Gerrie Fourie, CEO of Capitec - another survey to celebrate
Gerrie Fourie, CEO of Capitec - another survey to celebrate

Capitec stills sceptics: expects 22% rise in 1H profit

Published on

JOHANNESBURG (Reuters) – South Africa's Capitec Bank flagged on Thursday it expected first-half earnings to rise by as much as 22 percent, in sharp contrast to rival African Bank Investments, which was rescued by the central bank last month.

Capitec, like African Bank, is an unsecured lender that traditionally targeted lower-income South Africans. Following African Bank's collapse, ratings agency Moody's downgraded Capitec citing "heightened concerns regarding the inherent risks ofCapitec's consumer-lending focus."

But Capitec said in a regulatory filing on Thursday it had seen a marked increase in fees from transactions in the six months to end-August, when it also attracted more retail deposits.

"Transaction income grew significantly not only because of an increase in client numbers, but also because we attracted clients in higher income groups who do more transacting," it said.

Its shares were up more than 7 percent at 228 rand, outpacing a 0.2 percent rise by the All-Share index.

The South African Reserve Bank disagreed with Moody's rationale for the cuts, saying Capitec did not follow the same business model as Abil, which funds only a small portion of its lending from deposits.

Moody's later downgraded South Africa's four biggest banks saying there was a lower likelihood of central bank support to protect creditors after Abil's debt crisis.

Related Stories

No stories found.
BizNews
www.biznews.com