The second Viceroy report on Capitec Bank may be a miscalculation. It is difficult to tell. On the face of it, there is nothing wrong with Capitec. It is extremely well-managed, strongly capitalised and has its parent company, PSG, and the South African Reserve Bank to support it. But can you be certain?Full Article: https://platinumweal...oy-and-capitec/
Discussion thread: Viceroy Research: Capitec: A wolf in sheep’s clothing
The elephant in the room is the issue of the loan rescheduling by Capitec, specifically the non performing loans, these are then accounted for as new business written while at the same time erasing the arrear accounts from the debtors book.
Irrespective of Viceroy report and Fairtree (Verster) short positions, Benguela Global had highlighted this and asked for clarity of this prior to the high profile report from Viceroy.
They rightly had questioned the practice as being an accounting irregularity, which to my mind it is.
It seeks to hide the fact that a large portion of debtors book is not in good shape, equates to kicking the can down the road in the hope that things will turn around, i believe that Capitec has now pulled up the handbrake on these loans, why would they do this if everything was hunky dory?
Capitec has been requested to allow an independent audit of this section of their business which they have declined to allow, if there is nothing to hide, why have they reacted in this manner, surely you would gladly accept this as a solution to the negative perceptions that are now in the marketplace.
Quite sure there is a lot more to come out in this story.