Picture: Armand Hough/ANA/African News Agency
JOHANNESBURG - Capitec executive managers smiled all the way to the bank after the group reported an 18 percent increase in headline earnings for the year to end February. 

Chief executive Gerrie Fourie took home a combined R56.64 million during the period, including bonuses and benefits. 

In 2017 Fourie took home a total of R50.60m.

The group’s chief financial officer (CFO) André du Plessis took home R41.59m in total remuneration, up from R39.56m as compared to 2017.

Fourie’s massive payout was due to long-term incentives and a 10 percent increase in his basic pay package. 

His windfall included  a R10.75  million guaranteed package; R240 000 in other benefits; R4.05  million short-term bonus and a long-term incentive payout of R41.6 million.

The bank reported an increase in earnings of R4.5 billion for the year ended February 2018. 

This translated to a 27  percent return for shareholders.

Diluted headline earnings per share rose 18 percent to R38.46 while net transaction fee income inched to R5.1billion from R3.9  billion last year. Operational income also increased 13 percent to R17.8  billion and operating costs increased by 17  percent to R6.4billion. 

Capitec’s active clients rose by 15 percent to 9.868 million and the bank opened 30 new branches this year. 

In total Capitec now has 826 branches.

The bank said its headline earnings per share (Heps) rose 18 percent from the targeted 15 percent, and this meant a short-term incentive payment of 36.7 percent of the approved total guaranteed package for the 2018 year.

Head of risk management Nkosana Mashiya took home a total remuneration of R10.66m for the year, up from last year’s amount of R9.08m.

The group’s remuneration committee said its increases for all employees, including directors and key management, were determined through factors such as individual performance, team and company, competence, forecast profitability, economic factors, including the consumer price index (CPI) in  determining pay for its employees.

In March Capitec announced that it would absorb the increase in  VAT on their most popular digital transactions in an effort to keep bank fees as low as possible for their 9.5 million customers. 

First National Bank (FNB) has also announced that it would launch eWallet eXtra – a new zero-monthly-fee transactional bank account aimed at the unbanked and underbanked in June. 

The FNB offering will carry no monthly fee, but consumers are expected to pay per transaction.

Kokkie Kooyman, a portfolio manager at Denker Capital, said FNB’s offering was designed to compete with Capitec and prevent loss of market share and gain market share back.

“I think both can grow market share at the expense of other competitors, but should Capitec find that FirstRand’s products affect it directly it will respond like it always has done before,” Kooyman said. 

“Capitec will compete on price, client service and efficiency and quality of  the product.” 

Kooyman said the decision on how to react to FNB offering would only really be made once it sees how the FirstRand products stack up  against each other.

“Like any business facing a  competitor, Capitec will have to decide whether it fights on price, client service and or product efficiency and features. But it can only do that once it sees how the FirstRand products stack up to it in the market,” he said

-BUSINESS REPORT