Capitec reports surge in customers, hikes dividend on strong growth
Capitec Bank has published its financial results for the half-year period ended August 2022, showing a 17% growth in group headline earnings to R4.7 billion from R4 billion for the comparative period.
Active clients are up 13% to 19 million.
“Over the past five financial years, our compound annual growth rate was 17% despite the impact of the Covid-19 pandemic, the civil unrest and the KwaZulu-Natal floods. This demonstrates the underlying resilience of our business and the quality of our earnings,” said Gerrie Fourie, chief executive officer (CEO).
Operating profit before tax and credit impairments grew by 24% to R8.8 billion. Lending income grew by 13% to R8.0 billion, net credit life insurance and funeral plan income grew by 64% to R1.5 billion, and net transaction income (including net foreign currency income) grew by 8% to R5.6 billion, the bank said.
Net transaction income grew by 8% despite the impact of the continued shift away from cash to more cost-effective digital and POS transactions. “This shift and the introduction of the Live Better rewards programme impacted gross transaction income,” it said.
Digital transactions are, however, scalable at a lower cost than other transactions, the bank pointed out.
Operating expenses grew by 1% but excluding employee incentives grew by 9%, primarily due to growth in the number of employees.
“Our cost-to-income ratio reduced from 45% in the comparative period to 40%. We generated a return on equity of 26% – August 2021: 27%,” said Fourie.
Bad debts written off decreased to R2.5 billion (August 2021: R3.0 billion) due to lower write-offs of Covid-19-related rescheduled, which amounted to R312 million (August 2021: R490 million).
The directors resolved that a gross interim dividend of R14.00 per ordinary share be declared for the six-month period (31 August 2021: R12.00) on 29 September 2022.
- Headline earnings per share up 17% to 4,034 cents
- Headline earnings up 17% to R4.7 billion
- Interim dividend per ordinary share 1,400 cents
- Return on equity: 26%
- Capital adequacy ratio: 35%
- Retail clients using digital channels: 10.8 million
- Active clients: 19.0 million
The digital banking solutions that we have introduced have shifted clients away from cash transacting to digital banking, said Fourie. “Clients using digital transacting grew by 21% to 10.8 million, and they represent 57% of our total active clients.”
Digital transaction volumes grew by 27% to 791 million compared to the comparative period. During the reporting period, Capitec implemented several digital payment solutions. Samsung Pay and Google Pay for contactless mobile payments.
“Capitec Connect, our prepaid mobile offering, was launched during September 2022. Capitec Connect combines low, flat prepaid rates with bundles that do not expire,” noted the chief executive officer.
He said that employees in the data and technology field remain in high demand locally and abroad. “We appointed 1,642 external employees during the past 6 months with 20% fulfilling data and technology roles,” said Fourie.
“We will continue to appoint more data and technology experts for the rest of the financial year.”
He said that business banking is making good progress with the re-engineering of systems and processes and the migration to cloud computing. Testing of the new online banking system and the remote onboarding process will start soon, he added.
“This will enable the business to manage the anticipated volumes when we rebrand from Mercantile Bank to Capitec Business and will ensure that we provide business banking clients with the high levels of service Capitec clients currently enjoy. We anticipate that the rebrand will occur in the first quarter of the next financial year.”
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