Cape Town - 101011 - Banking Fees - CAPITEC Bank has been found to have the lowest fees. Photo: Matthew Jordaan

Johannesburg - Capitec Bank, South Africa’s second-largest provider of unsecured loans, said profit in the year through February climbed 28 percent after it added 711,000 new clients.

Net income rose to 2.04 billion rand from 1.6 billion rand a year earlier, the lender, based in Stellenbosch near Cape Town, said in a statement today.

Earnings per share excluding one-time items climbed 15 percent to 17.52 rand, beating the 16.95 rand median estimate of 12 analysts surveyed by Bloomberg.

Unsecured lending, which targets lower-income consumers with loans not backed by assets, may risk a political backlash as annual interest rates of as much as 31 percent mire borrowers in debt.

The National Consumer Tribunal heard allegations that the bank contravened credit laws on March 13 and judgment was reserved, according to Capitec.

“In the year ahead the retail credit market will remain tough,” Capitec said in the statement.

“We see opportunities in transaction banking.”

Capitec’s total dividend rose 16 percent to 6.63 rand per share. - Bloomberg News