost conscious, over 480 000 new clients were attracted over the past 12 months to Capitec Bank’s simplified, single solution to money management and its aggressive pricing offer.
While the banking industry in general is suffering reduced turnover, Capitec Bank’s success is underlined by the bank exceeding the two million mark in the number of clients by August 2009 – an increase of more than 30% over the preceding twelve months.
CEO Riaan Stassen, when announcing the results, said that Capitec Bank’s actions during 2008, in anticipation of the changing market conditions had delivered the expected results as far as client growth, transaction income and loan delinquency was concerned.
Headline earnings per share grew by 48% to 215 cents and an interim dividend of 55 cents per share, up from 30 cents in 2008, will be proposed.
Stassen said, “Even though we are operating in difficult economic conditions, Capitec Bank has a solid base from which to grow. The price sensitivity of consumers in recent times is resulting in thousands of clients choosing Capitec Bank above the traditional banks.” Our transaction income has grown by 70% to R212 million.
Loans of R3.7 billion were granted in the last six months, an increase of 20% on the six month period to August 2008. This was the result of an increase in the number of loans granted (indicating that the bank has an attractive product mix) and also, more importantly, an increase in the average loan amount – from R1 776 to R2 054.
Capitec Bank’s medium to long term funding is mainly derived from wholesale contractual deposits, which increased to R2.2 billion. Additional funding was raised in the domestic medium term note programme and a further five-year loan of R150 million was obtained from the Norwegian Investment Fund for Developing Countries, continuing the bank’s approach to increase its funding base via longer term contracted funding outside of South Africa.
A fixed-term savings plan launched in November 2008 has raised over R800 million and this product is now responsible for 27% of the fixed term funding.
The group’s risk-weighted capital adequacy ratio is 36% and, at 31 August, the bank was in a position to repay all retail call savings deposits immediately. The bank follows a particularly conservative approach to funding and continues to seek primarily long term contractual relationships to secure funding for growth.
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