Capitec reveals credit card take-up as it closes in on 10 million customers

Capitec on Tuesday reported an 18% rise in headline earnings to R4.5 billion for the year ended 28 February 2018, and generated a return of 27% on its shareholders’ equity.

Diluted headline earnings per share increased 18% to R38.46, while the directors declared a final gross dividend of 945 cents per ordinary share, bringing the total dividends for the 2018 financial year to R14.70 per share.

Net transaction fee income (non-lending) increased from R3.9 billion to R5.1 billion in 2018. “The net transaction fee income to operating expenses increased from 72% to 81%, which is in line with our objectives to cover all operating costs with net transaction fees by 2022,” Capitec said.

Net transaction fee income now makes up 41% of total net income. “This is a result of our focus on self-service banking, which has experienced a significant increase in transaction volumes,” the bank said.

Income from operations climbed 13% to R17.796 billion, while operating costs increased by 17% to R6.4 billion. “Our cost-to-income ratio is 36%,” Capitec said.

Active clients rose 15% to 9.868 million, from 8.569 million before, while the group opened 30 new branches over the period, to 826.

Capitec said that 74% of all possible transactions were performed by clients on self-service banking channels in 2018, compared to 62% in 2017.

“Over 3 million clients have activated our banking app. For the month of February 2018, the app facilitated more than 20 million transactions. When our clients make use of our app, we cover the cost of the data.

“The banking app’s wide appeal is evidenced by the fact that it is not only the most downloaded banking app in South Africa, but that it is also the 9th most downloaded app overall on the Google Play store in South Africa,” it said.

The lender said that the 2018 financial year presents the first full 12 month performance of its credit card. As at 28 February 2018, 289,000 active credit cards were in issue, with a total book value of R2 billion. This represents 4.2% of the total loan book, it said.

“The Capitec Bank credit card, which offers limits available up to R150,000, is used by 290 000 clients with its biggest growth coming from the middle- to higher income segments.

“The monthly fee for the credit card of R35 and personalised interest rates makes it one of the most competitive credit cards in the market. This credit card fee will remain unchanged for the next year,” Capitec said.

“We are optimistic about the political stability and economic potential of the country, and will continue to play our part in enabling and supporting radical economic growth in South Africa the long term,” said Capitec CEO Gerrie Fourie.

“Capitec remains steadfast and will focus on business efficiencies and expanding its digital capabilities.”

“The performance is in line with our expectations,” the bank said.

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Capitec reveals credit card take-up as it closes in on 10 million customers