Transcript Document
Innovative Thinking in Retail Banking Investor Pre - Roadshow Presentation April 2008 1 Our Focus Individuals in need of basic low cost banking 2 We deliver on four core needs: 3 3 • Accessibility • Affordability • Simplicity • Personal Service The Unique Business Model Unique / Innovative Technology Providing Simplified / Focused Product Range Via Customer Focused – Low Cost Delivery Channels Branches Mobile Bank 4 4 ATM POS INTERNET CAD CELL The Capitec Bank Revolution Our Technology Platform •Features • • • • • • Paperless Process Driven Real Time Delivery Cashless Central Control – no branch back office Handle high volume transactions efficiently •Structure • Open Platform • Windows-based • Scaleable 5 5 Simplified Focused Product Offer - Structure Transactions • Purchases • Transfers • Debit orders • Stop orders Multi loan Savings Account 1 / 3 / 6 month loans Focus Save Accounts 12 / 18 / 24 / 36 month term loans 6 6 Cash Wallet Simplified Focused Product Offer - Price Savings and Transactions • Aggressive Loans • Competitive 7 7 Our People • Cultural alignment • Service driven • Recruit for potential, train for skill • Team approach • Zero to hero in 7 weeks Firm Foundations • Ongoing investment in competency E Learning 8 8 The Market Average Income Spread LSM 9 9 Number (People million) Income % 0 – R 947 7 949 – R 1 179 12 1 2 2.1 3.8 R R 3 4 5 3.8 4.5 4.1 R 1 179 – R 1 443 13 R 1 443 – R 1 977 15 R 1 977 – R 2 549 13 6 7 4.3 2.3 R 2 549 – R 4 366 14 R 4 366 – R 6 659 8 8 1.7 R 6 659 – R 9 388 6 9 10 1.9 1.7 R 9 388 – R12 077 R12 077 – R19 298 6 6 Target Market 17m * Household Income after statutory deductions Client Base Salary clients only Loan clients only Loan & salary clients Sub-total Savings clients Total 10 10 02/07 02/08 78 368 158 005 236 092 348 966 132 712 170 922 447 172 677 893 563 107 693 283 1 010 279 1 371 176 Salary Clients Age 41.83 45 40 35 27.23 % 30 25 20 15.74 15 10 6.58 5.73 2.90 5 18 - 20 11 11 21 - 30 31 - 40 41 - 50 51 - 60 61+ Loan Clients Age 40 35 30 % 25 20 15 10 5 - 60+ Female 51 - 60 12 12 41 - 50 31 - 40 21 - 30 18 - 20 Male No Prediction R15000+ R10000 14999 R7500 - R9990 R5000 - R7499 R4000 - R4999 R3000 - R3999 R2000 - R2999 R1000 - R1999 R1- R999 13 13 Male Female 15 % Loan Clients Income Level 30 25 20 10 5 - History 1. Microlending 2. Bank (2000/1) - Management team - Determining strategy Bank licence PASA membership IT platform 3. Conversion - 14 14 Microlending to bank Deposit taking Client conversion to bank with Capitec 4. Growth Strategy Group & Operations Structure Management 8.79% Non-ex directors (excl black directors) 15.79% PSG Group 34.9% BEE groups & individuals 15.99% Other 24.53% CAPITEC BANK HOLDINGS (CBHL) Listed and registered as a bank controlling company 100% Capitec Bank (Retail bank) 15 15 75% Key Distributors (FMCG wholesaler) 100% Other (No activity) Management • CEO Riaan Stassen (54) • CFO Andre du Plessis (46) • 16 16 Other Executives: - IT Risk Human Resources Operations/Sales Marketing & Corporate Affairs Credit Risk - Card Services & Business Support Chris Oosthuizen (53) Christian van Schalkwyk (52) Leon Venter (46) Gerrie Fourie (44) Carl Fischer (51) Jaco Carstens (39) Ian Abrahams (39) Andre Olivier (40) Faick Davids (31) Employment Equity Profile Target 17 17 2004 2008 Senior Management 20% 8% 11% Middle management 30% 15% 25% Junior Management 40% 18% 50% Rest 82% 81% 93% Key Risks and Mitigants • Credit • Liquidity • Regulatory • Systems • Interest rate • Taxation 18 18 Liquidity Management - Banking Crisis 2000/1 - Philosophy • Caution : top priority (even over profitability) • Retail deposits - payout when requested - cash usage - short term loans • Facilities - don't bank on it - used for convenience • Fixed vs fluctuating rates • Forex - cover all positions - no appetite • 19 19 Simplicity / no complex structures Liquidity - History • Initial strategy – Self funding • Build trust – Retail savings deposit base • Wholesale funding agreements • Un-published ratings • Preference shares • Published ratings • BBEE • Short term corporate paper • DMTN • Retail term deposit base 20 20 Basel II – Pillar 1 Minimum Regulatory Capital Requirement 21 21 Basel I Feb 2007 Dec 2007 79% 51% Basel II (BIA) Dec 2007 Feb 2008 37% 36% Basel II (ASA) Feb 2008 58% Basel II – Pillar 2 The Supervisory Review Process • Supervisory Review and Evaluation Process (SREP) • Risk Management • Capital Management • Capitec Internal Capital Assessment Process (CICAAP) • Foundation Internal Ratings Based approach (FIRB) for credit risk 22 22 Basel II – Pillar 3 Market Discipline 23 23 • Regulation 43 Public disclosures • Quarterly, Bi-annual and Annual disclosures • Dedicated Website Page under Investor relations National Credit Act (NCA) Act • Income components & ceilings • Procedures, rules & output • Debt counseling & mediation VAT leakage Opportunity Strategy (pre-empting effect) 24 24 Financial Highlights 25 Holdings vs Bank results - IFRS Holdings : Equity settled in Statement of Changes in Shareholders Equity Bank : Cash settled through Income Statement 26 26 Loans Advanced 6,000 5,162 4,500 3,449 Rm 2,259 3,000 2,863 1,904 1,477 1,500 0 2003 27 27 2004 2005 2006 2007 2008 Number of Loans Advanced 3155 3500 2924 3000 2454 2617 2486 2650 2500 2000 '000 1500 1000 500 0 2003 28 28 2004 2005 2006 2007 2008 Loans advanced per product R’m 29 29 2007 % 2008 % 1 Month 1600 46 1 692 33 3 Month 687 20 757 15 6 Month 392 11 314 6 12 Month 425 12 797 15 18 Month 190 6 430 8 24 Month 155 5 774 15 36 Month - 398 8 3 449 5 162 Impairment per product 30 30 % 1 Month 3 Month 6 Month 12 Month 18 Month 24 Month 36 Month 2008 1.05 3.83 5.14 10.18 12.99 15.78 29.37 2007 1.61 3.16 6.85 13.13 24.30 21.65 - Net Transaction Fee Income 90 80 79 70 60 R'm 50 40 35 30 20 10 0 15 0 2003 31 31 0 2004 4 2005 2006 2007 2008 Value of Savings Deposits 838 900 800 700 600 R'm 554 500 400 314 300 200 100 0 4 0 2003 32 32 74 2004 2005 2006 2007 2008 Operations 33 Bank Branches 400 331 280 300 200 100 251 253 2005 2006 148 44 0 2003 34 34 2004 Number 2007 2008 ATMs 765 800 700 600 500 No 407 400 300 180 200 100 210 75 58 0 2003 35 35 2004 2005 2006 2007 2008 Employees 3,000 2,800 2,500 1,901 No 2,000 2,129 1,708 1,402 1,500 1,180 1,000 2003 36 36 2004 2005 2006 2007 2008 Profitability 37 Headline Earnings 250 212 200 160 150 R'm 116 100 70 47 50 30 0 2003 38 38 2004 2005 2006 2007 2008 Headline Earnings per Share 300 259 250 222 200 Cents 165 150 101 100 45 70 50 0 2003 39 39 2004 2005 2006 2007 2008 Return on Equity 30 26 22 23 20 16 12 % 10 8 0 2003 40 40 2004 2005 2006 2007 2008 Cost to Income Ratio 100 77 76 74 66 60 58 % 50 0 2003 41 41 2004 2005 2006 2007 2008 Shareholder Funds 1,117 1200 1,217 900 R'm 564 600 384 426 473 2003 2004 2005 300 0 42 42 2006 2007 2008 Market Capitalisation 4000 3500 3,031 3,195 3000 2,233 2500 2000 R'm 1500 1,072 1000 500 399 164 0 2003 43 43 2004 2005 2006 2007 2008 Total Assets 2,937 3000 2500 2,191 2000 R'm 1,251 1500 1000 512 805 434 500 0 2003 44 44 2004 2005 2006 2007 2008 Going Forward 45 Going forward Investment • Distribution - • +25 Branches +75 Mobile Banks +50 ATMs +2 250 POS devices Technology - Branch Streamlining Challenges 46 46 • • • • • Cash-plastic Economy Competitors Funding Crime Thank You Questions ? 47