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CAPITEC BANK HOLDINGS LIMITED - REVIEWED FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2012

Release Date: 26/09/2012 07:40
Code(s): CPIP CPI     PDF:  
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REVIEWED FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2012

Capitec Bank Holdings Limited
Registration number: 1999/025903/06
Registered bank controlling company
Incorporated in the Republic of South Africa
JSE ordinary share code: CPI ISIN code: ZAE000035861
JSE preference share code: CPIP ISIN code: ZAE000083838

REVIEWED FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2012

· Headline earnings per share up 35% to 702 cents
· Earnings up 43%
· Interim dividend per share up 35% to 169 cents
· Return on equity 28%
· Active clients 4.2 million
· Rights issue announced
                                          Six         Six          Six       Year
                                       months      months       months      ended
                                        ended       ended       August
                                       August      August        2012/   February
                                        2012        2011         2011        2012

PROFITABILITY

Interest on loans           Rm          3 035       1 940        56        4 347
Net loan fee income         Rm            631         724       (13)       1 471
Net transaction fee
income                      Rm            583         361        61          836
Interest paid               Rm           (726)       (451)       61       (1 022)
Other banking income        Rm              3           7       (60)          14
Income from banking
operations                  Rm          3 526       2 581        37        5 646
Net loan impairment
expense                     Rm         (1 019)       (679)       50       (1 604)
Banking operating
expenses                    Rm         (1 485)     (1 183)       26       (2 486)
Non-banking operations      Rm              4           -                      3
Tax                         Rm           (316)       (221)       43         (464)
Preference dividend         Rm            (11)        (10)       10          (19)
Earnings attributable to
ordinary shareholders
· Basic                     Rm            700          488       43        1 075
· Headline                  Rm            700          489       43        1 078
Cost-to-income ratio -
banking activities          %              42           46                    44
Return on ordinary 
shareholders' equity        %              28           29                    29
Earnings per share
· Attributable              Cents         702          518       35        1 122
· Headline                  Cents         702          520       35        1 125
· Diluted attributable      Cents         691          505       37        1 096
· Diluted headline          Cents         691          507       36        1 099
Dividends per share
· Interim                   Cents         169         125        35          125
· Final                     Cents                                            300
· Total                     Cents                                            425
Dividend cover              X             4.2         4.2                    2.6

ASSETS

Net loans and advances      Rm         22 823      13 393        70       16 863
Cash and cash
equivalents                 Rm          7 097       3 248       119        4 551
Investments                 Rm            924         908         2        1 199
Other                       Rm          1 197         676        77        1 009
Total assets                Rm         32 041      18 225        76       23 622

LIABILITIES

Deposits                    Rm         25 608      13 678        87       17 692
Other                       Rm            803         721        11          744
Total liabilities           Rm         26 411      14 399        83       18 436

EQUITY

Shareholders' funds         Rm          5 630      3 826         47        5 185
Capital adequacy ratio      %              38         35                      39
Net asset value per
ordinary share              Cents       5 351      3 772         42        4 962
Share price                 Cents      20 222     18 845          7       18 500
Market capitalisation       Rm         20 295     17 819         14       18 367
Number of shares in
issue                       '000      100 363     94 554          6       99 282
Share options
· Number outstanding        '000        2 269      3 233        (30)       3 087
· Number outstanding to
  shares in issue           %               2          3                       3
· Average strike price      Cents       6 187      4 283         44        4 358
· Average time to
  maturity                  Months         20         21                      16

OPERATIONS

Branches                                  534        474         13          507
Employees                               7 780      6 351         23        7 194
Active clients              '000        4 252      3 247         31        3 706
ATMs
· Own                                     581        507         15          550
· Partnership                           1 787      1 356         32        1 526
· Total                                 2 368      1 863         27        2 076
Capital expenditure         Rm            296        203         46          381

