Key points
- Capitec aims to grow with a focus on SMEs and the launch of an insurance division to diversify its services.
- Building on its success in digital services, the bank is looking to further expand into the prepaid calling and electricity voucher markets.
- Capitec’s purchase of Avafin Holding Ltd is a key step in its plan to expand internationally and enter new global markets.
Capitec Bank Holdings, led by South African billionaire Michiel Le Roux, is preparing to expand beyond its usual focus on retail banking. The bank has seen growth by targeting low-income retail clients in South Africa, a group often overlooked by other banks.
Now Capitec is looking to broaden its horizons by moving into the business sector and exploring international markets. This strategic shift represents an exciting new chapter for Capitec as it aims to diversify and reach more customers.
Go to business and insurance
Stellenbosch-based Capitec has traditionally focused on low-income depositors and unsecured loans, which has helped it grow into South Africa’s largest bank by client base.
However, Capitec is now turning its attention to small and medium-sized enterprises (SMEs) as a new avenue for growth. The bank is also building an insurance business and sees it as a critical area for expansion.
In a recent interview with Bloomberg, CEO Gerrie Fourie highlighted the opportunities in South Africa. He believes that better governance and cooperation between the government and the private sector could unlock great potential for growth.
Capitec is also looking to strengthen its presence in digital services, capitalizing on its success in South Africa’s prepaid mobile and prepaid electricity vouchers market. The bank currently owns 32 percent of the prepaid call market and 27 percent of the prepaid electricity voucher market.
By February 2024, these digital services had generated R3 billion ($166 million) in revenue, up from zero in 2022. This growth demonstrates Capitec’s ability to innovate and adapt to the evolving digital financial landscape, paving the way for further expansion.
International ambitions with the acquisition of Avafin
Capitec’s growth strategy is not limited to the domestic market; it is also focused on international expansion. In March 2024, Capitec acquired the fintech group Avafin Holding Ltd, which operates in Poland, the Czech Republic, Latvia, Spain and Mexico.
Fourie plans to transform Avafin into a fully operational bank and use it as a springboard for Capitec’s global ambitions.
Fourie envisions developing Avafin as a key platform for Capitec’s international growth strategy.
This “big dream” is to combine the strengths of Capitec and Avafin and create a strong position in international markets.
Moving into these markets is a bold move for Capitec, which operates primarily in South Africa but has shown steady growth and resilience.
