Capitec has expanded cross-border remittances to include 26 markets, from seven when it launched the service less than a year ago, as the lender broadens its appeal to South Africans and the large immigrant population that works and does business in the country.
The group’s cross-border remittances offering now reaches as far as Bangladesh, Pakistan and the UK — reflecting the cross-appeal the company has among the different strands of society
There is a large population of Bangladesh-origin residents in South Africa, with estimates varying between 55,000 and more than 300,000. Many have established small businesses in the country, particularly in the township informal economy, a segment Capitec aims to dominate.
South Africa is also home to many Pakistani immigrants, who are also players in the township economy, operating small businesses, including spaza shops and cellphone stores, or working in the medical sector.
“It is 26 countries that we now serve. The expansion was informed by demand from our customers and the transactions they need to process. The 26 countries include some countries outside Africa, like Bangladesh, Pakistan and the UK,” Capitec CEO Graham Lee told Business Day.
“The majority of them, however, are African countries. We serve a client base with deep links to the rest of the continent. The largest volumes are to Zimbabwe, Malawi, Lesotho and Botswana. There are significant transactions with East Africa as well,” Lee said.
Remittances, the cross-border payments that migrants living and working outside their country of origin send back home to loved ones, have been a lifeline for many migrant families.
Many families throughout the Southern African Development Community depend on income received via cross-border remittances, according to the FinMark Trust.
Over the years, the growth of competition in Africa’s financial services market has helped accelerate the time it takes for payments to clear while reducing costs. The landscape includes players such as World Remit, Mukuru, MoneyGram, Nala, Chippa, and, increasingly, mobile operators.
Capitec’s emphasis on growing the township economy has started to bear fruit, with its fledgling business banking proposition reporting a 71% increase in customer numbers to more than 450,000 in the year ended February.
Of these, 78,000 were entrepreneurs, 112,000 merchants and 260,000 small businesses. Capitec’s advances to its business banking clients surged 30% to R30.4bn in the year under review.
The strong performance of the group’s personal banking franchise, its business banking, value-added services and insurance unit saw it report a record profit of R16.8bn in the year, up 23% from the previous year.
The group also reported a market-leading return on equity of 31% while cementing its place as the country’s largest retail bank by customers, having amassed 26-million clients, with 15-million of these using the group’s app, making it the country’s largest digital bank as well.
Insurance
The Stellenbosch-based bank insures 16-million lives, with the insurance business set to be a big money-spinner. The sum assured breached the R500bn mark in the year under review.
The personal banking franchise accounted for 41% of the group’s earnings, followed by the insurance business at 27%, fintech at 26%, business banking at 5% and Avafin at 1%.
“Our growth over the past year reflects 25 years of staying focused on what matters most: making banking simpler, more accessible and more affordable for our clients. The trust that 26-million South Africans place in us is something we value deeply and it remains the foundation on which we continue to build,” Lee said.
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