Economy resilient, says Capitec CEO

• Gerrie Fourie is encouraged by green shoots but not persuaded to open lending taps just yet

Gerrie Fourie, CEO of the country’s third-largest bank by market value, Capitec, is optimistic about the resilience of the economy, but says it is still too soon to open the credit taps as the bank sits atop a vast cash stockpile. There are green shoots in the economy to celebrate, Fourie says, including that unemployment is not as bad as was initially thought when the Covid-19 pandemic began.

Gerrie Fourie, CEO of the country’s third-largest bank by market value, Capitec, is optimistic about the resilience of the economy but says it is still too soon to open the credit taps as the bank sits atop a vast cash stockpile.

There are still underappreciated green shoots in the economy to celebrate, Fourie says, including that unemployment is not as bad as was initially envisaged at the outset of the pandemic. But he believes the larger picture remains too uncertain to call.

“I think we have to wait and see regarding how severe the third wave is going to be and how the vaccine rollout progresses. My best estimate is that by the end of the year we will have a major vaccine rollout, and then the economy will revert to more normal activity and we can assess how structural reforms are being implemented by the government,” Fourie told Business Day.

Despite much greater co-ordination between the government and the private sector during the pandemic, Fourie believes the relationship is anything but conducive to elevating economic growth.

“If we can get government and private sector to work together we can make magic in SA, but the straight answer is no. There is not enough trust between the private sector and the government,” Fourie said.

Capitec reported results for the year ending February in which headline earnings per share declined 27% to R39.66. The bank declared a final dividend of R16 per share after passing an interim payout in line with guidance from the Reserve Bank. Peers Standard Bank and FirstRand also resumed dividend payments this reporting season.

Besides impressive continued client acquisition, the results were notable for the subdued credit extension. Despite adding 1.1-million new active retail bank clients during the year, the volume of loans extended declined 25% year on year, to R29.3bn, while the total loan book remained static at the year end at R75bn.

Fourie noted not only the bank was being conservative with credit extension during the pandemic, consumer appetite was also affected. Moving into 2021, credit applications were 25%-30% lower than the year before, but there was a “very strong uptick” in March.

“If the economy is booming then you can open up credit, but if it is uncertain and there are questions, then you have to be on the conservative side and those are the types of decisions we need to make in the next couple of months,” Fourie said.

Capitec initially provided payment relief on loans totalling R7.5bn. By year end, loans worth R3.9bn had fully recovered and R1.9bn were in arrears and had been written off. Fourie is optimistic the remaining R1.7bn will eventually be rehabilitated and return to classification as performing loans.

Capitec shares were down 0.39% to R1,385 on Tuesday.

THERE IS NOT ENOUGH TRUST BETWEEN THE PRIVATE SECTOR AND THE GOVERNMENT