Capitec moves to calm nervous investors with profit forecast

‘This guidance remains unchanged and Capitec’s fundamental business remains strong.’
Image: Supplied

Capitec sought to calm investors on Thursday after its shares sustained heavier losses than other banks in South Africa, forecasting a full-year profit rise of up to 21%.

Some traders have said that Capitec could be more exposed to any economic downturn as a result of the coronavirus outbreak due to its business model being centred on riskier unsecured lending and targeted at lower-income consumers.

Capitec said that only 1.1 million of its 12.6 million active customers had credit with the bank, its income is diversified with transactional and insurance revenue and there had been an increase in its middle- and higher-income clients.

The Johannesburg Stock Exchange saw its deepest-ever fall on Monday and Capitec said it believed falls in its shares, of 26% on Wednesday and more than 32% on Thursday, were due to the weakening of the rand, automatic selling triggered by algorithms and forced selling by some banks and other parties.

 

Capitec share price

 

It pointed to a trading statement issued earlier in March that said headline earnings per share – the main profit measure in South Africa – would rise by up to 21%.

“This guidance remains unchanged and Capitec’s fundamental business remains strong,” it said in a statement.

Shares in Capitec rose after its announcement, but were still 17% lower at 1412 GMT.

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Nothing wrong with the bank. Capitec is a great company. Their share price is just way too expensive. The share price is reasonable now (or sort of, in my opinion).

May we call it a ‘correction’ perhaps? And the ‘Corona Factor’ was not built in. Or something like that? But some people are sure as hell going to lose a lot of money.

Quite right..Gerrie is a good man and knows his stuff

I can attest to that.Known him for years

“Quite right..Gerrie is a good man and knows his stuff”

That’s what everyone must have thought of that Steinhoff guy before that fateful day in December of 2017.

Lots of people thought Markus Jooste a good man having known him for years ….and look what happened,
I wouldn’t be surprised to find that the connected in Capitec got out a while back with some knowledge that when the bank collapses, it will be bailed out by the government because of the client base. Let’s them walk away with their money AND a clear conscience.
The collapse of African Bank didn’t really affect the lives of the Kirkness family, from what Ive heard. Just like the collapse of Tongaat didn’t hurt the founding Saunders family either.
Trusting investors and tax payers are just collateral damage in cases like this.

no…much wrong..never trust management…you shall see

Mmmmm… Remind me again how they make their core profit?? And mostly from which sector of society…..? And what to the forecast over the next year for that said sector??

Transactional income was 40% of income in 2018, they now have over a 1 million more customers since then. Lots of my while middle class friends in their 30 and 40s have Capitec Banks as their bank, sure a lot of the lower class too, but do you predicts doom and gloom for ABSA? What about FNB with similar accounts, targeting the same market?

In a war situation, you get a nice-looking badge, a medal and a parade for showing courage under fire.

In the market, when things settle down, you get a nice-looking investment account statement, but no badge and no parade, for showing courage under fire.

Someone who takes a risk without understanding and quantifying that risk is called a fool. Someone who understands the risk and accepts it nonetheless is called brave. The market rewards bravery and punishes stupidity.

Yesterdays share drop was impressive…. R300 and today another R100

Maybe Capitecs base gets wiped out by a virus??? 12 months for a cure is a long wait…

lets see 150 infected … 150 x 150 x 150 = 3 375 000 x 150 = 50 million

Great analogy genius…If that happens every single company will be doomed, not just Capitec. Not that it would matter cause we would all be dead…

Have never and will never own any share in what is basically a loan shark dressed up as a bank. Can go to 1c I would not urinate on them if they are on fire.

Their auditors should be tarred and feathered for what they present as segmental results.

Of course none of the other banks offer short term unsecured loans? Thats the nature of the beast. I do however think a business that is open 7 days a week, and that has the lowest cost to bank, is a refreshing option, and all things being equal will do well.
No bank or insurance company is in it for the consumer. But Capitec does make sense for 90%

Erm. FNB do. Through Wesbank that owns DirectAxis.

TheSpark, he was being sarcastic

The 2 times I had to get personal loans from them, it was cheaper than the Big 4, and my credit card, way lower interest rate than the other banks. If they are a loan shark, the others 4 are loan megalodons, so hope you don’t have shares in them either.

Don’t worry dear investors we have just got off the line with all our borrowing clients and they have all promised us they gonna continue to pay back their loans to us, even if they all get retrenched. Their word and 3 months pay slip was good enough for us – therefore our promise we make to u now dear investor should be good enough for u.

From Googling:

ABSA down 44% in past month
SBSA down 39% in past month
FirstRand down 44% in past month
Nedbank down 22% in past month
Capitec down 51% in past month

So yeah, the big boys didn’t do too great either. Why the focus just on Capitec? Why didn’t Nedbank drop as much as the others?

End of comments.

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