Riaan Stassen is surely one of SA’s most successful banking entrepreneurs. Last week he announced his retirement as chairman of Capitec, leaving the bank he helped found only 18 years ago with one of the highest market valuations (on a price-to-book basis) in the world.
While Capitec is still a small bank on most measures — its R100bn balance sheet is one-thirteenth the size of Standard Bank’s, the largest in the market — it has caused an outsized level of disruption. That is clear in Capitec’s market capitalisation of R156bn, which places it third behind Standard Bank and FirstRand. With 11.4-million customers, it is among the biggest, with only Standard Bank having more, and only just.
Stassen’s influence is clear in the DNA of the bank. He is disarmingly approachable and casual. I doubt he has ever worn a tie in his career. But that was true of Leon Kirkinis too, the very likeable CEO of African Bank, which collapsed into curatorship four years ago.
The difference is that Stassen has shown an almost steely focus on evolving Capitec and ensuring it can be managed with razor-sharp analytics. He is famous for being able to tell you the exact performance of the loan book on any day. He ensured Capitec started out with simple but powerful and scalable systems that would allow him to track performance in near real-time, from the number of transactions through ATMs to the time taken to serve customers in branches. He saw that getting systems and processes right leads incrementally to competitive advantage.
That incrementalism is clear in the evolution of Capitec’s balance sheet. Its starting point was low brow — a bank funded largely by shareholder funds making short-term loans, much like any other microlender. But, little by little, it evolved both the funding side and the asset side of the business. That evolution is still in progress, with deposits creeping up as a proportion of funding (therefore lowering overall funding costs) and transactional revenue creeping up as a proportion of revenue.
The loan books have also been extending outward, going into longer-dated, more traditional, forms of lending. With the acquisition of Mercantile currently being considered by regulators set to move it into commercial banking, Capitec is starting to look ever more like a “normal” bank.