SALES
Loans
Value of loans advanced     Rm         12 831      9 226         39       19 393
Number of loans
advanced                    '000        1 934      2 355        (18)       4 648
Average loan amount         R           6 634      3 918         69        4 172
Repayments                  Rm          9 065      7 566         20       16 173
Gross loans and
advances                    Rm         24 697     14 495         70       18 408
Loans past due (arrears)    Rm          1 075        649         66          932
Arrears to gross
loans and advances          %             4.4        4.5                     5.1
Provision for doubtful
debts                       Rm          1 873      1 102         70        1 545
Provision for
doubtful debts to
gross loans and advances    %             7.6        7.6                     8.4
Arrears coverage ratio      %             174        170                     166
Loan revenue                Rm          3 552      2 596         37        5 660
Loan revenue to average
gross loans and advances    %            16.5       20.4                    38.6
Gross loan impairment
expense                     Rm          1 141        755         51        1 780
Recoveries                  Rm            122         76         61          176
Net loan impairment
expense                     Rm          1 019        679         50        1 604
Net loan impairment
expense to loan revenue     %       	 28.7       26.2            	    28.3
Net loan impairment
expense to average gross
loans and advances          %             4.7        5.3            	    10.9
Deposits
Wholesale deposits          Rm         10 753      5 454    	 97    	   7 162
Retail call savings         Rm    	8 864      4 963    	 79    	   6 348
Retail fixed savings        Rm     	5 646      3 125   	 81        4 015


CLIENTS

Active client base grew to 4.2 million

Capitec saw the active client base grow consistently during the past six months to reach
4.2 million at the end of August 2012. This reflects an increase of 31% and equates to
more than 90 000 new clients per month on average.

Active transacting and savings clients are in excess of 3.1 million. Lending only
clients total 1.1 million, comprising only 26% of total active clients.

The focus remains on acquiring clients that will use Capitec as their primary bank. Many
clients have accounts at a number of banks but choose one as the account into which
their salaries are deposited and from which payments are made.

EARNINGS

Increases in loan revenue to R3.6 billion and net transaction fee income to R583 million, 
along with an improvement in the cost to income ratio to 42%, resulted in earnings of 
R700 million, a 43% year-on-year increase.

The bank's focus has been to acquire more transacting clients, reduce the cost of credit
and maintain stringent credit criteria.

TRANSACTION INCOME

Net transaction fee income up 61% to R583 million

Gross transaction fee income (non-lending) grew by 55% compared to the six months ended
August 2011 and totalled R918 million. The growth in fee income exceeded the 31% growth
in client numbers for the same period.

Capitec delivered on its commitment to transparency and simplicity by charging a single
monthly administration fee of R4.50 for its Global One accounts and by simplifying
transaction prices. All transaction prices are quoted in the form of a fixed fee per
transaction.

Capitec promotes the use of mobile banking and at the end of August 2012 in excess of
2.0 million clients were registered for this service. The added convenience of mobile
transacting in the form of prepaid vouchers for electricity and cell phone airtime was
well supported and led to the doubling of income from electronic vouchers for the six
months since February 2012.

Net transaction fee income covered 39% of banking operating expenses compared to 31% in
the six months ended August 2011. The target for the full 2013 financial year is 40%.

LENDING INCOME

Loans advanced increased by 39% year-on-year to R12.8 billion

During the six months ended August 2012 Capitec took credit beyond traditional personal
loans by changing its offer to a single loan with a term of anywhere between one and 
84 months and a maximum amount of R230 000. Clients can now choose their own credit
plan based on their credit profile and affordability, instead of being bound by
predetermined loan terms.

The offer of loans up to 84 months closes the gap between Capitec and the traditional
banks in terms of the maximum unsecured loan amount offered. The lower pricing of the
new loan product is a further step in Capitec's strategy to reduce the cost of credit in
the unsecured lending market.

Before the introduction of the new loan product a client would identify the need for
credit, for example, to build a house or purchase durable goods, and would be granted a
loan. When the client identified another need for credit a few months later, a second
loan would be granted based on affordability. Under these circumstances the client would
pay an origination fee and a monthly administration fee for each of the loans.

