Capitec Bank Holdings Limited · JSE:CPI
Capitec Bank — H1 2018 Earnings Presentation
37 slides from Capitec Bank's earnings presentation, September 2017
Slide 1: Interim results presentation 2017
Interim results presentation 2017
Slide 2: Contents
Contents • Key indicators • Operating environment • What differentiates us • Highlights • Bank • Save • Credit • Continued focus
Slide 3: Key indicators
Key indicators
Slide 4: Key indicators: Earnings
Key indicators Earnings 4 000 27 25 27 28 26 3 500 3 793 26 26 26 3 000 3 222 24 25 2 500 23 22 2 547 20 2 000 2 046 18 2 017 1 500 1 754 1 469 16 1 000 1 173 14 500 12 - 10 2014 Aug-14 2015 Aug-15 2016 Aug-16 2017 Aug-17 Headline earnings (R'millions) Return on equity (%) Interim Results Presentati
Slide 5: Key indicators: Cost-to-income
Key indicators Cost-to-income (%) 37 36 36 36 35 35 34 34 34 34 34 33 32 32 31 30 2014 Aug-14 2015 Aug-15 2016 Aug-16 2017 Aug-17 Interim Results Presentation 2017 © Capitec Bank Limited 5
Slide 6: Net transaction fee income to operating expenses
Key indicators Net transaction fee income to operating expenses (%) 90 80 76 70 72 70 65 66 63 61 59 60 50 40 30 20 10 - 2014 Aug-14 2015 Aug-15 2016 Aug-16 2017 Aug-17 Interim Results Presentation 2017 © Capitec Bank Limited 6
Slide 7: Net transaction fee income to net income
Key indicators Net transaction fee income to net income (%) 45 40 40 37 37 34 34 33 35 32 32 30 25 20 15 10 5 - 2014 Aug-14 2015 Aug-15 2016 Aug-16 2017 Aug-17 Interim Results Presentation 2017 © Capitec Bank Limited 7
Slide 8: Operating environment
Operating environment
Slide 9: Operating environment: Improving economy
Operating environment Improving economy • Lower inflation – Food: 11.3% to 6.8% – All items: 5.9% to 4.6% • Lower interest rates • GDP up to 2.5% from last quarter • Stable exchange rate Interim Results Presentation 2017 © Capitec Bank Limited 9
Slide 10: Operating environment: Retrenchments
Operating environment Retrenchments Retrenchments 1 600 1 400 1 200 1 000 FY2016 800 FY2017 600 FY2018 400 200 0 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Interim Results Presentation 2017 © Capitec Bank Limited 10
Slide 11: Operating environment: Employment challenges
Operating environment Employment challenges • Unemployment rate 27.7% Q2 2017, highest rate observed since September 2003 (STAT SA) • Youth unemployment rate 55.9% (STAT SA) • Total employed increased (‘000) (STAT SA) April – June 2016 April – June 2017 Movement (%) Total Employed 15 545 16 100 4 Fo
Slide 12: Operating environment: Growing account inflows
Operating environment Sep 16 to Growing account inflows Aug 17 % change Average account inflows per banking client (same clients tracked over time) (Aug 2016 - Aug 2017, n = 1.9 million) 6% 6% 11% 16% Interim Results Presentation 2017 © Capitec Bank Limited 12
Slide 13: Operating environment: Cash availability – same clients
Operating environment Cash availability – 627 077 same clients Non-Government (%) Government (%) Total (%) Aug-16 Aug-17 Aug-16 Aug-17 Aug-16 Aug-17 More than 40% cash available 77 65 77 76 77 67 Between 39% and 21% cash available 9 8 16 12 10 8 Cash stress less than 20% cash available 6 5 6 6 6 6 N
Slide 14: Operating environment: Global One – net loan book clients
Operating environment Global One – net loan book clients Total book* Aug-16 (%) Aug-17 (%) More than 40% cash available 75 80 Between 39% and 21% cash available 14 10 Cash stress less than 20% cash available 6 6 No inflow 5 4 40% cash available clients per salary band Aug-16 (%) Aug-17 (%) R15 000 p
Slide 15: Operating environment: Debt review
Operating environment Debt review • Cost to the client • Effect on client • Aggressive marketing Interim Results Presentation 2017 © Capitec Bank Limited 15
Slide 16: What differentiates us
What differentiates us We help our clients bank better, so that they can live better. By offering simplified banking that is transparent, easy to access, affordable to use, and delivered through personal service, we put our clients in control.
