Capitec shares rise on update, despite latest Viceroy attack

Capitec Banking - [Google Images]

Capitec’s share price yesterday shrugged off the latest salvo against the company by American short-seller Viceroy Research.

The bank’s share price instead took its cue from the group’s announcement that its profits for the year to the end of February would be more than 15percent higher.

Capitec said it expected, “with a reasonable degree of certainty”, that its headline earnings per share (Heps) for the period would be between R38.06 and R39.04.

“Heps will be between 3806cents and 3904c per share, representing an increase of between 16percent and 19percent compared to the 3281c per share reported in the prior year,” the bank said.

“Earnings per share will be between 3802c and 3901c per share, representing an increase of between 16percent and 19percent compared to the 3278c per share reported in the prior year.”

The bank’s share price gained 3percent to close at R865.45, but still some distance from the R920 the group’s share was valued at before Viceroy’s explosive research was released in January. The group’s majority shareholder, PSG added 2.23percent to R219.50.

Capitec’s voluntary announcement means that the company’s earnings are outstripping those of its rivals.

Barclays Africa last week reported that its Heps for the year to the end of December grew 4percent, while Nedbank reported a 2.2percent increase in Heps. First Rand and Standard Bank are expected to release their financials this week.

Capitec’s financial results for the year to the end of February are expected to be published on March 27.


Capitec released the voluntary statement the same day on which as Viceroy Research attacked the bank again. Viceroy said the company had failed to answer any of its questions and had done so in an evasive and tangential manner.

“We maintain our recommendation that Capitec should be subject to an external, independent regulatory investigation, which we believe will result in Capitec being placed in curatorship in order to protect its consumers,” Viceroy said.

Viceroy last month drew the ire of Capitec when it accused the bank of making its loan books look healthier than they are, while effectively “hiding” the risks of default from its client base.

Andre du Plessis, the chief financial officer of Capitec, said yesterday its credit-granting principles were conservative and appropriate.

“Our credit models filter out the ‘noise’ in instances where these late payments occur outside clients’ control, and focus on stable and predictive risk variables that link underlying client behaviour to the risk that a client may default,” Du Plessis said.

Viceroy’s research report on Capitec has been met with scepticism and has found little support.

The SA Reserve Bank and National Treasury have backed Capitec.

The Financial Services Board has confirmed it was investigating Viceroy for possible market abuse and breaches of the Financial Markets Act.

S&P Global Ratings has said its rating for Capitec was not affected by a report published by Viceroy in January.