Having overtaken Standard Bank Group’s market capitalisation earlier this year, Capitec Bank is within touching distance of FirstRand and on track to be the country’s largest bank by value.
On Friday (23 May), Capitec’s market capitalisation was R397 billion at the close, versus FirstRand’s R403.8 billion (Standard Bank was at R372.9 billion).
Read: A different view of SA banking stocks
That’s just a 1.7% gap. Earlier in May, the gap was as close as 0.6%. Just one or two days’ outperformance should be enough to see Capitec overtake the owner of FNB.
Capitec has been growing earnings strongly and consistently for years, as other ‘full-service’ banks have battled to deliver growth in excess of 20% (often just 10%). Notably, Nedbank’s medium- and long-term targets are to grow earnings by GDP + CPI + 3% or 5% (depending on where we are in the credit cycle).
For the year ended 28 February, Capitec reported headline earnings growth of 30%.
Market cap on 23 May:
- FirstRand R403.8 billion
- Capitec Bank R397 billion
- Standard Bank Group R372.9 billion
- Absa Group R149.6 billion
- Nedbank R123.6 billion
- Investec R122.7 billion
| FirstRand (end Dec) | Capitec (Feb, the following year*) | Standard Bank (end Dec) | |
| 2019 | R351.2bn | R150.3bn | R268.3bn |
| 2020 | R286.3bn | R154.8bn | R202.4bn |
| 2021 | R341.1bn | R240.8bn | R226.8bn |
| 2022 | R348.5bn | R203.7bn | R271.5bn |
| 2023 | R412.4bn | R234.3bn | R344.8bn |
| 2024 | R426.1bn | R356.9bn | R367.9bn |
| 15 May 2025 | R403.8bn | R397bn | R372.9bn |
* Capitec has a February year-end, so the market capitalisation at the end of February the following year is used as a comparison.
Becoming the largest bank by market cap would be a remarkable moment for the country’s biggest bank by number of clients. Just 10 years ago, things looked very different.
In February 2015, Capitec had 6.2 million active clients, and its market capitalisation was R47.4 billion.
Today it has 24 million active clients, of which 8.8 million are ‘fully banked’ ones. FNB has 9.86 million active customers in South Africa with an additional 6.76 million eWallets in the country (customers with eWallets aren’t counted in the main number). Standard Bank has 11.89 million active clients in the country, of which it says 9.08 are “core”.
Capitec’s share price at all-time highs of over R3 000 (R3 530 on 15 May) has confounded many investors.
Some sold out when it was in the R200s (others sold out well before). Capitec’s share price growth in the last year has seen it dramatically close the gap with Standard Bank (and then overtake Africa’s largest bank by assets) and FirstRand.
It is up 51% over a 12-month period. By comparison, Standard Bank is up 20% and FirstRand just 5%.
On a price-to-book basis, Standard Bank is trading at 1.48 times, FirstRand at 1.95 times and Capitec Bank at 7.78 times. (Nedbank is at 1.05, Investec at 0.89 and Absa at 0.87).
Capitec luck?
In 2022, Allan Gray portfolio manager Pieter Koornhof highlighted that one should not discount the role that luck played in Capitec’s success.
“For example, the business was founded when South Africa’s economy was growing strongly, and social grants were expanding. These provided tailwinds for the high initial growth and returns that laid the foundation for Capitec’s later success.
“It would be more difficult to get off to such a good start in today’s anaemic economy.”
Koornhof cautioned that “Capitec’s story, and similar ones from other fast-growing companies, can make investing in such businesses seem like a sound investment strategy, and it certainly is possible to achieve high returns this way; however, this is easier said than done”.
“Part of the difficulty is that when a company has a couple of years of rapid growth, the market often values the share as if such growth will continue for decades.
“While companies can sometimes achieve this feat – Capitec is an important example of one that did so – it does not typically turn out that way. Indeed, history is littered with fast-growing companies that overreached in pursuit of growth and subsequently blew up, or delivered poor shareholder returns when they failed to live up to the market’s lofty expectations of them.”
Indeed, history will show that Capitec has continued to deliver fast growth even since 2022, and even in this “anaemic economy”. – moneyweb.co.za
