COMPANY COMMENT: Market expects Capitec to add to winning ways
Capitec’s impairments and arrears look scarier, up between 23% and 44%, and loan advances grew a subdued 10%
The question of where high-flying niche bank Capitec intends to diversify its sources of growth, ancillary to the present success recipe, is not going away. Does it plan to become a bigger bank with more products? Has it been eyeing offshore markets? Is the local market saturated?Management’s stock answer is that it is comfortable with its low-cost model of growing volumes, earning income and fees on lending, and paying top rates on deposits. Transaction-fee income has become another income driver, but talk about issuing a credit card and accessing the home-loans market has died down. Last week’s announcement that it intended to pay R280m for a 40% stake in an East European lending outfit allayed some speculation about an offshore foray. But at that price, Capitec is barely dipping its toes into foreign waters. Tuesday’s annual results to end February will in all probability paint another positive picture, with earnings expected to grow more than 20%. The market will be watching for...
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