Capitec Bank Holdings Limited · JSE:CPI
Capitec Bank — FY2017 Earnings Presentation
44 slides from Capitec Bank's earnings presentation, Feb 28, 2017
Slide 1: Annual Results Presentation
Annual Results Presentation 28 February 2017 © Capitec Bank Limited 1
Slide 2: Contents
Contents • Key indicators • Economic overview • Banking clients • Client service • Credit • Funding • International • Future
Slide 3: Key indicators
Key indicators © Capitec Bank Limited 3
Slide 4: Key Indicators: Headline earnings
Key Indicators Headline earnings (R’millions) 4 000 3 793 3 500 3 222 3 000 2 547 2 500 2 017 2 000 1 754 1 469 1 500 1 173 1 000 500 - 2014 Aug-14 2015 Aug-15 2016 Aug-16 2017 © 2017 Capitec Bank Results 4
Slide 5: Key Indicators: Return on equity
Key Indicators Return on equity (%) 30 27 27 26 26 25 25 25 23 20 15 10 5 0 2014 Aug-14 2015 Aug-15 2016 Aug-16 2017 © 2017 Capitec Bank Results 5
Slide 6: Key Indicators: Cost-to-income ratio
Key Indicators Cost-to-income ratio (%) 37 36 36 35 35 34 34 34 34 34 33 32 32 31 30 2014 Aug-14 2015 Aug-15 2016 Aug-16 2017 © 2017 Capitec Bank Results 6
Slide 7: Key Indicators: Net transaction fee income to operating expenses
Key Indicators Net transaction fee income to operating expenses (%) 80 72 70 70 65 66 63 61 59 60 50 40 30 20 10 - 2014 Aug-14 2015 Aug-15 2016 Aug-16 2017 © 2017 Capitec Bank Results 7
Slide 8: Key Indicators: Net transaction fee income to net income
Key Indicators Net transaction fee income to net income (%) 38 37 37 37 36 35 34 34 34 33 33 32 32 32 31 30 29 2014 Aug-14 2015 Aug-15 2016 Aug-16 2017 © 2017 Capitec Bank Results 8
Slide 9: Economic Overview
Economic Overview e CAPITEC
Slide 10: Economic Overview
Economic Overview • Macro economy • Retrenchments and debt review • High inflation • Cash availability • Lower real income © 2017 Capitec Bank Results 10
Slide 11: Economic Overview: Macro economy
Economic Overview Macro economy • Unexpected • Volatility © 2017 Capitec Bank Results 11
Slide 12: Retrenchments and debt review
Economic Overview Retrenchments and debt review YOY comparison - Retrenchment letters 1,600 1,200 FY2015 800 FY2016 400 FY2017 - Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb YOY comparison - Debt review 5,000 4,000 FY2015 3,000 FY2016 2,000 FY2017 1,000 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
Slide 13: High inflation
Economic Overview High inflation 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) © 2017 Capitec Bank Results 13
Slide 14: Cash availability
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 25 000 R 22 131 R 20 088 R 19 664 R 20 000 R 18 471 R 18 210 R 15 855 R 14 002 R 15 000 R 12 626 R
Slide 15: Lower real income
Economic Overview Lower real income 535 802 performing clients with inflows from February 2016 Non-Gov Gov Total 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 %
Slide 16: Banking Clients
Banking Clients
Slide 17: Banking Clients
Banking Clients • Growing client base • Opportunity in higher income segments • Focus on quality © 2017 Capitec Bank Results 17
Slide 18: Growing client base
Banking Clients Growing client base (‘000) © 2017 Capitec Bank Results 18
Slide 19: Opportunity in higher income segments
Banking Clients Opportunity in higher income segments Source: AMPS Dec -15 South Africa Income Capitec market share >R30,000 690 000 2% R10,000 – R30,000 4m 11% <R10,000 14,7m 25% Age 15-34 = 40% Age 15-34 = 54% © 2017 Capitec Bank Results 19
Slide 20: Focus on quality
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 © 2017 Capitec Bank Results 20
Slide 21: Client Service
Client Service
Slide 22: Client Service
Client Service • Distribution • Self-service banking • Service culture • People • Training © 2017 Capitec Bank Results 22
Slide 23: Distribution
Client Service Distribution Change Total since 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 257 525 301 branches open 7 days a week : Partnership (98) 2 371 © 2017 Capitec Bank Results 23
Slide 24: Self-Service banking
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
Slide 25: Self-Service banking - transaction volume
Client Service Self-Service banking - transaction volume 90 80 70 60 Millions 50 40 30 20 10 0 ATM/Branch/DNR (cash withdrawals) USSD/App/Card/Internet/SST © 2017 Capitec Bank Results 25
Slide 26: Service Culture
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
Slide 27: People
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 © 2017 Capitec Bank Results 27
Slide 28: Training
Client Service Training Number of employees attending courses 4 000 3 000 3 632 3 607 3 157 2 000 2 638 1 883 2 016 1 000 1 659 1 605 1 661 296 127 240 - Induction / onboarding Functional / technical Management and leadership Compliance 2015 2016 2017 Number of completed distance learning initiative
Slide 29: Credit
Credit
Slide 30: Credit
Credit • Regulatory • Model criteria • Loans advanced by term • Collections / provisions • Credit Card © 2017 Capitec Bank Results 30
Slide 31: Model criteria
Credit Model criteria Credit application (%) Nov-15 Nov-16 Applications # 318 443 410 692 Accept rate % 56 39 Taken up % 42 31 Taken up # 132 701 126 138 © 2017 Capitec Bank Results 31
Slide 32: Loans advanced by term
Credit Loans advanced by term 100% 3% 8% 9% 11% 90% 20% 13% 25% 80% 35% 34% 70% 36% 30% 34% 24% 60% 50% 25% 25% 40% 26% 30% 27% 26% 30% 14% 16% 20% 9% 16% 7% 14% 10% 18% 14% 15% 16% 11% 10% 0% 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
Slide 33: Collections / provisions
Credit Collections / provisions Arrears & impairment provisions of gross loans & advances 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
Slide 34: Credit card
Credit Credit card 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 © 2017 Capitec Bank Results 34
Slide 35: Funding
Funding
Slide 36: Conservative capital and funding
Funding Conservative capital and funding • Well capitalised • Consistent, well-priced, retail deposit growth – fixed and call • Compliance with all Basel 3 liquidity ratios © 2017 Capitec Bank Results 36
Slide 37: Deposits
Funding Deposits (R’millions) 35 000 30 000 25 000 20 000 15 000 10 000 5 000 - 2012 2013 2014 2015 2016 2017 Retail call Retail fixed Wholesale © 2017 Capitec Bank Results 37
Slide 38: International
International @S CAPITEC
Slide 39: Creamfinance
International Creamfinance • 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’ s
Slide 40: Future
Future e CAPITEC
Slide 41: Simplified Pricing
Future Simplified Pricing Free • Pay by card R5.00 • Transfer between accounts • Payments and transfers in • Access app with free data branch R1.50 R6.00 • Cash at card machine • Cash at Capitec ATM • Payments on app R8.50 • Send statements from app • Cash at any other ATM in SA (only R2.50 more) R3
Slide 42: Objectives
Future Objectives 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 • At
Slide 43: Objectives (continue)
Future Objectives (continue) 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 thro
Slide 44: thank you
thank you Results 41