The newly appointed CEO of South Africa’s biggest bank by customers has a unique problem on his hands.
Since Capitec Bank — South Africa’s first-ever challenger bank — made its public debut 23 years ago, its shares have soared by more than 200 000%. That’s made it the country’s best-performing stock since it was listed and the second most valuable lender on the continent, boasting more than 24 million customers.
Now, new CEO Graham Lee is expected to take it to even new heights. He’s betting that an improved offering to lure in more affluent customers in order to grow its retail bank along with aggressively expanding the firm’s business bank — which targets the three million small and medium-sized enterprises across South Africa — will do just that.
“It is daunting,” Lee said. But, he added, “the upside to both us and to South Africa with getting business banking right — it’s the single biggest opportunity”.
Capitec got its start back in 1997 as part of financial services company PSG Group. It was ultimately spun out in 2001 and listed on the JSE in February 2002.
Capitec is headquartered in Stellenbosch, South Africa’s preeminent wine country. Several members of the founding team came from the alcohol industry — when they sold wine into shebeens.
“We were going into the shebeens, into the townships and understood that side of the market and I think that helped us quite a lot,” outgoing CEO Gerrie Fourie said. That background, he said, helped them “really understand banking, and understanding the client”.
Initially, the bank focused on gathering deposits from low-income consumers across South Africa along with unsecured lending. Over time, the company went beyond retail banking and launched its mobile app, Capitec Connect, which also operates a telecommunications service. With 1.6 million subscribers, Capitec is the biggest seller of prepaid airtime with a 40% market share.
Huge scope
That push has helped the bank’s profit surge nearly 28 541% since it listed in 2002 and lifted the bank’s return on equity to 29%, which is higher than peers like Standard Bank and FirstRand.
“This gives them huge scope to leverage the balance sheet in future and growing different directions such as, for example, mortgages,” said Rademeyer Vermaak, the head of systematic solutions at Stanlib Asset Management.
Shareholders have piled into the stock, giving it a R410-billion valuation. That’s meant it’s now trading at a price-to-book ratio of 8.02 — one of the highest in the world, fuelling speculation from some quarters that the bank may be overvalued.
Read: New Capitec CEO announced
“It’s earnings profile is different from its peers,” Vermaak said, noting the company’s digital platforms business consumes less capital than the traditional banking business. That’s what makes it more profitable, he argued.
“Almost think of Capitec as a combination of a tech stock and a bank,” Vermaak said. “Tech stocks need to be pricier because of that growth factor.”
This is where Lee comes in. The 50 year-old has been with the bank since 2003, and led the lender’s pivotal retail unit for the last two years after holding various positions at Capitec’s credit, technology and data, and personal banking operations.
Now he’s plotting a continued expansion of the lender’s flagship digital retail bank. Not only is he hoping to cross-sell more of the bank’s products to existing clients, he wants to bring in even more of the 33 million working age South Africans as customers.
The bank has also embarked on a plan to attract the wealthy residents who earn more than R50 000/month. He’s planning to woo them with secured home loans and credit cards. The bank ultimately wants to build its market share with affluent clients to 25% by 2028 — a 10 percentage point increase from current levels.
The lender also recently set up a special-purpose vehicle with mortgage provider SA Home Loans that will see it nearly triple its home loan portfolio.
“We are very comfortable that the business remains in a very safe pair of hands,” Chris Steward, sector head of financials at Ninety One said of Lee, who took over on 19 July. “There’s history and there’s continuity — two important factors that we would look for from a succession perspective, which was neatly executed upon by Capitec.” — (c) 2025 Bloomberg LP
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