Interim results presentation 2017 - Simplified Banking · PDF fileContents •Key indicators •Operating environment •What differentiates us •Highlights •Bank •Save •Credit

Interim results presentation 2017

Contents

• Key indicators

• Operating environment

• What differentiates us

• Highlights

• Bank

• Save

• Credit

• Continued focus

Key

indicators

Interim Results Presentation 2017 4 © Capitec Bank Limited

Key indicators Earnings

2 017

1 173

2 547

1 469

3 222

1 754

3 793

2 046

23

25

25

26

27 26 27

26

10

12

14

16

18

20

22

24

26

28

-

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 Aug-17

Headline earnings (R'millions) Return on equity (%)


Key indicators Cost-to-income (%)

32

34

35

36

34 34 34

36

30

31

32

33

34

35

36

37

2014 Aug-14 2015 Aug-15 2016 Aug-16 2017 Aug-17


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

59 63 65

61 66

70 72 76

-

10

20

30

40

50

60

70

80

90

2014 Aug-14 2015 Aug-15 2016 Aug-16 2017 Aug-17


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

32 34 34

32 33

37 37

40

-

5

10

15

20

25

30

35

40

45

2014 Aug-14 2015 Aug-15 2016 Aug-16 2017 Aug-17

Operating

environment


Operating environment Improving economy

• Lower inflation

– Food: 11.3% to 6.8%

– All items: 5.9% to 4.6%

• Lower interest rates

• GDP up to 2.5% from last quarter

• Stable exchange rate


Operating environment Retrenchments

0

200

400

600

800

1 000

1 200

1 400

1 600

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

Retrenchments

FY2016

FY2017

FY2018


• Unemployment rate 27.7% Q2 2017, highest rate observed since September 2003 (STAT SA)

• Youth unemployment rate 55.9% (STAT SA)

• Total employed increased (‘000) (STAT SA)

Operating environment Employment challenges

April – June 2016 April – June 2017 Movement (%)

Total Employed 15 545 16 100 4

Formal sector (non-agricultural) 10 917 11 193 3

Informal sector (non-agricultural) 2 507 2 761 10

Agriculture, hunting, forestry and fishing 825 835 1

Private households 1 296 1 311 1


Operating environment Growing account inflows

Average account inflows per banking client (same clients tracked over time)

(Aug 2016 - Aug 2017, n = 1.9 million)

Sep 16 to

Aug 17

% change

6%

6%

11%

16%


Operating environment Cash availability – 627 077 same clients

Non-Government (%) Government (%) Total (%)

Aug-16 Aug-17 Aug-16 Aug-17 Aug-16 Aug-17

More than 40% cash available 77 65 77 76 77 67

Between 39% and 21% cash available 9 8 16 12 10 8

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

No inflow 8 22 1 6 7 19

100 100 100 100 100 100


Operating environment Global One – net loan book clients

* Clients where we collect their loan instalment from their Global One account

Total book* Aug-16 (%) Aug-17 (%) More than 40% cash available 75 80

Between 39% and 21% cash available 14 10

Cash stress less than 20% cash available 6 6

No inflow 5 4

40% cash available clients per salary band Aug-16 (%) Aug-17 (%) R15 000 plus 33 40

R10 001 – R15 000 28 29

R5 001 – R10 000 29 24

R1 – R5 000 10 7


Operating environment Debt review

• Cost to the client

• Effect on client

• Aggressive

marketing

What differentiates us We help our clients bank better,

so that they can live better.

By offering simplified banking

that is transparent, easy to access,

affordable to use, and delivered

through personal service, we put our

clients in control.

Highlights

95% clients waited for

less than 15

minutes to be

served

clients saved over

R165 million by banking

with their remote

app or phone

personalised

credit

interest rates

from as low as

12.9%

82%

of employees are

less than 35

years old

190 000 credit card clients

pay R35

per month


Bank Total Capitec clients as a % of SA population

Source: STAT SA- census 2016 and internal data

South Africa Capitec %

0-14 16 786 222 1

15-19 5 104 411 8

20-34 15 038 4 375 29

35-54 12 226 3 292 27

55-64 3 547 652 18

65 plus 2 952 232 8

Total 55 653 9 184 17

South Africa


Bank Banking client market share

12%

14%

18%

22%

25%

1 610

2 150

2 852

3 526

4 074

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

0%

5%

10%

15%

20%

25%

30%

Jun-13 Jun-14 Jun-15 Jun-16 Jun-17

Capitec share of employed population Banking clients

Source: Labour Force Survey 2017 Q2, 2016 Q2, 2015 Q2, 2014 Q2, 2013 Q2; Capitec internal data


