Annual Results Presentation - Simplified Banking · Results Feb-16 Feb-17 Feb-16 Feb-17 Feb-16 Feb-17 More than 40% cash available % 83 68 82 71 82 70 Between 39% and 21% cash available

© Capitec Bank Limited 1

Annual Results

Presentation

28 February 2017

Contents

• Key indicators

• Economic overview

• Banking clients

• Client service

• Credit

• Funding

• International

• Future

© Capitec Bank Limited 3

Key indicators

Results © 2017 Capitec Bank 4

Key Indicators Headline earnings (R’millions)

2 017

1 173

2 547

1 469

3 222

1 754

3 793

-

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

2014 Aug-14 2015 Aug-15 2016 Aug-16 2017


Key Indicators Return on equity (%)

23

25 25 26

27 26

27

0

5

10

15

20

25

30

2014 Aug-14 2015 Aug-15 2016 Aug-16 2017


Key Indicators Cost-to-income ratio (%)

32

34

35

36

34 34 34

30

31

32

33

34

35

36

37

2014 Aug-14 2015 Aug-15 2016 Aug-16 2017

Results 7

Key Indicators Net transaction fee income to operating expenses (%)

© 2017 Capitec Bank

59 63

65 61

66 70

72

-

10

20

30

40

50

60

70

80

2014 Aug-14 2015 Aug-15 2016 Aug-16 2017

Results 8

Key Indicators Net transaction fee income to net income (%)


32

34 34

32

33

37 37

29

30

31

32

33

34

35

36

37

38

2014 Aug-14 2015 Aug-15 2016 Aug-16 2017

Economic

Overview

Results 10

• Macro economy

• Retrenchments and debt review

• High inflation

• Cash availability

• Lower real income


Economic Overview

Results 11

• Unexpected

• Volatility


Economic Overview Macro economy


Retrenchments and debt review

Economic Overview

-

400

800

1,200

1,600

Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb

YOY comparison - Retrenchment letters

FY2015

FY2016

FY2017

1,000

2,000

3,000

4,000

5,000

Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb

YOY comparison - Debt review

FY2015

FY2016

FY2017


High inflation

Economic Overview

Inflation

(Consumer Price Index: All items vs. Food and non-alcoholic beverages

Source: Statistics South Africa CPI data

Note: June 2016 data unavailable from Stats SA (data shown is an average of May 2016 and July 2016)

Results 14

Economic Overview


Cash availability Average account inflows per banking client (include no inflows): Inflation adjusted data

(August 2015 income groups, Aug 2015 – Feb 2017, n = 2.7 million)

Feb 2016

R 2 221 R 4 035

R 2 985 R 2 921 R 3 937

R 2 780

R 5 157

R 7 712

R 5 468 R 5 303 R 7 099

R 4 895

R 10 543

R 14 002

R 10 933 R 10 562

R 12 626

R 9 661

R 20 088

R 22 131

R 18 471 R 18 210 R 19 664

R 15 855

R -

R 5 000

R 10 000

R 15 000

R 20 000

R 25 000

Au

g-1

5

Se

p-1

5

Oct-

15

No

v-1

5

De

c-1

5

Jan

-16

Fe

b-1

6

Ma

r-1

6

Ap

r-16

Ma

y-1

6

Jun

-16

Jul-

16

Au

g-1

6

Se

p-1

6

Oct-

16

No

v-1

6

De

c-1

6

Jan

-17

Fe

b-1

7

R1 - R2,000 R3,501 - R7,500 R7,501 - R15,000 R15,001 - R30,000

Results

Feb-16 Feb-17 Feb-16 Feb-17 Feb-16 Feb-17

More than 40% cash available % 83 68 82 71 82 70

Between 39% and 21% cash available % 9 6 13 12 11 10

Cash stress less than 20% cash available % 8 5 5 7 7 6

No inflow % - 21 - 10 - 14

100 100 100 100 100 100

Totalless than R5 000 R5 001 plus

Feb-16 Feb-17 Feb-16 Feb-17 Feb-16 Feb-17

More than 40% cash available % 84 70 74 70 82 70

Between 39% and 21% cash available % 10 8 19 18 11 10

Cash stress less than 20% cash available % 6 6 7 8 7 6

No inflow % - 16 - 4 - 14

100 100 100 100 100 100

Non-Gov Gov Total

15

Economic Overview

535 802 performing clients with inflows from February 2016


Lower real income

Banking

Clients

Results 17

Banking Clients

• Growing client base

• Opportunity in higher income segments

• Focus on quality


Results 18

Banking Clients Growing client base

(‘000)


Results 19

Banking Clients Opportunity in higher income segments Source: AMPS Dec -15


Age 15-34 = 40% Age 15-34 = 54%

<R10,000

R10,000 – R30,000

>R30,000

25%

11%

2%

South Africa Income

Capitec market share

14,7m

4m

690 000

Results 20

Banking Clients Focus on quality


Potential quality

• Earn money (salary, entrepreneurs, informal, allowance, social grant)

• Spend money (accommodation, electricity, transport, cellphone, groceries, education)

Capitec quality

Client Service

Results 22

Client Service


• Distribution

• Self-service banking

• Service culture

• People

• Training

Results 23

Client Service Distribution


301 branches open 7 days a week

Change

sinceTotal

Feb-16 Feb-17

Branches: Total 76 796

: New look 148 434

: Current (72) 362

ATMs :Total 319 4 024

: Regular 160 1 128

: Dual note recyclers 257 525

: Partnership (98) 2 371


Client Service Self-Service banking

• USSD clients up to 5.4 million

• Banking app clients up to 1.8 million

• Free data while using app

• Self Service Terminals / Cash Accepting ATMs (DNR)

