People walk past shops at the Randburg Central Business District in Johannesburg, South Africa, on Monday, September 4, 2023. Photographer: Michele Spatari/Bloomberg “It’s now for the politicians to create that framework,” he said in an interview. “If you’ve got a growth mindset, then you can correct things,” he said, referring to an unemployment rate of 33.5% that’s among the world’s highest and skills shortages that hinder business.
Consumer confidence in Africa’s biggest economy surged in the third quarter to a five-year high while household wealth jumped after markets rallied following the formation of a so-called government of national unity. That’s helped Capitec boost customers to 23.2 million by the end of August, representing 39% of South Africans.
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“Political stability — including positive sentiment about the government of national unity — normalized inflation and reduced interest rates promote economic confidence and set the scene for future growth,” Fourie said in a separate note.
Capitec reported its biggest jump in first-half profit since 2021 as the bank increased lending paced by prospects of an economic revival.
Net income rose 37% to 6.42 billion rand ($372 million) in the six months to Aug. 31, driven by a 72% surge in net interest income after impairments for the period, the company said in a statement Tuesday. It announced a dividend of 20.85 rand.
Its business bank, which started in 2022 to focus on small- and medium-sized companies, posted a 12% decline in headline earnings after Capitec opted to drop fees in March and reduce point-of-sale commission rates.
“By aligning our fees with retail banking and adjusting our merchant services pricing, we’re positioning ourselves to serve SMEs and tap into the underbanked emerging market,” Fourie said.
Read more: Retail Banker Sees Next Growth Chapter in South Africa Business
The lender has set up a special purpose vehicle with mortgage provider SA Homeloans that will allow it to almost triple the mortgage accounts on its books.
Capitec has about 3 billion rand in home loans, Fourie said, adding the bank will use the SPV to disburse a further 5 billion rand to consumers looking to buy a home.
“We will see how it performs, what the impact of that is, and if it’s positive, we’ll definitely expand it to a much bigger figure.” Fourie said.
Capitec’s shares jumped to a record after the earnings announcement. The rally lifted the bank’s gains to 38% since the May 29 election, outperforming the 10% gain in the benchmark index.
The Stellenbosch-based lender, which built the country’s biggest bank by customer numbers by focusing on low-income depositors and unsecured lending, is targeting small- and medium-sized businesses and building an insurance business for its next growth spurt. The lender is banking on further growth of the various units to sustain its performance for the rest of the year.
“We are confident that we can get to somewhere between 20% and 25% growth for the full year,” Fourie said.