Pepkor’s exploding financial services business is adding momentum to the group’s ambitions to join the scrum with established banks for the mass market wallet.
With 32-million clients, Pepkor is expected to be a force to be reckoned with as it launches a foray into retail banking.
The retail supermajor, with an arsenal of more than 6,600 stores, last year got the green light from the South African Reserve Bank, with its more than 10-million digital clients and expansive branch network giving it a platform from which to build a bank.
The group on Tuesday reported a 41% surge in revenue from its financial services segment in the six months ended March.
The key leg to its financial services, Foneyam, a smartphone rental product, reported a 32% increase in activated accounts, which translates to 1.3-million cellular rental accounts, taking the active base to 2.4-million.
“Customer take-up of a second FoneYam rental after completing the first has exceeded expectations, effectively extending customer lifetime value,” the company said.
The group’s insurance proposition covers 1.3-million lives, while its personal loans platform, Capfin, grew its active loan base to 378,000 loans.
Capfin’s gross credit book increased to R5.3bn.
Pepkor’s informal market play is also gaining traction, a market Capitec, SA’s largest bank by customer numbers, is also after, building its business lending platform.
Pepkor’s informal market proposition Flash reported a 20.3% increase in throughput, ending the six months under review with 176,000 active traders.
The imminent entry into fully fledged banking by Pepkor comes as insurance groups also eye the mass market.
Sanlam is deepening its relationship with GoTyme, previously TymeBank, to tap into its 12-million client base.
Sanlam, together with GoTyme, has more than 17-million clients, last week said: “Work continues to prepare for the launch of banking services in the South African market, in partnership with GoTyme, subject to pending regulatory approval.”
Old Mutual has also re-entered the banking space with the launch of OM Bank nearly a decade after it disposed of its majority stake in Nedbank.
The country’s leading telecommunications companies have also built formidable fintech propositions.
Pepkor’s revenue increased 13.2% with the group’s cash cow, the retail business, growing sales by more than 10%.
PEP increased sales by 6.3%, expanding market share in babies, kids, adults and the home market. Ackermans sales were muted, growing sales by only 1.3%. However, the brand gained market share in schoolwear and footwear, and online sales surged by 72%.
The specialty division reported a 49.1% surge in sales, aided by the acquisition of Legit, Swagga and Style.
Pepkor’s furniture, appliances and electronics segment grew sales by 13.9%.
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