• More capacity in branches for new clients, credit

applications and better client service

• Lower fee income on self-help, higher volumes and

efficiency

Results 25

Client Service Self-Service banking - transaction volume


0

10

20

30

40

50

60

70

80

90

Mill

ions

ATM/Branch/DNR (cash withdrawals) USSD/App/Card/Internet/SST


Client Service Service Culture

• Client centric ethos

• Service and client satisfaction measurement

• Service recovery, systems improvement and behaviour training

• Accolades:

• SA’s favorite bank according to social media sentiment (BrandsEye)

• Top retail bank in South Africa Consumer Satisfaction Index (SACsi)

• Ask Afrika Orange Index Service award

• Brand finance top 10 most powerful international banking brands


Client Service People

• Focus on client service and company values

• Recruit for potential and cultural fit, train for skill

• 1 629 new employees to 13 069

• 5 228 number of employees attending courses


Client Service Training

9 056 10 353

1 182

10 066

6 129

11 284

2 931

11 316 10 291

17 914

4 168

13 283

Induction / On-boarding Functional & Technical Management & Leadership Compliance

Number of completed distance learning initiatives

2015 2016 2017

2 638

1 659 1 605 127

3 157

1 883 1 661 240

3 632 3 607

2 016 296

-

1 000

2 000

3 000

4 000

Induction / onboarding Functional / technical Management and leadership Compliance

Number of employees attending courses

2015 2016 2017

Credit

Results 30

• Regulatory

• Model criteria

• Loans advanced by term

• Collections / provisions

• Credit Card


Credit

Results 31

Credit application (%)

Model criteria

Credit


Nov-15 Nov-16

Applications # 318 443 410 692

Accept rate % 56 39

Taken up % 42 31

Taken up # 132 701 126 138

Results 32 © 2017 Capitec Bank

Credit Loans advanced by term

14% 15% 18% 16% 11% 10%

7% 9%

14% 16% 16%

14%

30% 27%

25% 25% 26%

26%

24% 30%

35% 34% 36%

34%

25% 20%

8% 9% 11% 13%

3%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Aug-14 Feb-15 Aug-15 Feb-16 Aug-16 Feb-17

Credit facility and multi loan 1 - 12 month 13 - 36 month 47 - 60 month 61 - 84 month Credit Card

Results 33

Arrears & impairment provisions of gross loans & advances

Collections / provisions

Credit


Feb-16 Feb-17

Gross loans and advances R'm 40 891 45 135

Loans past due (arrears) R'm 2 297 2 855

Arrears to gross loans and advances % 5.6 6.3

Arrears rescheduled < 6 months R'm 1 542 1 583

Arrears and arrears rescheduled < 6 months to gross loans and advances % 9.4 9.8

Rescheduled from current < 6 months R'm 1 818 1 088

Arrears and all rescheduled < 6 months to gross loans and advances % 13.8 12.2

Provision for doubtful debts R'm 5 131 5 930

Provision for doubtful debts to gross loans and advances % 12.5 13.1

Arrears coverage ratio % 223 208

Arrears and arrears rescheduled < 6 months coverage ratio % 134 134

Arrears and all rescheduled < 6 months coverage ratio % 91 107

Results 34

What makes it different

• Single card to access Global One

• 5.35% - 5.90% on positive balance

• Available in real time, active immediately

• Performance and growth expectations


Credit Credit card

Funding

Results 36

• Well capitalised

• Consistent, well-priced, retail deposit growth –

fixed and call

• Compliance with all Basel 3 liquidity ratios


Conservative capital and funding

Funding

Results 37

Funding Deposits (R’millions)


-

5 000

10 000

15 000

20 000

25 000

30 000

35 000

2012 2013 2014 2015 2016 2017

Retail call Retail fixed Wholesale

International

Results 39

International

• Globally expanding online lending group

• Poland, Latvia, Georgia, the Czech Republic, Mexico and

Denmark

• Sophisticated technology and scoring

• Early stage with big potential

• Gain international and digital experience

• Provide strategic input

• Board of directors’ seats

Creamfinance


Future


Future Simplified Pricing

Free

• Pay by card

• Transfer between accounts

• Access app with free data

R1.50

• Cash at card machine

• Payments on app

• Send statements from app

R3.50

• Debit order

R5.00

• Payments and transfers in

branch

R6.00

• Cash at Capitec ATM

R8.50

• Cash at any other ATM in SA

(only R2.50 more)

Results 42

Future

1. Service

• Obtain single view of the client at all points of interaction

• Create a personalised, omni-channel, self-service experience

• Create and manage world class service levels at all points

2. Efficiency

• Focus on staff productivity and process optimisation

3. People

• Attract and retain top quality people

• Become the best incubator of industry leaders

• Build our culture of greatness and innovation

Objectives


Results 43

Future

4. Business Delivery

• Develop capacity to deliver in fast changing environment

• Deliver projects in reduced time

• Develop and maintain a client centric focus

5. Quality Clients

• Increase market share in higher income segments

• Improve quality of banking clients through stable product usage

• Move transactions from branch to mobile/self-service channels

6. Digital Banking Platform

• Develop client profiling

Objectives (continue)


Results 41

thank you

Documents

Annual Results Presentation - Simplified Banking · Results Feb-16 Feb-17 Feb-16 Feb-17 Feb-16 Feb-17 More than 40% cash available % 83 68 82 71 82 70 Between 39% and 21% cash available