CAPITEC: 129,851 -2106 (-1.60%)
South Africa's Capitec Bank cuts fees to compete with digital newcomers
* Lower transaction fees to cost at least 360 mln rand
* To hike fees for some cash withdrawals
* FY profit up 19 percent
(Recasts with pricing)
By Tiisetso Motsoeneng
JOHANNESBURG, March 28 (Reuters) - Capitec Bank
will take hit of at least $25 million from cutting transaction
fees in 2019, its chief executive said on Thursday, as the South
African lender fights to defend market share from digital
Launched in 2001 as a specialist in small personal loans,
Capitec is now positioning itself as a fully-fledged bank with
no-frills savings, insurance and credit card accounts. This is
to cut its reliance on unsecured loans, which rely solely on a
customers' promises to pay them back.
But the launch over the last few months of three digital
banks promising fees as low as zero looks set to trigger a price
war in the country, where more than 80 percent of the population
already have bank accounts.
Capitec's chief executive Gerrie Fourie told Reuters his
company would stand the challenge thanks to its strong brand,
product offering, extensive branch network and prices, which
were reduced at the start of this month.
"We have reduced our prices from March this year, and given
money back to our clients. For this year, we are going to give
back 360 to 380 million rand," Fourie said, referring to the
Fourie, at helm sine 2014, also said Capitec would hike fees
for cash withdrawals of more than 1,000 rand - in line with
strategies set out by new digital banks TymeBank and Discovery
Bank, both of whom have no branches or ATMs.
Fees at the main banks for deposits, withdrawals and
transfers have for years largely ranged from 100 rand to 250
rand a month, but can rise as high as 450 rand - a sizeable sum
in a country where the minimum wage is 20 rand per hour
Capitec reported a 19 percent increase to 4,577 cents in
headline earnings per share - the main profit measure in South
Africa - in the year ended February, thanks to strong growth in
The company attracted an average of 127,000 clients per
month in the past year, bringing the total to 11.4 million.
In November, Capitec agreed a 3.2 billion rand ($219
million) deal to buy Mercantile Bank, a move that should give it
a foothold in business banking if and when it is approved by
competition authorities later this year.
"We believe business banking is complex, pricing is complex
... so the thinking is can we do the same in business banking as
we've done in retail banking, by offering a simplistic and
transparent product?" Fourie said.
($1 = 14.6079 rand)
(Reporting by Tiisetso Motsoeneng; Editing by Gopakumar Warrier
and Mark Potter)
First Published: 2019-03-28 08:04:36
Updated 2019-03-28 10:08:35
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