The South African bank that behaves like a tech company and turned R1,000 into R1.28 million

A R1,000 investment in Capitec at its opening price of R2.75 on 18 February 2002 would be worth over R1.2 million today, with the bank’s share price trading between R3,360 and R3,521 last week.

Capitec has seen phenomenal growth in the past 23 years, thanks to its strategy of focusing on an underserved market and capitalising on its ability to build its IT infrastructure from scratch.

The upstart bank’s lack of legacy technology baggage enabled it to take on the big players, including FNB, Standard Bank, Absa, and Nedbank, and emerge victorious.

Capitec co-founder Riaan Stassen said in a 2010 interview that they had built the entire bank for R300 million. Of that, approximately R120 million was allocated to hardware and software.

“Many of the big banks can spend in the region of R3 billion over a three-year period on the same thing, and our system handles similar volumes to theirs,” Stassen said in 2010.

Author TJ Strydom wrote in his book Capitec: Stalking Giants that South Africa’s long-established banks were probably spending even more than that on IT fifteen years ago.

Although easier said than done, building Capitec’s systems themselves from the ground up had given the company two major advantages: lower cost and greater simplicity.

Having simpler systems that cost significantly less to operate allowed Capitec to offer customers better prices and remain profitable.

Unfortunately, you can’t hold on to this advantage forever. As Capitec grew, its IT costs ballooned, although they remained much lower than those of its competitors.

Capitec’s IT-related personnel costs rose from R319 million in August 2019 to R953 million in 2023. Other IT costs increased by about R500 million over the same period.

Cloud computing costs were negligible in 2019, but by 2023, they had increased to R163 million. Capitec had embarked on a major cloud migration drive in 2022, on which it has spent billions.

The migration featured products from companies such as Salesforce, Microsoft, and SAP, with the bank’s data platform and systems migrated to Amazon Web Services.

During Capitec’s half-year results in 2023, CEO Gerrie Fourie said the company needed to ensure it didn’t have any legacy systems. By 2024, all Capitec’s data will have been migrated to the cloud.

Amidst Capitec’s cloud migration, the bank also launched a mobile virtual network operator (MVNO) in partnership with Cell C, called Capitec Connect.

Thanks to its aggressive pricing strategy, Capitec Connect has also reported significant growth, with its net income increasing from R35 million to R193 million (451%) between 2024 and 2025.

The improvement was driven by a 74% increase in subscribers with active SIM cards over the last six months, reaching 1.6 million.

Despite only launching in 2022, Capitec Connect is South Africa’s biggest MVNO. It quickly surpassed older bank-based MVNOs, such as FNB Connect and Standard Bank Connect.

Capitec is more of a tech platform than a bank

Capitec’s revenue and earnings have grown significantly since it first listed on the Johannesburg Stock Exchange (JSE).

In its 2002 financial year, Capitec reported revenue of R270 million. According to the bank’s latest financial results, its revenue now stands at almost R44.1 billion, a 16,221% increase.

Its earnings have seen similar growth, rising by 28,529% from R48 million in 2002, to R13.7 billion in 2025.

Capitec shareholders have been handsomely rewarded for the bank’s excellent performance over the past 23 years.

Its share price traded as high as R3,520.85 on Friday, 20 June 2025, 127,931% higher than the R2.75 per share it listed for in February 2002.

An investor who bought R1,000 of Capitec shares on 18 February 2002 and held onto their stock through the tough times would now have R1.28 million.

What stands out about Capitec is that it trades at significantly higher ratios than its competitors, such as Absa, Nedbank, and Standard Bank.

Capitec trades at a price-to-earnings (P/E) ratio of 29, compared to Standard Bank’s P/E ratio of 9 and Absa and Nedbank’s P/E ratio of 7.

Many analysts argue that Capitec’s high multiple is justified due to its history of innovation and the way it operates, which resembles a tech company rather than a bank.

Grant Nader from Benguela Global Fund Managers said Capitec has created a platform rather than a bank, which allows it to continually offer new services to its 24 million clients.

“The way Capitec’s management sees the business they have created is very different from that of traditional banks. The other banks are now trying to play catch-up,” he said.

“Capitec is doing a tremendous job. Delivering a 29% return-on-equity leaves huge room for reinvestment into the business.”

He said Capitec is a great success story and advised people looking to invest in the company to do it now rather than wait.

“It is a company you should have in your portfolio. Growth is hard to achieve in South Africa. If you identify a growth company, you should own it,” he said.

Capitec revenue and earnings growth

Capitec share price growth