Pepkor’s Shift into Banking Services
Pepkor’s recent move marks a significant change in South Africa’s retail and banking landscape. Retailers are now stepping into the financial services arena to explore more profitable revenue streams, all while aiming to connect better with consumers who are, well, a bit tight on cash.
With a vast network of over 6,500 stores across southern Africa, Pepkor believes it can leverage its physical presence as a notable competitive edge. This extensive distribution means it has one of the widest reach capabilities in the region, which is quite a benefit.
According to company executives, customers will be able to tap into banking services both online and in-store at Pepkor locations. This hybrid approach is particularly aimed at people who don’t quite fit into the traditional banking model, perhaps because they haven’t been served well by those institutions.
This venture is crucial because, while South Africa boasts one of the continent’s most developed banking systems, it is still predominantly led by a handful of powerful institutions — think Standard Bank, FirstRand, Absa Group, and Nedbank. But, the competition landscape is changing quickly. Digital banks, fintech startups, and large retailers are racing to offer cost-effective, mobile-first services to low-income and previously unbanked consumers.
As smartphone usage and digital payments continue to rise across Africa, Pepkor’s initiative to establish a bank opens new doors for non-banking entities to enter financial services. It implies a shift where, perhaps, nearly anyone can become part of this financial ecosystem.
Pepkor has already secured conditional approval from the South African Prudential Authority for bank establishment and has initiated the formal procedures necessary for registration. Currently, the bank operates under the working title ‘plusb’.
To bolster this banking project, Pepkor acquired CloudBadger Technologies in October 2025, a company known for its banking software expertise. Garth Napier, Pepkor’s chief commercial officer, highlighted that the real strength lies in their mixture of digital banking capabilities and a large physical presence.
The company is already handling a whopping 22 million deposit and withdrawal transactions, as well as around 4 million bill payments annually. This level of activity indicates how ingrained financial services are becoming within Pepkor’s operations.
Interestingly, Pepkor’s financial services range extends well beyond just banking. Their smartphone rental platform, FoneYam, saw a significant uptake, adding 1.3 million new accounts in just six months to March 2026. That brings active users up to 2.4 million, which is quite impressive.
The demand for finance-enabled smartphones is clearly rising, as shown by FoneYam’s rental book growing by 53% year-on-year to R2.6 billion ($159 million). It seems consumers are starting to look for ways to manage their finances better, especially amidst affordability challenges.
Pepkor’s insurance branch, Abacus Insurance, has also seen a robust performance, doubling its revenue to R718 million ($43.9 million), and its funeral products now cover over 1.3 million lives. That’s, I think, a reflection of a growing need for different insurance options in the market.
Meanwhile, lending arm Capfin has expanded its reach, increasing its effective loan base to 378,000 loans, with a total credit book amounting to R5.3 billion ($324.1 million). This growth indicates a strong demand for loans and credit products.
Pepkor’s broader financial services division has emerged as the fastest-growing segment within the group, with revenues climbing by 41.6% to R3 billion ($183.5 million), and operating profits soaring by 63.4% to R691 million ($42.3 million).
This aggressive entry into banking seems representative of a larger trend in Africa, where both retailers and telecom companies are morphing into financial platforms. Firms across the continent with extensive customer networks are stepping into payments, loans, and digital banking, crafting new ways to maintain customer engagement and generate recurring income.
Pepkor had previously anticipated that launching their bank would be under R1 billion, but they now expect total expenditures to fall below R920 million ($56.3 million), based on current exchange rates.
As for expectations, executives are optimistic about achieving a return on equity exceeding 30% by the fifth year, assuming the rollout goes according to plan. That seems like a reasonable target, but, you know, with new ventures, there are always risks involved.
Despite various economic pressures like rising inflation, slow growth, increasing electricity costs, and high unemployment in South Africa, Pepkor’s core business has remained strong. They reported a 13.2% boost in group revenue to R54.8 billion ($3.35 billion) for the six months ending March 2026.
In terms of earnings, comprehensive earnings per share increased by 10.3% to 93.1 cents, alongside a 9.4% rise in operating profit to R6.3 billion ($385.3 million). It looks like they’re managing to navigate through these challenging times quite well.
Chief executive Peter Erasmus mentioned that the aim is to keep expanding this “retail-led consumer platform” through financial services and informal marketplace initiatives. If all goes well, Pepkor’s banking effort could turn out to be one of Africa’s most exciting retail finance experiments. Especially as traditional banks find it increasingly tough to compete against digital players that are reaching consumers more effectively and at lower costs.
