Capitec Bank Holdings Limited · JSE:CPI
Capitec Bank — H1 2022 Earnings Presentation
32 slides from Capitec Bank's earnings presentation, 2021
Slide 1: Digitalisation: Enhancing the banking experience for all
Digitalisation Enhancing the banking experience for all
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: Socio-economic landscape
Socio-economic landscape Impact on our clients 3
Slide 4: Socio-economic landscape
Socio-economic landscape Swift recovery from pandemic, but long-term impact still uncertain Positive • Global commodity boom • Current account surplus widened, low inflation and interest rates • Improved collaboration between government and private sector • Resilience of South African companies and
Slide 5: Impact of July 2021 civil unrest
Socio-economic landscape Impact of July 2021 civil unrest Impact on Capitec • 79 branches and 272 cash devices destroyed • Recovery management of cash and cash devices • Damage to infrastructure amounted to approximately R300 million • Claims submitted to SASRIA Our responsibility to our employees a
Slide 6: Financial highlights
Financial highlights Capitec Group
Slide 7: Group headline earnings
Group headline earnings Strong earnings recovery exceeded pre-pandemic levels HEPS: Increased by 513% Dividend: 4,500 1 200 cents ROE: 27% 4,000 3,500 3,000 ROE: 28% ROE: 27% Headline earnings 2,500 Group (R’ million) ROE: 26% 2,000 3 987 HEPS: 1,500 2 943 Decreased by 78% 2 461 No dividend declared
Slide 8: Key performance indicators
Key performance indicators Income from operations predominantly driven by robust transactional performance Aug 21 Aug 20 Change (R’m) (R’m) (%) Net lending, investment income and insurance income 7 202 6 718 7 Net transaction income 5 150 3 870 33 Funeral plan income 366 350 5 Other income/expenses*
Slide 9: Key performance indicators
Key performance indicators Higher cost-to-income distorted by COVID-19 and civil unrest Net transaction and funeral plan income Net transaction and funeral plan income to operating expense* (%) to net income (%) 91 98 97 90 86 76 47 46 51 40 Aug-17 Aug-18 Aug-19 Aug-20 Aug-21 Aug-17 Aug-18 Aug-19 Au
Slide 10: Group overview
Group overview Drivers of earnings
Slide 11: Active Retail client base
Active Retail client base Clients using digital channels increased by 22% to 8.9 million 18 16.7 16 14.6 14 12.6 12 Retail bank client base 10.5 10 9.2 8.9 (million) 8 7.3 6.3 6 4.9 6.3 4.2 5.5 4 4.7 3.9 3.1 2 1.5 1.1 1.1 1.1 1.0 1.1 - Aug-17 Aug-18 Aug-19 Aug-20 Aug-21 Total clients Digital clients
Slide 12: Success of Retail bank's digital journey
Success of Retail bank’s digital journey Voted as South Africa’s best digital bank in 2021 (SITEisfaction®) Digital clients as at 31 August 2021: • 8.9 million active digital clients up 22% (app, USSD and internet) • Strong behavioural shift from USSD to app (up 46% to 6 million clients) • 1 million
Slide 13: Net transaction income - Retail
Net transaction income - Retail Digital solutions enabled convenient transactions during lockdown Card payments and cash volumes closer 900 to pre-pandemic levels 800 Material shift to digital due to strict lockdown regulations 700 40% 600 41% Retail transaction volumes 41% 40% 35% 500 36% 44% (mill
Slide 14: Credit life insurance roadmap
Credit life insurance roadmap Agile management of insurance risk mitigated the impact of COVID-19 20,000 Insurance premium rates increased: Reinsurance cover for New loans: May 2020 death risk renewed on 18,000 Existing book: July 2020 1 August 2020 Insurance premium rates 16,000 lowered for new loa
Slide 15: Funeral plan income
Funeral plan income Sales recover to pre-pandemic levels Funeral income up by 5% to R366 million 1.6 120% Key performance indicators: 1.4 • More than 600 000 policies sold (18% on app) 100% • Book persistency in line with expectations 1.2 80% Active funeral book • Average premium per policy on book
Slide 16: Save
Save Total deposit book increased by 16% to R127.9 billion Total market deposits over the last 18 months • August 2019: R2.0 trillion • August 2020: R2.2 trillion • July 2021: R2.4 trillion (18% growth from August 2019) Our market share of household deposits: • 9.8% as at 31 July 2021 • Increased by
Slide 17: Retail credit
Retail credit Granting Diversification Performance Economic uncertainty Provisions
