Simon’s stock tips

CAPITEC

Cost-to-income a concern

apitec’s* results, released on 30 September, were full of very large increases as the base effect from a year earlier worked in their favour as the six months ending August 2021 did not include the level of bad debts. The bank also added back provisions for defaults. Comparing the 2021 interim results to the same period in 2019 and removing the added provisions, Capitec’s results are ahead of 2019, resulting in real like-for-like growth. There was, however, one area of concern and that was costs as operating expenses increased by 32%. This pushed the cost-to-income ratio up to 45%. Capitec has always had a low cost-to-income ratio and it has slowly been moving higher, which is to be expected. More bank