Capitec reports highest-ever profit and dividend with over 26.6 million clients and growing

Capitec’s profit for the first half of the year and its interim dividend have reached a new all-time high, bolstered by increased fee and commission income at South Africa’s largest bank by client base.

Headline earnings surged by 19% to R9.5 billion for the six months ending August 31, according to a statement released by the Stellenbosch-based lender on Wednesday. The company has proposed an interim dividend of R31.10 per share, marking a 19% increase as well.

Capitec share price

Graham Lee, the chief executive officer who assumed the role in July of last year, is guiding the company amidst growing competition, as rivals such as Nedbank Group and newcomer OM Bank aim to capture the low-income market. Former CEO Gerrie Fourie led the bank to four years of record profits, leveraging Capitec’s emphasis on low-income depositors and unsecured lending.

The bank’s business division, which launched in 2022, experienced a 52% rise in headline earnings. This segment, targeting small and medium enterprises, has reduced fees and lowered point-of-sale commission rates to attract customers.

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Interest income increased by 7%, while a rise in client numbers led to a 21% boost in fees and commission income. The lender achieved a return on equity of 31%, consistent with the previous period’s performance.

However, credit impairment rose by 21% to R5.75 billion, causing its credit-loss ratio to climb to 8.4%, up from 7.9% the prior year.

Established by Michiel le Roux, the lender separated from the financial services company PSG Group in March 2001 and was listed on the Johannesburg Stock Exchange in February 2002.

Read: Capitec anticipates earnings growth despite challenging credit conditions

Since its inception, the company has evolved into a financial services giant, boasting over 26.6 million personal and business clients as of August 31.

Capitec’s shares have appreciated by 6.5% since the beginning of the year, outpacing a 2.5% rise in the FTSE/JSE Africa Bank Index during the same timeframe.

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This growth has propelled Capitec’s remarkable increase since its 2002 listing to over 260,000%, solidifying its position as South Africa’s top-performing stock in that period compared to the benchmark, which rose approximately 893%.

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