Capitec Bank Holdings Limited · JSE:CPI
Capitec Bank — FY2018 Earnings Presentation
53 slides from Capitec Bank's earnings presentation, 2018
Slide 1: Results presentation 2018
Results presentation 2018
Slide 2: We enable clients to improve their financial lives
“We enable clients to improve their financial lives through an experience that is consistently simple, affordable, easy to access and personalised”
Slide 3: Contents
Contents • Key indicators • Operating environment • Credit • Banking • Save • People • Future © Capitec Bank Limited 3
Slide 4: Key indicators
Key indicators aS
Slide 5: Key indicators: Headline earnings
Key indicators Headline earnings Earnings UP 18% to R4.461 billion © Capitec Bank Limited 5
Slide 6: Key indicators: Cost-to-income
Key indicators Cost-to-income (%) © Capitec Bank Limited 6
Slide 7: Key indicators: Net transaction fee income to net income
Key indicators Net transaction fee income to net income (%) © Capitec Bank Limited 7
Slide 8: Operating environment
Operating environment © Capitec Bank Limited 8
Slide 9: Improving economy and political environment
Operating environment Improving economy and political environment 2016/2017: Economy and political instability 2017/2018: Economy stable Political environment volatile 2018+: Economy and political stability • Protracted recovery? • Land distribution? © Capitec Bank Limited 9
Slide 10: Capitec retrenchment letters received
Operating environment Capitec retrenchments letters received Mining retrenchments © Capitec Bank Limited 10
Slide 11: Debt review
Operating environment Debt review © Capitec Bank Limited 11
Slide 12: Loan book clients' cash availability
Operating environment Loan book clients’ cash availability Total book* Feb-17 (%) Aug -17 (%) Feb-18 (%) More than 40% cash available 74 80 75 Between 39% and 21% cash available 14 10 14 Cash stress less than 20% cash available 7 6 8 No inflow 5 4 3 40% cash available clients per salary band Feb-17
Slide 13: Credit
Credit 289 521 Capitec credit card clients - book of R2bn
Slide 14: Total credit market
Credit Total credit market (Loans advanced for 12 months to Sep’17) Market (R‘million) Credit type 2015 2016 2017 Secured credit 154 705 149 458 162 418 Mortgage 143 702 145 202 145 981 Unsecured and short term 87 421 98 352 98 045 Credit facility 69 121 52 902 61 705 Developmental 6 473 12 398 15 4
Slide 15: Unsecured and short term credit market by income group
Credit Unsecured and short term credit market (granted by income group for 12 months to Sep’17) (R‘million) 2015 2016 2017 Gross income Market Market Market R0 –R5 500 11 391 12 927 9 245 R5 501 – R10 000 16 831 17 087 14 792 R10 001 – R15 000 17 143 18 061 17 381 R15 000 plus 42 056 50 277 56 627 T
Slide 16: Credit granting strategy
Credit Credit granting strategy • Stricter variable income recognition • Stricter living expenses calculation • Stricter frequent maximum borrower model • Stricter granting criteria • Focus on higher income market and longer terms • Reduce pricing © Capitec Bank Limited 16
Slide 17: Stricter variable income recognition
Credit Stricter variable income recognition NCA 100% Note: Capitec data © Capitec Bank Limited 17
Slide 18: Stricter living expenses calculation
Credit Stricter living expenses calculation © Capitec Bank Limited 18 Note: Capitec data
Slide 19: Stricter frequent maximum borrower model
Credit Stricter frequent maximum borrower model © Capitec Bank Limited 19 Note: Capitec data
Slide 20: Stricter granting criteria
Credit Stricter granting criteria Feb ‘17 Feb ‘18 Taken up: 29% Taken up: 22% © Capitec Bank Limited 20
Slide 21: Focus on higher income market
Credit Focus on higher income market (gross income) © Capitec Bank Limited 21
Slide 22: Move to longer term
Credit Move to longer term (loans advanced by term % of total) R ’million © Capitec Bank Limited 22
Slide 23: Higher income (61-month term loans)
Credit Higher income (61 - 84 month term loans) © Capitec Bank Limited 23
Slide 24: Advanced internal risk assessment
Credit Advanced internal risk assessment (previous 6 months) Repayment history is only one factor in our multifaceted credit risk assessment model. Clients are approved based on the following risk drivers: • bank behaviour • utilisation of credit limits • employment/income stability . © Capitec Bank
Slide 25: High quality clients pay less on shorter terms
Credit High quality clients pay less on shorter terms © Capitec Bank Limited 25
Slide 26: High quality clients pay less on shorter terms
Credit High quality clients pay less on shorter terms Qualified for > 48 months or more • 33% of clients take up shorter terms • 45% of clients take up lower value • 31% of all loans granted pay interest rate below 20.5% © Capitec Bank Limited 26
Slide 27: Consistent internal consolidations
Credit Consistent internal consolidations (as a percentage of gross advanced) Avg. number of loans per client: 1.4 © Capitec Bank Limited 27
Slide 28: Credit card
Credit Credit card • Credit card client mix: 5% new banking clients, 22% new credit clients • Biggest portion of client base is higher income • 1.9% market share of credit card balances • 27% share of new credit cards granted • Performing better than business case • Model update on more internal exp
Slide 29: Performing loan look
Credit Performing loan look 2017 2018 Gross loans and advances R‘m 45 135 47 642 Arrears past due (not up-to-date with contractual obligations) R‘m 2 855 2 700 Arrears to gross loans and advances % 6.3 5.7 Up-to-date that rescheduled from arrears (not rehabilitated*) R’m 1 583 1 277 Arrears and up-t
