INTERNATIONAL - South Africa’s Capitec Bank on Thursday reported a 20% jump in half-year profit, underpinned by strong client growth with its customer base hitting more than 12.6 million.
The lender had expected its earnings to jump by up to 21%, in a sharp contrast to its peers, who saw a drop in their earnings at home amid a slowing economy.
Most South African banks have been struggling in 2019, with the economy suffering its worst contraction in a decade and the unemployment rate hitting an 11-year high - after years of already stagnant growth.
Headline earnings per share - the main profit measure in South Africa - stood at 2,545 cents for the period, compared with 2,128 cents a year earlier.
The bank’s ongoing growth was mainly due to a business model that resonated with South Africans, said Gerrie Fourie, chief executive officer, Capitec.
“We’re fortunate to be growing, continuously hiring employees and not retrenching,” he said in a statement.
Many South African lenders registered flat or minimal growth in their domestic retail banks, and large traditional lenders have been shuttering branches and cutting jobs in a bid to modernise their operations and bring costs down to compete with a host of new, digital-only rivals.
Some analysts were concerned that Capitec, the country’s fifth-largest bank, would be hit by a spike in bad debts. Capitec is more exposed to bad debts as compared with rivals as the bank has focused on lower-income consumers and riskier unsecured lending.
The bank’s gross loan book grew by 17% to 60.25 billion rand ($4.02 billion), Fourie said, adding that the total arrears of up to three months decreased by 11% by the end of Aug 2019.