Capitec and FirstRand battle to be most valuable bank in South Africa
Capitec briefly overtook FirstRand to become Africa’s most valuable bank, a month after it appointed a new chief executive officer.
The bank closed on 26 August with a market cap of R424 billion, R4 billion above that of FirstRand. However, in morning trading on 27 August, Capitec has lost ground to be valued around R3.5 billion less than FirstRand.
South Africa’s biggest bank by customer numbers, Capitec, has reported record profits for four straight years.
Its shares have jumped about 16% since the start of the year, outstripping peers on the FTSE/JSE Africa Bank Index, which climbed 3.6% over the period. FirstRand is down 1.3%.
Capitec’s stock has surged 213,189% since its listing on 18 February 2002. Under former CEO Gerrie Fourie, the bank’s focus on low-income depositors and unsecured lending helped lure customers. Graham Lee replaced Fourie on July 19.
“Capitec’s growth shows what a company can do by solving a real customer problem, with a decisive management team and agile technology,” Avior Capital Markets analyst Adrienne Damant said in response to questions from Bloomberg.
It has created a trusted brand and leveraged its large client base to consistently deliver better earnings growth and returns than its peers, she said.
Still, Capitec is facing intensifying competition as rivals, including Nedbank and new lender OM Bank, seek to tap the low-income market.
And while Capitec’s market value jumped to R424 billion as of the close of trading on 26 August, its total assets continue to be below that of its competitors. This can be seen in the table below.
| Bank | Total Assets |
|---|---|
| Standard Bank | R3.4 trillion |
| FirstRand | R2.5 trillion |
| Absa Group | R2.2 trillion |
| Nedbank | R1.5 trillion |
| Capitec | R239 billion |
Capitec was founded by Michiel le Roux in 1997, three years after Nelson Mandela led the African National Congress to victory in the nation’s first post-apartheid elections.
The lender was spun off from financial services company PSG in March 2001 and listed on the Johannesburg Stock Exchange 11 months later.
Since then, the company has transformed itself into a financial-services company with more than 24.1 million personal and business clients as of the end of February.
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