Microlender thrives in debt storm

“WE DON’T lend to social grant recipients. We have a large chunk of retail funding, and our provisioning is far more conservative.”

That’s how Capitec CEO Gerrie Fourie explained his company’s resilience and ability to continue growing profit in an industry dogged by massive debt writeoffs.

Although Capitec’s board presented a strong story, some analysts at Friday’s annual general meeting remained concerned about the outlook for a major player in an industry that is overshadowed by extensive write-offs at African Bank, which dominates the market with a 35% share.

Fourie was speaking to entranced shareholders who have enjoyed the benefits of Capitec’s strong share-price performance since it was listed in 2002.

All but one resolution received at least 98% backing from shareholders. The only resolution that met resistance related to endorsement of the company’s remuneration policy.

Seventeen percent of the shareholders voted against this resolution, which in Capitec terms qualified as a mini-revolution.

And that was not quite the end of it. In his first venture out to a Capitec AGM, shareholder activist Theo Botha ensured the meeting was not without a little frisson.

Botha sought clarity on executive-remuneration schemes, and asked why no bonuses had been paid out.

Fourie explained that the target for bonus payments had been set at a 35% hike in earnings per share, and the company had achieved only 15%.

Fourie told Botha that management was concerned about the level of bad debt. “It is clearly tough, and our clients are taking a lot of pressure . . . top management spends about 40%-50% of its time on the credit side.”

According to one company source, R4-million to R5-million a month was repaid as a result of garnishee orders.

Capitec management said it would offer home-loan products in response to market demand.