PIC assets grow 20% to R3.66trn Capitec’s fully banked clients rose 11% to 10.4 million

SPEAKER_1 (0:01)

And now, The Money Show with Stephen Grootes on 702 Let's walk the talk.

Stephen Grootes (0:07)

The Money Show with Stephen Grootes is brought to you by Absa Corporate, an investment banking connecting global finance to the future. That's how Absa's invested in your story. Good evening, I'm Stephen Grootes. Welcome to the programme, nine minutes after six at the time. Quite a busy corporate day, if you know what I mean. Strong results out from Capitec, the SEO, Graham Lee, already on hold to talk to you in just a moment. An important day in a way for the Public Investment Corporation. And I think for the first time, Patrick Dlamini, the CEO, they're able to speak relatively freely, perhaps, about what happened earlier in the year. You'll remember he was suspended. The finance minister fired the board. There was a new board, there was a court ruling. He was reinstated. Important developments there. Their results were out, very strong results, largely because of the performance of the JSC. We'll ask Patrick Dlamini how he feels about it now. I think that's going to be a very important conversation in a couple of moments. Now, some economic forecasts for our economy for this financial year. Not great, I'm afraid, but PWC, looking at that, will speak to Lulu Kruchel, their chief economist in Africa, a sustainability leader. And then AI and your job. I mean, there's so many anguished conversations about this. A very nuanced view I saw from the Bureau for Economic Research. Kipos Fenter is there, a senior economist. He's been looking at it. One or two things that might surprise you, sort of spoiler alert, you're probably okay. Very worried about younger people and their first job. We'll speak to him just before seven o'clock. Good to hear from you.

011-AA-307-02-021-4460567 and VoiceNotes, of course, tonight on 072-702-1702.

How are you feeling about AI and your job this evening?

SPEAKER_3 (1:53)

The Money Show with Stephen Grootes, live on 92.7 and 106 FM, streaming on the Prime Media Plus app and DSTV channel 856

Stephen Grootes (2:04)

Well, another stellar six months for Capitec Bank to the end of August. Headline earnings up 19 percent, personal banking profits up 17 percent, its business banking segment doing very nicely as well. Graham Lee is the CEO at Capitec. Graham, good evening and thanks for your time. It's a competitive banking environment, you're still growing very strongly.

Do you have any expectation of how long this really strong rate of momentum can keep going?

Graham Lee (2:31)

Good evening, Stephen, and thank you very much for having me. So Capitec continues to grow because we focus on our clients, so we consistently create more value for our clients.

What we have been implementing in the past couple of years though, is to create more of that value beyond core banking and to start bringing the strengths of the Capitec core model to other elements, insurance, activity, ability to serve yourself by electricity at home. And now, of course, we are bringing that more effectively to business banking. So what you see in our results really is the results of that diversification, the results of that investment in platform or insurance, platform for business banking, now starting to scale.

Stephen Grootes (3:19)

Yeah, I mean, talking of scale, I mean, you've been able to go through the last two years without increasing your fees for your customers, and growing scale makes that easier. How important is something like that for customers? There are banks now, other banks, Graham, that don't have fees at all.

Graham Lee (3:36)

Absolutely, and you know, the competition of the future is certainly going to drive in that way.

Our business model is one of scale and economies of scale. And when you build a scale business, long term, there are two benefits that come from that. One is the economies of scale, and for us, we share that back with our clients. So as we grow more, as we serve more clients, and we're able to then serve them more effectively to bring down costs, we share that back with our clients. That has reflected, say, in not increasing any fees at all for more than the last two years, and reducing many.

And of course, other good facts, for example, the free data and the free Capitec to Capitec calls, you can expect to see that going forward as well. The other significant advantage is it allows you to see more of the economy, understand more of your clients. The data that you get from the scale model allows you to serve those clients better, price your lending better, more accurately, which of course lowers prices as well. And that's another way in which you give back to the clients. It's a bit less obvious, but if you are able to create access to credit, credit funding for small businesses to help them grow, credit to people to enable them to buy cars, their first homes, and you're able to do it at a better price, then that benefits them and the entire economy around them. That's the other way in which you reduce prices.