Capitec Bank’s loan applications have grown since rival African Bank Investments Limited (Abil) failed, boosting its market share.
Gerrie Fourie, the chief executive of the low-cost bank, said yesterday: “In August and September, we saw Abil clients coming through and more loan applications at our branches.”
While Capitec had tightened lending criteria, it was adding customers and wanted to have 20 percent of the consumer banking market in four years from 10 percent now, he said.
Abil, placed under administration on August 10, had 3 million customers. Tom Winterboer, the curator charged with salvaging viable parts of Abil’s business, said earlier this month that while Abil was still offering loans and trying to recoup bad debts in a rescue effort, some clients had gone to other banks.
Fourie said deposits from retail customers were providing enough funding so that Capitec would not have to sell bonds for eight months following its rating downgrade by Moody’s Investors Service last month.
Capitec said its net income in the six months to August rose 21 percent to R1.17 billion after fees were raised. Headline earnings a share rose to R10.15 from R8.38. The firm declared a dividend of R2.46, up from R2.03.
Net transaction fee income rose to R1.2bn from R899 million a year earlier. Active clients increased by 418 000 from February to 5.8 million.
To increase local market share before expanding abroad in three to four years’ time, Fourie said Capitec wanted to target higher-income earners paid at least R15 000 a month.
“If there are five retail banks in South Africa, we should have 20 percent of the market, but we focus on individuals while the others focus on corporate and business banking and the rest of Africa, so we should beat 20 percent,” Fourie said.
The National Credit Regulator (NCR) forwarded a complaint about Capitec to a tribunal for a possible fine over alleged contraventions of credit laws in May last year.
While the tribunal has dismissed the application, the NCR has appealed the decision.
“We’re working on a settlement with the NCR,” Fourie said. “The formal legal route may take two to three years. We’re keen to settle, but we’ve got to go to court.”
While Abil’s capital adequacy ratio fell below 30 percent by the time it failed, Capitec’s was 38 percent at the end of August, down from 39 percent in February. The lender kept the ratio of bad debts to total loans and advances stable at 5.5 percent.
“There is a future for unsecured lending, though we tread cautiously as the industry is still maturing,” Capitec said.
The shares rose 0.26 percent to close at R244.79 yesterday. - Bloomberg