We have the support from shareholders and the publicÂ’ Â– Bonatla CEO..............ja sure 3479 Shares
233927 5 2015-04-01 10:32:17.720 Re:CPI 1073077094 233920 233920 0 233920 1 Okay, let me go against the hysterical praise singers and offer an opposing view. The other banking services mentioned are low margin and do require additional costs. Capitec managed to lure away customers from traditional Big 4 banks by charging almost no bank fees (not a great money spinner). It still makes about 80% of its profits from high, 30% interest rate loans, and how sustainable is that? As we've seen with African Bank, charging your clients exorbitant interest rates and bankrupting them is not a great business model. Only reason Capitec hasn't followed same route as Abil YET, is superior management and risk strategy, but as we've seen in America with subprime crisis, once the macro picture turns, even superior management can't save you. Bottom line - one of biggest features of SA economy last 10 years has been rise in unsecured lending, hence Capitec's spectacular share price rise, but how sustainable is this? Remember, their loans are UNSECURED. If things go south, they're gonna go south quickly... NULL World affairs & economy
233928 5 2015-04-01 10:57:05.880 Re:Re:CPI 1073030541 233920 233927 0 233920,233927 2 ABL and CPI are not even in the same pond so we can park that .. but why would their risk models that have worked for 14 years and through two crises suddenly stop working ?? they provision way aggressive against bad debts, if anything they provision too much .. an yip they make most money from unsecured lending, point is that is shifting and will continue to shift and with a C2I of 35% they have a ton of wiggle room for lower profit offerings to their 6.2million clients .. NULL World affairs & economy
233929 5 2015-04-01 11:12:33.097 Re:CPI 1073077094 233920 233920 0 233920 1 Simon, my point is that you have to look at quality of earnings. Sure, Capitec's risk model has served them well the last 14 years, but the INHERENT risk in unsecured lending, where they make 80% of their profits, is much higher than, say mortgage lending. You simply can't compare the quality of earnings of an unsecured lender with a mortgage lender (the description says it all!). In macro terms, 14 years for the spectacular growth in unsecured lending is simply too short to judge the long-term risk, especially when you consider that the market risk GROWS as your customer base grows! (people become more indebted, especially with 30% interest loans, and plenty of studies have shown that SA consumer has never been more vulnerable than now). With Capitec's loan repayment term of about 5 years, I say the jury is still out on whether unsecured lending in SA (at current levels) is a sustainable business. NULL World affairs & economy
233930 5 2015-04-01 13:38:08.203 Re:Re:CPI 1073034222 233920 233929 0 233920,233929 2 There is a key point here I think one has to make. Yes, currently the majority of CPI's profits come from unsecured lending, but not the majority of its GROWTH. Let me phrase it this way: Capitec's FY 15 profits rose 26% and its transactional fee banking income rose 35%, but its interest income only rose 14%. That means that the 20+% growth from Capitec is not coming from a boom in its loan book, but rather a steady growth in its retail banking model which is growing way faster than the loan book. Yes, the other products come with incremental cost, but Capitec's centralized ICT infrastructure means that this cost is far less than any of the other banks (which all have old, legacy decentralized ICT infrastructure) and thus it can undercut on price, yet achieve a higher margin than its competitors. If retail banking is a commodity, then you want to invest into the lowest cost producer. Capitec is the lowest cost producer of retail banking SA. NULL World affairs & economy
233931 1 2015-04-01 13:41:12.257 Re:Re:Knee jerking 1073081436 233814 233899 0 233814,233899 2 It is still early days manere fortis, but it would appear that that was a good decision. MTN CFDs bought at 201 last week would have netted you north of 60% profit today. Fundamentals don't lie :-). I don't think it is done yet. NULL Public Archive
233932 5 2015-04-01 14:21:01.077 Re:CPI 1073077094 233920 233920 0 233920 1 Dear Harathke Gross income increases can be very misleading if you exclude costs. Fact is, Capitec's transaction fee income rose R681 million, but operating expenses rose R789 million, therefore a NET INCREMENTAL DECREASE of R108 million. Surely the increase in operating costs can't be ascribed to the well established unsecured lending business? In fact, ALL the growth in profits came from unsecured lending, and the operational side of the business was actually a drag on earnings. Now, we can debate whether they are setting themselves up for future growth, but at the moment transactional banking NET income is going backwards. As to my point - of course you're going to poach clients from other banks if you only charge R5 banking fees a month. But are you going to make money? NULL World affairs & economy
233933 5 2015-04-01 14:29:29.640 Re:Re:CPI 1073034222 233920 233932 0 233920,233932 2 Not sure where you getting those numbers from. Per CPI's FY 15 results: Net transaction fee income R2608m (FY 14: R1927m) = +35% NULL World affairs & economy
233934 5 2015-04-01 14:46:03.510 Re:Re:Re:CPI 1073077094 233920 233933 0 233920,233932,233933 3 Gross income and percentages can be very misleading. Yes, gross transactional income increased by R681 million (35%), but operating expenses increased from R3,242 mio to R4,031 mio, an increase of R789 mio. Therefore incremental NET income DECREASED by R108 mio. If you look at unsecured lending, you'll see the NET profit increase came more than 100% from that segment, while transactional net income was a drag. If anything, Capitec's reliance on unsecured lending as driver of NET profits (not gross income) is GROWING. NULL World affairs & economy
233935 5 2015-04-01 17:22:08.917 Re:CPI 1073116486 233920 233920 0 233920 1 2nd jan 2015 cpi = R340 and change, today its R535 and change ... R195 up in 3 months??? does it really matter what makes it go up, if it is going up ride it. if hesitant exit call it a good trade and search for another. those analytical numbers are a headache for most, only number" i prefer seeing is the cfd balance in profit on cpi.
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I bought some MTN's, SOL's and Telkom's (before unbundling) a year or so ago at a cost of about R200k. Currently down 28% in total. No real movement on these shares. Do I take the loss and pay off my bond or hold on to these?
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