Capitec Bank Holdings Limited · JSE:CPI
Capitec Bank — H1 2021 Earnings Presentation
37 slides from Capitec Bank's earnings presentation, October 2020
Slide 1: Interim Results Presentation
Interim Results Presentation ~ © n August 2020 Return on equity e CAPITEC BANK HOLDINGS LIMITED
Slide 2: What our employees say
©) What our employees say
Slide 3: Capitec overview
Capitec overview Reflecting on the past 6 months Income from operations up 10% from August 2019 : Continued growth in client numbers indicate search for better value Client income impacted by lockdown Recovery of key industries as lockdown is relaxed Accelerated digital adoption but still strong dep
Slide 4: Key Indicators
Key Indicators Capitec Bank Group
Slide 5: Headline earnings
Headline earnings (R' million) Group headline earnings down 78% COVID-19 impact on earnings is acute 3,000 2,500 2,000 1,500 1,000 500 Return on equity (96) 26 26 2,000 | : Aug 16 Aug 17 Note: In the comparative periods the group comprised only retail banking. Aug 18 Aug 19 Regulation 43 quarterly d
Slide 6: Key ratios for Capitec Group
Key ratios for Capitec Group Non-lending income covering 97% of operating expenses Net transaction fee and funeral income to operating Net transaction fee and funeral income to net income expenses (excl. COVID-19 impairment charge) 97 Strong funeral performance & muted operating aa 47 ; i ’ Aug 19 F
Slide 7: Capitec group income statement
Capitec group income statement Solid growth before COVID-19 impairment (R’ million) Group * Retail Group Retail Group Aug 2019 Aug 2020 Aug 2020 Change (%) Change (%) Net lending, investment and insurance income 6 306 6 401 6718 2 7 Net transaction fee income 3529 3870 3 10 Net foreign exchange - 47
Slide 8: Retail Bank
Retail Bank Client growth Transactions Funeral plan Savings
Slide 9: Client growth continues
Client growth continues 14.6 million active clients (up 16%) inflows, remote banking, card or pending in-force policies purchases and debit orders + 46% of active clients between 16 and 35 years old = high potential Quality bank clients (up 10%) Insure clients (up 53%) 2 * 3.8 million banking client
Slide 10: Client income affected by lockdown
Client income affected by lockdown Slow recovery since initial shock in April * Lower income segment more severely affected * Reduction in overtime and bonuses * Casual and contract work severely impacted * SMEs hit the hardest @ cerpitec io
Slide 11: Accelerated digital adoption
Accelerated digital adoption Transaction volumes increased by 15% to 2.4 billion Digital * Card purchases YTD volume = 556.2 million (up 52%) YTD volume = 419.3 million (down 6%) 120 100 02 100 108 91 90 85 81 Ss © eee eel eee eee errr 50 30 2s Mar Apr May Jun Jul Aug Mar Apr May Jun Jul Aug Cash ?
Slide 12: Recovery in key industries
Recovery in key industries Client transaction values compared to March Restaurants and takeaways 96% 5% Mar20 Apr20. May20 © Jun20.Jul20. Aug 20 Transport (Fuel & Public transport) \ 41% Mar20 Apr20. May20. Jun20.- Jul20. Aug 20 Telecommunication 109% 102% Mar 20 Apr20. May20 Jun20. Jul20. Aug 20 He
Slide 13: SA's largest digital bank
SA's largest digital bank Digital banking in August 2020 Digital clients * Banking app — 4.0 million active clients (up 38%) + USSD users — 5.2 million active clients (up 11%) * Total digital banking clients — 7.3 million (up 24%) Send cash (launched in May 2019) * 2.2 million clients (up >100%) * T
Slide 14: Funding
Funding (R billion) Growing saving deposits Saving deposits of R97.6 billion (up 20%) * From 2.25% to 7.5% interest * R2.2 billion earned by clients 75 —Retail call —Retail fixed * Retail deposit market share is 70 8.7% in Jul 2020 65 62.9 62.0 623 60.3 60.4 60 55.6 55 50 45 40 35.3 35.0 35 33.2 33.
