Capitec Bank Holdings Limited · JSE:CPI
Capitec Bank — FY2022 Earnings Presentation
37 slides from Capitec Bank's earnings presentation, February 2022
Slide 1: Financial results
Financial results February 2022
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: Client-centricity drives strong growth
Agility Well-managed response to COVID-19 Client-centricity and civil unrest drives strong growth Highlights over the past 2 years 4.3 million 16% CAGR new clients Since Feb 2020 Trust in our brand across all segments Best digital Credit Focus on bank performance people 3.4 million new digital Prude
Slide 4: Financial overview
Financial overview Capitec Group
Slide 5: Substantial growth driven by client-centricity
Substantial growth driven by client-centricity Headline earnings increased by 84% to R8 440 million 5-year CAGR: +17% 10 000 Final ordinary dividend: 2 440 cents (up 53%) ROE: 9 000 Special ordinary dividend: 26% 8 000 1 500 cents Headline earnings (R’ million) ROE: 7 000 28% ROE: 6 000 28% ROE: ROE
Slide 6: Key financial performance indicators
Key financial performance indicators Increased demand for credit, prudent provisioning and capitalised for future growth opportunities Retail loan sales and disbursements (R’ billion) Net transaction, net foreign exchange and funeral plan income to operating expenses 39 44 91 100 92 30 31 81 87 29 F
Slide 7: Income statement
Income statement Strong investment income, recovery in credit life insurance and growth in net transaction income Feb 22 Feb 21 Change Change (Rm) (Rm) (%) (Rm) Net lending, investment and insurance income 15 107 13 422 13 1 685 Net transaction income 10 515 8 708 21 1 807 Funeral income 906 650 39
Slide 8: Change in composition of loan book
Change in composition of loan book Interest income on loans declined by 1% to R13 247 million – lower interest rates Total gross loans Total gross loans and advances and advances 90 000 R75 026 million R84 108 million 90 000 80 000 80 000 14 093 Interest income on loans including monthly fees Group
Slide 9: Investment portfolio and total deposits
Higher investment portfolio driven by continued growth in deposits Investment income increased 34% to R4 207 million and interest expense decreased 3% to R4 838 million 100 Government bonds: Total deposits: - Feb 22: R12.0 billion (up>100%) - Feb 22: R135 billion (up 11%) 90 80 Investment portfolio
Slide 10: Credit life performs well with agile risk management
Credit life performs well with agile risk management Net credit life insurance income increased 60% to R1 540 million 7 000 6 609 Pricing • Increased from May 20 6 000 (R4.50 per R1 000 non-government and R4.00 per R1 000 government ) 5 000 • Reduced from Aug 21 (R4.00 per R1 000 non-government and
Slide 11: Funeral plan growth due to affordability and simplicity
Funeral plan growth due to affordability and simplicity Funeral plan income increased 39% to R906 million 450 406 Active book 400 • 1.7 million policies (up 42%) 350 332 • Average premium per policy – R243 (up 7%) • Average collection rate – 87% (Feb 21: 85%) 300 Premium income and claims paid 266 P
Slide 12: Net transaction income
Transaction income fueled by client acquisition and new products Net transaction income increased 21% to R10 515 million 10 000 CAGR = 20% Key performance indicators: • Robust client growth 8 000 • Digital adoption and change in behaviour • Lean pricing Net transaction income 6 000 • Net transaction
Slide 13: Lower charge due to improvement in book quality post COVID-19
Lower charge due to improvement in book quality post COVID-19 Net credit impairment charge decreased 55% to R3 508 million Feb 22 Feb 21 Change Change (Rm) (Rm) (%) (Rm) Bad debts written off 6 186 6 379 (3) (193) Movement in provision for expected credit impairment charge (1 860) 2 378 (4 238) Gros
Slide 14: Credit impairment charge
Expected credit loss (ECL) ratio reflects prudent provisioning (1) The ECL ratio exceed pre-pandemic levels despite lower credit impairment charge 9 000 30 26.9 8 000 23.8 23.6 25 7 000 Expected credit loss ratio (%) 20.4 20.5 20.9 6 000 20 Credit impairment charge 18.1 5 000 (R’ million) 14.1 15 4
Slide 15: Gross loans and advances grow in higher income segments
Gross loans and advances grow in higher income segments R15 000 plus income segments growth driven by credit strategy and attractive product offering 60 52 50 44 19 40 38 % of retail gross loans and advances 12 33 29 8 30 6 5 9 11 8 7 20 6 22 23 22 10 20 18 - Feb 18 Feb 19 Feb 20 Feb 21 Feb 22 R15 0
Slide 16: Quality of gross loans and advances
Quality of gross loans and advances (1) Improved quality due to better client cash stress levels 30 28 Inflows - Improved salary inflows on the performing credit book leading to stable cash stress 25 Agility 23 - 431 quick changes made throughout the year to manage industry and employment risk - 6 3
Slide 17: Retail loan sales and disbursements to new clients
Retail loan sales and disbursements to new clients Access facility driving new credit client growth 700 000 Growth - Ceased 1 – 6 months loans resulted in lower client numbers when compared to financial year ended Feb 20 600 000 - New credit clients earning >R25k increased by 15% from Feb 20 Number
