Capitec Bank declared an increase in headline earnings of 18% to R3,9-billion during the last six months of its annual period up to end February 2021.
However, as a result of the first six months of COVID impact on operations, its annualised basis headline earnings were down by 27% to R4,6-billion.
A final dividend of 1 600 cents per ordinary share was declared (Feb 2020: 755c per share).
Capitec, which believe is now the largest digital bank in the country, experienced an increased digital adoption by its clients of 28% with digital clients now totaling over 8,6-million. The permanent adoption of digital channels by its clients contributed to 35% increase in the number of digital transactions to 1,1-billion.
Gerrie Fourie, CEO of Capitec Bank, says the bank’s agility and tech focus came to the fore during the Covid-19 pandemic as it acted swiftly to counter the impact on its clients and its business operations.
“We embraced innovation and digitalisation and so did our clients, and the permanent benefits and cost savings are expected to flow in the coming years. Clients are now more than ever before motivated to use digital channels such as our new banking app as they set to benefit from the lower transaction fees and zero-rated data charges.”
During the past year it continued to grow its active client base by an average of 160 000 clients per month – a 14% increase to 15,8-million customers.
Fourie adds: “It is a privilege to be able to help nearly 16-million South Africans simplify their banking so that they can live better. We believe the strong client growth we’ve seen over the last year is testament to the fact that our offering of simplified, affordable banking delivered through personalised service is more relevant than ever.”
Its net transaction fee income increased by 17% over the past year despite the pandemic. Net transaction fee and funeral plan income now cover 99% of operating expenses.
Indicators highlighting the retail bank’s diversified growth include:
* Transacting: Total net transaction fee was 9% higher to R8,1-billion;
* Saving: Retail deposits increased by 18% to R107,1-billion, and Capitec paid R4,1 billion back to clients as interest on deposits, fixed deposits and credit cards;
* Funeral Plan: Its funeral plan income increased by 57% to R650-million with 1,2-million active policies;
* Credit Life insurance: Net insurance income decreased slightly (2%) to R965-million;
* Credit: Credit granting criteria were tightened during lockdown and only 40% of total loan sales and disbursements were made during the first six months;
* The gross loan book decreased by 2% to R64-billion while the gross credit card book grew by 17% to R6,8-billion.
Retail credit clients who were impacted by the financial constraints of the pandemic were offered payment relief during the 3,5 months of hard lockdown. “This was welcomed by our clients as we offered support ranging from payment breaks to variable payment schedules to the value of R7,5 billion.” Says Fourie.
“We also offered clients an interest refund incentive for good repayment behaviour and R211-million has been paid back to date. The majority of Covid-19 related reschedules have rehabilitated and by end-February 2021 the outstanding balance was R1,7-billion – compared to the R7,5-billion that was initially rescheduled.”