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According to Gerrie Fourie, CEO of Capitec, the increase in credit impairments is primarily attributable to the weakening economy and the impact of increasing inflation on clients.
Capitec currently has over 20 million consumers and is making progress with its Capitec Connect product, but a difficult economic situation has caused credit impairments to increase by 80% to R6.3 billion.
According to CEO Gerrie Fourie, the increase in credit impairments is mostly attributable to the deterioration of the economy and the impact of greater prices on clients. Net loans and advances increased by 17% to R78.2-billion for the year, while total deposits and wholesale funding totaled R146.5-billion.
The bank's loan approval rate is presently at 45%, its lowest level ever. Credit applications, on the other hand, are surging, with about four million applications compared to just over 2.8 million credit applications in February 2021.
According to Fourie, 20% of customers complete debt review within a year after paying R9,000 upfront to the debt counsellor and with no change in their indebted position.
There is some good news with the bank's Live Better rewards program, which has 13.4 million customers and has returned more than R800 million to consumers in the form of fee savings and awards.
Capitec has invested R1.4 billion in strategic initiatives such as Capitec Business, which was formed after being granted a long-term insurance licence, Capitec Connect, the expansion of value-added services, and the continuous improvement of its data and technology infrastructure and cloud services. Approximately 70% of the entire investment was accounted for as operational expenditures.
With over 500,000 active SIM cards, Capitec Connect is revolutionizing the prepaid industry with low-cost data that never expires. Capitec Business will allow new clients to create an account in minutes and quickly qualify for a scored overdraft or structured loan. Merchant solutions, rental finance alternatives, payment services, and currency are all available.
During the fiscal year 2023, headline earnings increased by 15% to R9.7 billion, with profit in the retail banking and insurance businesses increasing by 12% to R9.3 billion.
Lending, investment, and insurance income climbed by 14% to R17.2-billion, owing to increases in net loans and advances, interest income, and credit life insurance income, as well as the impact of repo rate rises on credit life insurance income.
SOURCE: The Daily Maverick
