Capitec Bank Reports 36% Surge in Headline Earnings, Driven by Strong Growth in Value-Added Services
Capitec Bank Holdings has announced its unaudited financial results for the six months ending 31 August 2024, reflecting robust growth across key financial metrics. Headline earnings surged by 36% to R6.4 billion, compared to R4.7 billion in August 2023. This impressive growth continues the bank’s double-digit upward trajectory, with a notable 9% increase over the six months ending in February 2024, when earnings stood at R5.9 billion.
Capitec’s value-added services (VAS) and its mobile network offering, Capitec Connect, were standout performers, growing by 79% to R2.0 billion from R1.1 billion the previous year. The bank also declared a 36% increase in its interim dividend, rising to 2,085 cents per ordinary share from 1,530 cents in August 2023.
A key driver of this growth was net transaction and commission income, which increased by 19% to R6.9 billion from R5.8 billion in August 2023. Capitec’s expanding client base on its banking app grew by 21%, reaching 12.4 million users. Digital and card payment volumes also saw significant growth, contributing to 89% of total transaction volumes, up from 87% last year.
Capitec’s credit loss ratio saw a marked improvement, decreasing from 9.6% in August 2023 to 7.6%. This reduction reflects the bank’s strict lending criteria, which contributed to muted loan disbursements. Meanwhile, the group’s return on ordinary shareholders’ equity (ROE) rose to 29%, up from 24% in August 2023, driven by economies of scale and growing transaction volumes.
Interest income also contributed significantly, growing by 20%, with the current high-interest environment in South Africa playing a positive role. Additionally, Capitec’s funeral plan income rose by 14%, adding R91 million to its net insurance result, while net credit life insurance income remained stable.
Overall, the bank’s personal banking segment accounted for 49% of total headline earnings, strategic initiatives contributed 23%, insurance made up 24%, business banking represented 3%, and AvaFin accounted for 1%.