Slide 30: Prudent provisioning
Credit Prudent provisioning 2017 2018 Provision for doubtful debts R‘m 5 930 5 828 Provision for doubtful debts to gross loans & advances % 13.1 12.2 Provision for doubtful debts to arrears % 208 216 Provision for doubtful debts to arrears and rescheduled % 134 147 loans from arrears not rehabilitat
Slide 31: Prudent provisioning (%)
Credit Prudent provisioning (%) 2017 2018 Up-to-date 7.7 7.8 Rescheduled form up-to-date (not rehabilitated) 15.3 17.4 Rescheduled form arrears (not rehabilitated) 51.9 50.9 Arrears 67.2 65.0 © Capitec Bank Limited 31
Slide 32: Banking
Banking 109 million electronic transactions done in Dec’17 Clients saved R65 million on international card purchases
Slide 33: Banking growth priorities
Banking Growth • Continued growth in higher income clients • Optimise client value to banking and product usage • Grow transaction volume and self-service banking © Capitec Bank Limited 33
Slide 34: Growing total clients
Banking Growing total clients with 15% (9.9 million) Higher income (R15,000 plus) up 28% 9.9 8.6 7.3 Million 6.3 5.4 76% of credit clients bank with Capitec Note: If client is included in one of the categories it will be excluded in the others,. © Capitec Bank Limited 34
Slide 35: Growing banking client market share
Banking Growing banking client market share (Dec’17) Feb’18: 4 517 million (28% of market) Source: Labour force 2017 Q4, 2016 Q4, 2015 Q4, 2014 Q4, 2013 Q4 , Capitec internal data © Capitec Bank Limited 35
Slide 36: Distribution focused on service experience
Banking Distribution focused on service experience Change since Total Feb 2017 Feb 2018 Branches Total 30 826 New look 159 593 Current (129) 233 ATMs Total 621 4 645 Regular 40 1 168 Dual note recyclers 202 727 Capitec branded partnership 335 1 825 Non-branded partnership 44 925 © Capitec Bank Limit
Slide 37: Growing transaction volume (focus on self-service)
Banking Growing transaction volume (focus on self-service) Total transaction growth: 27% 37% Growth 19% Growth © Capitec Bank Limited 37
Slide 38: Growing transaction volume (digital solutions)
Banking Growing transaction volume (digital solutions) Debit orders Card payments • 118 million debit orders • 484 million transactions • 20% growth in transaction volumes • 34% growth in transaction volumes (YoY) (YoY) USSD Banking app • 3.7 million active clients • 1.5 million active clients • 361
Slide 39: Transaction fees earned up 31%
Banking Transaction fees earned up 31% 2022 Target: 100% © Capitec Bank Limited 39
Slide 40: Save
Save Clients earned over R3.4bn in interest – up by 29% Save “Clients earned over R3.4bn in interest – up with 29%”
Slide 41: Help clients manage their money
Save Help clients manage their money • R58 bn retail deposits • Market share 6.5% (Jan‘18) • Well-priced retail deposit growth – fixed and call • 28% growth in fixed term savings • Brand acceptance and trust due to support of clients • Consistent, conservative approach to liquidity • R265 million gr
Slide 42: Deposits
Save Deposits (R’millions) © Capitec Bank Limited 42
Slide 43: People
People 13 333 employees, 85% younger than 35
Slide 44: Client service
People Client service • Recruit for potential and cultural fit, train for skill • 264 new positions created • Service measurement and improvement at all client touchpoints • Service culture • Accolades: Columinate SITEisfaction best bank app in SA Lafferty Group best bank in the world (2nd time)
Slide 45: Future: Digital banking
Future Digital banking
Slide 46: New Insure category (new funeral plan)
Future New Insure category (new funeral plan) All clients get access to the Global One solution Clients can simply activate the offers they choose by using on the banking app © Capitec Bank Limited 46
Slide 47: New Insure category (new funeral plan)
Future New Insure category (new funeral plan) • Market size • Partner with Sanlam • Simplified single solution • Accessible in branch or on app (cost 38% less) • 30%-35% lower than market leaders • Unique features © Capitec Bank Limited 47
Slide 48: 2018 Focus
Future 2018 Focus Increase client value – Banking: Benefits, digital service channels – Credit: Reduce pricing, remote access, improved solutions Service experience – Brand advocates through a world-class service experience – Work place banking – Completely paperless – Facial recognition © Capitec B
Slide 49: 2018 Focus
Future 2018 Focus Business delivery – Deliver faster in a fast-changing environment – Scale our way of work while maintaining client centric focus – Technology architecture to allow for agility Diversify income streams – Insure (new funeral plan) – Merchant Services / SMEs © Capitec Bank Limited 49
Slide 50: 2018 Focus: People
Future 2018 Focus People – Develop exceptional leaders – Diversity and transformation – Improve employer value proposition / learning environment © Capitec Bank Limited 50
Slide 51: 2018 Focus: Digital innovation
Future 2018 Focus Digital innovation – Increased resources and investment – Personalised mobile banking platform – Simplified mobile payments – Machine learning and analytics – Continued focus on digital security – Financial education © Capitec Bank Limited 51
Slide 52: © Capitec Bank Limited
© Capitec Bank Limited 52
Slide 53: Follow #BankBetterLiveBetter
Join other Capitec people and follow #BankBetterLiveBetter on HOG Each platform has a different purpose, so find the one that fits your personality and become part of the conversation. #BankBetterLiveBetter capitecbank.co.za =) CAPITEC Capitec Bank is an authorised financial services provider (FSP 4