Capitec Bank Hldgs Ltd

Driven by purpose, every bold move is a promise to build trust, provide security, to make a meaningful difference. We ignite growth and opportunity to open doors, to keep our word to South Africa and prove it every day. Through each solution, moment, client interaction, and lead met, Simplicity is at the core of frictionless solutions that go beyond banking. Providing tools that enable, grow, and protect skills that empower the next generation. Support that fuels businesses. Partnerships that strengthen communities. Progress you can count on. Inventive. Relentless. United by purpose. Trust to create the future right now. Capitec. Purposeful innovation builds trust. Please put your hands together for our group CEO, Graham Lee.

Good morning everyone. It is a pleasure to be here with you to share the results of our last six months. It is I mean, this is quite something for me to be standing here. It's been two and a half months since I've had the privilege of being CEO and I have loved every single minute of it. And the reason for that is all of you. Every single one of you. All of the 17,000 people in the branches, from the branches to the BSE, from the newest consultant through to our board of directors, thank you very much for your support for me. Thank you for the excellent work that you've done. and thank you for continuing to strive to be better for our clients. It is more than 20 years since I joined Capitec and in that time there's a couple of things which have always been true. We've stayed true to our fundamentals and we've always put our client first. So in the spirit of that, we are now up to 25 million clients. It comes from our personal banking, that's $24.4 million, all of our merchants and core businesses as part of business banking, and the quarter of a million clients contributed by Avafin, but together we're now at 25 million clients. Now, despite the huge denominator, we've still grown that by 8%. but there were a few exciting segments which have grown even more steeply, and they give me great optimism for the future. They include young clients, so we're doing very well in youth, and also in our clients who are higher income earners, earning more than $50,000. That's up by 24%. Even more importantly, are those clients who use us the most. So our app clients who go onto our app every single month, every single day even, who buy our digital products. And most importantly, our fully banked clients, up by 11%. Now that's a really important number because that 38% of our clients contributes roughly three quarters of all of our income. And then there are two areas which I'm particularly excited about. And those are Capita Connect and our core business offering, our business solutions to help grow South Africa. And if you look at Capita Connect, that's grown by 76%. Now, I just need to clarify something here. We've changed our definition of an active client. from a six-month active definition to a three-month active definition, but both of them grew by pretty much the same rate. We did that to simply be more comparable with the rest of the market. And then in global biz, our global biz clients are up by 57%, which is fantastic growth. Our innovation for our clients has resulted in headline earnings of 26% increase, 8 billion rand. Now, this is balanced through all parts of the business. If you take a very traditional view of a bank's income statement, you look at the net interest income, and that's gone up by 27%. Strong growth in book, strong growth in a healthy book. And that is at a credit loss ratio of 7.9%. Now, that's including Aberfan. Aberfan were comparing six months this year to four months last year, So the CLR for them has gone up more steeply. If you take Aberfan out, Capitec is at 6.8% credit loss ratio, which is down from 7% this time last year. Then if you look at our non-credit part of the business, all of our transactions, Connect, BAS, all put together as non-interest revenue, that's grown by 19%. And that means that of all of our income from operations, 65% comes from business other than credit. Those fintech businesses, what I'm now referring to, strategic initiatives is very much an internal term for ourselves, but looking out there in the world, the businesses that are largely fintech, are fintech, are value-added services, the digital experiences that our clients love so much and use daily, as well as Caps to Connect, that's gone up by 40%. It's incredible growth. Our net insurance income is up by 45%. Now there are some adjustments that need to be made in order to get a like-for-like growth and the reason for that is Since the transfer of business from ourselves and taking on all of the funeral business onto our own license, there are some movements in the income statement, where once the interest tax and so forth was netted off in the cell, we now gross them up, both in the above the line of the income as well as in the tax. But I'll be unpacking that for you a little bit later on. OPEX for the entire group is up by 16%. Again, excluding Averton, it's down, it's a little bit lower, it's at 14%. And all of that means that we grew our return on equity to 31%. Now, during the year, beginning of the financial year, we simplified and reduced our fees. So one of the things I'd like you to keep in mind is when considering results, remember that despite the fact that we gave back, not only did we not increase our fees and charges by inflation, we actually reduced them. And the net result of that was giving back R203 million in fees to our clients. So our financial results, the growth is on top of that. Looking at the income statement in detail, there are a few things that I'd like to highlight on income statement, excluding Aberfan. So what you see up on screen right now are the bits just without Aberfan. So looking at the South African credit business, we grew our net interest income by 23%. And that's on the back, like I said, of growth in a really healthy book. Our total net insurance income of 45%. You need to adjust for the sale tax. You need to adjust for the profit sharing from Sunrise. And you need to adjust for the finance charges. So that is actually at a normalized rate of 20%. OPEX of South Africa alone is 14% and that taxation line goes up. The reason that goes up is