Slide 18: Credit granting
Credit granting Recovery driven by proactive management of credit granting during pandemic 25 60 Main drivers • Agile risk approach to granting as restrictions eased 55 20 • Competitive pricing: Global One 50 clients on average received 16% 15 lower term loan interest rates and fees than the market
Slide 19: Credit book performance
Credit book performance Improvement in arrears and unrehabilitated reschedules to pre-COVID-19 levels 12 7.0% • Improvement in arrears and unrehabilitated reschedules 6.0% Total up-to-date that rescheduled (Not yet rehabilitated) 10 Excluding industry-wide • Positively impacted by Total stage 2 and
Slide 20: Diversified portfolio
Diversified portfolio New Access Facility grew to 32% of total credit disbursed 100% Flexible features 13% • No use, no monthly fees 90% 26% • Once-off application and initiation fee R100 to R300 (max) 28% 28% Distribution of sales (disbursements) across credit products 32% 80% Attractive facility p
Slide 21: Credit book performance
Credit book performance Improved inflows but still cash strain in certain pockets of employed survivors Inflows 30% • Economic activity shows salary inflows on the performing credit book improved by 50% across all industries 27% 25% Civil unrest • Exposure to clients at civil unrest affected < 1.3%
Slide 22: Credit book performance
Credit book performance Low book debt review roll levels experienced 0.8% • Low debt review levels (<0.5% H1 2022) 0.7% • Rolls into debt review largely attributable Clients Rolling to Debt Review as % of Total Credit Clients to increased unemployment levels in SA, 0.6% adding additional household c
Slide 23: Economic uncertainty
Economic uncertainty Household stress in the last 3 years Household Adult Dependants Sandwich Generation 60% 60% 50% 52% 50% 51% 40% 43% 40% 42% 43% 38% 39% 35% 36% 30% 30% 34% 31% 31% 27% 28% 20% 20% 10% 10% 0% 0% 2015 2016 2017 2018 2019 2020 2021 2015 2016 2017 2018 2019 2020 2021 Other Dependant
Slide 24: Retail credit provisions
Retail credit provisions Expected credit loss (ECL) coverage ratio remained prudent at 26.5% (Total provision for credit impairments/Total gross loans and advances) 30 28.0 7 000 Impairment charge 26.9 26.5 • At pre-COVID-19 levels 25 5 821 6 000 • Employment stability 21.3 20.4 20.5 5 000 Expected
Slide 25: Business bank
Business bank Building the future 25
Slide 26: Business bank
Business bank Headline earnings for the 6-month period was R126 million Total active clients increased by 16% to 104 777 • +- 1 300 new business clients per month Key financial performance indicators • Robust transactional recovery as a result of eased lockdown restrictions • Excellent foreign excha
Slide 27: Client strategy
Client strategy Digital first Purpose lending Live Better Scale 27
Slide 28: Digital GlobalOne experience
Digital GlobalOne experience Flywheel effect with new digital solutions that grow client value Shop online (card or QR payments) Scan to pay from the app (Masterpass, SnapScan or Zapper) Immediate RTC payments from the app (reduce the need for cash) Digital Payments Open a new account on the app in
Slide 29: Purpose lending
Purpose lending Credit partnerships to meet key client needs Capitec Home Loans: • In partnership with SA Home Loans launched November 2020 • 566 new loans registered and 525 approved with registration in progress • Increased take-up of credit card and access facility experienced Unsecured credit av
Slide 30: Live Better
Live Better Behavioural banking with automated savings benefit Live Better savings account offers 3.5% interest • Introduced in July 2021 • Automated savings tool through Interest Sweep and Round-up • Active clients: 2.2 million • Savings to date: R55.6 million New partners offer benefits when clien
Slide 31: Scale
Scale Personal service scaled through technology People • Human connection remains a competitive advantage • Cross-skilled and remote service model through technology • Continued recruitment drive and development of scarce skills Digital and data • Cloud services enable machine learning models and A
Slide 32: Thank you
Thank you 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 32
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