Top Africa clothing retailer Pepkor prepares to establish bank presence

Pepkor Holdings Ltd. got approval from South African authorities to establish a banking presence there as the continent’s biggest seller of clothing and mobile phones using prepaid seeks to offer its millions of lower-income customers more financial services.

The retailer last month also bought a financial technology software platform to support this expansion, it said in a statement Tuesday. 

This is as Pepkor prepares to join other retailers, including the country’s largest grocer Shoprite Holdings Ltd., that are also using consumer data gathered from loyalty programs to offer banking solutions to about a sixth of South Africans that have no accounts or are under-serviced by traditional lenders. 

“We continue to build a unique position of trust among millions of our customers” as Pepkor seeks to solve a spectrum of customers needs, chief executive officer Pieter Erasmus said in a separate statement. “Our strategic focus on digital inclusion and fintech has added scalable future growth opportunities that are now delivering tangible results.”

Many local retailers already offer basic financial services such as fund transfers, bill payments and cash withdrawals. Revenue at Pepkor’s fintech unit rose 31% to 16.6 billion rand ($961 million) in the year through September, accounting for 17% of the company’s total sales.

The Cape Town-based retailer, which has more than 6,000 stores and sells mobile devices and offers financing through both its Pep and Ackermans stores, earlier reported a 9.2% increase in its dividend payout. 

Pepkor rose as much as 3.8% in early trading in Johannesburg, its biggest intraday gain in more than three weeks. The stock has still dropped 10% this year, compared to 24% decline in the FTSE/JSE Retailers Index.