The new loan product reduces the cost to the client because additional credit
requirements are met by increasing the value of the client's existing loan. The client
does not pay an additional origination fee and will only pay one monthly administration
fee. The payment collections from the client's bank account are also reduced to a single
collection, increasing the client's ability to manage his finances.

The impact of the new loan product is reflected in the 18% decrease in the number of
loans advanced and the 69% increase in the average loan amount advanced compared to the
six months ended August 2011.

The 69% year-on-year growth in the sales of loans with terms longer than 12 months was
largely attributable to the new loan product. Loans with terms longer than 12 months
contributed 80% of sales compared to 66% for the six months ended August 2011.

The new loan product also attracted a significant number of new clients to Capitec.
Loans advanced to new clients increased by 64% compared to the six months ended 
31 August 2011.

Capitec's credit granting criteria are constantly assessed and adjusted to ensure that
risk appetite is not exceeded. The risk parameters in the credit models are measured
against the actual performance of loans and credit bureau information is utilised in the
models to identify stresses in the market.

The continued growth in the unsecured lending market should be considered against the
background of the restructuring of the market that occurred with the introduction of the
National Credit Act (NCA) in 2007. The NCA restricts the interest rates and fees that
may be charged on unsecured loans. The resulting reduction in the cost of credit makes
unsecured credit available to a wider market. Higher income clients, with monthly income
in excess of R15 000, have progressively accounted for an increased portion of unsecured
credit granted. These clients carry a lower risk. Our analysis also indicates that
increased affordability, together with growth in disposable income has meant that the
growth in unsecured lending has not resulted in borrowers becoming over-indebted.

Arrears as a percentage of gross loans and advances down to 4.4%

The 70% year-on-year growth in the gross loan book from R14.5 billion to R24.7 billion
was achieved while maintaining the quality of the book. Book quality is measured most
objectively by loans past due (those in arrears) as a percentage of the total loan book
as well as the rand amount of arrears.

Arrears as a percentage of gross loans and advances improved to 4.4% compared to 4.5% in
August 2011 and 5.1% in February 2012. Loans past due increased to R1.1 billion compared
to R649 million at the end of August 2011 and R932 million at the end of February 2012,
a lower rate of increase than the gross loan book.

The provision for doubtful debts as a percentage of the gross loan book is 7.6%,
unchanged year-on-year and down from 8.4% at the end of February 2012. The decrease
compared to February 2012 is in line with the relative decrease in arrears and the
cyclical nature of the loan book. The provision as a percentage of arrears is 174%,
which signifies prudent provisioning.

Although loan book growth was predominantly in longer-term loans, these loans are
granted to lower risk clients. Loans with terms longer than 12 months now comprise 98%
of the loan book compared to 95% at the end of August 2011.

Net loan impairment expense down to 4.7% of average gross loans and advances

The net loan impairment expense as a percentage of average loans and advances decreased
to 4.7% from 5.3% for the six months ended August 2011 and 5.6% for the six months ended
February 2012.

The net loan impairment expense grew by 50% year-on-year and amounted to R1.0 billion.
The net expense includes recoveries of R122 million which increased by 61% year-on-year.
The growth in the expense was lower than the growth in the loan book and was positively
influenced by the arrears performance.

Our policy is to write off a client's full outstanding loan balance if any payment is in
arrears for more than 90 days.

The gross loan book grew by R10.2 billion during the six months ended August 2012.
During the same period the gross loan impairment expense (before recoveries) grew year-
on-year by R386 million to R1.1 billion from R755 million and by R116 million compared
to the six months ended February 2012. The table below analyses these increases:

                                                   February     August
Change compared to the six                             2012       2011
months ended                                             Rm         Rm

Book growth                                             300        495
Improvement in book quality                            (150)       (80)
Increased valuation of handed over book                 (34)       (29)
Increase in gross loan impairment
expense                                                 116        386

The continued growth in the longer-term loan book and the lengthening of the maximum
loan term affected the impairment expense. The provision for loans with terms longer
than 60 months is calculated by stretching the historical data that is available on
loans with shorter terms. Uncertainty surrounding new longer-term loans is greater at
the beginning of the term and the fact that the past does not necessarily reflect future
economic conditions must also be considered. For this reason the provisioning curve at
the beginning of the life span of a loan product is steepened by increasing the IAS39
provision on loans with terms of 12 months and longer.

