TymeBank eyes top three after hitting first profit goal

TymeBank has thrown down the gauntlet to the big five banks, saying it aims to be in the top three in the next three years.

This is as it notched up a rare feat in the banking industry by turning a profit within five years of its launch.

“Our next ambition is to become a top-three retail bank right in the next three years … that’s the next ambitious goal that we’re setting for ourselves in the business,” co-founder and CEO Coen Jonker told Business Day in an interview.

Jonker was speaking on Tuesday shortly after the digital lender backed by billionaire Patrice Motsepe issued a statement showing that it had turned a profit in December, for the first time since going to market in February 2019.

This is a remarkable milestone for a bank that started operations less than five years ago with no branches, legacy systems or an established customer base. It now boasts more than 8.5-million customers, making it the fastest-growing bank in SA.

CONFIDENT

TymeBank’s profitability is also a rare achievement in a sector in which new entrants struggle to compete with dominant players and face high regulatory and operational costs.

Jonker was confident that the bank’s profitability is sustainable but admitted that TymeBank’s balance sheet would not rank among the top five.

However, he said the bank would excel in the industry in terms of return on equity, costto-income ratio, net promoter score and client base size.

The lender has set an ambition of a 30%-plus return on equity, a measure of how much profit a company makes for each rand that the owners invest in it, and a cost-to-income ratio, a measure of efficiency, of under 40%, Jonker said.

TymeBank spends less than R100 to sign up a new customer, a figure he said is the lowest in the world.

TymeBank credited the bank’s long-standing, strategic relationships with Pick n Pay and Boxer, TFG and the Zion Christian Church among the reasons behind its success.

Its success also validates

ARC’s investment strategy, which focuses on businesses that can leverage technology and innovation to transform the financial services industry and create value for shareholders and society.

The lender told Business Day in December that more than 70% of its customers are active clients. In that report, this paper also said it may list on a major stock exchange in the next four to five years, as its valuation approaches R20bn.

“TymeBank’s landmark achievement comes after more than four years of dedicated effort, strategic investments and an unwavering commitment to the business’s core mission to offer quality banking services to all South Africans,” Motsepe said in a statement.

“Having attracted more than 8.5-million customers, TymeBank’s unique proposition continues to digitally disrupt and transform the banking sector. And as the business evolves, we are seeing it gradually appeal to more affluent consumers who appreciate its unrelenting innovation, customer-centric transparency and accessibility.”

Jonker said shareholders showed continued confidence in TymeBank, as evidenced by the Tyme Group’s successful capital raise in 2023.

“As the country’s first digital bank we’ve overcome numerous challenges as we consistently innovated and broke new ground in the market. Through it, our team has remained focused and committed to our mission of providing South Africans with affordable, accessible and quality banking services.

“This purpose has clearly resonated with consumers given our rapid growth, high levels of customer satisfaction and the successful introduction of a wide range of products and services,” he said.

TymeBank has grown to provide lending to small businesses. It bought Retail Capital a year ago, a fintech company that provides funding to small- and medium-sized businesses, in a R1.5bn deal, making its foray into the hotly contested business banking sector.