The South African investment that turned R1,000 into R2.1 million
Capitec’s share price has grown monumentally over the last 25 years as it transitioned from a micro-lender to a fully fledged financial services provider with over 20 million customers.
Since its listing in February 2002, Capitec’s share price has grown by 211,618%. This means R1,000 invested twenty-five years ago would now be worth R2.1 million.
The story of Capitec goes back to 1997, when Capitec’s founding entity, PSG, acquired micro-lending businesses, including Smartfin and Finai.
Amid a fragmented microlending industry with 2,500 players, PSG wanted to establish a dominant position.
Following management changes in 2000, the microlending business was spun out as a subsidiary of PSG’s banking business.
Capitec was registered as a bank on 1 March 2001, with the company then listed on the Johannesburg Stock Exchange on 18 February 2002.
Despite its current success, Capitec’s early days were characterised by major challenges, such as strict regulations, large capital requirements, and the dominance of much larger retail banks.
Nevertheless, PSG’s equity capital helped Capitec overcome many of these challenges and continued on its growth path.
Capitec focused on targeting unbanked South Africans through its single-status products, which were not changed based on income.
The simplicity of its products and the transparency of its pricing convinced many people to also switch banks.
When Capitec was formed, the group focused on four key areas that would always remain priorities: accessibility, simplicity, affordability and personalised service.
It added that it had always been a priority for its clients to access their banking whenever they needed to.
From the get-go, Capitec would open its branches from 08:00, which was an hour before any of the other banks did. They also stayed open later until 17:00, giving clients an extra 67 banking hours per month.
Constantly evolving
In 2003, the group launched Global One, giving customers four free savings accounts linked to their main savings account.
Not only did these accounts help customers realise their savings goals, but they were also the first savings accounts that customers could name themselves.
To make banking even more portable, the company built a computer in a silver aluminium case and carried it to wherever people were. This became known as the “Die Tas Man.”
The group’s bid to boost connectivity was further supported by introducing Internet banking in 2008, introducing simplified banking for its 2 million clients. Cellphone banking was launched a year later.
2009 was also a critical year for the group, with it further stressing the need to back banking simplified amid a financial industry that was overly complicated.
By 2011, the group had 3.7 million clients and began opening its branches on Sundays. The Capitec banking app would then launch in 2014, allowing clients to bank anywhere at any time.
Capitec had 23 million customers by 2024, more than one-third of South Africa’s entire population. This shows that its strategy worked exactly as planned.
The company is pushing into business banking following the acquisition of Mercantile Bank in November 2019, which has now been rebranded to Capitec Business.
Capitec CEO Gerrie Fourie said that the group wants to transfer the simplicity and low-fee banking services it offers to retail clients to the business sector.
Unlike many of the largest banks in South Africa, which focus on the highly competitive corporate banking space, Capitec Business is primarily focused on servicing SMEs and entrepreneurial clients.
In another growth prospect, Capitec obtained its long-term insurance licence in the 2023 financial year. The company started offering life insurance in June 2024, with better-than-expected uptake.
Underpinning all of these ambitions is a company that has seen remarkable growth in its financial metrics.
In 2003, Capitec’s net income and headline earnings stood at R30 million in 2003. Fast forward to 2024, profit for the year and headline earnings reached R10.5 billion, showing growth of about 35,000%.
Moreover, the group’s total dividend increased from 19 cents per share in 2003 to 4,875 cents per share, showing growth of roughly 25,000%.
Capitec share price growth
Capitec revenue growth
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