JOHANNESBURG - Capitec Bank chief executive Gerrie Fourie has clarified the lender’s loan position exclusively to Business Report as the National Treasury came to the defence of the under pressure bank and decried “the reckless manner” in which Viceroy Research had released its damning report on the bank.
Fourie was adamant that Capitec did not roll over any loans, when responding to Business Report queries about the lender’s loan position and Viceroy Research claims that Capitec’s “concealed problems” largely resembled those seen at beleaguered African Bank prior to its collapse in 2014.
The National Treasury strongly defended the bank yesterday, stating that Capitec was solvent, well capitalised and has adequate liquidity.
The Treasury said that it had been in constant contact with the Registrar of Banks since the report was released.
It had requested that the Financial Services Board (FSB), as the market regulator, working with the JSE, should urgently consider whether it should initiate a market abuse investigation into the conduct of Viceroy Research and to ensure that it is regulated appropriately.
“The FSB is also requested to alert relevant overseas regulators, like the Securities and Exchanges Commission in the US and the Financial Conduct Authority in the UK, to consider whether Viceroy Research is regulated appropriately, and to consider whether it has transgressed any of their market conduct and market abuse laws that aim to protect investors,” the Treasury said.
Capitec’s share price was up by more than 5percent on the JSE yesterday after a report by rating agency S&P Global .
Capitec shares yesterday gained 5.55percent on the JSE yesterday to close at R845.
S&P Global Ratings said its ratings on Capitec Bank “(BB/Stable/B) are not affected by an investment report published by Viceroy Research on January 30, or by the market’s reaction to the report".
It said to date the bank had experienced only mild funding outflows and its liquidity remained sound.
Fourie on Wednesday bought R1.5million worth of Capitec shares in a sign of confidence in the company.
Responding to Business Report queries on the lender’s loan position, Fourie said Capitec did not roll over any loans.
He was responding to the claim by Viceroy Research that Capitec’s “concealed problems” largely resembled those seen at beleaguered African Bank prior to its collapse in 2014.
The New York-based group said about Capitec: “By refinancing delinquencies, Capitec is also creating a false economy within its income statement, as it records interest and fees on delinquent loans which would otherwise be unpaid.
Credit risk
"This type of loan renewal would be concerning at any commercial bank. However, Capitec being a retail microfinance lender, carrying forward small, unsecured retail loans represents much higher credit risk.”
Fourie said the bank gross loans and advances at the end of August 2017 was R46.54m, this was slightly up from R45.14m at the end of February.
Fourie said Capitec wrote off all loans that were more than three instalments in arrears. He said: “The current loans and advances at the end of August were R44.05m and those in arrears were R2.5m.”
At the end of February the amount which was in arrears was R2.86m.
Ray Russon, a general secretary at the National Black Consumer Council, said if any wrong has been committed this must be corrected with immediate effect, but they believe Capitec still remains relevant, because it provides "a required service to our people" such as an app with data.
“We appreciate the fact that Capitec has been trying to service a market that has largely been neglected by the other banks, that is the poor and marginalised.
"We are arranging to meet Capitec so we can understand the nature of the complaints and to ensure our people continue to receive fair banking facilities,” Russon said.
He added Viceroy Research seemed biased against South African companies.