In an impressive feat of financial growth, Capitec has reported a dazzling 36% rise in headline earnings a share, reaching R6.4 billion for the six months ending August 31.
The significant uptick solidifies the digital bank’s position as the leading retail bank in South Africa by customer numbers, with its client-centric and digitally diversified solutions continuing to attract new business.
“Our continued investments since 2020, even amidst a tough economy, have borne fruit. We’ve developed solutions that meet our clients’ needs, facilitated by political stability, normalized inflation, and lower interest rates, which in turn promote economic confidence,” said CEO Gerrie Fourie.
Capitec’s digital banking platform, now with 23 million customers, experienced a 19% increase in net transaction and commission income, reaching R6.9bn..
The bank’s value-added services (VAS) and Capitec Connect revenues surged by an impressive 79% to R2bn. Return on shareholder equity also increased notably from 24% to 29% by the end of August 2023.
Digital banking transformations continue to be a key growth driver. Active banking app clients jumped 21% to 12.4 million, now representing 54% of the bank’s total 22.8 million clients. Digital and card payment volumes grew by 24%, now constituting 89% of total transaction volumes, with the banking app itself seeing a 30% rise in transaction volumes, accounting for 88% of all digital transactions.
“These figures reflect millions of South Africans embracing digital financial solutions that simplify their financial activities and make access to finance more affordable. We’re successfully transforming how people bank,” Fourie said.
Capitec’s value-added services income skyrocketed by 73% to R2bn, driven by the growing number of clients using services such as send cash, bill payments, prepaid options, vehicle licence renewals, and purchasing various vouchers. The bank sold 132 million vouchers during this period.
Capitec Connect, the bank’s mobile virtual network operator, introduced new bundles and saw active SIMs increase to 1.2 million by the end of August 2024. Data usage surged to over 5 petabytes, translating to a net income contribution of R69 million, up from just R4m the previous year.
"Our focus on expanding our VAS offerings and transforming cash transactions into seamless digital experiences is yielding significant results. Strong adoption of our new payment channels and digital services is enhancing client experience and providing vital data to optimise our offerings," said Fourie.
The bank’s insurance segment also showed robust growth, with net funeral insurance earnings rising by 14% to R727m, contributing 11% to group headline earnings. The funeral book expanded 20% to encompass 3 million active policies, covering 13.6 million lives. Moreover, the new life cover solutions launched in June 2024 accumulated 38,526 active policies by August 31, contributing R8m to the insurance profit.
On the business banking front, Capitec did encounter a 12% decline in headline earnings to R214m, attributable to deliberate fee reductions and strategic changes in merchant e-commerce. Nevertheless, there was a notable increase in the client base, with active clients rising by 30% and active merchants climbing by 31%.
"Our business banking strategy is firmly focused on long-term growth. By aligning our fees with retail banking and adjusting our merchant services pricing, we’re positioning ourselves to cater to SMEs and tap into the underbanked emerging market," said Fourie.
Capitec acquired AvaFin as a subsidiary in May 2024. AvaFin, a leading online consumer lender operating in countries including Poland, Latvia, Czechia, Spain, and Mexico, generated a taxed profit of R66 million from May to August.
“The AvaFin acquisition opens exciting growth opportunities for us on a global scale, aligning perfectly with our vision to become a leading global financial brand over the next decade,” said Fourie.
BUSINESS REPORT