Capitec shoots the lights out

Capitec has produced another set of strong results, growing its headline earnings per share by 30% and boosting its dividend by 34%. 

This was revealed in the bank’s annual results for the financial year ended 28 February 2025, released early on 23 April 2025. 

The bank has gone from strength to strength in recent years, reducing its reliance on lending and rapidly growing its value-added services. 

It has also launched its business banking operations following its 2019 purchase of Mercantile Bank, alongside its more recent foray into insurance. 

The expansion of its product and service offerings resulted in the bank growing its active client base to 24.1 million, making it the largest bank in South Africa by customer base. 

Apart from its customer growth, the bank’s financial performance continues to excel, with headline earnings increasing by 30% year-on-year to R13.7 billion. 

Crucially, this growth has not come at the expense of wasted shareholder capital, as Capitec has improved its return on equity to 29%, driven by its expanding value-added services business. 

The bank has also benefited from a declining credit-loss ratio as financial pressure on consumers eases and its efforts to improve client affordability pay off. 

Interest income from lending increased by 17%, as credit-granting criteria were eased for specific client segments during the year, resulting in a 28% rise in loan disbursements. Business banking loan disbursements grew by 29%. 

Despite 12% growth in gross loans and advances, the credit impairment charge on loans and advances decreased by 6%. 

The group CLR (excluding AvaFin) decreased from 8.7% to 6.9% (including AvaFin: 7.5%). This contributed R973 million to the growth in headline earnings, excluding the AvaFin impairment. 

As a result, net interest income contributed R2.7 billion to the growth in headline earnings. 

Capitec’s strength lies in its reduced reliance on lending to drive financial performance, which contrasts with some of its traditional competitors. 

Since its launch, Capitec has focused on growing its non-interest income through transactional income and commissions, with its value-added services, such as Capitec Connect, playing a major role. 

As a result, net non-interest income contributed R3.1 billion to the increase in headline earnings, growing by 22%. 

Net transaction income and commission, including value-added services and Capitec Connect, increased by 25%, with VAS contributing R1.5 billion of the increase. 

Digital transactions and card payments accounted for 90% of transaction volumes, excluding system-generated transactions.

Capitec’s fledgling insurance business contributed R437 million to the increase in headline earnings, with credit life insurance income growing by 1% and funeral and life cover by 44%. 

Due to its strong performance, the bank increased its final dividend by 34% to R44.25 per share. This brings the total dividend for the 2025 financial year to R65.1 per share.