Capitec is bucking the banking retrenchment trend as it plans to employ 600 new workers.
Lender Capitec Bank on Thursday reported a profit for the first half of the year grew 20%, in line with expectations in interim profits, thanks to strong customer growth and a smaller impairment charge.
Capitec has also increased the number of clients using its digital services, from 4.7 million to 6.8 million. The lender bank is defying the odds, oppositely while big banks are retrenching, Capitec is employing.
The uptick in digital banking has been cited as one reason why banks are reducing their floor space and retrenching staff.
But Capitec says its digital expansion is creating the need to hire more people.
It added 200-thousand new clients a month over the past six months and now has 12.6 million active customers.
However, in an emailed statement Capitec said that it has no plans to retrench employees and is currently in a growth phase.
“We’re fortunate to be growing, continuously hiring new employees and not retrenching. Over the past year, our staff complement has grown by over 200 people,” it said.
“We also plan to open a further 17 branches in the next 6 months. Our implementation of technology in the business has not posed a threat to jobs, instead, it has helped us improve processes, freeing up our staff to help clients bank better.”
The bank said it will provide more details on its social channels on the morning of the strike.
The performance outshone more muted growth at many rivals, who have struggled after the economy suffered its worst contraction in a decade and the unemployment rate hit an 11-year high after years of already stagnant growth.
“We’re fortunate to be growing, continuously hiring employees and not retrenching,” Capitec CEO Gerrie Fourie said in a statement.
Many South African lenders registered flat or minimal growth in their domestic retail banks, and large traditional lenders have been shuttering branches and cutting jobs in a bid to modernise their operations and bring costs down to compete with a host of new, digital-only rivals.
Headline earnings per share – the main profit measure in South Africa – stood at 2 545 cents for the period ending August 31, compared with 2 128 cents a year earlier. Stripping out non-operational factors, income from operations rose 7%.
Its shares were up 0.49% at 0728 GMT, with the strong results largely expected by the market after the lender previously said half-year earnings could rise by up to 21%.
“The result was more or less guided for… so that wasn’t a surprise,” Harry Botha, banking analyst at Avior Capital Markets, said according to Moneyweb, adding Capitec’s growth was more muted if a 17% decline in the bank’s credit impairment charge was excluded.
In the past two years, the bank has been reducing its exposure to the lowest-income consumers and tightening its credit policies, as well as trying to diversify away from a reliance on risky unsecured lending.
The reliance on risky lending and focus on the lower-income market leaves Capitec more exposed than peers to any increase in bad debts, and analysts had been concerned over a potential rise in troubled loans during the period.
But while the bank’s gross loan book grew by 17% to R60.25 billion, its total arrears of up to three months had decreased by 11% by the end of August 2019 – one of its best performances on arrears to date, Fourie said.