Capitec under siege – but winning the war

Since its launch in 2001, Capitec has grown from a challenger to a trailblazer, with new banks looking to follow in its footsteps and even incumbent banking giants taking a page out of the bank’s book.

Despite the increased competition in Capitec’s target market, the bank has thrived. It now boasts nearly 25 million clients, making it the largest bank in South Africa by customers.

Capitec was founded in 2001 with a focus on short-term lending to lower-income, unbanked individuals, which was an underserved part of South Africa’s market.

At the time, most banks in South Africa did not consider this market commercially viable. In addition, starting a new bank in the country at that time was significantly more difficult.

This is due to stringent regulations, big capital requirements and the dominance of large retail banks.

Doubts about Capitec’s viability and ability to compete were almost proven right, as the bank struggled to attract a large customer base and notable deposits.

However, the bank stuck to its strategy of targeting unbanked South Africans, not differentiating products based on income level, and developed easy-to-understand products.

While it took some time, Capitec started gaining traction and even attracted clients away from the traditional Big Four banks in South Africa.

Today, Capitec is the country’s biggest bank by client numbers and holds a significant share of the market.

In addition, it has significantly shifted from relying largely on interest revenue and unsecured lending to diversifying its revenue through new channels, including value-added services, insurance, and business banking.

The bank has been so successful that newer entrants to the market are looking to replicate its success and follow in Capitec’s footsteps.

For example, insurer Old Mutual recently launched its banking offering, OM Bank, which is seen as a direct competitor to Capitec.

OM Bank is challenging Capitec in the so-called ‘middle mass market’, which refers to South Africans earning between R5,000 and R80,000.

In addition, South Africa’s so-called Big Four banks have expanded their services to offer products aimed explicitly at the lower-income market.

While this has significantly expanded access to banking services in South Africa, it has also turned up the heat for Capitec, which is facing increased competition from both new and existing banks.

Regardless of this pressure, Capitec continues to go from strength to strength, with no signs of stopping anytime soon.

Winning the war

Capitec’s latest interim results for the six months through August 2025 showed how far the bank has come since its launch in 2001.

These results revealed a strong performance for the banking giant, with basic earnings per share up 24% to R6.93 billion.

The bank’s income grew across all business units, with net interest income after credit impairments up 27% to R7.1 billion and net non-interest income up 19% to R13.4 billion.

CEO Graham Lee explained in the bank’s interim results presentation that 65% of Capitec’s income from operations now comes from business other than credit.

This is a far cry from the short-term, credit-based lender the bank initially became known for in the first few years after its launch. “Now, we are so much more than that,” Lee said.

This feat is made even more impressive by the fact that Capitec has not significantly raised its fees to achieve this.

In fact, the bank decided earlier this year to lower and simplify its fee structure and transaction prices for the Personal and Business Banking segment.

This is part of the reason Capitec has seen such exceptional client growth, with the bank reaching nearly 25 million active clients in the six-month period.

This represents 8% client growth, putting Capitec significantly above its traditional banking peers, which tend to see more subdued growth of between 1% and 2%.

Capitec has also been highly popular among investors. Since listing on the JSE, it has been the country’s best-performing stock, with its share price up 200,000%.

This means Capitec is also the country’s second biggest bank by market cap, falling just below banking giant FirstRand, which it briefly surpassed earlier this year.

Former Capitec CEO and co-founder Gerrie Fourie has attributed the bank’s success to its sustained focus on its so-called “winning formula” of four fundamentals – affordability, accessibility, service, and simplicity.

Looking forward, Capitec plans to keep its momentum going, with big plans for its business banking segment, in particular.

The bank is looking to make its mark on South Africa’s informal market, which has an estimated value of around R75 billion and millions of businesses that lack traditional banking services.

The graphic below shows how Capitec’s income streams have diversified between August 2024 (the inner circle) and August 2025 (the outer circle).