“In the next year to two years, we will reduce prices on a constant basis. Our long-term plan was always to reduce interest rates dramatically, by between 5% and 10%. But you need time and stability,” Fourie said yesterday.
‘Tackling secured credit’
Capitec charges an average interest rate of 28% on longer-term unsecured loans currently, Fourie
“The reason to bring down rates is to actually take secured credit head-on,” added Charl Nel,
Capitec’s head of marketing and corporate affairs.
Fourie believes market forces will over time push interest rates down in line with government
proposals. “The moment bigger players come in, they bring stability and market forces will bring
rates down,” said Fourie, who was commenting on the group’s results for the six months to
“The problem with doing it overnight, is that it creates uncertainty and prevents us from really
investing. You want to have very clear guidelines from government on how you’re going to approach the next five to 10 years.”
Earlier this year, government dropped a bombshell on the unsecured lending industry when it
proposed that the maximum prescribed rate on unsecured credit transactions be reduced from the current 32.65% to 24.78%.
If this were to happen, high-risk borrowers will struggle to obtain credit from formal channels and be forced into the under ground market.
“We strongly feel you need to cap credit life, as lenders are using it to take on extra risk,” Fourie
By overcharging on credit life, lenders pocket money to lend more money to clients who
shouldn’t be getting it, he added. Fourie said that Capitec’s average rate is currently about 10%
lower than the rest of the market.
At 464 000, Capitec’s net client growth over the past six months is at an historical high.
“We’re still seeing about 110 000 new clients coming in every month and our fallout rate has reduced from 40 000 to 30 000 clients a month,” Fourie said.
Gross loans and advances grew 8% over the period to R37.9 billion, while arrears fell from 5.5% to 4 .7%. Provisions for doubtful debts have climbed 13% to R4.2 billion, as a function of the weak economy.
Capitec grew headline earnings 25% to R1.5 billion and declared a dividend of R3.75 a share,