South Africa’s leading challenger bank, disrupting the incumbents
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. As an example of a high-quality financial company in our portfolios, we are confident in Capitec’s ability to grow sustainably over the long term with a seasoned team at the helm and the bold vision to make banking accessible and transparent for the masses in South Africa.
With an emphasis on efficiency, Capitec, a South African bank has achieved the lowest cost base in the industry, which allows it to offer more competitive rates to customers. The lower loan rate not only helps attract higher quality customers, it also inherently reduces credit risk through lower instalments. It is common to see such practices at Capitec, where both parties win. The company applies a cap on returns (as calculated by return on equity) at 25%, and as it has grown and gained market share the bank has reinvested the extra returns in new growth areas, while 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 18 million accounts.
Lowest cost operator (cost/income ratio)
Reinvesting for growth
Return on equity (ROE) is a measure of financial performance calculated by dividing net income by shareholders' equity.
Book Value Per Share (BVPS) is a measure of a company's assets, allocated to each outstanding share of common stock. Source: Company data, Bloomberg, as at 30 June 2023.
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