Capitec Bank, the biggest digital bank in South Africa, added one million new clients in the six months to August 31, a staggeringly big number considering the weak economic environment.
When questioned about how the bank managed to gain so many new clients in such a short period, its CEO, Gerrie Fourie, said in an interview yesterday that in fact, the bank had managed to grow at about two million new clients every year, for the past five years.
The bank now has some 21.1 million active clients, which is a significant proportion of South Africans. He said if you add all the clients of all the banks in the country together, you come up with between 55 and 56 million people.
However, the approximate population above the age of 12 is 40 million people. He explained that the approximately 15 million people difference is the number who are double-banked.
He said from Capitec Bank’s point of view, some 7.5 million of its clients are “fully banked,” in that they use a Capitec card or product first to pay for things, earn more than R3 500 a month in cash and do all their transactions at the bank. This number, he said, is about six times more than that of its competitors.
The number of clients embracing digital transactions grew 8% to 11.7 million, while app user numbers climbed to 10.2 million, making Capitec the biggest digital bank in South Africa.
When questioned about whether he was afraid the bank may run out of new clients given the population and strong competition in the market, he said that for them, the most important function was how to optimise its client base and add value to its services, such as, for example, the creation of better products. In six months the bank had generated an additional R390 million in income from new services alone, he said.
“Our investment in innovation and 11% active client growth resulted in an 18% increase in retail transaction volumes. Net insurance grew by 33% to R1.5 billion.”
Capitec’s funeral cover income increased by 59%, while credit life insurance income grew by 20%.
The bank grew headline earnings per share by 9% to R4.7bn, but operating growth was 26%, which translated into 9% headline earnings growth principally because of higher impairments due mainly to the effect of the weak economy on its clients.
Fourie said, however, that they expected impairments would improve in the second half due in part to inflation starting to ease and interest rates were stabilising.
He said that in an economic climate rife with financial challenges, Capitec’s latest results highlighted their commitment to product diversification, underpinned by investment and innovation to meet their clients’ needs.
“Considering the convenience of digital payments, Capitec’s portfolio now includes Samsung Pay, Google Pay, Apple Pay, Garmin Pay digital wallets, Capitec Pay, and the recently launched PayShap,” said Fourie.
Capitec Pay, an innovation that makes online payments simpler and safer for clients and retailers, had processed 52 million transactions since it was introduced in March 2023.
The PayShap solution launched in August 2023 had already captured a 43% market share.
Capitec’s value-added services (VAS) offerings now encompassed bill payments, vouchers, and national lottery ticket purchases.
VAS constituted some 16% of Capitec’s net transaction and commission income, generating R394m in the interim period.
Capitec Retail’s gross loans and advances saw an uplift of 8% to R83.8bn. The total credit impairment charge on retail loans and advances rose by 62%, as anticipated by the bank and in line with the industry, amounting to R4.6bn.
Capitec Business’s headline earnings increased 20% to R242m. The division recently launched its online banking platform and Capitec App, migrating more than 23 500 existing clients.
Capitec’s IT-related expenditures, excluding employee costs, increased 36% to R880m, driven by investment in scalable technology and cloud services to support future growth.