American banking super major JPMorgan Chase, has spent billions of rand buying Capitec shares, cementing its position as one of the lender’s biggest shareholders.
Capitec, which is seen as still having a long runway to grow and gain market share, said on Friday that JPMorgan now owns 8.37% of the group. Based on Friday’s market capitalisation, Capitec is worth about R263bn — making JPMorgan’s stake worth about R22bn.
In January, JPMorgan had a 5.11% stake in Capitec.
JPMorgan is the US’s largest bank, worth about $551bn. It is headed by Jamie Dimon, largely credited with building the lender into a behemoth in the wake of the 2009 global financial crisis, which saw the bank get out of it unscathed.
Capitec last month reported a 16% rise in headline earnings for the year to-end-February. Operating profit before tax increased 16% to R13.4bn, while headline earnings per share rose 16% to R91.71.
The total dividend per share increased 16% to R48.75.
The results show that the group has made big progress in attracting higher-income customers. It reported a 61% increase over the past three years in the number of clients earning R15,000 or more a month, resulting in a total 2.9-million clients in this category. The lender has about 1.1-million clients earning more than R30,000 a month.
Retail bank active clients grew to 22-million from 19.9-million in 2023, with 11.2-million of them using the banking app. Fully banked clients, who perform more transactions and therefore contribute more to income, increased to 7.8-million from 6.9-million in 2023.
The number of clients using value-added services grew by 17% to 9.8-million. Capitec, run by Gerrie Fourie, is also looking at expanding its international business after the SA Reserve Bank in March approved a transaction in which Capitec will increase its shareholding in international online consumer lending group Avafin Holdings from 40.66% to 97.69% at a purchase price of €26.3m.
By April 15 all the regulatory approvals for the transaction had been obtained. Avafin provides online consumer loan products in Poland, Latvia, Spain, the Czech Republic and Mexico.
Capitec has also launched an assault on business banking by purchasing Mercantile Bank in 2019 from the Portuguese state-owned banking group Caixa Geral de Depósitos, in a deal worth R3.5bn.
The Stellenbosch-based bank shrugged off competition from Nedbank and a consortium of the Public Investment Corporation and Bayport Financial Services to lay its hands on Mercantile. It has since rebranded Mercantile to Capitec Business. Capitec’s share price is up 75% over the past five years.
Shoprite
JPMorgan has also taken a liking to Shoprite, SA’s largest retail group. It owns about 6.69% of the retail major. Shoprite is worth about R156bn on the JSE. In the six months to December, Shoprite added a net 197 new stores to total 3,543 stores, adding 2,617 new jobs in the process.
The retailer has also had 58 consecutive months of market share gains in SA.
Ninety One, SA’s largest asset manager, earlier this year said it expected Shoprite and Woolworths to beat earnings forecasts this year and increase their market share, solidifying their already dominant positions.
African Development Bank and JPMorgan recently held talks on potential partnership between the two institutions. The US bank works with the development lender on capital market transactions. Part of the discussions is considering leveraging African Development Bank guarantee instruments to increase funding to eligible African countries, particularly low-income states.
JPMorgan in 2021 launched a $20m fund for black-owned businesses in SA. Over eight years the firm aims to support 500 early-stage businesses and generate a minimum of 1,000 new permanent jobs, creating $1.2bn of financing in the SA economy
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