SOUTH AFRICA – Capitec Bank, a South African lender Bank, reported profit for the first half of the year grew 20%, in line with expectations, thanks to strong customer growth and a smaller impairment charge.

The performance outshone more muted growth at many rivals, who have struggled after the economy suffered its worst contraction in a decade and the unemployment rate hit an 11-year high after years of already stagnant growth.

 “We’re fortunate to be growing, continuously hiring employees and not retrenching,” Capitec CEO Gerrie Fourie said in a statement.

Headline earnings per share – the main profit measure in South Africa – stood at 2,545 cents for the period ending Aug 31, compared with 2,128 cents a year earlier. Stripping out non-operational factors, income from operations rose 7%.

Its shares were up 0.49% at 0728 GMT, with the strong results largely expected by the market after the lender previously said half-year earnings could rise by up to 21%.

“The result was more or less guided for, so that wasn’t a surprise,” Harry Botha, banking analyst at Avior Capital Markets, said, adding Capitec’s growth was more muted if a 17% decline in the bank’s credit impairment charge was excluded.

In the past two years, the bank has been reducing its exposure to the lowest-income consumers and tightening its credit policies, as well as trying to diversify away from a reliance on risky unsecured lending.

The reliance on risky lending and focus on the lower-income market leaves Capitec more exposed than peers to any increase in bad debts, and analysts had been concerned over a potential rise in troubled loans during the period.

But while the bank’s gross loan book grew by 17% to 60.25 billion rand (US$4.02 billion), its total arrears of up to three months had decreased by 11% by the end of Aug 2019 – one of its best performances on arrears to date, Fourie said.

Many South African lenders registered flat or minimal growth in their domestic retail banks, and large traditional lenders have been shuttering branches and cutting jobs in a bid to modernise their operations and bring costs down to compete with a host of new, digital-only rivals