Bank Client and transaction growth

• Quality banking clients up 21%

• Transaction fee income up 29%

• Cellphone and internet transaction growth up 39%

• Total number of transactions up 27%

• 71% of possible transactions done on self-help

devices


Bank Transaction growth

Transaction volumes ( '000)

Channel Aug-16 Aug-17 Growth (%)

Cellphone* 158 746 220 753 39

Point of sale 173 805 228 181 31

ATM 140 126 163 025 16

DNR 3 136 7 844 150

Self service terminals 116 2 899 2 401

Branch 27 976 27 001 (3)

SMS and debit orders 502 346 625 603 25

* USSD, internet banking and app


Bank Distribution

Change since Total

Feb-17 Aug-17

Branches Total 15 811

New look 91 525

Previous layout (76) 286

ATMs Total 257 4 281

Regular 12 1 140

Dual note recyclers 110 635

Partnership 135 2 506


Save Help clients manage their money

• Brand acceptance and trust

• Consistent, conservative approach to liquidity

• Well-priced retail deposit growth – fixed and call


Save Deposits (R’millions)

-

2 500

5 000

7 500

10 000

12 500

15 000

17 500

20 000

22 500

25 000

27 500

30 000

32 500

35 000

2013 2014 Aug-14 2015 Aug-15 2016 Aug-16 2017 Aug-17

Retail call Retail fixed Wholesale


-

5 000

10 000

15 000

20 000

25 000

30 000

2015Q1 2015Q4 2016Q1 2016Q4 2017Q1

Total market Advances Capitec Advances

Unsecured and short term credit granted (R’000)

Credit market

Credit

26.4% 27.1%

25.7% 27.8%

25.2%

19 943

26 960

22 093

26 449

23 076

Source: NCR


Credit Credit market – unsecured Rand value by term

Source: NCR

Quarter 1

Products 2015 (R’m) 2016 (R’m) 2017 (R’m)

0-12 Months 4 484 4 966 4 845

13 -36 Months 5 234 5 446 4 917

37-60 Months 9 287 10 267 11 428

61-84 Months 938 1 414 1 886

Total 19 943 22 093 23 076


Credit Credit market – unsecured credit Rand value per

income category

Quarter 1

Salary band 2015 (R’m) 2016 (R’m) 2017 (R’m)

R0 - R5 500 2 300 2 926 2 154

R5 501 - R10 000 3 790 3 901 3 436

R10 001 - R15 000 3 981 4 076 4 138

R15 000 plus 9 872 11 190 13 348

Total 19 943 22 093 23 076

Source: NCR


Credit Regulatory

• Debt relief

• Credit life insurance


Credit Improved solution

• Reduced pricing

– 1.5% interest cut, 6 months term reduction

• Cut back on small and tiny companies / lower income

• More personalised credit offer

• Better interest rate options based on affordability


Credit Loans advanced by term


Credit Application

6 months ended

Aug-16 (%) Feb-17 (%) Aug-17 (%)

Applications Decline Rate 47 60 67

Application Approved: Not Taken up 12 8 6

Applications Taken Up Rate 41 32 27

Total 100 100 100


Credit Collections/provisions

Arrears & impairment provisions of gross loans & advances

Aug-16 Feb-17 Aug-17 Gross loans and advances R'm 42 812 45 135 46 544

Loans past due (arrears) R'm 2 561 2 855 2 498

Arrears to gross loans and advances % 6,0 6,3 5,4

Arrears rescheduled within 6 months R'm 1 645 1 583 1 396

Arrears and arrears rescheduled within 6 months to gross loans and advances % 9,8 9,8 8,4

Rescheduled from up-to-date within 6 months R'm 1 535 1 088 1 049

Arrears and all rescheduled within 6 months to gross loans and advances % 13,4 12,2 10,6

Provision for doubtful debts R'm 5 874 5 930 5 925

Provision for doubtful debts to gross loans and advances % 13,7 13,1 12,7

Arrears coverage ratio % 229 208 237

Arrears and arrears rescheduled within 6 months coverage ratio % 140 134 152 Arrears and all rescheduled within 6 months coverage ratio % 102 107 120


Credit Credit card

• Consistent

growth in clients

• Overseas travel

• Adjusted pricing

Continued

focus


Continued focus

• Cream Finance

• Improved service

• People development and leadership

• Business delivery and throughput

• Growing quality clients

• Developing digital banking platform

Documents

Interim results presentation 2017 - Simplified Banking · PDF fileContents •Key indicators •Operating environment •What differentiates us •Highlights •Bank •Save •Credit