Capitec’s robust financial performance for the year ending February 2024 was fueled by the expansion of digital transactions and customer numbers, resulting in a profit surge of more than 15%.
Headline earnings grew to R10.6 billion from the restated headline earnings of R9.2 billion in 2023. Headline earnings for the 6 months ended February 2024 (H2 2024) grew by 25% to R5.9 billion compared to the headline earnings of R4.7 billion for the 6 months ended August 2023 (H1 2024).
“Our long-term strategy to diversify our income streams and grow quality clients produced double-digit growth in a financial year where external economic events placed pressure on our credit business.,” said Gerri Fourie, Capitec’s CEO.
Non-interest income made a significant contribution to the 16% growth in headline earnings for the 2024 financial year and increased to 72% of income from operations after credit impairments (2023: 66%).
“The diversification of the Retail bank driven by the introduction of new products yielded positive results in 2024,” he added.
Retail bank active clients grew to 22 million versus 19.9 million in 2023, 11.2 million of whom use the banking app compared to 9.4 million in 2023.
Fully banked clients, who perform more transactions and therefore contribute more to income, increased to 7.8 million from 6.9 million in 2023.
The number of clients using our value-added services (VAS) grew by 17% to 9.8 million, contributing to an increase in income from VAS. A total of 4.6 million unique digital clients utilised Capitec Pay and more than 500 000 clients made use of ApplePay, GarminPay, GooglePay and SamsungPay.
“Agile, proactive and conservative management of credit granting resulted in more recent tranches performing better.”
The retail bank’s gross loans and advances increased by 2% to R83.8 billion (2023: R82.3 billion), and the provision for ECL grew from R18.8 billion to R21.4 billion.
The stage 3 loan book grew to R22.3 billion at the end of February 2024 (2023: R18.5 billion).
Arrears contributed R223 million to the growth, up-to-date reschedules that have not rehabilitated contributed R717 million, and the default book contributed R2.7 billion.
The stage 2 loan book decreased from R13.5 billion at the end of the 2023 financial year to R12.9 billion primarily because balances migrated to stage 3 but also because the migration from stage 1 to stage 2 slowed during H2 2024.
The bank’s total coverage ratio increased from 22.9% at the end of February 2023 to 25.5% at the end of February 2024.
Internationalisation
On 11 March 2024, the South African Reserve Bank (SARB) approved a transaction in which Capitec will increase its shareholding in Avafin Holdings Limited (Avafin), an international online consumer lending group, from 40.66% to 97.69% at a purchase price of EUR26.3 million.
Avafin management will continue to hold the residual interest in the business, in line with Capitec’s philosophy of management ownership.
By 15 April 2024 all the required regulatory approvals for the transaction had been obtained.
Avafin provides online consumer loan products in several countries, including Poland, Latvia, Spain, the Czech Republic and Mexico.
“The key reasons for acquiring the controlling interest in Avafin are the strong culture fit, geographical diversification and an excellent management team. Avafin is closely aligned with our client-centric retail business philosophy and is well positioned for growth,” said Capitec.
