South Africa’s leading challenger bank

Founded in 2001 by a team of ex-banking and retail professionals, Capitec’s management strive to do things differently from the large incumbent banks. They have the bold vision to make banking accessible and transparent for the masses in South Africa.

With emphasis on efficiency, the company achieved the lowest cost base in the industry, which allowed them to offer more competitive rates to customers. The lower loan rate not only helped attract higher quality customers, it also inherently reduced credit risk through lower instalments.

It is common to see such practices with Capitec where both parties win. The company caps returns (ROE1) at 25%, and as they have grown and gained market share they have reinvested the extra returns in new growth areas while also passing on the cost savings to customers through lower fees and rates. This in turn attracts more customers, generating further growth and unlocking additional economies of scale which the company then reinvests. As a result, Capitec has created a virtuous cycle of growth, scale and reinvestment which has seen it boast the largest number of retail customers in the country with approximately 15m accounts.

Capitec is an example of a high quality financials and as shareholders in our Global Emerging Markets portfolios since 2017, we are confident in the company’s ability to grow with a seasoned team at the helm.    

Lowest cost operator (cost/income ratio)

Reinvesting for growth

1. Return on equity (ROE) is a measure of financial performance calculated by dividing net income by shareholders' equity.

Source: Company data, Bloomberg, as at 31 March 2021.

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