Capitec, South Africa's biggest bank (by customers), says it’s ready to grow its small and medium enterprise (SME) banking market, where cash is king.
CEO Gerrie Fourie said this week — after the release of the group’s financial results for the year ended February 2025 — that the underserved township SME market was a big focus as it is largely unbanked, something Capitec wants to change.
“We have a 1% market share. Everyone is playing big in the commercial space, they do big deals. We want to focus on the SME side; that, for us, is a big focus area,” he said.
The Stellenbosch-based financial services provider has been on a five-year journey to build its business bank after the 2019 acquisition of Mercantile Bank,, which they rebranded to Capitec Business in 2024.
On obstacles they were encountering in growing their share of the SME market, Fourie said the biggest challenge was that it was still predominantly a cash economy. “One of the challenges is how to bank them because they are forcing you to use cash. The perception is, I have R5,000 for today, I pay my wages, I pay my stock in cash and it does not cost me anything. How do you break that mindset?”
In its push to drive digital business banking, the bank said it has made it possible to open an account within minutes, as well as making its business transactional fees the same as retail banking.
“Our fee structure is extremely low, the lowest in the market. Unlike other banks — which come in with packages priced at 5c lower than ours — we treat all clients the same, so all get exactly the same pricing structure.”
We want to focus on the SME side; that, for us, is a big focus area.
— Gerrie Fourie, Capitec CEO
Nedbank said in its latest annual report — released last week — that SME banking has emerged as the “next battleground”, highlighting the enhanced digital capabilities at existing banks and the entry of non-traditional competitors. “Key investor concerns include the potential impact of Capitec replicating its retail market successes in the SME market,” the bank noted.
The focus on SMEs is part of Capitec’s diversification from a predominantly unsecured lender into a diversified banking group. It reported a 30% increase in headline earnings, generated mainly from personal banking, business banking and Avafin — the online lender — and from strategic initiatives like Capitec Connect.
Its board approved a final gross dividend of R44.25 per ordinary share, up from R33.45 a year earlier, bringing the total dividend for the 2025 financial year to R65.10 per share, up from R48.75 cents.
As part of its diversification, Capitec has also established itself as a fully-fledged long-term insurer, after obtaining an insurance licence and buying out Sanlam as an insurance partner in that business.
Fourie said Capitec reported a 25% increase in its funeral and life cover policies, with 15 million lives now insured. “If you look at Sanlam and Old Mutual, they offer a variety of products. Capitec does one or two things, and it does them extremely well. We will evaluate the market and decide what the next steps should be.”
Users of the bank’s app are also receiving discounted streaming deals on Showmax, after a streaming arrangement with its owner, MultiChoice, was penned last year. The bank has sold about 500,000 Showmax streaming vouchers through this arrangement.
Tracking the average annual spend of its 24 million clients, the bank showed that a huge chunk of their money went to groceries, whose spending growth was three times higher than the next item, fuel. This is in line with the rise in food inflation.
Capitec was slapped with a R56.25m administrative penalty by the Reserve Bank’s Prudential Authority in December, after an inspection in May 2021 found it fell short in its compliance with certain provisions of the Financial Intelligence Centre Act.
In the latest risk management report released last week, the company said it was refining its compliance framework and had developed its anti-money laundering programme after considering the findings of the inspection. “We are strengthening our client onboarding and ongoing due diligence controls across personal and business banking. We have expanded our monitoring controls to ensure timely filing of regulatory reports and accurate, enhanced due diligence processes,” it said .
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