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Phenomenal price rise – This bank has increased 50,000 per cent News

Tuesday, August 22nd, 2017 | Economy

It sounds totally surreal: If you bought shares of the South African Capitec Bank worth 2000 francs in 2002, you would be a millionaire today. Such a dream return in only 15 years would not have been possible with any Swiss share. Even Apple securities can not keep up.
According to Bloomberg, the Capitec share has been able to gain value each year since the 2002 stock exchange, with the exception of the financial crisis year 2008. From February 2002 until today the Kursplus is 50'664 percent. In 2017, too, the share can again grow by 24 percent. And although South Africa is currently being plagued by economic difficulties and political unrest. Unemployment in the country is currently 28 percent.

Percentage share price performance of the Capitec share since 2002, source: Bloomberg
How is such a course development possible? Capitec has focused on lending to low-income clients. A niche that has been largely neglected by other African banks in the past. Very beneficial to Capitec. The demand for loans is very high in the lower income segment, while at the same time the bank is able to earn a high margin in these risk-bearing (and thus higher interest-bearing) loans.
Nischebank is continuously gaining new customers, and last year alone it was 1.3 million. Overall, it is now 8.6 million. Analysts say that this broad customer base will in the future enable the cross-selling of further financial products. And: While other South African banks are losing customers, Capitec is expected to grow further.
In the meantime, however, with an estimated P / E ratio of more than 26, the bank has achieved a rating that is well above the industry average. Many financial participants therefore fear a correction. However, the share has been regarded as too expensive for years – nevertheless, it continues to rise unawares.


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