Loan revenue up by 37% year-on-year to R3.6 billion

The launch of the new loan product resulted in a change in the make-up of the all in
yield.

The reduction in the number of loans advanced together with the increase in average loan
amounts meant that income from origination fees, which is capped on higher-value loans,
decreased by 9% compared to the six months ended 31 August 2011. The income from monthly
administration fees was also affected by the reduction in the number of loans advanced
and grew only nominally. Total loan fee income decreased by 5% year-on-year and by 7%
compared to the six months ended February 2012 to R782 million.

The introduction of the new loan product resulted in a diversification of interest rates
based on the clients profile and the increased options regarding the term of the loan.
Interest income increased by 56% year-on-year to R3.0 billion compared to R1.9 billion
for the six months ended August 2011 and R2.4 billion for the six months ended February
2012.

The credit life and retrenchment insurance cost borne by the bank for the benefit of its
clients increased to R151 million compared to R96 million for the six months ended
August 2011 due to the growth in the gross loan book. We do not charge our clients any
fee for this cover.

COST STRUCTURE

Cost to income ratio down to 42%

The cost-to-income ratio of banking activities improved to 42% from 46% for the six
months ended August 2011 and remained unchanged from the six months ended February 2012.

Capitec is in an expansion phase and the cost-to-income ratio was therefore not expected
to decrease significantly during the current financial year.

The bank's footprint was expanded by opening 27 new branches during the six months ended
August with another 28 new branches planned for the remainder of the financial year.

Capital expenditure increased by 46% year-on-year to R296 million.

Banking operating expenses grew by 26% compared to the six months ended August 2011 and
totalled R1.5 billion. This represents an increase of R302 million.

Employment, premises, information technology, cash-handling and marketing costs remain
the major components of operating expenditure.

The contribution of employment costs to total banking operating expenditure increased by
1% year-on-year to 54%. Employment costs contributed R158 million to the year-on-year
increase in operating expenditure.

Capitec employed 7 780 people as at the end of August 2012 compared to 6 351 at the
end of August 2011 and 7 194 at the end of February 2012.

There have been no changes to the incentive schemes since August 2009. Share
appreciation rights are cash-settled and the expense fluctuates according to the Capitec
share price. Share options are equity-settled and the income statement expense is
therefore not subject to share price fluctuations. The senior management performance
scheme and the staff performance bonus scheme are based on growth in headline earnings
per share. In total, incentive schemes contributed R160 million to employment costs
compared to R159 million for the six months ended August 2011 and R123 million for the
six months ended February 2012.

FUNDING AND LIQUIDITY

Total funding grew to R25.3 billion

Retail call savings grew by 79% year-on-year to R8.9 billion. Growth resulted from
increased client numbers and an increase in the average savings balance per client.

Retail fixed savings grew by 81% year-on-year, totalled R5.6 billion at the end of
August 2012 and comprised 34% of total term funding compared to 36% at the end of August
2011 against a target of 40%. The ratio will fluctuate based on the timing of wholesale
funding issuances. Fixed deposit rates remained competitive and the number of fixed
deposit accounts grew by 23% during the last year.

Retail funding comprises 57% of total funding compared to a target of 60%. Retail
funding remains an attractive source of funding because it currently costs on average 
4% less than wholesale funding and diversifies funding sources.

Wholesale deposits increased by 97% year-on-year to R10.8 billion and by R3.6 billion
subsequent to February 2012. The increase was principally due to the issuance of 
R3.0 billion in listed and unlisted subordinated and senior debt. The issuances of listed
debt were oversubscribed, indicating the funding market's confidence in Capitec. Senior
listed bonds in the amount of R322 million were repaid in May 2012.

