Capitec Bank Holdings Ltd: Compare and contrast Capitec with Nu – two top franchises

Research evidence excerpt

Capitec Bank Holdings Ltd: Compare and contrast Capitec with Nu – two top franchises

28E 20,258 20,643

02/29E 23,315 24,039

Both in strong growth trajectories, Capitec's revenue more diversified

Capitec's high fee generation, increasingly from non-financial services (20% of NIR), Stephan Potgieter, CFA

stands out. The more diverse revenue mix makes its business model less exposed to Analyst

stephan.potgieter@ubs.comcredit cycles than Nu, while we also see higher credit risk for Nu given the credit

+44-20-7568 8162

dynamics in Brazil and associated asset quality concerns. Capitec operates on lower cost

of risk (~8%) than Nu (~15%). With both in a strong earnings growth trajectory, we Thiago Batista, CFA

forecast higher growth for Nu (5 yr CAGR 25.5% pa in USD) than Capitec (17.5% pa in Analyst

thiago.batista@ubs.com

ZAR), although we see risk to the upside for Capitec from new initiatives and expansion

+55-11-3513 6518

of its AvaFin franchise internationally.

Beatriz Shinye

Valuation: Capitec on much higher multiples than Nu Associate Analyst

beatriz.shinye@ubs.com

Capitec is on a PE of 24.0x (CY27E) vs. Nu on 12.8x, P/BV 6.9x vs 3.2x, with the market +55-11-2767 6569

cap per client at USD1300 also about double Nu's USD590. We think Capitec's premium

valuation is due to a higher quality revenue mix, lower credit risk, established dividend

payout of 55% (Nu not paying dividends), and deteriorating macro outlook in Brazil.

However, the relatively attractive valuation of Nu is a constraint for Capitec, while also

supporting the investment case of Nu. We think 2Q26 could be a sweet spot for Nu, a

potential positive catalyst.

Highlights (Rm) 02/24 02/25 02/26 02/27E 02/28E 02/29E 02/30E 02/31E

Revenues 36,043 44,068 52,421 61,095 71,069 82,155 96,078 112,108