Capitec made its name banking ordinary South Africans, and the strategy has paid off handsomely. The bank has just reported headline earnings up 23% to R16.8 billion, serving a client base that has swelled to 26 million. But at its annual general meeting, chief executive Graham Lee spent less time celebrating the consumer business and more time pointing at what comes next.
The excitingly low market share
Lee framed Capitec's small footprint in several markets as its greatest opportunity, describing an excitingly low market share in business banking, personal loans and insurance. The numbers are striking: the bank holds only about 5% of business banking, around 5% of personal loans, 13% of savings, 2% of insurance and just 1.4% in its Capitec Connect mobile network. Business banking alone brought in about R871 million of the group's R16.8 billion in headline earnings for the year to end-February, while its share of business credit and deposits sits at just 3% and 2% respectively. Business banking, for both formal and emerging businesses, is the greatest growth opportunity in the three years ahead, Lee said.
The underserved millions
The pitch rests on a gap in the market. Lee said more than four million formal and informal businesses in South Africa remain underserved by complex banking products built for large companies rather than small ones. They are the future engine of our economy; they are the future engine of our employment, he said. He was candid about how much runway is left, noting the bank had not yet properly touched home loans and vehicle finance, all types of insurance, and stokvels.
Beyond banking, Lee pointed to embedded finance and an enterprise-payments business as three-to-five-year bets already being incubated and funded, while the group's offshore push currently runs through AvaFin, a short-term lender active in markets from Poland and Spain to Mexico and the Czech Republic, which chipped in about R128 million, or 1% of group earnings. For a bank that already reaches a quarter of the country, the next chapter is about depth, not just headcount.
