Capitec grows, challenges for the top four post

Capitec Bank Holdings continued to steal market share during the six months ended August to reach a client base of 5 million.

However the banking group noted yesterday that it might be difficult to meet its objective of opening 75 new branches for the 12 months to February 2014 due to unfavourable market conditions.

Capitec announced financial results for the six months ended August yesterday and showed a 39% growth in earnings to R971m. The banking group said it opened 29 new branches during this period. “The economic slowdown will make it more challenging to meet the higher target of 75 new branches (2013: 55) as developers shelve plans for new shopping malls. The number of ATMs grew to 2 844”.

The pace at which Capitec has been growing and challenging the established banks like Absa, Standard Bank, FNB and Nedbank, has raised eyebrows.

Since establishment in 2000 Capitec has grown phenomenally from what appeared to be a focus on unsecured lending for the low to middle income market into becoming a fully fleshed bank and has amassed close to 600 branches across the country. It is now competing for the fourth largest retail bank in the country which could bump Nedbank to the fifth position. In fact the latest AMPS data place Capitec on the fourth position with 10.8% market share ahead of Nedbank’s 10.7%. But the AMPS are not a clean reflection of market share.

Capitec said “Despite South Africa’s medium-term challenges, we remain excited about the future and the opportunities available to us. Unsecured credit is here to stay and, for most, the need for a low-cost banking solution is a necessity”.

“We have passed the 5 million client mark and continue to grow. 339 000 new clients have chosen to bank with Capitec over the last six months. Our market share of primary banking clients is now over 10%”.

The group said “We are concerned about the fundamentals of the economy. South Africa is operating below potential.

Many sectors are impacted by labour cost pressures, low productivity and inertia as extended strikes and prolonged bargaining erode the ability of companies to operate sustainably. There are also now more financial pressures on consumers.

The bank however noted that there are opportunities for its value offering in a slowing economy.

“A slower economy is not all bad news. Cost pressures will encourage many consumers to re-consider their banking costs”.

Capited also announced yesterday that its founding CEO Riaan Stassen is set to retire at the end of December.

“Riaan will continue to serve on the Board of the bank as a non-executive director after his retirement.

He will be succeeded Gerrie Fourie on 1 January 2014.

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