The funding strategy remains to match the duration of assets and liabilities. This is a
powerful statement.

Liquidity management remains conservative

The management of liquidity continues to take preference over the optimisation of
profitability. Capitec complied with the two new Basel 3 liquidity ratios: the liquidity
coverage ratio and the net stable funding ratio.

Capitec's internal liquidity measurements and policies are more conservative regarding
the utilisation of retail call savings than the abovementioned prescribed measurements.
This means that funding in excess of operational requirements is held. These funds are
invested in interest-bearing instruments.

CAPITAL

Return on equity at 28%

The return on ordinary shareholders' equity remains above target and in line with the
return of 29% for the 2012 financial year.

The risk-weighted capital adequacy ratio is 38%. The R1.3 billion in subordinated debt
issued during the six months ended August 2012 increased the capital adequacy ratio at
the end of the six months by 6% from 32% to 38%. We continuously monitor capital
requirements and review the need for additional capital.

The disclosure in terms of Regulation 43 of the Banks' Act is available on the Capitec
Bank website.

RIGHTS ISSUE

An announcement regarding a rights offer on ordinary shares will follow immediately
hereafter in a separate announcement.

The R2.25 billion in proceeds from the rights issue will be utilised to fund growth in
the loan book as well as expansion of the branch network by between 50 and 75 branches
per year for the next 3 years.


THE FUTURE

The success of Capitec is driven by the bank's clients. We will continue to improve our
unique service, positioning and product offer for the benefit of our clients.

Opportunities exist to broaden our market to include higher income clients that are
increasingly exposed to our simplified, low-cost offer and are finding that the Global
One solution is perfect for their needs.

The expansion of the branch network will continue to provide improved market penetration
and more branches in shopping malls will assist in the acquisition of a different client
profile.

INTERIM DIVIDEND

The directors approved an interim ordinary dividend of 169 cents per share on Tuesday 
25 September 2012. The dividend will be payable on Monday 22 October 2012.

Last day to trade cum dividend       Friday 12 October 2012
Trading ex-dividend commences        Monday 15 October 2012
Record date                          Friday 19 October 2012
Payment date                         Monday 22 October 2012

Share certificates may not be dematerialised or rematerialised between Monday 15 October
2012 and Friday 19 October 2012, both days inclusive.

In terms of the new Dividends Tax effective from 1 April 2012, and the amendments to 
section 11.17 of the JSE Listing Requirements, the following additional information 
is disclosed:

   (1)     The local dividend tax rate is 15%.

   (2)     The full dividend will be subject to dividends withholding tax. The dividend 
	   will not be paid out of contributed tax capital and there are no secondary 
	   tax credits available for utilisation. Accordingly, the net cash dividend per 
	   share is 143.65 cents.

   (3)     Capitec's issued ordinary share capital is 100 363 200 shares as at 25 September 2012.

   (4)     Capitec's tax reference number is 9405/376/84/0.

INTERIM CONSOLIDATED BALANCE SHEET

                                                                Six
                                                             months
                                    Reviewed 	Unaudited     August      Audited
                                      August       August      2012/     February
                                        2012         2011       2011         2012
                                       R'000        R'000                   R'000

ASSETS

Cash and cash equivalents          7 097 122    3 247 637        119    4 551 203
Investments designated at
fair value                           923 564      907 945          2    1 198 833
Loans and advances to clients     22 823 468   13 393 174         70   16 863 028
Inventory                             50 524       23 503         15       42 079
Other receivables                     80 043       53 717         49       57 745
Current income tax assets             61 841            -                  62 331
Property and equipment               673 052      479 977         40      543 121
Intangible assets                    122 182       54 422        125       69 262
Deferred income tax assets           209 093       64 546        224      234 242
Total assets                      32 040 889   18 224 921         76   23 621 844

LIABILITIES

Loans and deposits at
amortised cost                    25 607 827   13 678 188         87   17 692 062
Provisions                            16 877       16 356          3       24 998
Other liabilities                    786 360      616 178         28      718 549
Current income tax
liabilities                              161       88 681       (100)         885
Total liabilities                 26 411 225   14 399 403         83   18 436 494

