Johannesburg - Capitec has said that the National Credit Regulator has withdrawn its complaint of reckless lending against the bank.
Capitec yesterday said during the presentation of the bank’s results for the six months to August that the regulator withdrew that claims that the bank had contravened the National Credit Act last week following seven months of investigations.
The bank’s chief executive Gerrie Fourie said the withdrawal has paved the way for Capitec to operate without further scrutiny.
Fourie said the bank would now focus its energies on launching new products to diversify its streams of income and bolster earnings in the future.
Among the new products would be insurance for retrenched and dead clients that would allow the bank to settle outstanding credit amounts.
“We will maintain our conservative approach to credit in the current conditions. We remain relentless in the pursuit of continued service excellence and our strategy to be the best retail bank for all South Africans,” said Fourie.
The bank has already launched credit life and retrenchment insurance products linked to lending products. Fourie said Capitec would also offer its clients credit cards, the first phase of which is currently being rolled out in the Western Cape.
He said the facility would be available across the country next month.
Biggest change
“The implementation of our credit card has entailed the biggest change to our IT systems in the history of the bank and we are pleased that the roll-out has taken place successfully,” Fourie said.
“Our credit card roll-out is a journey, and at first it will only be available to people that are formally employed. In time, however, we will improve the credit card offer to also serve people with more sophisticated credit card needs, such as clients with dual household income or those running their own businesses.”
The bank reported a 19 percent increase in headline earnings to R1.75 billion for the period - up from R1.45bn reported in 2015, while headline earnings per share also gained 19 percent to 1 517 cents per share as compared to 1 271c per share reported in the last period.
Fourie said bank had added 648 000 new clients as as a result of a combination of increased branch distribution in key malls and a strong brand proposition of simplified banking and value for money.
He said 31 new branches were opened during the period, bringing the total number of branches to 751. There are 280 branches, mainly in shopping malls, which are open seven days a week.
The bank declared an interim dividend of 450c per share, up by 20 percent compared to 2015.
Results
Samantha Pauwels, a portfolio manager at Cannon Asset Managers, said Capitec produced results that were in line with market expectations. “The 19 percent headline earnings growth is roughly in line with consensus,” said Pauwels.
However, Pauwels cautioned the bank about the rise in its loans and impairments. “The company’s increased impairments is concerning, being up 23 percent as loans in arrears rose 44 percent, reinforcing the strain on consumers in this challenging local macro environment. Capitec remains well capitalised and increased the dividend by 20 percent, reaffirming management’s confidence in the business,” she said.
She added: “The market has optimistic forecasts for Capitec, leaving very little room for error. Currently the group is trading on a rating more than 40 percent higher than the big banks.”
Capitec shares rose 0.78 percent on the JSE yesterday to close at R609.
BUSINESS REPORT