Capitec didn’t have the greatest day on the JSE today [September 29, 2022]. Its shares slumped over 10% following the release of its first-half results. Capitec actually reported higher profits. It said that it increased its retail banking clients in the period under review to around 19 million customers, and a lot more of those customers were becoming digitally savvy, and banking online. To unpack the numbers we’ve got the CEO of the bank, Gerrie Fourie, on the Market Update.
I think, just coming back to dividends, the one thing about Capitec we believe to be consistent is we said to our shareholders we are looking over the dividend policy, that 50% of our earnings will be paid out in dividends with about 37% paid out in the first six months and the rest in the second six months. And we’ve been consistent on that and we won’t change our dividend policy. So we believe in consistency, and that’s important.
How much? We don’t see a rising interest rate as an opportunity to make profits. We see with rising interest rates you need to be fair to your clients. So what we do, as lending rates go up, is increase our deposit rates because we fund our lending book by our deposit book. So we are fairly neutral. If you look at the impact of interest rates, they’ve got a small effect on our profitability because we believe it’s always best to look at what is fair to the client.
What does that mean about your position towards lending, then, in this environment going forward? I think that’s a market everyone is starting to enter. We’ve been monitoring that market very carefully. Everyone goes into the lending space, and the big question there is how do you get data, because if you’ve got data you can score that particular business better. So our approach is to offer those clients a full banking solution so the client can transact, save and get credit.