EQUITY

Ordinary share capital and
premium                            3 164 676    2 123 125          49   2 926 435
Cash flow hedge reserve              (23 901)      (6 712)         256     (1 920)
Retained earnings                  2 229 920    1 450 136          54   2 001 866
Share capital and reserves
attributable to ordinary
shareholders                       5 370 695    3 566 549          51   4 926 381
Non-redeemable,
non-cumulative,
non-participating preference
share capital and premium            258 969      258 969           -     258 969

Total equity                       5 629 664    3 825 518          47   5 185 350

Total equity and liabilities      32 040 889   18 224 921          76  23 621 844

INTERIM CONSOLIDATED INCOME STATEMENT


                                     Reviewed     Unaudited
                                          Six           Six       Six     Audited
                                       months        months    months        Year
                                        ended         ended    August       ended
                                       August        August     2012/    February
                                         2012          2011      2011        2012
                                        R'000         R'000         %       R'000

Interest income                     3 034 829     1 939 554        56    4 346 902
Interest expense                     (725 627)     (450 856)       61   (1 022 374)
Net interest income                 2 309 202     1 488 698        55    3 324 528
Loan fee income                       782 453       819 925        (5)   1 657 018
Loan fee expense                     (151 013)      (96 188)       57     (186 360)
Transaction fee income                917 712       590 468        55    1 360 308
Transaction fee expense              (335 061)     (229 638)       46     (524 202)
Net fee income                      1 214 091     1 084 567        12    2 306 764
Dividend income                             9           727       (99)       1 532
Net impairment charge on
loans and advances to
clients                            (1 018 613)     (678 866)        50  (1 604 190)
Net movement in financial
instruments held at fair
value through profit
loss                                    2 533         6 321       (60)      12 070
Other income                              281            18                    679
Sales                                 136 650       104 659        31      217 145
Cost of sales                        (120 813)      (93 656)       29     (191 996)
Non-banking income                     15 837        11 003        44       25 149
Income from operations              2 523 340     1 912 468        32    4 066 532
Banking operating expenses         (1 485 249)   (1 182 772)       26   (2 486 318)
Non-banking operating
expenses                              (11 742)      (11 034)        6      (22 342)
Operating profit before tax         1 026 349       718 662        43    1 557 872
Income tax expense                   (315 541)     (220 966)       43     (463 532)
Profit for the period                 710 808       497 696        43    1 094 340

Earnings per share (cents)
· Basic                                   702           518        35        1 122
· Diluted                                 691           505        37        1 096



INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

                                     Reviewed     Unaudited
                                          Six           Six         Six       Audited
                                       months        months      months          Year
                                        ended         ended      August         ended
                                       August        August       2012/      February
                                         2012          2011        2011          2012
                                        R'000         R'000           %         R'000

Profit for the period                 710 808       497 696          43     1 094 340
· Cash flow hedge before
  tax                                 (30 426)       (4 504)        838         2 151
· Income tax relating to
  cash flow hedge                       8 445         1 261        (288)         (602)
Other comprehensive income
for the period net of tax             (21 981)       (3 243)                    1 549
Total comprehensive income
for the period                        688 827       494 453          39     1 095 889

RECONCILIATION OF ATTRIBUTABLE EARNINGS TO HEADLINE EARNINGS

                                     Reviewed      Unaudited
                                          Six            Six          Six      Audited
                                       months         months       months         Year
                                        ended          ended       August        ended
                                       August         August        2012/     February
                                         2012           2011         2011         2012
                                        R'000          R'000            %        R'000