because of that gross out from the cell and insurance business. The tax comes down there and for the next year or two it will look a little bit higher. Overall growth for South Africa is at 25% and Aberfan contributes nicely and lifts our overall earnings to 26% growth. And you can see that in the changes to the earnings contribution. If you look back a year, to August 2024, our personal banking contributed 49% of the overall income. Aberfan was only 1%, Business Bank 3%, and you can see that insurance was 24% and all of our fintech was around about 23%. In the last year, Aberfan has more than doubled to 2% contribution. Our business banking has also nearly doubled to 5% of the group contribution now, which is fantastic. Insurance at 26 and FinTech 26. But the other point that I'd like to make is we continue to grow our physical network. We continue to grow the physical number of branches and our cash distribution, the physical number of our cash devices, because our personal bank, all of the clients and distribution and data from that personal bank They are the launch pad for all of our opportunities. If you take a step back and look from our data, take a view of the South African economy, there are some mixed signals in the broader economy. There are some concerns about rising retrenchment, particularly in some of those industries that are more affected by international trade policy. But this is balanced by optimism. It's balanced by optimism in some of the green shoots that we're seeing in the cooperation between business and government, which is having positive outcomes. However, I'd actually like to stress something far more interesting, which is that with our 24.4 million personal bank clients and the more than 300,000 global business merchants, we have very rich data about South Africa, about the entire economy. Economic growth for the whole country is not where we want it to be. Some of the indicators are negative. But we have the data to be able to see and take advantage of the opportunities. And one that I'd like to share is people earning in the emerging market. So what you see in the graph on the top right is the growth in people. This is our fully banked clients. who earn a salary, and we've grown them by 7%, compared to those people who are entrepreneurs, who have multiple income, who are hustling. And the number of those clients has grown by 15%. Then on top of that, if you take a like-for-like sample, August last year, and August this year, that same set of clients, and look at the growth in their income. Salary owners, their income has grown on average by 6%, and that's to be expected. But those same entrepreneurs and hustlers, their income inflows into their accounts has grown by 15%, more than double, almost triple. And that really is good news. Card machine flows alone to those people has gone up by 26%. Moving on to our launch pad, personal banking. There's continued diversification in our income streams. There was a time 15 years ago when we were largely a credit business. Now we are so much more than that. Credit income though continues to contribute strongly. That's up 24% in the last year. Net transaction income is up 6%. Now this is net transaction income if you strip out all of the new innovative types of transactions that we're doing through VAS and Capital Connect, and they've grown by 40%. Now that 6% number might seem subdued, but there are a few things that you need to take into account. So the first is we reduce fees. So that's 6% growth, the first adjustment you need to make in order to get a real understanding of what our true growth rate is, is to add back the fees that we reduced it by. Then we continue to encourage our clients to move from getting their notifications on SMS, which is a fee-bearing transaction, to an in-app message. It's safer, it's faster, it saves them money, it's good. It's good for our clients. And they have continued to migrate. And then more and more clients are using the Send Cash functionality because it's slick and useful and cool to do cash transactions for themselves. So you see a reduction in the number of clients using their card and more clients using the digital mechanism for getting their cash withdrawal. When you account for all three of those things, our growth in net transaction income is actually 12% and the growth in volumes is 20%. And now all of those things are positive for our clients and intended. They're part of our strategy. Digital volumes continue to grow really strongly. So cash overall, pure cash at the ATM with a card has grown only by 3%. Now if you consider that relative to how fast our clients have grown, you can see clearly that cash per client continues to come down and that shifts us towards all form of digital electronic payments and card. Digital payments including Capatek pay is up by 28% and card payments have also grown strongly from a big base by 23%. Now, unpacking that just a little bit more, if you look at physical card alone, that's up by 19% but the dramatic change has come in the use of pay wallets. So Apple Pay, Garmin Pay, Samsung Pay, that's gone up by 131% in the last year. really strong client uptake of a form factor which we know they like very much. If you look at e-commerce, so that's all the transactions made to buy something online, including and led by Capasic Pay, that's gone up by 35%. Pure gas transactions, buying airtime, electricity, our new advances, vouchers, all manner of those digital transactions, including buying your license, they've gone up by 20%. And pure electronic payments are up by 23%. Strong growth across all types of digital payments. And then I'd like to take just a minute to do some marketing. If you are traveling internationally and you do not have a Capitec card, you should get one. We have recently, and recently means from this morning, dropped our international card payment fee for physical card overseas down to zero. We have never charged an ethics margin. And given that our clients in the last six months have done more than a billion rand of physical transactions overseas, it means that compared to what we would have charged them if we acted the same as all of the other card providers, we've saved our clients 25 million rand. Focusing on credit for a little bit. Many of you who've known me for