Capitec’s unsecured lending rates down
Capitec is to further lower client costs by bringing unsecured lending rates in line with that of the secured credit market.
It now offers interest rates of 12.9% on unsecured short-term loans to low-risk clients. CEO Gerrie Fourie said the decision, in line with the bank’s strategy to make unsecured lending more affordable, was influenced by more stability in the tenyear-old market – brought about by regulations and Capitec’s growing understanding of the relatively new market and its expertise in assessing client risk profiles.
He sought to allay fears related to the grating of unsecured loans. “It’s interesting that when you talk ‘unsecured’ it’s a swear word, but when you say credit card, everyone is happy. I’m the opposite, I think credit should be a swear word. Credit cards, which are also unsecured, [fund] consumption, it’s clothes and food and liquor 90% [of the time]. Unsecured lending is actually 60% to 70% on education, housing and improvements.”
Capitec’s Charl Nel added that secured loans are linked to assets whereas unsecured loans are linked to income, also an asset.
Renier de Bruyn at Sanlam Private Wealth said Capitec’s results reflect a business that’s in good shape with strong customer growth, retail deposit growth and transactional banking growth.
“On the loan side, its book has been growing at around 10% over the last few years so the growth is in line with expectations. There was a noticeable decrease in arrears and rescheduled loans, which on the surface looks good. On the positive side, this is likely due to an improved performance of its loan book, but it was also impacted by a significant increase in write-offs due to debt review.”
Capitec reported a R1.2 billion increase in gross loans and advances with a product term of 61-84 months increased by a R1.2 billion and a R1.3 billion increase in its credit card book. As a percentage of gross loans and advances, up-to-date loans and advances increased to 82.1% (78.7%) while arrears decreased to 5.4% (6%).