CAPITEC AND VICEROY

Hailed for its investigation into Steinhoff’s labyrinthine accounts, Viceroy Research has been accorded something akin to crusader status in the market. Just ask Aspen, or Resilient — or any company thought to be a target of the three-man Viceroy team that specialises in betting against companies it believes are overvalued.

But whether Viceroy’s report into Capitec is of the same calibre as the Steinhoff report seems debatable.

For one, Viceroy’s assumption that Capitec’s loan book is “massively overstated” and should be impaired by R11bn is based on figures that Capitec’s executive claim are woefully wrong. Viceroy is adamant its figures are correct, and that it’s only a matter of time before Capitec’s business unravels. It may still be right.

But while Steinhoff was already headed south when Viceroy stuck the boot in, that fate seems less inevitable for Capitec, whose financials appear to be less frail.

This isn’t to say Viceroy doesn’t make some telling points. For example, the bank’s record on reckless lending is far from spotless; its punishing interest rates have left more than one customer trapped in a debt spiral; and its habit of rescheduling loans is a concern, as this has the potential to hide bad debts.

But at this point it seems unlikely that these weaknesses are systemic enough to sink Capitec entirely.