CAPITEC Bank yesterday posted a surge in annual profits, one-third higher than pre-pandemic levels, as its active client base increased by 14 percent and as its shareholders received a whopping dividend.
For the year ended February 2022, headline earnings per share, a gauge used in South Africa to show profitability, grew by 84 percent to R73 per share.
This as active clients rising to 1.81 million and its digital banking clients increased by 17 percent to 10.1 million - very strong growth.
Headline earnings rose to R8.4 billion from R4.6bn, while operating income before credit impairments grew by 17 percent to R27bn.
Profit after tax improved to R8.5bn, from R4.46bn in 2021.
Capitec chief executive Gerrie Fourie said the company delivered stellar results across the business.
“Our transactional income is up 20 percent, the number of clients has increased to 4.5 million clients, our digital clients are up 10 million. We had a very strong performance on our insurance products, overall, I think the performance has been strong,” he said.
The group also declared a final gross dividend of R24.40 per ordinary share, bringing the total dividend for the 2022 financial year to R36.40. The company also declared a special dividend per ordinary share of R15.
“Our capital adequacy is at 36 percent, we are in a strong capital position and that is why we decided to give back to our shareholders. I think R51 dividend over the whole year is been a very strong reward for our shareholders,“ he said.
Fourie said Capitec also paid its staff a R1.3bn as a bonus.
“The biggest contributors to our transactional income are clients that are making use of our full product range. Clients who have their salaries paid into our bank accounts and have debit orders, and making use of the app,” he said.
Fourie said the bank had a high credit impairment due to the Covid-19 pandemic and the ailing economy.
“We now understand Covid-19 much better and that is why credit impairment dropped to 2 percent,” he said.
Fourie said the business banking segment contributed R220m to the bottom line.
In 2019, Capitec bought specialist business bank Mercantile for R3.56bn. The unit flagged headline earnings of R174.5m, with a 10 percent increase in clients. Capitec is rebranding Mercantile bank to integrate it into its business.
“The Business bank offering will encompass the same principles of accessibility, simplicity, affordability, and personalised service that our retail clients have grown to expect,” Capitec said.
"We believe there are a lot of opportunities in the small-medium enterprise market, and that is where we will be focusing on," he said.
Andre du Plessis, Capitec’s chief financial officer, said the group met the socio-economic challenges of the past two years by focusing on its strategic objectives to generate sustainable growth for its stakeholders.
“Our focused approach delivered compound annual growth of 23 percent in headline earnings over the past 10 years,” he said.
Du Plessis flagged that digitalisation and product innovation were the cornerstone of the bank’s strategic objectives.
He said the group had continued its strong hiring drive for specialists with the necessary data skills to align to its ambition of further accelerating our digital adoption. A total of 335 specialists were appointed during the year.
However, the digitalisation journey came with a price tag.
He said IT expenses increased from R0.7 billion to R1bn, as it hiked investment in its digitalisation.
“Other costs such as maintenance, network support and information security increased as a result of the civil unrest which resulted in the temporary closure of 272 branches,” he said.
In PwC’s 2021 Major Banks Analysis analysis released last month it found most of South Africa’s big banks, such as Absa, FirstRand, Nedbank and Standard Bank, had delivered better-than-expected financial performances in 2021 and might reach 2019 pre-pandemic earnings level this year.
Last month Absa reported it had more than doubled headline earnings to R18.6bn in 2021 after the economy recovered faster than the bank expected and credit losses were reduced.
Shares in Capitec, with a R267.6 billion market cap, yesterday slipped -1.83 percent to R2262.84, with the share price up 68.19 percent in three years.
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