Business
Capitec Bank spreads its net in South Africa
Cautious accounting
Capitec has been especially cautious in the provisioning of bad debts, choosing to write off loans after the first missed payment. At the same time, the success of its low-cost bank accounts means that fee-based income is rising. When asked whether he thought Capitec’s stratospheric growth rates could be sustained, incoming chief executive Gerrie Fourie explained: “Our focus is to offer a banking product that resonates with people of all income levels. It appears that we have managed to offer a simple, transparent, easily accessible product that increasingly gains market acceptance. We do not expect this to change in the year to come.”
So while lower growth rates can be expected in the extension of credit, the bank plans to power ahead with the roll-out of its banking products, like the Global One account, which has a fixed monthly fee of R4.50 ($0.40). With many South African banks expanding into the continent to find growth, is this the next step for Capitec?
Fourie says: “The bank’s intention from day one was to take the model internationally, but this will only be done once we have a strong foothold in our local market. [So] we do not foresee that we will expand beyond our borders during the next financial year.” But before it does so, Capitec and the broader lending industry will seek to con- vince the market that the phenomenal growth rates enjoyed prior to 2012 do not hide the weakness of the unsecured loan sector.
Source: The Africa Report
