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