Capitec has hit back at new allegations made by the Viceroy Research group, this time also warning its shareholders to expect "false allegations" and "fresh attacks" to continue over an extended period.
On Monday, Viceroy alleged that Capitec's balance sheet, income and solvency numbers were not reliable, and that the mechanism of underrepresenting losses is to pretend that uncollectable loans are collectable and still accruing income.
Viceroy suggested that loans of at least R10-billion fall into this category, and that these loans are largely in the long-dated loans on Capitec's balance sheet.
We want to reassure our customers that we are open for business and we welcome the statement from the Reserve Bank that we are solvent with adequate liquidity. Capitec Bank remains committed to transparency and full disclosure.— Capitec Bank (@CapitecBankSA) January 30, 2018
Capitec responded late on Tuesday afternoon, saying only 7.3 percent of its credit clients currently qualify for loans in excess of 60 months, and the scoring models for the 61-to 84-month loans currently target 12-month default rates of 4.2 percent in aggregate.
They warned shareholders to react with caution to allegations made by Viceroy.
"We believe that the campaign will continue for the foreseeable future. Shareholders can expect the release of fresh attacks and false allegations over an extended period," the bank said.
The South African Reserve Bank has a responsibility to determine whether the information provided to them – and on which they base their regulatory decisions is accurate. We do not think it is. $CPI #JSE— Viceroy (@viceroyresearch) February 5, 2018
"The South African Reserve Bank, as part of their normal oversight function, performs reviews of all areas including detailed credit-risk reviews on Capitec. They are fully aware of the credit-scoring models and the risk targets that we set when we extend credit. We track performance against these targets and update our models as soon as any deviation occurs."
The bank also said independent industry experts have reviewed their credit-granting models.
"The conclusion of these reviews [has] confirmed that the models are accurate and highly predictive. The reviews and the related target default rates for different risk groups are in line with our disclosed results," Capitec said.