Capitec revenues soar

Unsecured lender Capitec Bank wants to increase its transaction income in what it expects to be a challenging year as far as interest revenue is concerned.

Its revenues from transaction fees jumped 54% to R361-million in the six months to August, and loan revenue rose 50% to R2.6-billion.

Finance director Andre du Plessis said the bank would soon replace its Maestro debit card with a Master debit card to allow online bookings and payments, which should boost non-lending earnings.

"The intention is to have a better mix of banking, transactional income versus lending income, so that we are not as reliant on lending income as in the past," he said.

The bank's target is for non-lending income to cover at least 40% of its operational expenses by 2014. It is now just over 30%.

Capitec prides itself in having a simpler fee structure than larger rivals Standard Bank, Absa, First National Bank and Nedbank.

Capitec said this year would be tough because South Africa was starting to feel the economic stress gripping the rest of the world.

"It's fair to say it's going to be a challenging year, both from an economic and a credit point of view," Du Plessis said. "The economy worldwide is tough, jobs are scarce and there is a lot more competition in the market."

Despite very high interest rates of between 23.5% and 28.5% for five-year loans, Capitec's loan book jumped 86% to R14.5-billion in the year to August.

Unsecured lending was South Africa's fastest growing consumer credit segment with a 52.8% leap in September from a year earlier, according to the National Credit Regulator.

With an interest rate ceiling of 32% for unsecured loans, banks are finding the segment more lucrative for financing items such as cars and house extensions, normally financed by secured credit.

Du Plessis said the lender's balance sheet held no non-performing loans. Capitec writes off advances in arrears for longer than three months.

After two rights issues in 2011 ahead of the global implementation of new capital and liquidity requirements, Du Plessis said it was unlikely that Capitec would stage another big capital raising exercise this year.