Slide 15: Active policies
Active policies 000) Funeral plan remains client priority Growth in average premium per policy 1,000 979 979 933 230 800 210 641 E 600 589 2 s 1900 @ = g 4 400 396 170 200 150 130 Mar 20 ‘Apr 20 May 20 Jun 20 Jul 20 Aug 20 mm1H 2020 Policies mm 1H 2021 Policies —1H 2020 Ave. premium —1H 2021 Ave. pr
Slide 16: Retail credit
Retail credit COVID-19 response Client relief Credit life insurance Prudent provisioning New access facility
Slide 17: COVID-19 Response
COVID-19 Response Prudent credit risk management Initial Shock After Shock Recovery Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-21 Sep-20 Oct-20 Nov-20 e oe o 2 a © 2 e Credit Risk Management > Agile, Intensive, Continuous Granting (Industry, Employer, Income band) Branch Capacity Client Solutions Remote
Slide 18: Additional probability of default
Additional probability of default COVID-19 Response Key industry performance and additional risk 50% 45% 15% Gov, MUNIs, Parastatals Other Manufacturing mmBalance at Risk April Forecast Mining August Forecast Retail & Services 48% 60% 50% 38% 40% 30% 20% 10% 2% mas 0% Travel & Leisure @ capitec 18 %
Slide 19: COVID-19 Response
COVID-19 Response Impact on client inflows per industry 105% 100% 95% 90% 85% 80% 75% 70% 65% 60% 100% 100! Mar-20 —_—— =< Average 9 101% 101% 101% 100% 98% 97% 96% 95% 95% 95% 95% 94% Apr-20 —Gov, MUNIs, Parastatals —Other May-20 Manufacturing Mining Jun-20 —Retail & Services 68% Jul-20 —Travel & L
Slide 20: COVID-19 Response
COVID-19 Response Granting growth in higher income bands 60% 50% = Aug 17 mAug 18 mAug 19 40% 34% 16% —_ 12% UJ [| : ll LJ [| a <R7,500 R7,500 - R10,000 R10,000 - R20,000 m Aug 20 UN 7 | | >R20,000 @ capPitec 20
Slide 21: Client relief
Client relief Total COVID-19 relief of R7.5 billion * R5.5 billion — 3-month COVID-19 payment break (directly affected) * R15 billion - Variable COVID-19 rescheduling (indirectly affected ) * RO.5 billion — COVID-19 other rescheduling Instalment schedule: Month Payment break Variable schedule 1 20%
Slide 22: Client relief
Client relief Behavioural incentive Offered interest relief to clients that were rescheduled based on repayment behaviour Interest accumulated during the first 3 months of the rescheduling period will be refunded up to 100% to qualifying, good paying clients in the form of a loan balance reduction 5
Slide 23: Client relief
Client relief Relief payment break success Payment break success Variable instalment rescheduling success 100% 100% 95% 93% 98% 90% at 96% 85% 7 85% - 83% 94% 0 80% 92% 92% 75% 90% Jun-20 Jul-20 Aug-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 —First Payment Success — -Second Payment Success (one month del
Slide 24: Credit life insurance
Credit life insurance Self-insured for retrenchment risk from 1 May 2020 Retrenchment claims comparison 1H 2020 vs 1H 2021: R’ million Mar Apr May Jun Jul Aug Total Total claims paid 1H 2020 31 33 45 45 57 37 248 Total claims paid 1H 2021 36 26 49 113 81 76 381 - Paid by reinsurers + 36 26 43 45 21
Slide 25: Prudent provisioning
Prudent provisioning Additional COVID-19 provisions of R4.2 billion 5% growth in book R63.4 bn R60.3 bn Key considerations Industry 39% growth in provisions ° Essential/Non-essential services e178 bn Employer strength and size R128 bn * Client net income bands LI . Effects on joint household incomes
Slide 26: New access facility
New access facility Flexible revolving credit Lifetime facility launched on 4 May 2020 ° Average rate 17.2% * Product range: 3 - 60 months + No monthly fees when 0 credit balance * 48 212 clients with credit limits amounting to R2.5 billion taken up @ capitec 26
Slide 27: Business Banking
Business Banking
Slide 28: Business bank performance overview
Business bank performance overview R47 million loss for 6-months ended 31 Aug 2020 Results driven by the following factors (compared to Aug 2019): * Significant increase in credit impairment charge (up > 100%) + Lower net lending and investment income (down 7%) * Higher operating expenses (up 37%) T
Slide 29: Credit management
Credit management Relief to credit clients and prudent approach COVID-19 Loan Guarantee Scheme: * To date: R500 million (including capitalised interest) advanced + In total 181 clients assisted COVID-19 Relief: * 2899 accounts with a balance of R4.2 billion (before taking security into consideration
Slide 30: Our people and communities
Slide 31: Our people
Our people Create clarity and energy * New group structure successfully implemented * Flexible remote working * Virtual learning and leadership development — 1 650 employees * Live Better Talks to inspire * Over 320 employees redeployed through talent development program + Employee engagement survey
Slide 32: Social responsibility
Social responsibility Supporting clients and community © Oo trcvernacazeny x + Relief efforts © > © (i wbranentai zoe # O*O: + Employee volunteer program Y eo) + Mask drive and donations to community projects live better academy G and feeding schemes Learn how to take control * Gift of the Givers an
Slide 33: Future focus
Future focus Key trends Business bank Culture
Slide 34: Future focus: Key consumer trends
Future focus Key consumer trends . Rapid adoption of e-commerce and cashless payments . Digital learning becomes the norm . New focus on health and related products . Shift in travel and tourism ° Invest in home improvement . Work from home and gig economy . Family and community is more important .
Slide 35: Future focus: Business bank
Future focus vente Business bank Section 54 completed by November 2020 * Building a digital and scalable business bank of the future * Deliver on Capitec fundamentals * Integration and launch under Capitec brand in next 24 months
Slide 36: Future focus: The core of our culture
Future focus The core of our culture Understand our client's needs * Digital banking and e-commerce * Self-service credit * End to end client service experience Empower and develop our people * Flexibility and multi-skilling * New way of work * Investment in innovation and data science Delivery * Ag
Slide 37: Thank you
thank you any questions?
Capitec Bank Holdings — H1 2021 Earnings Presentation on 6ix