Capitec overcomes share-plunge with 2018 half-year results

Capitec CFO recalls "grey hairs" in the wake of the report that sent shares plummeting.

The Viceroy report, which accused Capitec of unethical practices earlier this year and led to a plunge in their shares, has had no impact at all on long-term earnings, as the bank’s half-year results show. 

Recalling the release of the report, Capitec CFO Andre du Plessis says: 

“I have a couple of extra grey hairs. When the Viceroy report came out, I received 17 questions from Bloomberg at 9am and answered all of them before the official release of the report at 10am. We managed to get a detailed SENS response out at 16h00 and organised an international call for investors at the same time, where 741 callers dialed in. It was an unpleasant situation. The short seller didn’t have its facts right. I believe that our open communications and speed of response helped a lot in handling the situation.”

The results show that along with an additional 109 000 users per month, there has been a 25 percent increase in transactions and a 20 percent jump in earning and dividends for the bank. Capitec also boosted its lending book 3 percent to R41,8 billion. Their net transaction income rose 32 percent to R3,1 billion, meaning that 90 percent of the bank’s operating costs are now covered by transactional banking income. 

The quality of the bank’s earnings has improved as it reduced its reliance on lending activities to generate profit, due to the implementation of new statutory accounting standards that are potentially more punitive on bad debts. 
 
After the releasing the interim results on Wednesday, Capitec CEO Gerrie Fourie commented: 

“We have continued to focus on running the business in the best possible manner, so nothing has changed.”

The JSE responded to this announcment by pushing Capitec’s share price two percent higher, making it the top performer on the FTSE/JSE banking index that day. 

For further insights into what makes Capitec’s finance boss tick, check out the Q4 issue of CFO Magazine, available at the Finance Indaba on 3 and 4 October at the Sandton Convention Centre