Net profit after tax                  710 808        497 696           43    1 094 340
Preference dividend                   (10 706)        (9 763)         (10)     (19 419)
Net profit after tax
attributable to
ordinary shareholders                 700 102        487 933           43    1 074 921
Non-headline items:
(Profit)/loss - disposal of
· Property and equipment                 (147)         1 176         (113)         596
· Income tax charge ­
  property and equipment                   43           (344)        (112)        (192)
· Intangible assets                        16            960          (98)       3 048
· Income tax charge ­
intangible
  assets                                   (4)          (269)         (99)         (853)
Headline earnings                     700 010        489 456           43     1 077 520



INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS

                                                   Reviewed    Unaudited
                                                        Six          Six        Audited
                                                     months       months           Year
                                                      ended        ended          ended
                                                     August       August       February
                                                       2012         2011          2012
                                                      R'000        R'000          R'000

Cash flow from operating activities               2 836 438      693 663      1 803 314
Cash flow from investing activities                 (17 404)    (115 288)      (578 101)
Cash flow from financing activities                (273 115)    (172 656)       484 072
Net increase in cash and cash
equivalents                                       2 545 919      405 719      1 709 285
Cash and cash equivalents at the
beginning of the period                           4 551 203    2 841 918      2 841 918
Cash and cash equivalents at the
end of the period                                 7 097 122    3 247 637      4 551 203


INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

                                                   Reviewed    	  Unaudited
                                                        Six             Six      Audited
                                                     months          months         Year
                                                      ended           ended        ended
                                                     August          August     February
                                                       2012            2011         2012
                                                      R'000           R'000        R'000

Equity at the beginning of the period             5 185 350      3 450 513     3 450 513
Total comprehensive income for
the period                                          688 827        494 453     1 095 889
Ordinary dividend                                  (297 847)      (193 837)     (317 939)
Preference dividend                                 (10 706)        (9 763)      (19 419)
Employee share option scheme:
Value of employee services                             6 936         6 324        11 778
Shares issued and acquired for
employee share options at cost                      (238 357)     (204 534)         (702)
Proceeds on settlement of
employee share options                                34 517        31 131        35 091
Tax effect on share options                           22 703        46 783       142 886
Shares issued                                        238 357       204 534       798 932
Share issue expenses                                    (116)          (86)      (11 679)
Equity at the end of the period                    5 629 664     3 825 518     5 185 350

COMMITMENTS

                                                   Reviewed      Unaudited      Audited
                                                     August         August     February
                                                       2012           2011         2012
                                                      R'000          R'000        R'000

Capital commitments approved by the
board
· Contracted for
  Property and equipment                             91 437         36 281       85 195
  Intangible assets                                   9 322          2 654        6 744
· Not contracted for
  Property and equipment                            176 660        199 339      458 247
  Intangible assets                                  41 325         43 575      122 329



                                                   Reviewed      Unaudited	Audited
                                                     August         August     February
                                                       2012           2011         2012
                                                      R'000          R'000        R'000

Operating lease commitments
Future aggregate minimum lease
payments
· Within one year                                   192 781        154 356      170 248
· From one to five years                            544 784        434 310      475 371
· After five years                                  124 184         84 173       99 694
Total future cash flows                             861 749        672 839      745 313
Straight-lining accrued                             (41 461)       (30 088)     (35 749)
Future expenses                                     820 288        642 751      709 564

SEGMENT ANALYSIS

The group has two operating segments which conduct business within the Republic of South
Africa:
· Banking - incorporating retail banking services including savings, deposits, debit
  cards, cell phone and internet banking and consumer loans to individuals.
· Wholesale distribution - consisting of the wholesale distribution of fast moving
  consumer goods.

There are no clients that account for more than 10% of revenue.

Transactions between the business segments are on normal commercial terms and
conditions.

Banking segment revenue consists of interest income and fee income on consumer loans,
transaction fee income on savings accounts, dividend income and other income. Wholesale
distribution revenue consists of sales of fast moving consumer goods.

