South Africa's Capitec Bank reports 16% rise in 2023 profit

AFRICAN STOCKS AND FINANCEApril 28, 2024 at 10:55 AM UTC

TLDR

Capitec Bank, a South African lender, saw a 16% increase in full-year profit driven by strong performance in the second half.
Net transaction and commission income surged by 30%, with headline earnings per share reaching 9,171 cents for the year ended on February 29.
Growth was attributed to rising transaction and commission income, including value-added services, fueled by increased digital transactions and adoption of new payment channels.

Capitec Bank, a South African lender, reported a 16% increase in full-year profit, buoyed by robust performance in the second half. The bank's net transaction and commission income surged by 30% during the period.

Headline earnings per share, a key profit metric in South Africa, climbed to 9,171 cents for the year ended on February 29, up from a restated 7,938 cents in the previous year. Capitec attributed this growth to a rise in transaction and commission income, including value-added services (VAS), which reached 13.9 billion rand ($724 million).

The increase was fueled by a surge in digital transactions by clients and their adoption of VAS and new payment channels offered by the bank.

Key Takeaways

Capitec revealed that it initially eased its credit-granting standards in late 2021 as some clients exhibited signs of recovery post-COVID-19. However, amidst rising inflation and interest rates due to the Russia-Ukraine conflict, the bank began tightening its criteria again in June 2022. By February 2023, there was a notable uptick in clients entering debt review and experiencing arrears and defaults. Despite these challenges, the bank saw a 12% increase in insurance profit after tax, reaching 3.1 billion rand. Additionally, profit after tax in its business banking unit surged by 23% to 478 million rand.

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