Capitec [JSE: CPI] increased its headline profit by 20% to R2.9bn for the six months to end-August, with its dividend up 20c to 755c.
It added 200,000 new clients per month over the past six months, and now has 12.6m active clients.
Transaction income grew by 12%, despite a reduction in its transaction fees via its app. Some 6.8 million clients now use its digital services, primarily via its banking app, from 4.7m last year. The number of app transactions doubled to 290m.
By comparison, 6 million clients visit its 834 branches every month. At 122 branches, the cashier has been replaced by a full self-help functionality. “This enabled us to add an additional consultant workstation for further capacity in the branch.” Some 21 new branches will open in the next few months.
Retail deposit growth of 23% to R81.4bn, with R2.28bn paid out in interest on retail call deposits, fixed deposits and positive credit card accounts over the past six months.
Since the product launch, in May 2018, more than 1 million Capitec funeral plan policies have been issued and during the last 2 months, 100 000 policies per month. Of the total policies issued, 67% are active.
“To date, the claims experience and policies that lapse are lower than expected due to the book being in the early stages of maturity,” Capitec said.
While its gross loans increased by 17% to R60.3bn, Capitec became stricter in granting credit which helped to curb arrears of up to 3 months – which decreased by 11% to R2.16bn.
But gross loans and advances in arrears by more than 3 months and loans with legal statuses (debt review and handed over) more than doubled – from R3bn to almost R7bn. Capitec said that this was due to the new accounting standard IFRS 9. Previously, loans were written off when they were more than 3 months in arrears or had a legal status. Since the implementation of IFRS 9 on 1 March 2018, loans are only written off when there is no reasonable expectation of further recovery beyond 5% of the gross balance at write-off. Loans therefore remain on book for longer and this resulted in the increase in stage 3 loans that are more than 3 months in arrears.
Its gross credit card book grew by 71% to R4.55bn – 3.6% of the total South African retail credit card market. Currently clients can qualify for credit limits of up to R250 000 with interest rates as low as prime.
Capital expenditure has increased to R804 million at August 2019 (August 2018: R457 million) mainly due to the building of our new head office as well as the implementation of the new SAP general ledger, procurement and human resource system.
As the banking union Sasbo plans to strike about retrenchments in the industry, Capitec said: “We have had no retrenchments and do not plan any either.” It now employs 13 923 people.