Capitec profit, dividend hit record as clients top 26.6m

Capitec’s first-half profit and interim dividend jumped to a fresh record as higher fee and commission income at South Africa’s biggest bank by clients lifted revenue.

Headline earnings climbed 19% to R9.5 billion in the six months to August 31, the Stellenbosch-based lender said in a statement Wednesday. The company proposed an interim payout of R31.10 per share, also 19% higher.

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Chief executive officer Graham Lee, who took the role in July last year, is steering the company through intensifying competition as rivals, including Nedbank Group and new entrant OM Bank, seek to tap the low-income market. Former CEO Gerrie Fourie oversaw four years of record profit as Capitec’s focus on low-income depositors and unsecured lending paid off.

Its business bank, which started in 2022, reported a 52% increase in headline earnings. The unit, which targets small- and medium-sized companies, dropped fees and cut its point-of-sale commission rates to lure clients.

Read: Capitec and Ninety One Assurance fined for administrative non-compliance

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Interest income rose 7% while higher client numbers resulted in a 21% jump in fees and commission income. The lender generated return on equity of 31%, matching the prior period’s result.

The bank’s credit impairment climbed 21% to R5.75 billion. That lifted its credit-loss ratio to 8.4%, compared with 7.9% in the previous year.

Founded by Michiel le Roux, the lender was spun out of financial services company PSG Group in March 2001 and listed on the Johannesburg Stock Exchange in February 2002.

Read: Capitec expects earnings rise despite deteriorating credit conditions

Since then, the company has transformed itself into a financial-services behemoth with more than 26.6 million personal and business clients as of August 31.

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Its shares have gained 6.5% since the start of the year, outpacing a 2.5% increase in the FTSE/JSE Africa Bank Index over the period.

Read: Capitec shareholders approve corporate name change

The advance has lifted Capitec’s surge since its 2002 listing to more than 260 000%, helping the company retain its mantle as South Africa’s best-performing stock in the period and exceeding the benchmark gauge, which climbed about 893% in the period.

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