a long time know that I spent a large part of my career at CAP taking credit and I did come back into my office a month or two back and there was a chocolate on my desk with a small sign saying my first love is credit and you're right. Credit sales growth. So in the personal bank we've had really strong growth in our loan disbursements. That red line you can see a clear step change. So we're hitting record levels But we're doing so without taking on additional risk. And what I mean by that is we have not changed our risk appetite. That does not come from us being willing to take on any form of less healthy or worse book. Rather, it comes from excelling in our credit operations. In using our data and our algorithms to better create personalized offers for our clients and messaging for the clients. And that's increasing the volume of applications. The actual... approval rate has remained stable, as our risk appetite has remained stable. But bringing our clients in more, through the right messages, serving them in nations, greater distribution, and doing it more efficiently, that's what's creating the lift. Particularly if you look at clients earning more than 50,000, really strong growth in that as well. 20% of total sales now, more than 6 billion rand to those higher earning clients. As I've said now several times, it's a healthy book that we're growing out. So we've grown our personal bank lending book by 7.8 billion rand. And in doing so, we've done it in such a way that we've reduced the roles to default. And we've reduced the roles to debt review, which means that both our coverage ratio, our ECL, and as well as the credit loss ratio have both come down exactly as per our plan. Looking at where that credit is coming from, first of all, we've grown really strongly in credit cards. Now, you may have heard in my voice earlier, but we are proud of the value that our credit card gives to clients. In addition to that zero currency conversion fee, we don't charge a margin, every single credit card client gets a gigabyte every month, as well as 1% back on all of their spend. And because of that, we're now attracting more and more clients, including more higher income clients. Purpose Lending is contributing beautifully as well. We have improved our distribution, we've signed up more partners and working closely with those partners, embedding a better experience of providing credit where the clients need it, at the point where they need that solution and then working with them to improve the experience. We have dramatically increased our purpose lending. And this is lending for a good purpose. It has a lower cost to the client, it has a lower risk to us, and all in all it's a very good part of the business for us. And then clients continue to operate more remotely. They continue to use the app, and they continue to use Kappa Tech Direct, and we're seeing really good, strong growth there, largely through data-driven messaging. The appropriate message to the client at the appropriate time. We are adding on more credit solutions. So I mentioned earlier that we've had a really big take up in our credit card from people earning above $50,000. But those are not the only clients we want to give those fantastic offers to. The free data and the interest back and the no charges, we want as accessible as possible to everybody. And so we have added on a credit card to make our capital credit card more accessible to a much broader set of the population, lower exposure and it's faster repayment. And what that does is it's a discipline and helps people to score for the future. More than 65,000 of those cards were given in the six months to August. We are also working more closely with our partner SA Home Loans to provide better home loan for our clients. Since February, we've granted $720 million, and we are going to extend that partnership into a new special purpose vehicle to give a better offer to our clients in the coming months. And then, all of those entrepreneurs around the country, they don't just transact, they also need creative businesses. And we've been enabling our multiple income offer. which has grown very strongly, 984 million, as well as our new repayers you earn. So understanding the variation in flows that entrepreneurs have throughout a month and being able to provide a collection mechanism suitable for them opens up accessibility to far more clients. Moving on to Capital Connect, so it's very exciting. We're now at 1.1 million clients and there's a really strong net income of 165 million. But Kappa Tech Connect is not only about contributing to the bottom line. It's not only about generating revenue, it is to create value for our clients. So as we scale, we will continue to drive down prices and give more data as give-backs to reward our clients for good banking behaviour. We gave 449 terabytes back over the course of the last six months and we have just recently started with a new give back which is that if your Capita Connect SIM is the SIM for your verified number for your banking with every single purchase we'll give you 20% extra free. Because of that we have tripled, more than tripled our usage of data. So it's now at 14.9 terabytes and you can see on the slide just for fun That's 4.3 billion songs. Something else to be proud of, there was a recent survey done, the South African Telecom Sentiment Index, and we came out top. I think that is a fantastic tribute to the team. That really is a testament to the fantastic work done by all of the Capital Connect team. Well done. We've also launched devices. So if you go into Apple right now, you can order any one of 22 devices, and that range will get wider. With that purchase, we will give you free data, and our finance offering is the best in the market. Zero percent deposits and the lowest finance charge. So we are going to change how our people get access to smartphones, and through that, increase the number of people who have them, who use our app, who use our other digital services. There's a virtuous cycle here. Looking at savings, now savings continues to be an important barometer of trust in Capitec. So I am very pleased that we've continued to increase our market share strongly, particularly in the access anytime, fixed deposit and notice accounts. So we changed the structure