South African discount retailer Pepkor Holdings plans to launch its bank in April 2027, aiming to leverage its extensive store footprint nationwide to attract 1.8 million primary banking customers within five years, executives said on Tuesday.

South African retailers are increasingly moving into financial services to diversify revenue as banking products offer steadier, higher-margin income streams and more frequent client engagement than traditional retail.

Pepkor chief commercial officer Garth Napier told investors after the retailer reported strong first-half results that its bank would combine digital and physical services, with customers able to transact across more than 6 500 stores.

The retailer already processes about 22 million cash-in/cash-out transactions and four million bill payments annually, underscoring the scale of its existing financial services activity, he said.

South Africa’s banking sector is dominated by a few large lenders, but competition has intensified as digital banks and retailers target underbanked consumers. Mobile‑led, low‑cost services have become a key battleground.

At its capital markets day in March, Pepkor said it was building an integrated ecosystem driven by growing smartphone use and stronger use of its financial services, including loans and insurance.

Spending

Pepkor chief financial officer Riaan Hanekom said the retailer had targeted spending of about R1-billion on the new bank but now expects to spend no more than R920-million in total, up to its planned launch next April, depending on final regulatory approvals.

Pepkor, which owns Pep and Ackermans clothing brands, plans to have 1.8 million primary banking customers by year five.

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Earlier on Tuesday, the retailer reported a 10.3% rise in headline earnings per share to 93.1c in the six months to 31 March 2026, buoyed by acquisitions, growth in its core Pep clothing brand and demand for financial services. Group revenue rose 13.2% to R54.8-billion.

It’s not only the banking incumbents that Pepkor is challenging. TechCentral reported earlier on Tuesday that Pepkor’s cellular business continues to expand as it pivots decisively from selling phones to financing them, with its FoneYam smartphone rental book swelling to R2.6-billion in the interim reporting period.

The rental book has grown 53% in 12 months, from R1.7-billion a year ago. FoneYam activated 1.3 million new accounts during the half – growth of 32% – taking its active customer base to 2.4 million.

Total handset sales across Pepkor’s brands came in at roughly 6.7 million units, broadly flat against 6.8 million a year earlier.

Pepkor’s active cellular Sim base now exceeds 30 million, with recurring revenue from that base up 13.4% to R1.1-billion. — Nqobile Dludla and Lulah Dube, (c) 2026 Reuters, with additional reporting (c) 2026 Reuters