{"id":769178,"date":"2024-04-24T08:41:33","date_gmt":"2024-04-24T06:41:33","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=769178"},"modified":"2024-04-24T08:41:38","modified_gmt":"2024-04-24T06:41:38","slug":"capitec-not-worried-about-south-africas-new-bank","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/banking\/769178\/capitec-not-worried-about-south-africas-new-bank\/","title":{"rendered":"Capitec not worried about South Africa’s new bank"},"content":{"rendered":"\n

Capitec CEO Gerrie Fourie says the group is not concerned about the launch of Old Mutual’s new bank, with the companies already in competition.<\/p>\n\n\n\n

Last Friday, 19 April, Old Mutual said that it received approval from the South African Reserve Bank’s (SARB’s) Prudential Authority to establish a bank in South Africa, which is expected to launch by the end of 2024.<\/p>\n\n\n\n

The group said that it is now formally transitioning from \u2018bank build mode\u2019 and will enter into a strict and rigorous industry testing phase with selected bank partners.<\/p>\n\n\n\n

The bank is set to operate in the mass market space, taking on the likes of Capitec and African Bank. <\/p>\n\n\n\n

However, speaking with BusinessTech following the release of Capitec’s financial results for the year ended 29 February 2024, Fourie said that Old Mutual is not a new competitor, as it already operates in the unsecured lending space.<\/p>\n\n\n\n

Fourie said that the group is not concerned that Old Mutual will start to gain market share, despite Capitec’s own move to cut back in the unsecured lending space.<\/p>\n\n\n\n

Opening the taps<\/strong><\/p>\n\n\n\n

Fourie said that the group is expecting some relief for its customers as food inflation and load shedding ease in intensity.<\/p>\n\n\n\n

However, he said that the group will remain cautious about extending credit in the unsecured retail segment – its core business.<\/p>\n\n\n\n

Amidst the challenging economic environment in South Africa over the last year, Capitec aggressively cut sales in the unsecured lending market.<\/p>\n\n\n\n

Data from the National Credit Regulator showed that Capitec’s competitors cut quarterly unsecured credit sales by 9% in Q3 2023. Capitec, on the other hand, saw a 32% decrease over the period.<\/p>\n\n\n\n

However, Fourie said that the group was possibly too aggressive in its strategy and will look to open up to certain pockets while still remaining cautious.<\/p>\n\n\n\n

He told BusinessTech that these pockets would be sector- and client-specific, highlighting the hospitality sector as an example, which is seeing a resurgence amid increased foreign travel into South Africa.<\/p>\n\n\n

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Source: Capitec<\/figcaption><\/figure><\/div>\n\n\n

Amid heightened interest rates in South Africa, Capitec, like many other banks in South Africa, saw its credit loss ratio increase from its through-the-cycle target of 8.5% in February 2023 to 11.0% in August 2023.<\/p>\n\n\n\n

The group is expecting the credit loss ratio to return to the 8.5% target by February 2025.<\/p>\n\n\n\n

Although Fourie expects interest rates to only be cut around September 2024, he said that the group factors in interest rate shocks of roughly 2% when making its credit loss ratio predictions, meaning that no cut this year, which many analysts are now expecting<\/a>, will not affect Capitec’s credit losses.<\/p>\n\n\n\n

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Reserve Bank adds new measures that will impact interest rate decisions in South Africa<\/a><\/blockquote>