Capitec CEO on scrapping final dividend, how the bank is helping small business fight COVID-19

Capitec, a leading South African bank, has made the decision to hold back on paying dividends to shareholders and to not increase salaries of executives or offer cash bonuses. This decision comes in response to guidance from the South African Reserve Bank, which has recommended that banks preserve cash for potential increased lending needs due to the COVID-19 crisis. Capitec CEO, Gerrie Fourie, explained that the bank had initially planned to pay out dividends amounting to close to 1.4 billion, but has chosen to retain this capital in light of the uncertain economic conditions caused by the pandemic. Fourie emphasized the importance of maintaining a conservative approach and ensuring that the bank has sufficient capital reserves to weather the impact of the lockdown and the coronavirus pandemic on the economy. Capitec's strong financial position, with a capital adequacy ratio of 30% and robust liquidity ratios, has positioned it well to navigate the current challenges. The bank has also made contributions to various funds, including the solidarity fund, to support relief efforts during this crisis. In response to the economic uncertainties brought on by the pandemic, Capitec is focused on supporting its clients, particularly small businesses, through personalized assistance and financial relief measures. The bank is evaluating each client's circumstances individually to determine the most appropriate support, which may include payment breaks, restructuring of debts, or providing working capital to sustain operations once the lockdown is lifted. Fourie highlighted the importance of not only offering short-term relief such as payment breaks but also addressing the longer-term need for working capital to help businesses resume operations post-lockdown. As the pandemic continues to unfold, Capitec is prepared to adapt its business model to meet the evolving needs of its clients. The bank has transformed its branch operations into call centers, enabling clients to access banking services remotely. This shift towards digital channels reflects a broader trend towards online banking and remote service delivery, which has been accelerated by the current crisis. Capitec is also leveraging its digital capabilities to enhance its customer experience and engagement, recognizing the importance of maintaining connections with clients even as preferences shift towards online interactions. While the bank has seen a significant number of clients continue to visit branches, it is proactively adjusting its strategies to cater to changing customer preferences and ensure seamless service delivery in a post-COVID-19 world. The decision to forego dividends and focus on supporting clients, especially small businesses, underscores Capitec's commitment to responsible financial management and stakeholder engagement during these challenging times. By prioritizing the needs of its clients and the broader community, Capitec is positioning itself to weather the economic impact of the pandemic and emerge stronger in the recovery phase. As the situation continues to evolve, the bank remains vigilant and ready to adapt its strategies to meet the changing demands of the market and support its stakeholders effectively.