Capitec Bank Holdings Limited · JSE:CPI
Capitec Bank — FY2021 Earnings Presentation
35 slides from Capitec Bank's earnings presentation, February 2021
Slide 1: Financial Results
Financial Results February 2021
Slide 2: Welcome
Welcome Please send any questions to: InvestorRelations@capitecbank.co.za Questions will be answered at the end of the presentation.
Slide 3: 2021 Highlights
©) 2021 Highlights
Slide 4: Agility and digitalisation
Agility and digitalisation A year of 2 halves March — August: September — February: Adapt Deliver • Prioritised the safety of our Maintained service employees and clients • Focused on growth delivery throughout • Implemented a remote the year • Transitioned to a flexible working environment working
Slide 5: Key Indicators
Key Indicators Capitec Group
Slide 6: Key performance indicators
Key performance indicators Group headline earnings down by 27% 7 000 ROE = 28% 6 000 6 277 H1 2021: H2 2021: Dividend Declared: HEPS decreased by 78% HEPS increased by 18% R16.00 per share at 2.5 compared to H1 2020 compared to H2 2020 coverage 5 000 ROE = 17% Headline earnings 4 586 ROE = 30% 4 000
Slide 7: Key performance indicators
Key performance indicators Group headline earnings increased by 18% in H2 2021 Feb 2021 Feb 2020 (1) Change H2 2021 vs H2 2020 (R’m) (R’m) (%) (R’m) Net lending, investment and insurance income 13 422 13 232 1 (222) Net transaction fee income 8 708 7 416 17 951 Funeral income 650 413 57 (6) Other in
Slide 8: Key performance indicators
Key performance indicators Costs well maintained and strong capital position for future growth Net transaction fee and funeral plan Net transaction fee and funeral plan Income to operating expenses income to net income 102 86 99 97 62 61 46 47 Retail 91 91 Retail Aug 19 Feb 20 Aug 20 Feb 21 Aug 19 F
Slide 9: Retail Bank
Retail Bank Our culture drives performance
Slide 10: People
People Develop talent, nurture future leaders and focus on engagement Talent acquisition • 820 appointed and 78 new positions created • Virtual onboarding and training Talent development • Digital learning environment and 55 356 training engagements • 182 employees enrolled for the Harvard Manage Me
Slide 11: Client growth continues
Client growth continues Leading the market with 8.6 million digital banking clients (up 28%) 16 15.7 Client growth over the last 5 years: Digital fees: Total clients – 8.4 million Reduced in 2019, Digital clients – 5.9 million unchanged for the last 3 years 13.9 14 12 11.4 9.9 10 8.6 8.6 Clients (‘m
Slide 12: Clients embrace digital payments
Clients embrace digital payments Strong engagement resulted in a change in transactional behaviour Transaction volumes for the month (‘m) Feb 2017 Feb 2019 Feb 2021 Digital 20.9 48.3 86.4 Card payments (issuing only) 24.9 51.7 79.2 Cash 26.4 37.1 38.8 Profile of digital clients ('m) Monthly inflow o
Slide 13: Digital transactions unaffected by lockdown
Digital transactions unaffected by lockdown Total transaction volume increased by 17% to 5.3 billion 120 Normal seasonality 100 Normal seasonality 80 Transaction volumes (‘m) 60 Level 5 of lockdown 40 20 Feb 21: - Avg value per cash transaction: R663 (Feb 20: R671) - Avg value per card transaction:
Slide 14: Funeral plan continues to grow
Funeral plan continues to grow Income increased by 57% to R650 million Market share: • 37% of all new policies issued (based on sum assured) (1) • 16% of total active funeral plan book • Avg coverage per policy = R96 000 (Highest in the industry) (1) • Avg of R530 cover for every R1 in premium paid
Slide 15: Savings is positive
Savings is positive Retail bank deposit book grew 18% to R107.1 billion Group retail deposit market share as at Jan 21 = 9.4% (Jan 20: 8.2%) Composition of retail deposit book: • Call savings: R69.9 billion (up 27%) • Fixed savings: R35.4 billion (up 10%) • Wholesale: R1.8 billion (down 47%) Drivers
Slide 16: Delivery of new products
Delivery of new products Payment solutions Send cash • Added new cash-out options at our own Capitec ATMs, Pick n Pay and Massmart stores • 12.3 million transactions (Feb 20: 3.8 million) • R6.1 billion in value created (Feb 20: R1.8 billion) Scan to pay on our app • Launched in September 2020 • Val
Slide 17: Delivery of new products
Delivery of new products Home loan solutions and remote onboarding Capitec Home Loan • Launched in November 2020 in partnership with SA Home Loans • Applications done online in 4 easy steps under 5 minutes with no documentation required • 24 423 applications through our website or branches since lau
Slide 18: Retail Credit
Retail Credit Strategies COVID-19 impact Payment relief Prudent provisioning Credit life insurance Diversification
Slide 19: Credit strategies
