“Our first priority is a credit card. That will give us a very nice and full basket for the client,” Capitec CEO Gerrie Fourie said after the release of the company’s results on Monday.
Capitec said it was always looking for opportunities to diversify its business but was not exploring secured credit.
Capitec posted a 21% rise in interim headline earnings on Monday further underscoring the difference in its banking model versus that of African Bank, which is under curatorship.
Capitec’s credit rating was downgraded by Moody’s last month after the bailout of African Bank, raising questions about Capitec’s future wholesale funding profile and costs. The downgrade angered Capitec and the South African Reserve Bank as it was seen as unnecessary.
On the profile of wholesale funders and funding costs, Mr Fourie said there was no need to go to the market for funding in the next six to 12 months.
Capitec finance director Andre du Plessis said he would engage funders before the need to raise money arose.
Capitec’s results on Monday showed a modest growth in gross loans and advances, with this rising 7% in the six months ended August to just over R35bn. Arrears grew 8% to R1.9bn. The provision for doubtful debts was increased 18% to R3.7bn.
Asked to comment on the arrears and the higher provisioning, Mr Fourie said: “If you look at the six months, it’s got two halves. The first half was extremely difficult, you go through your normal cyclical January, February, March, bad-performing period. Secondly you were in a strike season … that’s reflecting in the arrears and write-offs.”
He said the lender had provisioned higher given the uncertainty in the economy and to avoid being caught should any trouble emerge. Analysts said this was in line with Capitec’s conservative approach
Mr Fourie said that the acceptance rates for loan applications stood at 43% in the six months under review. However, the take-up rate of loans was 30%. This was partly because some customers were not happy with the loans offered, either because the term rate was too short or the loan offered was too small, he said.
In the comparable previous six months period the take-up rate was 28%, but 18 months ago it was 43%, reflecting a tightening in credit offering.
Capitec head of marketing Carl Fischer said the 2% growth to 30% in the take-up rate of loans was a reflection of people with much higher income applying for unsecured credit.
Capitec’s big growth came from the transactional segment. Net transaction fees grew 34% to R1.2bn. Active clients rose 16% to 5.8-million partly due to attracting more middle income clients.
Capitec’s cost-income ratio grew by a 1% to 34%, while return on equity rose to 25% from 23% in the previous comparable period.
Commenting on the results, Avior Research banking analyst Harry Botha said: “It’s pretty solid numbers, not much that you can fault them on.”