JOHANNESBURG – Retail bank Capitec yesterday said it had successfully shrugged off the criticism of its operating model by Viceroy Research last year, adding a whopping 700000 new clients in the first three months of the year.
Capitec said in the year to end- February, 1.5million people registered with its branches, taking the bank’s total active client base to 11.4million.
Chief executive Gerrie Fourie said the bank’s client-centric approach remained instrumental in building a strong, sustainable business.
“To acquire more than 700000 new clients in three months tells you that the brand has been accepted and we are really penetrating the market,” Fourie said.
“We focus on accessibility, and now have 840 branches (14 are new) with extended trading hours and more than 300 Sunday banking branches, as well as more than 5000 ATMs across the country.”
Capitec came under pressure last year after Viceroy said in a note that the bank’s loan book was massively overstated, and it would need to increase write-downs for loans that could not be repaid.
The growth of the lender’s branch network in the year bucked trends in the industry that has seen banks close some of their branches due to a shift in consumer behaviour.
This month, Standard Bank said it would cull about 1200 jobs and close 91 branches as part of its retail and business banking model to meet its customers’ needs.
Fourie said Capitec’s branch network remained valuable, as more than 6million of their clients used them monthly.
He said the strong client growth and solid credit performance saw its profits for the year under review surge 19percent to R5.3billion.
The group’s net transaction fee income increased by 26percent to R6.5bnin the period.
Jordan Weir, a trader at Citadel, said Capitec had worked hard at cutting its underlying client fee structure, specifically targeting digital banking and administration fees.
“Capitec’s banking app, for example, is zero-rated for mobile data charges. This means their clients can bank on Capitec’s mobile platforms without consuming data, facilitating greater exploration and use of their app and by extension, products and services,” Weir said. “Ultimately, consumers want a friendly, efficient and cost-effective banking experience. These are the three pillars that Capitec seem to have excelled at focusing on in recent years.”
Capitec said it was unfazed by the entry of app-driven banks that present the biggest disruption to the sector since it burst onto the scene 19 years ago.
Patrice Motsepe’s TymeBank went live last month, while Discovery Bank and Bank Zero are set to launch in the second half of the year.
Fourie said Capitec was set to thrive in the digital age.
“Our digital channels experienced significant growth: more than 5.2million of our clients now use our digital banking for money management from anywhere at any time,” he said. “This makes us one of the biggest digital banks in terms of numbers in South Africa.”
Fourie said Capitec expected to obtain regulatory approval for its R3.2bn acquisition of Mercantile Bank in the next three months.
Capitec shares rose 3.86percent on the JSE yesterday to close at R1340.