South ‌African (SA) discount retailer Pepkor plans to launch its bank in April 2027, aiming to leverage its extensive store footprint nationwide to attract 1.8 million primary banking customers within five years, executives said this Tuesday.

SA retailers are increasingly moving into financial services to diversify revenue as banking products offer steadier, higher-margin income streams and more ⁠frequent client engagement than traditional retail.

Pepkor Chief Commercial Officer Garth Napier told investors after the retailer reported strong first-half results that its bank would combine digital and physical services, with customers able to transact across more than 6 500 stores.

The retailer already processes about 22 million cash-in cash-out transactions and 4 million bill payments annually, underscoring the scale of its existing financial services activity, he said.

SA’s banking sector is dominated by a few large lenders, but competition has intensified as digital banks and retailers target underbanked consumers. Mobile‑led, low‑cost services have become ‌a key ⁠battleground.

At its capital markets day in March, Pepkor said it was building an integrated ecosystem driven by growing smartphone use and stronger use of its financial services, including loans and insurance.

Pepkor’s Chief Financial Officer, Riaan Hanekom, said the retailer had targeted spending of about R1 billion ($61.2 million) on the ⁠new bank, but now expects to spend no more than R920 million ($51 million) in total, up to its planned launch next April, depending on final regulatory approvals.

Pepkor, which owns Pep and Ackermans clothing brands, ⁠plans to have 1.8 million primary banking customers by year five.

Earlier this Tuesday, the retailer reported a 10.3% rise in headline earnings per share to 93.1 cents in the six ⁠months to March 31, buoyed by acquisitions, growth in its core PEP clothing brand and demand for financial services.

–Reuters–