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For more than two decades, South African billionaire Michiel Le Roux has built his reputation on a deceptively simple banking philosophy: strip out complexity, keep costs low, scale aggressively, and earn customer loyalty over time.
That model is once again delivering results.
Capitec Bank, the retail lender Le Roux co-founded with the ambition of transforming access to affordable banking in South Africa, has signalled a major jump in earnings for the 2026 financial year, reinforcing the durability of the low-cost strategy at the heart of its growth story.
In a trading statement issued ahead of its full-year results, Capitec said headline earnings per share (HEPS) are expected to rise between 20% and 25%, to a projected range of 14,294 to 14,890 cents.
That increase would translate into total headline earnings of approximately R16.5 billion to R17.2 billion, up sharply from R13.739 billion recorded in the 2025 financial year a year that itself delivered a notable 30% increase in earnings.
The latest earnings outlook underscores a core principle that has long defined Le Roux’s approach to banking: accepting thinner margins in exchange for scale, efficiency, and long-term customer relationships.
Capitec was built to serve mass-market customers historically underserved by traditional banks, relying on high transaction volumes, streamlined operations, and transparent pricing rather than complex product structures. That philosophy remains central to its current performance.
Loan book expansion fuels profit growth
A key driver of the anticipated earnings surge is the continued expansion of Capitec’s loan book. Improving macroeconomic conditions supported stronger demand for credit during the period, while the bank broadened its reach through targeted lending products.
New purpose-specific loans and facilities designed for customers with multiple income streams helped deepen market penetration, while growth in Capitec’s existing credit card customer base further lifted lending income.
Importantly, the quality of the loan book also improved. The bank reported a healthier expected credit loss (ECL) coverage ratio, signalling disciplined risk management alongside balance sheet growth, an essential component of sustaining profitability at scale.
Cutting fees, growing income
In March 2025, Capitec implemented a simplified fee structure that reduced transaction costs for customers and lowered prices for merchant point-of-sale devices. In many banking models, such price cuts would typically pressure revenue.
At Capitec, the opposite occurred.
The bank’s rapidly expanding client base and rising transaction volumes more than offset the lower fees, allowing net transaction and commission income to grow in line with internal expectations.
The outcome reflects a strategy long associated with Le Roux’s thinking: make banking cheaper and simpler, increase usage, and allow volume to drive profitability.
While Le Roux has stepped back from day-to-day leadership, the results highlight the enduring strategic foundation laid during his tenure. Capitec’s performance suggests that its low-cost, customer-centric model remains structurally advantaged, even as competition in South Africa’s banking sector intensifies.
As the bank prepares to publish its full 2026 financial results, the message from the trading statement is clear: the simplified banking vision that reshaped South Africa’s retail banking landscape continues to generate outsized returns.
For Michiel Le Roux, it is further validation that simplicity, executed at scale, can be one of banking’s most powerful profit engines.
