2 minute read
26 Mar 2014
4:18 pm

Capitec’s earnings grow

Capitec Bank's earnings grew by 27 percent from February 2013 to February 2014.

Image courtesy stockxchnge.com

The bank’s earnings went from R1.6 billion to R2bn this year, said Capitec Bank CEO Gerrie Fourie.

“This is the first time the headline earnings topped the R2bn mark,” he said in a statement on Wednesday.

“The solid growth in earnings is on the back of Capitec’s focus of growing its transactional banking business during the period under review and good control over costs.”

The bank’s income was kept afloat by the growth in transacting income which at 43 percent was valued at R1.9bn.

“Transaction income now covers 59 percent of operating costs, compared to 45 percent in the previous period,” said Fourie.

“The cost-to-income ratio for banking activities has therefore declined from 38 percent to 32 percent.”

The commercial bank welcomed 711,000 new clients in the past year, bringing its number of clients to 5.4 million.

Fourie said he was happy with the client growth in the banking business and the inroads Capitec Bank was making in the market for primary bank clients who deposit their salaries.

“Capitec’s market share in this sector has increased from 9.2 percent to 12.7 percent over the past year,” said Fourie.

However, the bank recorded a decline in credit turnover linked to its loans.

The figures were down from R25.4bn last year to R18.2bn this year.

“Gross loans and advances increased from R30.7bn to R33.7bn and net loan impairment expense increased by 50 percent to R4bn.

“Arrears to gross loans and advances increased from 5.8 percent to 6.5 percent year-on-year,” said Fourie.

He said the bank had only approved 44 percent of loans applied for, but only 29 percent of the credit offered was taken up by customers as Capitec Bank’s credit offer was in many instances less than the client applied for in either amount or term.

All in all, Fourie approved of the progress made by the bank, adding that the past three years had helped the bank weather the storm better than most of its competitors.

Capitec’s number of loans advanced decreased by 19 percent on the previous year to just over three million, and the average term per loan advanced decreased from 48 months in 2013 to 37 months by the end of the financial period.

“We remain conservative with our approvals, but aggressive with our pricing and Capitec Bank remains the best priced unsecured credit provider in the market. Also, we do not charge life or retrenchment cover as an additional fee, as other providers do,” Fourie said.

“Our revised credit criteria and provisioning over the past three years has helped us meet the challenges that all banks face in the unsecured credit market.”

Retail savings deposits grew substantially by 37 percent in the past year to R23.6bn.

“We’ve also experienced higher income clients making use of our credit offer despite the stringent assessment criteria,” said Fourie.

An independent survey recently conducted endorsed Capitec as the number one bank for 2014 for its mobile and internet offerings.