Capitec Bank said its non-bank fintech arm added R2.7 billion to group headline earnings in the six months to 31 August, lifting the total to R9.5 billion, a 19% increase from the same period a year earlier. The figure comes from the bank’s unaudited interim results, published on Wednesday, and is sourced from TechCentral.
Headline earnings are the profit before tax and extraordinary items. In Capitec’s case, the fintech contribution represents about three-quarters of the R3.5 billion earned by its Personal Banking division, which excludes the fintech business. The fintech segment grew from R2.1 billion a year earlier, while Personal Banking fell slightly from R3.3 billion.
The bank’s value-added services (VAS), prepaid airtime, data, electricity and other small-ticket items, generated R3.5 billion in net income, up 30% on the prior year. The number of VAS clients rose 14% to 13.5 million and transactions climbed 26% to 1.1 billion. Money-transfer service “send cash” saw net income rise 32% to R906 million, with 6.8 million users. Capitec Connect, the bank’s mobile virtual network operator that runs on Cell C’s network, lifted net income 72% to R284 million, driven by 1.8 million active clients, up from 1.1 million a year ago.
Data usage more than doubled to 34.3 petabytes and voice minutes rose 84% to 573 million. The bank also introduced free Capitec-to-Capitec calls and raised the maximum airtime advance from R10 to R100, with advances taken up increasing from R36.1 million to R96.8 million.
Digital payment methods such as Apple Pay, Google Pay, Samsung Pay and Garmin Pay attracted 2.4 million users, a 68% jump, and spending through those channels grew 87% to R52.1 billion. The banking app’s user base expanded to 16.5 million from 13.9 million.
Capitec’s enterprise payments platform, Capitec Pay, processed 182 million payments worth R45 billion for 12.5 million clients, with net income up 51% to R365 million. Total net transaction and commission income rose 20% to R12.2 billion on a 14% increase in transaction volumes, even though the bank did not raise any fees for a second year.
On the cost side, operating expenses grew 5% to R10.5 billion, but the cost-to-income ratio fell to 36% from 40%, indicating improved efficiency. Technology spending, excluding salaries, rose 8% to R1.7 billion, driven by higher cloud fees and outsourced tech resources.
Credit costs increased. The group’s annualised credit loss ratio, the net credit impairment charge as a percentage of average gross loans, rose to 8.4% from 7.9%. In Personal Banking the ratio climbed to 9.2% from 8.1%, largely because of a forward-looking provision for expected losses linked to the US-Iran conflict, higher inflation and a 25-basis-point rise in the repo rate to 7% in May. Excluding that provision, the Personal Banking credit loss ratio would be 8.5%.
Business Banking headline earnings jumped 52% to R609 million, though its credit loss ratio rose to 3.4% from 2.1% as unsecured lending through credit scoring expanded 175% to R4.2 billion.
For small-business owners and entrepreneurs, the rapid growth of Capitec’s fintech services means more affordable channels for paying suppliers, topping up airtime for staff, and moving money without relying on cash. The bank’s decision not to raise fees while expanding digital options could keep transaction costs lower for SMEs that process many small payments.
Capitec also announced in July that it will sell its Capitec Rental Finance unit to a subsidiary of Sasfin Holdings, a move that will further sharpen its focus on banking and fintech services.
These results sit within a broader shift among South African banks toward non-bank digital services, as customers increasingly demand convenient, low-cost ways to manage everyday expenses. While the earnings boost is clear, the higher credit loss ratios remind investors that macro-economic pressures, such as inflation and interest-rate moves, remain a risk factor for the sector.
Read more about similar trends in the Tech & Telco section.
The interim dividend was lifted 19% to 3 110c per share, reflecting the stronger earnings profile that the fintech arm helped create, according to the group’s breakdown. Net non-interest income now makes up 70% of income from operations after credit impairments, up from 65% a year earlier, underscoring the shift toward fee-based services. Combined net income from value-added services and Capitec Connect rose 32% to R3.8 billion, a figure that includes the R3.5 billion generated by VAS alone and the R284 million from Connect, highlighting the growing contribution of non-bank offerings to the bank’s profitability.
Card-machine transaction expenses in Personal Banking fell sharply to R128 million from R625 million, a decline driven by higher volume rebates that lifted net income from card payments by 67%, while the removal of the international transaction fee caused net income from international card transactions to drop 10% to R285 million. These cost efficiencies helped push total net transaction and commission income up 20% to R12.2 billion despite a 14% rise in transaction volumes, showing that the bank can grow revenue without relying on fee hikes.
Business Banking’s unsecured lending, approved through credit scoring, expanded 175% to R4.2 billion, yet the segment’s credit loss ratio rose to 3.4% from 2.1%, reflecting the higher risk profile of loans that carry a 13.7% loss ratio. The forward-looking macroeconomic provision in Personal Banking increased to R664 million from R290 million in February, though it stayed below the R831 million held a year earlier. Excluding that provision, the Personal Banking credit loss ratio would be 8.5%, indicating that the underlying credit quality remains under pressure despite the broader earnings boost.
Technology spending, excluding salaries, climbed 8% to R1.7 billion, with cloud fees up 27% and outsourced technology resources rising 20%, signalling a continued investment in digital infrastructure to support the expanding fintech ecosystem. The sale of Capitec Rental Finance to a Sasfin Holdings subsidiary, agreed in July, will remove a non-core asset from the balance sheet, allowing the bank to concentrate resources on its high-growth fintech platforms and further improve its cost-to-income ratio, which has already fallen to 36% from 40%.
