Capitec’s interim headline earnings per share growth came in at the higher end of its guidance, proving again that the group remains on a roll after surpassing Nedbank as far as market capitalisation is concerned.
It continues to tick all the right boxes, reporting increased income from lending and ensuring its bad debts are managed prudently. The bank enjoys strong capital levels and has seen an increase in customers.
Adding 106,000 customers a month over the past 12 months is no mean feat, as is delivering a 10% increase in net lending and investment income and a 29% surge in net transaction fee income, while maintaining a stable capital adequacy ratio of 34.6% at end-August and a return on equity of 26%.
Stricter requirements for granting credit had a limited effect on its loan book as the group is making headway in extending loans to better-quality clients. Arrears as a percentage of gross loans and advances decreased from 6% to 5.4%.
At the same time, there was a 28.7% increase in retail deposits to R55.4bn.
The only probable negative is Capitec’s high market valuation, with most of the good news already priced in. That means many investors who have been standing on the sidelines waiting for the share price to dip may have missed the boat.
Will Capitec capture more market share from some of its bigger competitors? Considering its meteoric rise, it would seem likely it has more tricks up its sleeve. This would mean its full effect on the banking sector is yet to be felt.
Confirmation from statemandated parties involved in the R11bn Beijing Automotive Industry Holding Company (BAIC) vehicle plant being built in the Coega special economic zone near Port Elizabeth that it is way behind schedule points to the many flaws in SA’s economy.
Primary among them is the notion of SA’s government that state intervention must be robust and immanent. But prescription of the kind that destroys natural competition will eventually kill off dinosaurs in both the public and private sectors unless they change their feeding habits. Let them rather extinguish themselves.
Regulation should largely prevent corruption, fraud and dumping of exports and little else. But in SA, the state wants to direct the markets.
In the freest of markets, state regulation facilitates trade and innovation by ensuring that things can get done. Let the market decide whether a company should sink or swim, as long as it is not killing people or ripping them off. State tinkering in markets raises questions over whether this will ultimately enable the country to sustainably grow per capita income ahead of inflation.
It appears that even the Chinese — whose rulers love state control — are being hindered by the attempt to include local communities in the Nelson Mandela Bay metropolitan area in the building and operation of the BAIC vehicle plant.
Some among more than 1,000 local groups that have registered to be part of this project are railing against the competition the government has engendered among them through its social stipulations.
The result seems to be that workers’ strikes and community action against BAIC SA, the local operating arm of the Chinese vehicle maker, are preventing the timeous completion of the factory.