South Africa’s Capitec profit rises 84%

Furthermore, it is important to make clear here that many South African banks have suffered huge and large impacts on their earnings in recent years.

One of these reasons in particular was due to large credit impairment charges related to the health crisis and associated government blockages.

With that, after all, lenders are now returning to pre-pandemic performance levels as restrictions ease.

Capitec and its own power

When a company is born with a mission and a principle that is, in fact, real, when it is not just marketing, this company manages to reach levels never dreamed of before – that’s what happened with Capitec.

Always driven by the same vision since its creation, to be seen as a differentiated bank that offers everyone access to simple, accessible and personalized banking services and that allows them to live better.

This vision, this mission and unwavering focus on doing what is right for its customers has driven 84% growth in group profits to R8.4 billion in FY2022. This represents a compound annual growth rate of 23% since 2012.

Named SA’s strongest brand in the Brand Finance 2022 ranking, the bank increased its active customer base by 14% to 18.1 million, which translates into almost 190,000 new customers per month. Active digital banking customers (app, internet banking and USSD) grew 17% to 10.1 million, of which 6.6 million customers use the banking app, a 25% increase since 2021.

All these numbers only make it increasingly clear that Capitec has been investing in growth and training of its team to better serve and help its customers. It continues with a strong recruitment effort for technology and data skills to further accelerate the bank’s digital transformation.

And when we talk about technology and the online world, we can talk about levers, a powerful engine to accelerate Capitec’s growth. All this because the bank becomes simpler and more intuitive as the main driver, with a 27% growth in digital transaction volumes.

Customer transactional behavior has shifted from cash to digital channels, accelerated by the pandemic. Overall, net transaction revenue increased 21% to R10.5 billion, where customers quickly adopted contactless card payments and online shopping.

An Inside Look at Capitec: Earnings Breakdown

At this point, let’s talk about many numbers, details of the gains that Capitec had and how the indicators behaved, check it out:

To begin with, we need to make it clear here that loan revenues accounted for 53% of total operating revenues. Lower interest rates, the composition of loan sales and the impact of annuities from lower loan sales during 2021 led to a slight 1% drop in interest income on loans.

Insurance accounted for 9% of operating income, an increase of 2% over the previous year. Credit life insurance net revenue increased primarily due to lower claims, while funeral plan revenue increased due to lower claims and better collection rates.

In addition to all this, other indicators that highlighted the diversified growth of Capitec were:

  • Total transaction volume increased by 26% to 6.7 billion
  • Interest income on investments increased 34% to 4.2 billion
  • Capitec remained well capitalized with a capital adequacy ratio of 36%.
  • Credit impairments decreased by 55%, as the full impact of the COVID-19 pandemic was accounted for in 2021

Live Better: The engine of growth

To grow exponentially you need an engine, something that makes this explosion occur in a short time. Digital platforms along with the Live Better rewards program were crucial to this.

Capitec, looking to expand the company’s growth, launched Live Better, a program that challenges traditional rewards offerings. The company’s CEO Gerrie Fourie adds that research has shown that Capitec’s customers want a rewards program. So a program with no subscription fees, no points and no levels was created. All customers can receive cash back on all their daily card purchases by simply banking with us. Simple and practical.

Customers receive 0.5% cashback on debit card payments and 1.5% cashback on credit card payments, regardless of where or how much they spend. The only requirement is to have a credit product, funeral plan or term savings, have 3 debit orders and perform 5 app transactions per month, such as buying airtime or paying a beneficiary.

Cashback is paid on the 10th of each month, known as the Live Better day, into the customer’s Live Better savings account, which earns 1% higher interest than their main transactional savings account.

More than 5.7 million customers have already activated their Live Better accounts and the bank will continue to add more rewards partners to its stable.

You can be sure that Capitec will continue to innovate to add real value to customers and simplify banking, as it has done in its two decades.

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