Capitec Bank Holdings Limited · JSE:CPI
Capitec Bank — H1 2015 Earnings Presentation
40 slides from Capitec Bank's earnings presentation, September 2014
Slide 1: Interim Results 2014
9/30/2014 Interim Results 2014 1 1
Slide 2: Key Financials
Key Financials oS CAPITEC 9/30/2014
Slide 3: Headline earnings per share (Cents)
9/30/2014 Key Financials Headline earnings per share (Cents) +21% 3 3
Slide 4: Headline earnings (R' millions)
9/30/2014 Key Financials Headline earnings (R’ millions) +21% 4 4
Slide 5: Return on equity (%)
9/30/2014 Key Financials Return on equity (%) 5 5
Slide 6: Total Assets (R'millions)
9/30/2014 Key Financials Total Assets (R’millions) 6 6
Slide 7: Cost to income ratio (%)
9/30/2014 Key Financials Cost to income ratio (%) 7 7
Slide 8: Net transaction fee income to expenses (%)
9/30/2014 Key Financials Net transaction fee income to expenses (%) 8 8
Slide 9: Net Transaction Income to net loan revenue (%)
9/30/2014 Key Financials Net Transaction Income to net loan revenue (%) 9 9
Slide 10: Business Drivers
9/30/2014 Business Drivers 10 10
Slide 11: Number of active clients ('000)
9/30/2014 Business Drivers - Clients Number of active clients (‘000) 11 11
Slide 12: Number of primary bank clients ('000)
9/30/2014 Business Drivers - Clients Number of primary bank clients (‘000) 12 12
Slide 13: Net transaction fee income (R'millions)
9/30/2014 Business drivers- transacting Net transaction fee income (R’millions) 13 13
Slide 14: Value of new loans advanced (R'millions)
9/30/2014 Business Drivers - Credit Value of new loans advanced (R’millions) 14 14
Slide 15: Loan book exposure – by granting model
9/30/2014 Business Drivers - Credit Loan book exposure – by granting model 15 15
Slide 16: Loan sales – By product
9/30/2014 Business Drivers - Credit Loan sales – By product 16 16
Slide 17: Cash flow pressure – Loan clients with >40% cash available
9/30/2014 Business Drivers - Credit Cash flow pressure – Loan clients with >40% cash available (Portfolio) Sector Aug-13 Nov-13 Feb-14 May-14 Aug-14 Government 60.3% 60.2% 58.8% 71.5% 66.5% Non-Government 74.3% 77.0% 69.1% 77.2% 78.5% 17 17
Slide 18: Cash flow stress distribution – Loan clients with a salary drop
9/30/2014 Business Drivers - Credit Cash flow stress distribution – Loan clients with a salary drop in Aug 13 – Aug 14 (Same clients) Level of Cash Stress Aug-13 Aug-14 A. More than 40% cash available 68.9% 66.4% B. Between 30% & 40% cash available 11.4% 12.8% C. Between 20% & 29% cash available 9.0
Slide 19: Loan book scoring trends - Compuscore
9/30/2014 Business Drivers - Credit Loan book scoring trends - Compuscore 19 19
Slide 20: Credit approval
9/30/2014 Business Drivers - Credit Credit approval % of applications Aug-13 Aug-14 Total declined applications 59 57 Applications accepted – taken up 28 30 Applications accepted – not taken up 13 13 Total Applications 100 100 20 20
Slide 21: Arrears to gross advances (%)
9/30/2014 Business Drivers - Credit Arrears to gross advances (%) 21 21
Slide 22: Arrears and Impairment Provision of Gross loans and advances
9/30/2014 Business Drivers - Credit Arrears and Impairment Provision of Gross loans and advances Aug Aug Aug- 2012 2013 2014 Gross Loans & Advances R’m 24 697 32 644 35 086 Loans past due (arrears) R’m 1 075 1 799 1 935 Arrears to gross loans & advances % 4.4 5.5 5.5 Provision for doubtful debts R’m
Slide 23: Conservative Provisioning
9/30/2014 Business Drivers Conservative Provisioning August 2013 (%) August 2014 (%) Credit Status of Book Provided of Book Provided Up to date 94.5 7.0 94.5 7.8 1 payment arrears 3.2 40.9 3.1 45.6 2 payments arrears 1.4 68.8 1.4 74.0 3 payments arrears 0.9 84.8 1.0 87.0 TOTAL 100 9.8 100 10.7 23 23
Slide 24: Value of retail savings deposits (R'million)
9/30/2014 Business Drivers - Liquidity Value of retail savings deposits (R’million) 24 24
Slide 25: Deposits (R'millions)
9/30/2014 Business Drivers - Liquidity Deposits (R’millions) 25 25