Slide 17: Highlights
personalised 190 000 credit interest rates from as low as 12.9% credit card clients pay R35 per month Highlights clients saved over 82% R165 million of employees are by banking less than 35 with their remote years old app or phone 95% clients waited for less than 15 minutes to be served
Slide 18: Bank: Total Capitec clients as a % of SA population
Bank Total Capitec clients as a % of SA population South Africa South Africa Capitec % 0-14 16 786 222 1 15-19 5 104 411 8 20-34 15 038 4 375 29 35-54 12 226 3 292 27 55-64 3 547 652 18 65 plus 2 952 232 8 Total 55 653 9 184 17 Source: STAT SA- census 2016 and internal data Interim Results Presentat
Slide 19: Bank: Banking client market share
Bank Banking client market share 30% 4 074 4 500 3 526 4 000 25% 25% 3 500 2 852 22% 20% 3 000 2 150 18% 2 500 15% 1 610 2 000 14% 10% 12% 1 500 1 000 5% 500 0% 0 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Capitec share of employed population Banking clients Source: Labour Force Survey 2017 Q2, 2016 Q2, 201
Slide 20: Bank: Client and transaction growth
Bank Client and transaction growth • Quality banking clients up 21% • Transaction fee income up 29% • Cellphone and internet transaction growth up 39% • Total number of transactions up 27% • 71% of possible transactions done on self-help devices Interim Results Presentation 2017 © Capitec Bank Limit
Slide 21: Bank: Transaction growth
Bank Transaction growth Transaction volumes ( '000) Channel Aug-16 Aug-17 Growth (%) Cellphone* 158 746 220 753 39 Point of sale 173 805 228 181 31 ATM 140 126 163 025 16 DNR 3 136 7 844 150 Self service terminals 116 2 899 2 401 Branch 27 976 27 001 (3) SMS and debit orders 502 346 625 603 25 * USS
Slide 22: Bank: Distribution
Bank Distribution Change since Total Feb-17 Aug-17 Branches Total 15 811 New look 91 525 Previous layout (76) 286 ATMs Total 257 4 281 Regular 12 1 140 Dual note recyclers 110 635 Partnership 135 2 506 Interim Results Presentation 2017 © Capitec Bank Limited 22
Slide 23: Save: Help clients manage their money
Save Help clients manage their money • Brand acceptance and trust • Consistent, conservative approach to liquidity • Well-priced retail deposit growth – fixed and call Interim Results Presentation 2017 © Capitec Bank Limited 23
Slide 24: Save: Deposits
Save Deposits (R’millions) 35 000 32 500 30 000 27 500 25 000 22 500 20 000 17 500 15 000 12 500 10 000 7 500 5 000 2 500 - 2013 2014 Aug-14 2015 Aug-15 2016 Aug-16 2017 Aug-17 Retail call Retail fixed Wholesale Interim Results Presentation 2017 © Capitec Bank Limited 24
Slide 25: Credit: Credit market
Credit Credit market Unsecured and short term credit granted (R’000) Total market Advances Capitec Advances 30 000 26 960 26 449 25 000 23 076 22 093 19 943 20 000 15 000 10 000 27.8% 27.1% 25.2% 25.7% 26.4% 5 000 - 2015Q1 2015Q4 2016Q1 2016Q4 2017Q1 Source: NCR Interim Results Presentation 2017 © C
Slide 26: Credit market – unsecured Rand value by term
Credit Credit market – unsecured Rand value by term Quarter 1 Products 2015 (R’m) 2016 (R’m) 2017 (R’m) 0-12 Months 4 484 4 966 4 845 13 -36 Months 5 234 5 446 4 917 37-60 Months 9 287 10 267 11 428 61-84 Months 938 1 414 1 886 Total 19 943 22 093 23 076 Source: NCR Interim Results Presentation 2017
Slide 27: Credit market – unsecured credit Rand value per income category
Credit Credit market – unsecured credit Rand value per income category Quarter 1 Salary band 2015 (R’m) 2016 (R’m) 2017 (R’m) R0 - R5 500 2 300 2 926 2 154 R5 501 - R10 000 3 790 3 901 3 436 R10 001 - R15 000 3 981 4 076 4 138 R15 000 plus 9 872 11 190 13 348 Total 19 943 22 093 23 076 Source: NCR I
Slide 28: Credit: Regulatory
Credit Regulatory • Debt relief • Credit life insurance Interim Results Presentation 2017 © Capitec Bank Limited 28
Slide 29: Credit: Improved solution
Credit Improved solution • Reduced pricing – 1.5% interest cut, 6 months term reduction • Cut back on small and tiny companies / lower income • More personalised credit offer • Better interest rate options based on affordability Interim Results Presentation 2017 © Capitec Bank Limited 29
Slide 30: Credit: Loans advanced by term
Credit Loans advanced by term Interim Results Presentation 2017 © Capitec Bank Limited 30
Slide 31: Credit: Application months ended
Credit Application 6 months ended Aug-16 (%) Feb-17 (%) Aug-17 (%) Applications Decline Rate 47 60 67 Application Approved: Not Taken up 12 8 6 Applications Taken Up Rate 41 32 27 Total 100 100 100 Interim Results Presentation 2017 © Capitec Bank Limited 31
Slide 32: Credit: Collections/provisions
Credit Collections/provisions Arrears & impairment provisions of gross loans & advances Aug-16 Feb-17 Aug-17 Gross loans and advances R'm 42 812 45 135 46 544 Loans past due (arrears) R'm 2 561 2 855 2 498 Arrears to gross loans and advances % 6,0 6,3 5,4 Arrears rescheduled within 6 months R'm 1 64
Slide 33: Credit: Credit card
Credit Credit card • Consistent growth in clients • Overseas travel • Adjusted pricing Interim Results Presentation 2017 © Capitec Bank Limited 33
Slide 34: Continued focus
Continued focus 3
Slide 35: Continued focus
Continued focus • Cream Finance • Improved service • People development and leadership • Business delivery and throughput • Growing quality clients • Developing digital banking platform Interim Results Presentation 2017 © Capitec Bank Limited 35
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Slide 37: Join other Capitec people and follow
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
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