By Ashleigh Brown, journalist, Justmoney
Despite the downgrade by Moody’s, following African Bank being placed under curatorship, Capitec Bank reported a headline earnings growth of 21% for the six month period ending August 2014. Capitec highlighted that income was driven by client growth which was up by 16%, and this in turn grew bank transacting income by 34% to R1, 2 billion for the six month period.
CEO of Capitec, Gerrie Fourie, stated that conditions in the transacting sector of the industry was favourable for the bank and good client growth was achieved as a result of the ongoing quality service-support the bank offered at the best prices in the industry.
Through this client growth Capitec was able to expand its client offerings, and thus making banking more accessible for its clients.
Banking app
Justmoney reported yesterday that Solidarity found that Capitec had the cheapest transactional bank account compared to Absa, Standard Bank, Nedbank and First National Bank.
Fourie said that Capitec was making inroads into the market and that they have further improved their in-branch client flow processes, to monitor capacity and service quality on an ongoing basis. This is in order to ensure better client support, which Fourie highlights as a challenge in retail banking.
Furthermore, Fourie said that Capitec had recently launched a mobile banking app, which was the safest app for clients to use. “We have also expanded our remote banking offer with a new banking app that is the easiest to use in the industry. It is unique in that it has a safety feature which is phone connected which negates SIM-swap fraud. We have had an excellent take up of over 100 000 clients over the past eight weeks, including positive feedback on its simplicity and functionality,” said Fourie.
Charl Nel, Capitec head of strategic communication added: "We took a very simplified approach when developing the app as our main aim was to ensure that the offering allows our clients to take full control of their money in a secure and convenient manner whenever they need access to it."
However, Nel added that they realise that some clients might see the activation process as tedious and frustrating, but highlighted that with the increasing amount of banking fraud, their approach was to rather create an application which is secure in order to protect their clients from becoming targets for fraudulent activity.
Credit market
Business Day Live reported yesterday that Capitec was looking at launching a credit card somewhere in the future. Furthermore, Capitec was looking at diversifying its offerings, but would not be looking at secured credit. However, Capitec declined to comment to Justmoney on the possibility of a credit card.
“The credit industry remains under pressure and we are pleased with our conservative approach to both credit extension and provisioning which we have applied over the past 24 months. Our performance is within our risk appetite and we are seeing new higher income clients taking up our credit offer,” said Fourie.
Fourie stated that the transactional income of the bank was now at 41% of their total lending and transacting income, and they are covering 63% of their expense with that income.
The bank said new active bank clients grew by 418 000 to 5, 8 million on a six month basis. It has further expanded its current offer of home loans in Gauteng, in partnership with S.A. Homeloans, to Western Cape and Kwa-Zulu Natal, with other provinces following soon “This is part of our strategy to meet all our clients’ core banking needs,” said Fourie.
Declined credit applications at the bank remained high at 57% and ultimate take up rate by clients is only 30% of all loans offered. Fourie stated that this was indicative of the present debt-state of clients and the pressure in the economy.
Capitec now has more to offer clients, both in terms of easier accessibility brought by their banking app, and in terms of the cheapest transactional account on the market at the moment. The growth that they have shown is a positive sign and perhaps in the future there will be more offerings form the bank.