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Capitec remains committed to transparency, it says, after a further attack by short-seller Viceroy.
It was still working on a detailed response to the open letter issued by Viceroy when contacted by Fin24 on Wednesday morning.
"We have noted the latest report about Capitec Bank from Viceroy Research," Capitec said. "We are currently working through the report and in remaining committed to transparency, will respond to Viceroy directly."
Viceroy issued a fresh jab at the bank in the form of an open letter to Capitec's audit committee, in which it claims "Capitec management have continued to mislead investors" and "end-of-financial-year announcements in 2018 are reflective [of] deteriorating business conditions and corroborate the continuity of several intentionally misleading accounting practices".
Viceroy will continue to take Capitec up on its invitation to ask questions, it says. "We believe these questions are quite straightforward […] and we would appreciate straightforward answers."
The short-seller's concerns are primarily around "transparency and flawed management analysis" as well as "unsustainable business practices". Capitec's practices and financial results lead Viceroy to believe management's delivery of analysis to stakeholders is "extremely misleading and not at all reflective of declining business fundamentals", the letter says.
Attached to the letter is a report from Viceroy which reiterates Viceroy's concerns over lending practices, which it believes to be "suspicious". According to Viceroy, Capitec misrepresents the balance of its unpaid loans by rescheduling these through the issuance of new loans.
They also claim 70% to 80% of Capitec's consumers in debt counselling were issued new loans prior to repaying existing loans. Further, they say, tens of thousands of Capitec borrowers' datasets within debt counselling firms show consumers could get new loans after paying down their arrears just a day previously – rather than having a "cooling off" period between loans.
"While the borrower is getting more and more indebted and is still unable to pay their debts, lending to people who were immediately prior in [debt] allows Capitec to artificially generate 'cures', unsustainably increase its loan book, charge massive initiation fees and create a façade of quality within its consumer base," the report says.
But other analysts have argued that Viceroy has itself misrepresented Capitec, acting in its own self-interest and selectively presenting its research.
Capitec has previously said it was largely unaffected by Viceroy research thus far. Despite the earlier Viceroy report, it lifted net income by 17% in the year ended February 28 2018, with a dividend of 1 470 cents per share.
At 13:07 on Wednesday, Capitec [JSE:CPI] shares were trading at R847.43 per share, down by 1.00%. The share price reached a high of R859.20 earlier in the session.
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