Capitec dividend beats estimates after bank posts record profit

Capitec Bank Holdings said it will pay a dividend that beats analysts’ estimates after profit at South Africa’s biggest bank by clients jumped to a record for a fifth straight year.

Headline earnings climbed 23% to R16.8 billion ($1 billion) in the year to February 28 from R13.7 billion a year earlier. That compares with the median estimate of R16.9 billion, according to 10 analysts surveyed by Bloomberg.

The company proposed a final dividend of R53.60 per share, bringing the total payout to R79.80 for the year, surpassing a consensus estimate of R78.93.

The results are the first under the new Chief Executive Officer Graham Lee, who took the role on July 19. Former CEO Gerrie Fourie oversaw four years of record profit as the lender’s focus on low-income depositors and unsecured lending paid off. Lee is steering the company through intensifying competition as rivals including Nedbank Group and new lender OM Bank seek to tap the low-income market.

“More than one in three of all adult South Africans used our app to bank in the last 30 days,” Lee said in a briefing on Wednesday.

Interest income rose 18% to R14.1 billion while higher client numbers resulted in a 19% jump in fees and commission income.

The bank’s credit impairment climbed 21% to R9.98 billion, which lifted its credit loss ratio to 8.1%, compared with 7.5% in the previous year.

Founded by Michiel le Roux, the lender was spun off from financial services company PSG Group in March 2001 and listed on the Johannesburg Stock Exchange in February 2002.

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Since then, the company has transformed itself into a financial-services behemoth with more than 26 million personal and business clients as of February 28. Its return on equity climbed to 31%.

Capitec’s share price has climbed more than 250 000% since it was listed, helping the company retain its mantle as South Africa’s best-performing stock and outstripping the benchmark FTSE/JSE Africa All Share Index, which climbed about 970% in the same period.

The bank’s shares climbed as much as 1.2%, before paring gains to 0.7% by 9:15 a.m. in Johannesburg. The benchmark index advanced 0.4%.

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