Slide 26: Distribution changes – August 2014 vs August 2013
9/30/2014 Business Drivers - Distribution Changes – For 6 months - August 2014 vs August 2013 Change Change Total Aug-13 Aug-14 Aug-14 More branches 29 18 647 More ATMs including own partnership ATMs 290 290 3 208 More staff 582 421 9 491 Cell phone clients (‘000) 461 485 2 922 Internet clients (‘00
Slide 27: Growing the business
9/30/2014 Growing the business 27 27
Slide 28: What drives the business
9/30/2014 What drives the business • Banking clients / Transacting activity • Growing substantially • Credit • Cautious, doing well, ongoing improvements implemented • Savings Deposits • Short term – confidence, recovering 28 28
Slide 29: Banking / Transacting – Quantity and Quality
9/30/2014 Banking / Transacting • Quantity • Ongoing growth of 100 000 clients p/m • Growth - 40 000 bank transacting clients p/m • Quality • Significant growth in higher income, younger profiles • More active clients doing non cash transacting • Most growth – Gauteng, urban areas 29 29
Slide 30: Banking / Transacting – Product take up
9/30/2014 Banking / Transacting • Product take up • New App - 90 000 new clients in 6 weeks • SAHL – steady, good cross sell opportunity • Internet growth good - new functionality • Distribution platform • Branch placed in higher income, urban malls • ATM distribution platform enhanced • Focus - Emp
Slide 31: Banking / Transacting – Efficiency
9/30/2014 Banking / Transacting • Efficiency • Queue system drives capacity planning • Measurement of ‘time to’ and ‘time of’ service drives skill evaluation / process optimisation • New sales flow enables better delivery of options and improved sales impact • IT / Project capacity enhanced 31 31
Slide 32: Credit – unsecured segment - Q1
9/30/2014 Credit – unsecured segment - Q1 • Substantial market, here to stay • Declining: 2013 – R23b, 2014 – R19b (Q4 2012 – R30b; Q4 2013 – R21b) • Unsecured as % of : • Mortgages - 61% • Secured - 53% • Facilities - 116% • Mortgages granted – 93% > R350 000 • Move to higher value loans: 82% > R15
Slide 33: Credit – unsecured segment - Q1 continued
9/30/2014 Credit – unsecured segment - Q1 continued • Still stressed: • Book reported current 74% to 70% Y.O.Y. • Total Accounts - reduced 364 000 Y.O.Y. 33 33
Slide 34: Credit – unsecured segment
9/30/2014 Credit – unsecured segment • Regulatory guidelines & enforcement needed • Tainted sector – requires cleaning up • Credit life • Higher net worth clients entering segment • Growth potential at lower prices 34 34
Slide 35: Credit – picking the quality
9/30/2014 Credit – picking the quality • Ongoing credit model improvement • New regression model • Short term vs long term • Debt to income criteria improved • Employer model improved • Stricter affordability • Revised collections structure and management 35 35
Slide 36: Credit – picking the quality (continued)
9/30/2014 Credit – picking the quality (continued) • Improved intelligence on clients / employers • Conservative provisioning • ABIL – also an opportunity / caution • Singular management focus 36 36
Slide 37: Savings / Deposits
9/30/2014 Savings / Deposits • Growing retail deposits R3b to R26.6b • Earn interest from first rand – 4.4% • Remain well capitalised • Moody’s was negative • Awkward timing, awkward to respond • Received remarkable support from • Reserve bank • Analysts / Investors • Media commentators • Thank you
Slide 38: People
9/30/2014 People • Flat structure • Ownership culture • Team driven • Quick decision making • Focused and involved 38 38
Slide 39: General
9/30/2014 General • Trust – remains the ‘heart’ of banking • Minimal retail effect of the negative publicity • Our brand philosophy has set us apart • Simplicity, sincere, straightforward • Ambitious but conservative 39 39
Slide 40: Thank you
a CAPITEC BANK rf = Anes —— 7 = . hello — Thank you 40 9/30/2014 40
Capitec Bank Holdings — H1 2015 Earnings Presentation on 6ix