Capitec Bank, one Africa’s biggest lenders, expects its half-year profit to rise by as much as 20 percent, relying on double-digit customer growth and a fast-expanding merchant network to weather the pinch of sticky living costs and high interest rates.

The Stellenbosch-based lender said Thursday that headline earnings per share for the six months ended Aug. 31 will likely land between R82.15 ($5.1) and R83.54 ($5.18). That marks an 18 percent to 20 percent jump from the R69.6 ($4.31) it reported during the same period a year ago. Basic earnings per share are projected to track a matching path, climbing from R69.27 ($4.3) to between R81.74 ($5.07) and R83.12 ($5.15).

Much of that lift came straight from day-to-day transaction activity. Capitec crossed the 26 million customer mark in its personal banking unit, bringing in more swipe fees as retail clients spent larger amounts per visit and tapped their cards more often at checkout counters.

Capitec balances fee gains against bad-debt risks

That retail foot traffic fed directly into the bank’s business division. More merchants signed up for point-of-sale machines during the half, while checkouts through Capitec Pay picked up pace. Along with regular card swipes, business accounts generated steady fee income from value-added offerings like airtime, data, and bill payments.

The gains were not limited to banking counters. Capitec’s insurance arm also shored up the bottom line, led by its credit life and funeral policies. A lower rate of customer claims, combined with better returns on its investment book, helped keep margins healthy across the division.

Still, the country’s weak consumer backdrop left clear marks on the loan ledger. While interest income from personal loans managed to tick higher, cash-strapped households found it harder to qualify for new debt. Capitec raised its forward-looking credit loss provisions to reflect fresh economic risks, even as it kept overall debt book quality steady.

The small-business loan book told a similar story. As Capitec wrote more loans to business owners, upfront bad-debt provisions climbed alongside higher macro credit reserves. The lender pointed to its mix of automated scoring and hands-on credit vetting to justify the push into riskier business lending.

Smart tech powers bank profit resilience

Even with heavier bad-debt buffers, disciplined overhead costs gave the bank room to protect its return metrics, thanks to automated back-office tools and self-service digital platforms that kept operational spending from eating into profits.

Capitec said the trading figures remain unreviewed by external auditors. The bank is scheduled to publish its full interim financial results on the Johannesburg Stock Exchange news service on or around Sept. 30.