Capitec shoots the lights out 

Capitec has produced strong results for the first half of its 2025 financial year, with headline earnings surging 36% and return on equity nearing 30%. 

The bank also crucially reduced its annualised credit loss ratio to 7.6% from 9.6% in the same period last year. 

This was revealed in Capitec’s interim results for the six months ending August 2024, in which the bank also said it had reached 23.2 million active clients, including point-of-sale merchants. 

“Our strong results demonstrate the strength of our diversified business model,” Capitec CEO Gerrie Fourie said.

“We have continued to invest significantly since 2020, despite the tough economy, and have developed solutions that meet the needs of our clients.”

Interest income, which surged 72% to R5.6 billion after credit impairments, drove the company’s strong performance. 

However, growth in this area was limited by the tight lending criteria during the past six months to minimise the impact of bad debt on its credit loss ratio. 

This strategy bore fruit, with credit impairments being reduced by 15% and R729 million. The bank’s annualised credit loss ratio (excluding AvaFin) decreased to 7.0% from 9.6% (including AvaFin: 7.6%).

Despite the strong growth in interest income, non-interest revenue remains the core of Capitec’s business, contributing 67% of operating profit. 

Capitec’s non-interest revenue comes primarily from net transaction and commission income, which includes the contribution of value-added services such as Capitec Connect. 

Active Capitec Connect clients grew from 0.9 million to 1.2 million, increasing income from this source. 

Capitec Connect and other value-added services contributed R2 billion to non-interest revenue, totalling R11.2 billion. 

Digital and card payment volumes increased by 24%, representing 89% of the total transaction volume, excluding system-generated transactions.

Encouragingly, Capitec’s insurance business also contributed positively to earnings, generating R1.6 billion in revenue. However, its growth was relatively flat at 5% year-on-year. 

Its new business banking offering, launched in 2019, grew its loan and advanced book by 26% to R21.1 billion. 

Capitec said it has laid the foundations for the growth of this business and will focus on servicing small and medium-sized enterprises alongside the underbanked market. 

The number of merchants on the platform has grown by 31% to 47,267 since the end of August 2023. On average, 11,000 accounts were opened every month in the six months to August 2024. 

Headline earnings per share increased by 36% to 5,544 cents, from 4,072 cents in the comparative period.

Capitec said the growth in headline earnings was exaggerated because headline earnings for the six months to August 2023 provided a low base on which to calculate growth.  

Headline earnings for the six months to August 2023 were impacted by the high credit impairments, which started to improve during the second half of the 2024 financial year. 

The bank generated a return on equity (ROE) of 29%, up from 24% at the same time last year. The increase in ROE was driven by the muted loan disbursements and the growing ROE on transaction and VAS income arising from economies of scale as volumes grow.

As a result of its strong performance, Capitec declared an interim dividend of 2,085 cents per share, up 36% from the same period last year. 

“Political stability, including positive sentiment about the Government of National Unity, normalised inflation and reduced interest rates, promote economic confidence and sets the scene for future growth,” Fourie said.