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Second quarter boosts Capitec

But Covid-19 crisis takes its toll.
Clients are embracing digital. Image: Supplied

The Covid-19 crisis saw Capitec Bank’s operating profit decrease 86% to R538 million, from R3.83 billion for the six months ended August.

Although there was a steep decline in earnings for the period, there was a sharp recovery in the second quarter – where the bank grew headline earnings over R1 billion – after incurring a headline loss of R404 million in the first quarter.

The recovery can also be seen in client income returning to March levels by the end of August, and active retail banking clients growing by 784 000 to 14.6 million for the six-month period.

Despite the recovery, the Covid-19 crisis put Capitec customers under considerable pressure; it offered them R7.5 billion in relief in the form of payment breaks and variable payment reschedules.

The lockdown also added R4.2 billion to the total gross impairment charge of R6.3 billion for the reporting period.

Digital Age

Capitec CEO Gerrie Fourie said one of the noticeable things about the Covid-19 crisis was how it has sped up the country’s digital transformation. He said this could clearly be seen in how the bank’s clients have increasingly used its mobile app to transact.

“Our active app clients have grown 38% to over four million and our new app is the most downloaded app on all major South African app stores,” he clarified.

This move to digital banking has seen its, app, internet and USSD transactions collectively grow 52% to R556 million.

Capitec’s share price rose by as much as 1.25% in early morning trade before dropping to its opening price of R984.31.

Capitec

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The only banking share that did not drop by an average off 30% during covid19.

and that raises many questions on a share that is already expensive

If you believe these accounts I have a statue in NY for sale

This R7.5 billion in relief that was “given”, surely this is just income that has been deferred as the loan period would have been extended, thereby ensuring additional income for the remaining period of the loan, far exceeding the original R7.5 Billion so called “relief” as the interest for this period would still have been capitalised and added to the loan.

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