Capitec CEO Gerrie Fourie discusses the bank’s financial results amongst other things as the JSE darling reports bumper earnings. Fourie explains that although earnings are not comparable to 2020’s numbers due to the onset of the coronavirus pandemic and ensuing lockdowns, they have increased by 35% since 2019. That equates to a 16% compounded annual earnings growth rate over the two-year period. Lastly, the Viceroy saga is well and truly behind Capitec as the FSCA slapped the short-seller with a R50m fine for making ‘false, misleading and deceptive statements’ about Capitec in 2018, which led to a 23% drawdown in its share price. – Justin Rowe-Roberts
Gerrie Fourie on Capitec’s financial results:
I think that’s what we’ve done to show the comparison with 2019. If you look at your earnings per share has gone up by 35%. So if you look at it over a two year period compounded, its 16% per year. So I think if you can grow through a Covid year plus the unrest and achieve 35% earnings growth compared to August 2019, I think that tells you that we had a very good performance or rather, we as a team are very happy with the performance.
On where to next for Capitec:
It’s an interesting thing. We never discuss market cap or share price in our exco board meetings. It’s all about the fundamentals and delivering on the needs of the other clients. And I think that’s the important thing, you mustn’t focus on the output, but you must focus on the input. If I look at a retail bank, we’ve got a very nice base of 16.7 Million clients that has got a savings account with us, but we need to optimise those clients. On average, we’ve got between – if you look at save, transact, credit and insure – we’ve got about an 8% to 9% market share per category or per function. And then how do we take that to a 20% market share? And then you’ve got a business bank – we are building a new digital offer and we are planning to rebrand by the end of next year. Then to optimise it, so we believe they still think there’s plenty of potential, it’s just for us to go and execute on our plans.
On short-seller Viceroy being slapped with a R50m fine for its report on Capitec:
We’ve answered all those questions in 2018 in detail. Their allegations and our answers were put on SENS, so the public can see exactly how we’ve answered it and how we handle it. The penalty, that’s something between Viceroy and the FSCA. So we stayed out of it because we believe it’s something that they mishandle. Again, we are focusing on a business. We believe our credit policies are correct. Our provisions are adequate and we have very strong growth on the transactional side. If you look at our transactional income has grown by 33%. So for us, it’s focusing on a business.
On the reasons why the market rates Capitec highly:
I think if you look at all profit growth in the last couple of years, it’s been between 15% and 20%. So I think people are looking at the forward looking earnings that we can generate and then looking at the potential – you know, what can you do? I think there’s a lot of potential in the business banking side and there is a lot of potential in the retail space. If you look at credit – I’m just using that and coming back to the market share argument – we’ve got 5.7% market share on credit. Now the moment you take that to 10% or 15%, that’s a completely different business. So there’s plenty of opportunities.
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