“We remain cautious in the way we grant credit by applying comprehensive credit screening models and a detailed client affordability assessment before granting a loan. With provisions we have a prudent approach setting aside calculated buffers for possible bad debts,” [DATA CPI:Capitec] said.
“We apply stringent rules to limit bad debts, which have the effect of limiting loan sales. Loan sales were two per cent less than for the corresponding six months ended August 2013. Tighter rules meant the number of loans granted declined by 20 per cent.”
The company also reported satisfactory earnings growth of 21 per cent for the six months ending 31 August 2014.
(READ MORE: Reserve bank disputes Moody’s downgrade of Capitec)
Headline earnings increased to 1.1 billion rand from 971 million rand while headline earnings per share grew to 1,018 cents in the 2014 period from 844 cents in 2013.
“Vigorous marketing and last year's redesign of the branch banking system have created momentum that is pushing net transaction fee income higher. Tight underwriting and a focus on collections contained the impact of the weak economic environment,” said Capitec.
“In May 2014, the World Economic Forum recognised Capitec Bank as one of 16 African high growth companies regarded as trailblazers and innovators. Capitec Bank’s ‘Global One’ remains the most cost-effective account as per Solidarity’s September 2014 report on bank charges.”
(READ MORE: Capitec drives decrease in S.African bank charges)
Income from banking operations rose 12 per cent to 5.5 billion rand in 2014 from 4.9 billion rand in 2013 and the bank’s cost-to-income ratio stood at 34 per cent.
Its interim dividend per share was up 21 per cent to 246 cents from 203 cents and return on equity stood at 25 per cent.
“We will drive brand awareness and acceptance, and develop the product offer while expanding the distribution platforms, which will all contribute to further growth in the years to come. It is our aim to provide credit responsibly to those who can afford to manage it,” Capitec said.
“Access to credit is a staple of modern life and the changes introduced by the NCA in 2007 enabled access to credit for many South Africans previously excluded. There is a future for unsecured lending, though we tread cautiously as the industry is still maturing.”