Credit strategies Credit landscape shows recovery in unsecured lending and facilities lagging 60 50 49 43 40 40 41 NCR New Credit Granted (R’bn) 32 30 23 22 20 14 10 0 2019 Q3 2019 Q4 2020 Q1 2020 Q2 2020 Q3 Unsecured & Short-term Credit Unsecured: Facilities Mortgages Secured (Includes VAF) Source
Slide 20: Credit strategies
Credit strategies Critical assessment, robust challenge, agile implementation FY20 FY21 FY21 FY22 Pre-COVID-19 First Half Second Half Outlook Positioned COVID-19 COVID-19 Economic for a Second Wave First Wave Recovery Down-turn Reduce Risk Agile response Gradual release Outlook Increased minimum inc
Slide 21: COVID-19 impact on industries
COVID-19 impact on industries Key industry performance – change in additional PD estimate 52% 50% 50% 48% 40% 40% Additional probability of default 38% % of total balance at risk 30% 30% 22% 20% 20% 15% 17% 10% 10% 9% 12% 10% 8% 8% 6% 6% 2% 4% 0% 0% Gov, Muni's, Parastatals Other Manufactoring Minin
Slide 22: COVID-19 impact on industries
COVID-19 impact on industries Stabilising inflows in most industries 105% 101% 101% 100% 100% 100% 100% 100% 100% 100% 98% 100% 99% 98% 96% 96% 97% 95% 95% 94% 94% 96% 96% 92% 95% 92% 95% 90% 89% 91% 88% 85% 80% 79% 80% 77% 76% 75% 74% 75% 72% 75% 71% 70% 68% 65% 60% Mar 20 Apr 20 May 20 Jun 20 Jul
Slide 23: Payment relief
Payment relief Good rehabilitation in the second half R7.5bn COVID-19 Rescheduled Book: Rehabilitation over time 100% 90% Balance as at 28 Feb 21: 80% Stabilised R1.9 billion Arrears or worse 70% R1.7 billion Not yet rehabilitated Reschedule balance (%) 60% R3.9 billion Rehabilitated or settled 50%
Slide 24: Payment relief
Payment relief Cumulative performance vs normal rescheduling performance targets 35% Behavioural incentive: 30% interest refund Driving good repayment performance Proportion of rescheduled balance in >30days • 25% and lower incidence of debt review 20% • 187 000 clients qualified 15% • R211 million
Slide 25: Prudent provisioning
Prudent provisioning Net credit impairment charge Feb 2021 Feb 2020 Change (R’m) (R’m) (%) Gross credit impairment charge 8 289 5 623 47 Bad debts recovered (929) (1 263) (26) Net credit impairment charge (including COVID-19 charge) 7 360 4 360 69 COVID-19 charge (2 945) (250) > 100 Net credit impai
Slide 26: Credit life insurance
Credit life insurance Net insurance income only down 2% despite increase in claims Feb 2021 Feb 2020 Change (R’m) (R’m) (%) Premium income received 2 840 2 414 18 Reinsurance premium paid (416) (918) (55) Net premium written 2 424 1 496 62 Claims paid (1 443) (779) 85 Claims recovered from reinsurer
Slide 27: Credit life insurance
Credit life insurance Significant increase in retrenchment claims experienced Feb 2021 Feb 2020 Change (R’m) (R’m) (%) Total value of claims paid 1 443 779 85 Retrenchment 1 007 498 >100 Death 414 253 64 Permanent and temporary disability 22 28 (21) Total number of claims paid 44 119 25 553 73 Retre
Slide 28: Granting
Granting Continued move of granting into higher gross income segments 60% 54% 50% 47% 43% 39% 40% 36% 35% 34% 33% 30% 20% 14% 11% 10% 11% 10% 9% 8% 7% 6% 0% <R7 500 R7 500 - R10 000 R10 000 - R20 000 >R20 000 FY2018 FY2019 FY2020 FY2021 28
Slide 29: Granting
Granting New Access Facility drives diversification Distribution of sales (disbursements) across credit products 100% 13% Access Facility 90% 26% 28% 28% • Launched in May 2020 80% • 159 000 clients 70% 40% • R8.6 billion in limits taken up 60% 29% • Lifestyle product for higher income 50% 40% • No
Slide 30: Business Bank
Business Bank Building the future
Slide 31: Business bank
Business bank Response to COVID-19 Primary focus was to assist our business clients Payment breaks and moratoriums • 1 017 business clients assisted on balances totaling R4.2 billion • 46 clients with a balance of R3 million in arrears at year end • Outstanding balance at year end was R3.6 billion S
Slide 32: Business bank
Business bank Integration and investment in the future Focus on people • A division of Capitec Bank since 1 December 2020 • Engagement and integration of systems, processes and culture • Appointed 134 new employees in the current year Build the bank • Development on track for digitalisation and scal
Slide 33: Future
Future Focus on people, scale, digital and data
Slide 34: Future
Future Scale and efficiencies to create more value People • Future fit skills development focused on agility and growth • The human touch remains critically important • Budgeted to appoint 436 employees in FY2022 Scale • Leverage our client base and create efficiencies • Partnerships that create mut
Slide 35: Please send any questions to InvestorRelations@capitecbank.co.za
Please send any questions to: InvestorRelations@capitecbank.co.za Capitec Bank Limited is an authorised financial services provider (FSP 46669) and registered credit provider (NCRCP13) Capitec Bank Limited Reg. No.: 1980/003695/06