Question:
Capitec Bank is offering 13 percent interest on fixed deposit for 12 months.

How can they provide interest so high above the average? Are they well capitalised and what is their risk factor?

Answer:
Firstly, Capitec Bank’s unique high-volume business model uses innovative technology and processes to drive down costs. The most obvious example is that branches operate without back-offices. All these cost-savings are passed on to our loyal clients who enjoy the most affordable banking in the market with the best interest on savings.

Moreover, profits increased by 42 percent for the year ending 28 February 2009 in a time where the banking industry as a whole is struggling. About 40 000 new clients sign ups every month; Capitec Bank has increased its active client base by 34 percent to over 1.8-million clients.

Headline earnings per share grew by 41 percent to 366 cents and we have R1.4-billion in equity and R3.5-billion in assets, excluding cash. The return on ordinary shareholders’ equity for 2009 was 27 percent compared to 22 percent last year.

So, at the end of February we would have been able to repay all saving deposits in one day. Our capital adequacy ratio was 43 percent at year-end.

Question:
Can the supplier unilaterally increase the limit of an approved and agreed upon debit order?

Answer:
Yes, suppliers can increase your debit order without your consent, knowledge or approval.

A debit order is an instruction that allows a supplier to debit your account. To cover themselves suppliers usually state in the original agreement entered into with a client that they can increase the limit on a debit order.

For further information about Capitec Bank, click here!

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