Capitec says that its client base has grown by 15% over the past year, to 11.4 million clients. On average, it said that 127,000 clients join the bank each month.
In January, the bank said it experienced its highest single-month uptake, with over 266,000 new clients joining.
On Thursday, the bank published audited financial statements for the year ended 28 February 2019, showing strong growth in headline earnings and customer growth.
- Headline earnings per share up 19% to 4 577 cents
- Headline earnings up 19% to R5.292 billion
- Total dividend per share up 19% to R17.50
- Return on equity – 28%
- Active clients – 11.4 million
- Active banking app clients – 2.2 million
- Active funeral policies – more than 360,000
“Continued growth is testimony to staying true to our fundamentals. Clients trust a solution that they understand, which is reliable and transparent. This focus resulted in an enhanced credit offering and an increase in transactions due to sustained acquisition of banking clients,” Capitec said.
Self-service terminal and dual note recyclers (DNR) transactions increased in volume by 111% to 18 million and 55% to 29 million respectively at the end of February 2019. Net transaction fee income grew by 26%. Clients continue to move from cash to card with 62% of value spent on card (February 2018: 59%), it said.
Capitec said that the volume of banking app transactions has increased by 75% to 343 million for the financial year (February 2018: 196 million).
And as new digital banking competition comes on stream in South Africa in 2019, Capitec said that improved processes and advanced technology increased efficiency, enabling it to make digital banking more affordable by lowering fees.
“On 1 March 2019, transaction fees for payments made via the banking app, internet banking or USSD were reduced from R1.60 to R1.00 and the monthly administration fee of our Global One account was reduced from R5.80 to R5.00,” Capitec said.
“By taking all the digital banking fees and the monthly administration fee into consideration, we are putting R360 million back into our clients’ pockets,” it said.
Capitec warned that the risk of cash handling in South Africa has increased significantly over the last few years.
“As an alternative, real-time clearance is a simple solution for clients to facilitate immediate payment on our banking app and internet banking. This is much safer than carrying cash around. We are leading the industry by having reduced the real-time payment fees to the other banks from R10.00 to R8.00.”
The effect of credit optimisation strategies resulted in a decrease in the shorter term credit products and increase in longer term loans, the bank said.
“Against the background of a lacklustre economy, and increased credit risk-taking in the unsecured credit market, we introduced further granting restrictions.
“We curbed granting to clients who exhibited tendencies to frequently borrow the maximum amount on offer and we built on our prudent approach applied in affordability assessments by increasing our minimum living expenses threshold. Notwithstanding this, we grew and optimised our book through a focus on client quality and protecting the book from clients prone to go under debt review.”
Capitec said its strategy is to drive the price of unsecured lending lower. “Those clients with positive credit behaviour receive our best interest rates and we have a lower return on equity target for these clients.
“The average interest rate charged for this group was 17.5% compared to the book average of 24%. Our unsecured lending rates go as low as 12.9% and we charge credit insurance on the actual amount of outstanding debt and not on the original amount advanced.”
It said that its credit card offer has been well-received by the market, with a monthly fee that remained unchanged at R35 and an interest rate as low as prime.
“With an average of 14,000 new credit card clients per month, disbursements increased by 57% to R6.2 billion. At 28 February 2019, the gross credit card book was R3.6 billion and comprises approximately 3% of the total South African retail credit card market.”
Looking ahead, it said that continued investment in new payment solutions, digital development and advanced data and analytics will allow the group to offer retail clients easier ways to bank, “and more personalised credit offers”.