Capitec H1 profit lifts to 20% on robust client growth

South Africa’s Capitec Bank reported a lift of 20% in H1 profit, establised by strong client growth with its customer base hitting more than 12.6 million.

The lender had expected its earnings to lift by 21%, in a sharp contrast to its peers, who saw a drop in their earnings at home amid a slowing economy.

Meanwhile most South African banks have been struggling in 2019, with the economy suffering its worst contraction in a decade and the unemployment rate hitting an 11-year high – after years of already stagnant growth.

Headline earnings per share – the main profit measure in South Africa – stood at 2,545 cents for the period, compared with 2,128 cents a year earlier.

The Chief Executive Officer, Capitec Gerrie Fourie said the bank’s ongoing growth was mainly due to a business model that resonated with South Africans.

In a statement he said, “We’re fortunate to be growing, continuously hiring employees and not retrenching.”

Many South African lenders registered flat or minimal growth in their domestic retail banks, and large traditional lenders have been shuttering branches and cutting jobs in a bid to modernize their operations and bring costs down to compete with a host of new, digital-only rivals.

Some analysts were concerned that Capitec, the country’s fifth-largest bank, would be hit by a spike in bad debts. Capitec is more exposed to bad debts as compared with rivals as the bank has focused on lower-income consumers and riskier unsecured lending.

The bank’s gross loan book grew by 17% to 60.25 billion rand ($4.02 billion), Fourie said, adding that the total arrears of up to three months decreased by 11% by the end of Aug 2019.

Source: Reuters