Slide 18: Access facility
Access facility Predominant driver of quality in new disbursements 100% 7 Access facility features 90% 17 No use, no monthly fees Net credit loan sales and disbursements distribution • 30 80% 25 • Choose term of repayment at every drawdown 70% Attractive facility offering 43 • Priced from 13.15% 60%
Slide 19: Operating expenses well contained
Operating expenses well contained Operating expenses: R12 555 million (up 33%) and cost-to-income: 47% (2021: 41%) 50 47% Increase in salaries 45 41% 41% • Headcount and annual salary increases 39% 40 Contribution to total cost-to-income ratio 36% 19.4 • Digitalisation strategy – drive for IT skills
Slide 20: The bank for everyone
The bank for everyone Client growth Full banking solution Accessibility Behaviour shift Live Better rewards
Slide 21: Strong retail client growth continues
Strong retail client growth continues Digital banking clients increased by 17% to 10.1 million 20 14 18.0 18 12 9.4 million new 15.7 16 clients in 5 years Number of clients per product (million) 10.1 13.8 10 Total active clients (million) 14 8.6 Clients with inflows 12 11.4 7.0 8 over R15 000pm up 2
Slide 22: A full banking solution
A full banking solution Everything you need from a bank • Transaction account • 4 free savings plans • Credit life insurance • Up to R500 000 • Earn interest on daily balances (flexible/fixed) • Funeral plan • Fixed-term credit • Debit and credit card • Tax-free savings • Credit card from prime • Li
Slide 23: Full banking solution
Full banking solution Best value for money Fees Feb 18 Feb 22 Monthly account fee R 5.80 R 5.00 Monthly credit card fee R 35.00 R 40.00 External transfer (EFT) R 1.60 R 1.00 Debit order R 3.73 R 3.50 Immediate payment (RTC) R 10.00 R 7.50 ATM withdrawal (own) R 6.56 R 7.50 ATM withdrawal (other bank
Slide 24: Accessibility
Accessibility Meeting clients’ needs through physical and digital channels 853 branches with 4.5 million visits 7.9 million calls per month and 34 per month million minutes of client service for Self-service transactions increased by the year 21% to 21 million Physical Call Capitec Direct offers cre
Slide 25: Behaviour shift from cash to digital and card
Behaviour shift from cash to digital and card Card payments increase by 45% to 1.4 billion 3 500 3 000 Total transaction volumes increased by 26% 1 354 2 500 Transaction volumes: cash, card and digital 2 000 1 092 84% 795 (million) 1 500 81% 581 79% 1 409 480 73% 1 000 975 72% 940 613 484 500 444 46
Slide 26: Digital payments on app more convenient
Digital payments on app more convenient 3 billion system transactions per month show scalability New Pay Me personal QR code for all clients on our app and WhatsApp Scan to Pay interoperable with all major QR codes EFT and Pay to Cell volume increased 46% to 11.3 million for the 714 million prepaid
Slide 27: Investing in people
Investing in people Developing employees Social impact
Slide 28: Developing employees
Developing employees Building a leading employer brand to attract and develop top talent Talent Culture and acquisition and leadership development Autonomy and Hybrid working ownership 28
Slide 29: Social impact
Social impact Focus on sustainable education and development in the communities where we operate Financial Capitec education Foundation through digital, focus on maths at scalable learning high-school level solutions Support communities Enterprise with employee development volunteerism and through I
Slide 30: Business bank
Business bank Improved profitability and client growth
Slide 31: Business bank
Business bank Significant improvement in profitability underpinned by client and volume growth Profitability • Headline earnings of R174.5 million (2021: R1.5 million loss) • Income from operations increased by 19% to R1 581 million Total active business clients up 10% to 125 270 • Business bank cli
Slide 32: Future
Future Key trends and insights
Slide 33: Key trends and insights
Key trends and insights Gearing for growth Work • War on talent • People expect purpose and flexibility (hybrid work) • Side-hustles and gig economy become the norm (multiple income and emerging market) Connections • Everyone and everything is connected (IOT, social media and the metaverse) • Omnich
Slide 34: The year ahead
The year ahead New solutions that meet clients’ needs
Slide 35: New solutions
New solutions Live Better targets R1 billion in savings payout and 8 million clients during FY23 Get 0.5% back on all debit card and 1.5% back on credit card payments • Paid into Live Better savings account that earns higher interest • Require 1 product, 3 recurring payments and 5 app payments per m
Slide 36: New solutions
New solutions Strong focus on innovation and challenger mindset Data • Cloud services • AI and machine learning • Client engagement Credit • Lending based on non-salary and multiple income streams • Youth market • Reward good credit behaviour Digital commerce • Innovative payments solutions • Capite
Slide 37: Thank you
Thank you Please send any questions to InvestorRelations@capitecbank.co.za