Capitec seeks to widen product offering

CAPITEC Bank (CPI)‚ which has made its mark in unsecured lending, is looking to offer a wider range of retail products to extend its reach.

It is considering the introduction of credit life insurance and a credit card and wants to attract more public servants.

Credit life insurance is offered to clients who take up loans and Capitec aims to use this to make up for the potential loss of revenue that may come from an expected reduction in the interest rates unsecured lenders are allowed to charge.

The National Credit Regulator is looking to cut the exorbitant interest rates charged by unsecured lenders‚ which are often close to 33%.

It is not clear by how much the maximum rates will be reduced.

“If the cap comes in‚ we could introduce credit life into our portfolio‚” Capitec chief executive Gerrie Fourie said.

On sustaining earnings growth in the tough economic environment‚ he said: “We still believe there is plenty of growth in South Africa. Our market share is lower in government and provinces like Gauteng and North West.”

Capitec had been opening more branches in Gauteng, particularly in higher income areas‚ he said.

“We will continue with that. Gauteng is the economic hub; income levels are higher. Our market share here is 14%. It should be at least 18%.”

Capitec would also roll out more ATMs. “Our budget is about R460-million for branches in this financial year. We open about 50 to 60 branches per year‚” Fourie said‚ pointing out that Capitec’s growth had also been spurred by its decision to expand beyond catering for low-income earners.

In the six months ended September Capitec grew its active client base by 16% to 6.7 million. The bank said the addition of 902 000 clients was complemented by growth in higher-income credit clients.

Capitec grew headline earnings 25% in the period under review to R1.47-billion.

Its share price rose more than 3% after the release of the results on Tuesday and finished the day up 2.4% at R489.24.

This year Capitec’s share price has risen 43.9%‚ making it the best-performing banking stock‚ followed by Finbond‚ which is up 30%. — BDlive