The segment information provided to the executive management committee for the
reportable segments is as follows:

                                                  Wholesale        Intra-
                                     Banking   distribution       segment           Total
                                       R'000          R'000         R'000           R'000

Reviewed six months ended
August 2012
Segment revenue                    4 735 470        136 650          (186)      4 871 934
Segment earnings after tax           707 882          2 926             -         710 808

The following items are
included in segment
earnings after tax:
Interest income                    3 035 015              -          (186)      3 034 829
Interest expense                    (725 602)          (211)          186        (725 627)
Net fee income                     1 214 091              -             -       1 214 091
Net impairment charge             (1 018 340)          (273)            -      (1 018 613)
Depreciation                         (89 746)          (246)            -         (22 493)
Other operating expenses          (1 373 010)       (11 496)            -      (1 384 506)


Unaudited six months ended
August 2011
Segment revenue                    3 351 223        104 659           (531)     3 455 351
Segment earnings after tax           498 341           (645)             -        497 696

The following items are
included in segment
earnings after tax:
Interest income                    1 940 085              -           (531)       939 554
Interest expense                    (450 833)          (554)           531       (450 856)
Net fee income                     1 084 567              -              -      1 084 567
Net impairment charge               (678 806)           (60)             -       (678 866)
Depreciation                         (63 493)          (219)             -        (63 712)
Amortisation                         (11 623)              -             -        (11 623)
Other operating expenses          (1 107 656)       (10 815)             -     (1 118 471)

Audited year ended February
2012
Segment revenue                    7 367 351        217 145           (912)      7 583 584
Segment earnings after tax         1 092 630          1 710             -        1 094 340

The following items are
included in segment
earnings after tax:
Interest income                   4 347 814               -            (912)     4 346 902
Interest expense                 (1 022 329)           (957)            912     (1 022 374)
Net fee income                    2 306 764              -               -       2 306 764
Net impairment charge            (1 604 052)           (138)             -      (1 604 190)
Depreciation                       (145 141)           (457)             -        (145 598)
Amortisation                        (27 920)              -              -         (27 920)
Other operating expenses         (2 313 257)        (21 885)             -      (2 335 142)

NOTES

The condensed consolidated interim financial statements are prepared in accordance with
International Accounting Standard (IAS) 34 `Interim Financial Reporting', the
requirements of the Companies Act of South Africa (Act No 71 of 2008), as amended, and
the Listings Requirements of the JSE Limited. These condensed consolidated interim
financial statements should be read in conjunction with the annual financial statements
for the year ended 29 February 2012, which were prepared in accordance with IFRS. The
accounting policies applied conform to IFRS and are consistent with those applied in the
previous year. Standards, interpretations and amendments to published standards applied
for the first time during the current financial year did not have any significant impact
on the financial statements. The group complies in all material respects with the
requirements of the King III Code.

The preparation of the condensed consolidated interim financial statements was
supervised by the chief financial officer, André du Plessis CA(SA).

AUDITOR'S REPORT

The company's external auditors, PricewaterhouseCoopers Inc., have reviewed the
condensed interim financial report. A copy of their unqualified review opinion is
available on request at the company's registered office.

On behalf of the board

Michiel le Roux
Chairman

Riaan Stassen
Chief executive officer

Stellenbosch
26 September 2012

COMPANY SECRETARY AND REGISTERED OFFICE
Christian George van Schalkwyk: BComm, LLB, CA(SA)
1 Quantum Road, Techno Park, Stellenbosch 7600, PO Box 12451, Die Boord, 7613

TRANSFER SECRETARIES
Computershare Investor Services (Proprietary) Limited
(Registration number: 2004/003647/07)
Ground Floor, 70 Marshall Street, Johannesburg 2001,
PO Box 61051, Marshalltown 2107

SPONSOR
PSG Capital (Proprietary) Limited (Registration number: 2006/015817/07)

DIRECTORS
MS du P le Roux (Chairman), R Stassen (CEO)*, AP du Plessis (CFO)*, Ms RJ Huntley,
JD McKenzie, Prof MC Mehl, Ms NS Mjoli-Mncube, PJ Mouton, CA Otto,JP van der Merwe
*Executive

capitecbank.co.za
enquiries@capitecbank.co.za

Date: 26/09/2012 07:40:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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