Capitec reported a huge spike in retrenchment insurance pay-outs during the pandemic. Capitec’s CEO, Gerrie Fourie took us through results on Kaya Biz with Gugulethu Mfuphi.
Fourie reflected on the year that was, and how they had to react to the realities of the effects of COVID-19 immediately, and how it took them two weeks to have everyone settled and ready to work.
“Overall given COVID-19, we had a very good year, looking at everything in perspective. I think none of us knew what was going to happen with COVID-19. When it happend our management team and core teams stood together and decided on what we need to do for the clients. We needed to make sure that our staff is okay, as they worked from home.”
A rise in retrenchment cover claims
Capitec’s headline profit for the past year fell by 27% to R4.6 billion – although the company did see a strong recovery in the past six months. According to Capitec’s latest financial statements, the increase in claims was as a result of the COVID-19 pandemic and not reinsuring the retrenchment risk since 1 May 2020.
There was a rise in Capitec’s credit life policy claims which cover clients against the risk of retrenchment, death, permanent or temporary disability and the inability to earn an income.
Retrenchment claims amounted to R1.0 billion compared to R498 million for the year ending in February 2020.
During the first part of the lockdown, the bank offered R7.5 billion in repayment relief to clients.
Though the impact of COVID-19 affected the banking sector, Fourie stated that they are starting to see people returning to normal levels of income.
“Overall, on income levels, we saw a drop 10 -15%, especially during April, May and June 2020. Apart from the hospitality and travel industry, we are now starting to see normal in-flows of 97-98%, so people are starting to get back to normal levels. Where our economy has been hit very hard is with temporary workers, and casuals, because that’s where businesses cut first. On the permanent side, that cut wasn’t that hard.” He said.