Finance

One JSE stock turned R1,000 into R1 million

Capitec has been the best performing JSE-listed share over the last 20 years, with total shareholder returns of 108,000% – or 42% per year.

Put another way – if you invested R1,000 in Capitec Bank shares in 2002, this investment would now be worth R1.1 million today.

Capitec’s story started in 1997 through the acquisition of micro-lending businesses such as Smartfin and Finaid by the founding entity, PSG.

Capitec was registered as a bank on 1 March 2001, and the company was listed on Johannesburg Stock Exchange (JSE) on 18 February 2002.

The bank faced significant challenges in the early days, including strict regulations, big capital requirements, and the dominance of large retail banks.

The backing from PSG, which provided Capitec with a significant amount of equity capital, helped it to overcome these challenges.

It believed in its strategy to target unbanked South Africans with its “single status” products which do not differentiate on income level.

Capitec also convinced many people to switch banks because of the simplicity and transparency of its products and pricing.

It started to capture revenue market share from big banks, notably Absa and Nedbank. Capitec increased its revenue share from 3% in 2006 to 16% in 2021.

Today, Capitec has a subscriber base of over 18 million clients, representing 45% of South Africa’s 35 million adults with banking accounts.

It has 14,029 employees and 853 bank branches and continues to gain market share against its large competitors.

Capitec remains ambitious and continues to look for growth opportunities in the local market.

Capitec CEO Gerrie Fourie said they have big plans in the business market through Mercantile Bank, which they bought in 2019.

Mercantile Bank is being moulded to fit Capitec’s philosophy of transparency and simplicity.

The process should be completed by the end of the year, after which they will rebrand Mercantile Bank to Capitec Business Bank.

They also have a big cloud strategy to help Capitec meet their client’s needs faster and increase their computing capabilities.

Capitec’s share price performance was equally impressive. It increased from R1.75 per share in September 2002 to over R2,370 per share in April 2022.

The share price has come off its highs earlier this year, but it is still the best-performing stock on the JSE over the last two decades.

To put Capitec’s exceptional performance in perspective, it easily outperformed other standout stocks like RMB, Naspers, and Alviva over the same period.

The table below shows Capitec’s exceptional return to shareholders over the last 20 years compared to other top performers on the JSE.

CompanyAnnualized Return20-Year Return
Capitec Bank41.97%108 315%
RMB33.04%30 100%
Naspers29.85%18 673%
Alviva29.61%17 787%
PSG28.19%14 170%
HCI25.87%10 042%
Advtech23.56%6 887%
Clicks21.77%5 032%
Mr Price21.70%4 972%
Cashbuild21.32%4 744%

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