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Capitec reported headline earnings of 9.5 billion rand, about $583 million, for the six months to Aug. 31, a rise of 19% and another record for the bank Michiel le Roux founded in Stellenbosch.
The board declared an interim dividend of 3,110 cents a share, also up 19%, and operating profit before tax rose 21% to 12.6 billion rand.
Capitec now banks more South Africans than anyone else. Active clients rose 7% to 26.6 million, with 1.6 million joining during the half, and the number using it as their main bank grew 11% to 10.4 million, which is 41% of the total against 38% a year ago. App users rose 18% to 16.5 million.
What has changed is where the money comes from. Capitec built its business lending small unsecured amounts to low-income South Africans, and businesses outside that core now generate 70% of operating income. Net interest income rose just 7% to 12.7 billion rand, while non-interest income jumped 21% to 16.1 billion.
Three of those newer businesses grew fastest. Fintech income, covering value-added services and the mobile network Capitec Connect, rose 32% to 3.8 billion rand, with Connect's net income climbing to 284 million rand from 165 million and its active users reaching 1.8 million from 1.1 million. Insurance earnings rose 22% to 2 billion rand on credit life and funeral cover. Business banking earnings rose 52% to 609 million rand.
Business clients more than doubled, up 123% to 545,000. The number Capitec classes as entrepreneurs rose 204% since February to 237,000.
Costs barely moved. Operating expenses rose 5% against 19% earnings growth, which pushed the cost-to-income ratio down to 36% from 40%, and return on equity held at 31%.
Graham Lee, who became chief executive in July last year, said the group delivered broad-based growth across personal banking, business banking, fintech and insurance despite global uncertainty. He took over from Gerrie Fourie, who ran the bank through four consecutive years of record profit.
Competition is arriving at the bottom of the market Capitec built. Nedbank is pushing into low-income banking, and OM Bank, the new lender launched by Old Mutual, is doing the same.
Le Roux founded Capitec in 2001 with Riaan Stassen and listed it on the Johannesburg exchange on Feb. 18, 2002, at a time when no South African bank was interested in customers earning a few thousand rand a month. The shares have risen more than 260,000% since, making it the best-performing stock on the exchange over that period, against about 893% for the benchmark index.
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