Simon’s stock tips

CAPITEC

Bad debts rise

apitec’s* financial results for the six months through 31 August showed the impact of the hard lockdown and the resultant job losses as bad debts spiked to record levels. That said, Capitec’s systems managed the hit as the bank pulled back on lending and rolled over loans. Those rolled loans (and payment holidays by the large banks) worry me as it may just be kicking the bad debt can down the road. But assuming the worst is behind – even as we have an awfully long road back to a pre-Covid-19 economy – the banks will survive the next couple of tough years. That all said, valuations on the big four remain very cheap (Capitec is never cheap) but I see no reason to rush in to buy