Capitec Bank Holdings Limited

Analyst thesis

Our recommendation is based on:

• Capitec remains well positioned to benefit from improving conditions in the South African consumer market. Although short-term headwinds persist, the longer-term outlook includes lower interest rates, easing inflation, and an improving economic backdrop, which should support household affordability, credit demand, and transaction volumes.

• The group's large and growing customer base provides a significant scope to deepen customer relationships and cross-sell opportunity across Capitec's expanding product offering.

• Capitec's digital banking model and established customer franchise provide a strong platform for continued growth, supported by its simple, low-cost offering, increasing digital adoption and the ability to leverage its existing infrastructure across a broader range of financial products.

• Capitec's growth prospects and high-quality franchise have already been priced in, with the current share price leaving limited scope for further re-rating. We therefore believe the investment case is increasingly dependent on Capitec continuing to exceed already elevated market expectations rather than further expansion in the valuation multiple.