Market analysts say the findings against Capitec Bank by Viceroy Research lack substance. The report released by the research company indicates that Capitec may have concealed losses by refinancing loans.

Following the report there has been growing concerns that Viceroy Research may have benefited from the sharp movement in the share price sparked by its report.

Despite the latest controversy, Capitec continues to win the hearts of both the unbanked and banked. The bank is attracting new depositors almost daily earning billions of rands in fees. The bank has made a name for itself by offering simple banking.

The latest controversy may have triggered a sharp decline in the company’s share price, but it is unlikely to make a significant impact on its banking operation for now. The South African Reserve Bank which is responsible for banking sector supervision has given Capitec thumbs up. Market analyst Patrick Mathidi concurs.

“It has a very different business model to African Bank, which was predominantly a micro-lending business. As compared to Capitec they are diversified , they have other sources of income, they are a retail bank…do get retail deposits which is more stable as opposed the model of African Bank.”

There are suspicions that Viceroy Research may have used its report to benefit financially. The Financial Services Board and the Johannesburg Stock Exchange are currently investigating these allegations.

“We think that this is up to the FSB and JSE in term of whether there were people who sold the stock while it was still high with intention to buy lower levels on the back of this report,” says Mathidi.

There is very little that is known about Viceroy Research. However, the company made headlines recently by uncovering financial irregularities involving retailer Steinhoff. It now appears that investors are now taking the latest expose involving Capitec with a pinch of salt.

“The fact that the report writers themselves did not seek clarity before publishing the finding one can only guess that there were mischievous intentions behind this.”

Viceroy claims that Capitec gave loans to delinquent customers, meaning it was giving new loans to customers who were not paying back the loans they got from the bank. Click below for more on the story: