Capitec Bank Holdings Limited · JSE:CPI
Capitec Bank — H1 2024 Earnings Presentation
32 slides from Capitec Bank's earnings presentation, August 2023
Slide 1: Capitec Bank Interim financial results
Capitec Bank Interim financial results August 2023
Slide 2: Hello
Hello Please send any questions to: InvestorRelations@capitecbank.co.za Questions will be answered at the end of the presentation.
Slide 3: Key drivers of our success
Key drivers of our success We continue to invest and innovate to meet the needs of our clients Client-Centric Focus Resilience Growth Future-focused • Challenging operating • Pre-provision operating • Digital payments environment profit (PPOP) up 26% • Business bank • Diversified income with a • Non
Slide 4: Group financial performance
Group financial performance
Slide 5: Group consolidated income statement
Group consolidated income statement Pre-provision operating profit (PPOP) grew 26% to R10.6 billion Aug 23 Aug 22 Change Change (R’ m) (R’ m) (%) (R’ m) Net interest income 8 018 6 863 17 1 155 Net transaction and commission income 6 913 5 559 24 1 354 Net insurance and investment result (1) 1 548 1
Slide 6: How we evolved
How we evolved From lender to diversified financial services company (R’ million) Aug 23 % of total CAGR % Aug 17 % of total Income from existing products/services: Lending income (incl. credit life insurance) 9 504 52 4 7 370 76 Transaction income 5 361 29 16 2 156 22 24% Existing value-added servi
Slide 7: Group key performance indicators
Group key performance indicators Strong earnings, increase in productivity and capital position strengthened Aug 23 Aug 22 Profitability Non-lending income (1) to operating expenses (%) 115 105 Non-lending income (1) to income from operations 44 42 Cost-to-income (%) 38 41 Return on equity (%) 24 25
Slide 8: Retail bank and Insurance
Retail bank and Insurance
Slide 9: 4 key themes
4 key themes Better banking behaviour drives growth Deposit growth Existing clients Prudent and Move from shows trust in take up agile credit cash to card the brand diversified management and digital products 9
Slide 10: Net interest income increased 13% to R7.3 billion
Net interest income increased 13% to R7.3 billion Balance sheet growth, margin expansion and conservative approach Interest income on lending: Interest expense Interest on investments: 100 R8.0 billion (+17) R4.2 billion (+45%) +10% R3.6 billion (+42%) +2% 75 +6% (R’ billion) 50 +8% 89 81 80 82 75 7
Slide 11: Active clients increased to 21 million
Active clients increased to 21 million Existing clients take up diversified products App clients increased by 18% to 10.2 million – the biggest digital bank in SA Total active retail clients Digital clients Fully banked clients +11% (app, internet and USSD) +8% +12% 20.9 7.5 18.9 11.7 6.7 16.7 10.8
Slide 12: Net transaction and commission up 25% to R6.5 billion
Net transaction and commission up 25% to R6.5 billion Clients move from cash to card and digital banking Digital +28% • App transactions grew 53% to 789 million 1 250 +21% • App volumes represent 83% of all digital transactions (Aug 22: 65%) 1 070 • Digital growth attributable to the launch of new p
Slide 13: New products generated R394 million in income
New products generated R394 million in income We unlock value by answering the needs of our clients through new technology Market share statistics +15% Market share statistics 4 500 60 - Bill payments: 30% - Prepaid airtime and data: 32% - Lotto: 14% 3 922 - Prepaid electricity: 27% 52 4 000 New pro
Slide 14: Capitec Connect reached 1.3 million SIMs
Capitec Connect reached 1.3 million SIMs Growth in clients and improved usage as we continue to innovate Highlights • Improved network coverage and quality with Cell C migrated to the MTN network • Active base and revenue per user improves month-on-month • Lowest rates for small data bundles at R45
Slide 15: Capitec Insure
Capitec Insure Total net insurance and investment result increased by 33% to R1.5 billion Highlights • Implementation of new systems and technology • Nearly 250 000 credit life policies issued on our own license • Guardrisk cell-captive is in run-off, and section 50 transfer initiated • Negotiations
Slide 16: Funeral Plan active policies grew 20%
