Capitec’s resilience sees 9% growth

The bank’s 2023 interim results reflect resilience, growth, future focus, and a consistent commitment to innovation.

20063 _ Interim Financial Results _ September 2023 - Website Article - Desktop@2x

South Africa, 28 September 2023: Despite ongoing economic pressure on South African consumers and businesses, Capitec, the country’s best digital bank according to the 2022 SITEisfaction report, recorded headline earnings growth of 9% to R4.7 billion in its August 2023 Interim financial results. The bank’s effective client acquisition strategies added close to 1 million new active clients in the past six months, bringing the total number of active clients to 21.1 million.

Gerrie Fourie, Chief Executive Officer at Capitec, says, “In an economic climate rife with financial challenges, Capitec's latest results highlight our unwavering commitment to product diversification, underpinned by our investment and innovation to meet our clients’ dynamic needs. We are not just banking for today but shaping the future of banking in South Africa."


Resilient growth in a challenging economy

Capitec has grown its non-interest income streams through product diversification and digitalisation, insurance licensing, and broadening payment services. This resilience has seen its net transaction and commission income grow 24% to R6.9 billion.

Fourie says, “Our ongoing investment in innovation and 11% active client growth resulted in an 18% increase in retail transaction volumes. Net insurance registered 33% growth to R1.5 billion.”

Capitec says its funeral cover reported a substantial 59% hike in income, while credit life insurance income saw a 20% increment.


Digitalisation and diversification

“Considering the convenience of digital payments, Capitec’s portfolio now includes Samsung Pay, Google Pay, Apple Pay, Garmin Pay digital wallets, Capitec Pay, and the recently launched PayShap,” says Fourie.

Capitec Pay is an innovation that makes online payments simpler and safer for clients and retailers and has processed 52 million transactions since it was introduced in March 2023. The PayShap solution launched in August 2023 has already capturing a 43% market share.

Initially designed for clients to send cash and buy essentials like airtime and electricity, Capitec’s Value-Added Services (VAS) offerings now encompass bill payments, vouchers, and national lottery ticket purchases. VAS now constitutes 16% of Capitec’s net transaction and commission income, generating R394 million. Fourie adds, “Capitec Connect has issued over 1.3 million SIM cards. We’ve also registered 248 224 credit life policies on our own licence and have 2.4 million active funeral plan policies.”


Capitec's net transaction and commission income reflect a robust digital strategy

The leading digital bank’s latest results reveal that the number of clients embracing digital transactions has grown 8% to 11.7 million, while the number of app users climbed to 10.2 million, making Capitec the biggest digital bank in South Africa. Fourie says, “This surge has propelled digital transaction volumes by 21% to 957 million, with the banking app claiming 83% of these transactions. Income from Send Cash payments and voucher sales soared 56% to R1.1 billion.” 

Particularly remarkable was the 78% climb in Send Cash income, which reached R265 million, and the substantial contribution from bill payments, vouchers, and national lottery ticket purchases, summing up to R274 million.

Capitec says its Live Better programme has rewarded clients’ card payment transactions, which grew 28% to 1.1 billion, with R186 million in cash back. This initiative, which has seen 16.9 million clients register, forms part of the bank’s long-term strategy to steer clients away from traditional cash transactions, resulting in cash transaction volume increasing by only 3% to 286 million compared to digital transaction growth of 28% to over 1 billion for the period under review.


Diligent loan management amid a turbulent financial environment

Capitec Retail’s gross loans and advances saw an uplift of 8% to R83.8 billion. The total credit impairment charge on retail loans and advances rose by 62%, as anticipated by the bank and in line with the industry, amounting to R4.6 billion. This nudged the credit loss ratio to 5.5%.

Fourie adds, “Our challenging economy invariably reduced our clients' disposable income in this period. Our credit management remains agile and we proactively instilled stricter credit granting criteria and treatments for all our credit offerings, further tightening existing measures.”


Building SA’s best business bank

Capitec Business' headline earnings soared by 20% to R242 million. The division recently launched its Online Banking platform and Capitec App, migrating over 23 500 existing clients. Fourie says, “Capitec Business is unwavering in its pursuit to become SA’s best business bank. We've opened 4 501 accounts in August, with 40% of new business bank accounts opened through the app or online.”

Key Business Bank performance indicators reveal a 14% increase in active clients, now totalling over 183,000, while loan sales, including overdrafts, jumped by 16% to R37.4 billion. Net loans and advances portfolio expanded by 21% to R16.1 billion, and deposits grew by 6%, reaching a noteworthy R19.1 billion.  


A healthy increase in operating expenses

Capitec says its recent operating metrics reveal a 14% rise in group operating expenses to R6.6 billion. The bank says this is due to an uptick in employee benefits, including incentives, which amounted to R356 million, bringing the cumulative to R3.5 billion. The bank also grew its headcount by 130 individuals to 15 425.

Capitec’s IT-related expenditures, excluding employee costs, also saw a considerable jump of 36% to R880 million, driven by investment in scalable technology and cloud services to support future growth.

Fourie concludes, “We’re committed to pushing the boundaries of banking by making it simpler, more affordable, easier to access, and delivered with a personalised experience. We keep innovating to help more South Africans simplify their financial lives and live better.”

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