Illustrative image: Capitec Bank (left) keeps posting great numbers while new kid on the fintech block Weaver Fintech (right) is dominating the buy-now-pay-later landscape. (Images: Jacques Stander / Gallo Images | Sourced / Weaver Fintech website)
Goodness knows we are used to hearing about how tough things are in South Africa and how difficult it is to find growth.
We regularly have to suffer through announcements such as the latest one from Truworths, where things are so bad in the local business that it has more than offset the growth in the UK, leading to a drop in headline earnings per share (Heps) for the group. And even when we go in with low expectations, such as in the case of KAP, companies can still disappoint us with their local performance.
Luckily, there are local companies that restore balance to the world by delivering solid growth in earnings despite the tepid economy. We need to be careful with the definition of “local” though, as there are many companies listed on the JSE that are generating great results based on factors that are external to South Africa.
The JSE isn’t SA Inc
A good example of the gap between JSE-listed company numbers and the on-the-ground situation in South Africa is Standard Bank, where double-digit growth in Heps and the dividend is thanks mainly to the performance of its African businesses.
South Africa only contributes roughly half of Standard Bank’s earnings, with lower growth in the local business than in Africa in the latest period. And it’s not only about top-line growth, with the outperformance in Africa leading to a positive impact on Standard Bank’s margins, as the pockets of growth in Africa offer higher margins than in South Africa.
It’s also not helpful to use the gold sector as an example of a feel-good story around South Africa, as the reason for growth in earnings is based on global gold prices rather than the state of the local economy. Nobody who holds a JSE Top 40 ETF is complaining about this, but it’s an important nuance to keep in mind when considering the JSE vs the South African economy.
Luckily, there are names on the JSE that are showing strong growth, thanks to their performance right here at home, illustrating exactly how much potential there is for stock pickers in the financial services sector.
Capitec: still the apex predator when it comes to growth
Capitec is a company that just doesn’t seem to ever stop growing. Come rain or shine in South Africa (and usually the former), it keeps posting great numbers. Capitec is easily the best-performing banking stock on the JSE this year (and over almost any time period you can think of) and it provides a case study of how a focused strategy can win market share and grow earnings even when the broader sector isn’t exciting. Sure, that means that this growth comes at the expense of competitors, but Capitec investors are more than fine with that.
A recent trading statement noted that Capitec’s Heps for the six months to August 2025 will be up by 22% to 27%. The performance has been driven by both net interest income and non-interest revenue, accompanied by a stable credit loss ratio in an environment where all the banks are singing a positive tune around credit quality. Capitec is therefore achieving growth in the loan book without sacrificing quality, helping it win market share from the traditional banking names.
It’s just more of the stuff that Capitec investors are used to, really. And if there’s one thing that investors love, it’s dependable growth.
Weaver Fintech: the new kid on the block
Nobody is surprised anymore by great numbers at Capitec, as the bank is famous for the disruption it has caused to local banking. But there’s another name coming through the ranks in financial services that is also causing disruption in the sector, albeit in terms of payments rather than banking. That name is Weaver Fintech, a company that I invested in earlier this year.
Weaver used to be called HomeChoice, which for the longest time was a retail-led business that few people paid any attention to. But behind the retail branding, there was a strong lending business being developed.
Read more: HomeChoice’s digital revolution amid retail challenges
Then, with an acquisition in the buy-now, pay-later (BNPL) space, Weaver suddenly found itself at the forefront of one of the most exciting fintech verticals in South Africa.
Read more: HomeChoice’s fintech pivot drives more than R25m AI annual investment
BNPL is disrupting the way that people pay for retail products. The product does exactly what it says on the tin: customers buy a product (and receive it) and only have to pay later. But unlike a credit card, it’s possible to achieve this at absolutely no cost to the consumer – provided that the full amount is paid back in a matter of weeks. Where customers need a longer repayment period, the BNPL service providers offer competitive interest rates.
But how can even the short-term deal be free, you ask? The secret sauce is that the merchant is footing the bill. Before you panic about how sustainable that is, it’s hardly any different to the credit card commissions that would typically be paid by the merchant when customers pay by card. BNPL therefore gives the merchants a way to sell to a wider base of customers on similar economics to credit card sales. In a country like South Africa where so many consumers are literally living from one payday to the next, this can make the difference between an abandoned cart and a confirmed sale.
Read more: South Africans turn to online shopping, ‘buy now, pay later’ schemes to keep their heads above water
BNPL is just one part of the Weaver story, with a broader financial services offering that is also performing well. In the six months to June 2025, Weaver grew revenue by 29% and Heps by 45%. Cash quality of earnings is evident, with the interim dividend up 47%. These excellent results have given the company confidence to expand not just the retail footprint (an important distribution channel for financial products), but also the size of the credit book.
With such strong growth, the main risk is any deterioration in the credit quality of the book and whether Weaver will grow too quickly to keep things under control, an issue that has claimed many start-up scalps over the years. I’m very happy with my Weaver position in my portfolio, but I’ve sized it appropriately for a more speculative play that still has a long way to go.
Having said that, Capitec also had to start somewhere. I’m happy to have gotten in at what feels like an early stage in the BNPL journey. DM