Funeral Plan active policies grew 20% The net insurance and investment result grew 59% to R636 million +11% 2 930 2 651 Funeral performance metrics (R’ million) Key performance indicators • Active book: 2.4 million policies (Aug 2022: 2.0 million) • Policies issued last 6 months: 718k (up 11%) • Num
Slide 17: Retail credit
Retail credit
Slide 18: Economy – South African statistics
Economy – South African statistics South African households under pressure 80 SARB Ratio of Household Debt to Disposable Income % of debt to gross disposable income and % debt service cost 12 Stable household income and debt levels 75 • Lower level of retrenchments contributed to stable household in
Slide 19: Economy – South African statistics
Economy – South African statistics South African credit market tightening 16 National Credit Regulator 50% Lower household credit supply 16 Consumer Credit Market Report 15 15 • Credit applications continue to grow 14 45% (notwithstanding seasonality) 13 13 • Approval rates decline as credit provide
Slide 20: Retail credit: Tightened credit granting criteria
Retail credit Decisive action: Tightened credit granting criteria Loan sales and disbursements decreased by 9% to R24.2 billion Loan and limit sales decreased by 32% to R14.6 billion • Stricter income to instalment criteria • Stricter granting criteria decreases Term Loan sales by 11% • 421 unique g
Slide 21: Retail credit: Stricter granting returns new book performance
Retail credit Decisive action: Stricter granting returns new book performance to pre-covid levels % of new book showing strain: (arrears, rescheduling or debt review within first three months) 8.7% 8.0% 8.0% 7.9% 7.6% 7.6% Aug 19 Aug 20 Aug 21 Aug 22 Feb 23 Aug 23 21
Slide 22: Retail credit: Relief for clients in distress
Retail credit Decisive action: Major focus on providing relief to clients in distress % of book rescheduled Treatments available Rewarding clients for on more channels: honouring payment WhatsApp, SMS arrangements shortcode, and App 10.4% 44.6% More treatment types 10.1% Increased call center to pro
Slide 23: Expected credit loss coverage ratio remains healthy
Retail credit Expected credit loss coverage (ECL) ratio remains healthy 100 30 28.0 90 28 Anticipated impairment charge increase 26.5 • The impairment charge increased by 62% to R4.6 26 billion, in line with the industry 80 23.5 24 24.5 70 60 22 Prudent ECL coverage 21.3 • Coverage ratio prudent giv
Slide 24: Business bank
Business bank
Slide 25: Capitec Business
Capitec Business Focus on developing the world’s best Business bank Delivered major improvements • New online banking platform • Single Capitec app for business and personal banking • Record number of 4 501 accounts opened in August 2023 • 40% of accounts opened in August 2023 on the app/online – av
Slide 26: Headline earnings grew 20% to R242 million
Headline earnings grew 20% to R242 million Strong performance attributable to growth in active business clients Key performance indicators • Active clients grew 14% to more than 183 000 • Loan sales and disbursements (incl. overdrafts) increased 16% to R37.4 billion • Net loans and advances grew 21%
Slide 27: Group operating expenses
Group operating expenses
Slide 28: Operating expenses increased 14% to R6.6 billion
Operating expenses increased 14% to R6.6 billion Increased efficiency as cost-to-income ratio improved to 38% (Aug 2022: 41%) 4 500 Salaries (incl. incentives): 4 000 +11% • Headcount grew to 15 425 heads (Aug 22: 15 295) Specific operating expenditure categories (‘ million) 3 454 • Higher due to th
Slide 29: Technology and data remain central to growth strategy
Technology and data remain central to growth strategy Focus on building an exceptional client experience with our information technology platform 2 000 +31% Partner with the technology and software 1 800 163 • AWS cloud, Salesforce, Microsoft and SAP Group IT-related investments costs (R’ million) 1
Slide 30: Future focus
Future focus Building an ecosystem with the client at the core
Slide 31: The Capitec ecosystem
The Capitec ecosystem Helping people live better through simplified personal and business banking, insurance and value-added services Insure Credit Life Funeral Plan Future products GlobalOne GlobalBiz Personal Banking Business Banking 21m clients 11m digital Single solution for businesses Full-serv
Slide 32: Thank you
Thank you Please send any questions to InvestorRelations@capitecbank.co.za
Capitec Bank Holdings — H1 2024 Earnings Presentation on 6ix