of our interest rates. We changed from a tiered main account to a single flat rate for everybody. And then we strongly increased our interest on our call and notice and fixed deposits to be much more competitive and to encourage people to be much more deliberate in their savings. Because of that, you can see on the slide, we are up 31% in those strong long-term purpose accounts. And overall, between our access any time call, notice deposits and fixed term plans, it's now 68% of our entire deposit book. This is what we intended. We look forward to growing it even more strongly and encouraging clients to be more purposeful in their savings and earn even higher interest rates. If you look just at notice, our notice accounts are very popular. The seven-day notice deposits, it bridges the gap between those who are not able to save at all and those able to save a little. And there's been phenomenal growth. It is really enabling a savings culture amongst our clients. Moving on to insurance. We've had 19% growth in the sum assured. Now, a recent survey done by Swiss Re tells us that that is 39% of the whole of the South African market. It's R481 billion in sum assured, and that's 15.8 million lives covered. And since November, 100% of the business is on our own license. We've got a strong focus in insurance on making sure that the three products we have are exceptional, that the client experience the entire way through is the best that it can possibly be, and that's what our focus will remain for for the short while. If you move on to life, so our new life cover, that's new and there's already 72 billion in summer assured covered. Now you add those two together, that means the total summer assured for lives covered in South Africa is now over half a trillion rand. One of the things that I like most about our life insurance is the way that we enable the clients, empower the clients to choose how that cover will be used. And we allow them to choose between a lump sum payout, between a monthly income to your dependents to help them manage their monthly needs, and then specifically to be paid out into a trust to take care of your children's education and their other needs. And what you can see up on that pie chart is the extent, the proportions which our clients are choosing to use those three. So lump sum remains the biggest, but almost half go to that monthly income choice or children's needs. And that's very positive. Now I mentioned at the beginning that you need to normalise growth. So there's very strong growth in our financial statements, and that is the true result. However, to compare with last year, To compare like for like, you need to account for the fact that some of the business, some of the book is transferring out of the cell and to Cathartic's own license and all of the new businesses own license. And as that's happening, there's a taxation effect. In the cell, the tax was netted off and so now we gross up the income and we gross up the tax. We also do the same thing, essentially, with the investment income. That comes out. It becomes more clear. And then there is the additional profit that we earn, because prior to the 1st of November, we were sharing 30% of the profit with someone, and since the 1st of November, 100% of the profit accrues to us. When you take those three things into account, the adjusted result for insurance is a 20% growth, which is excellent. That was for the insurance team, not me. Moving on to business banking. I am excited by everything at Capitec, I really am, but what excites me the most is business banking. And the reason for that is not just because it's such a big opportunity for growth for us, and it is. It's because this is how we contribute to the growth in South Africa. So, because of that, I'm really pleased that our number of our clients has grown so strongly. So our core business banking clients, GlobalBiz, they're up by 57% to 182,000 now. Now they come to us for a couple of reasons. They come to us because better service. They come to us for better credit and they come to us for simpler, lower fees. So on the better credit side, our gross loans have gone up by 23%. That's a loan book now of 26 billion. Catching up with the personal bank fast. And in terms of fees, we simplified and aligned. So no business bank client pays different fees to a retail client. If you do a real time transaction, they cost you exactly the same. As they should. And because of that, 93 million of the fee give back has gone to business bank clients in the year. One of the other changes that you'll see is we've become much more efficient in credit across the board. Our intuitive processes are better. But in addition to that, our scored credit is getting stronger. So our scored credit is up 109%. And that enables us to serve our clients faster, give them an answer quicker, so that they can carry on running their business. Very recently, we've just landed overdrafts on the app. So our clients can apply, conclude for an overdraft entirely by themselves, self-service on our app. And that's going to change things for them, saving them time. Looking ahead, One of the most important parts of our business going forward is enterprise payments. So we recognize that this is one of the key enablers for business because collection success is critical to business growth. So because of that, we took all of our businesses in which we help other businesses take a payment, debit order collections, merchant services, the e-commerce pieces, and we put them together into a single division called enterprise payments. If you look at the debit order business, Catholic Payment Services, we grew by 19% in the year. And Catholic Pay Econ, that's grown by 36%. Moving on to payment taking via card machines, we're up 165% to 85,000 trading merchants. If you look at the turnover from August this year of 42.4 billion to 27.1 billion, you can see just how strong that growth is. And this is well spread. This is not a small number of merchants. 85,000 is a broad cross-section of all of the businesses in South Africa that need to take payment by this mechanism. And we're winning that business because we have a fantastic machine, but also the lowest merchant commission rates in the country. 95 million of the reduced fees has gone in lower merchant commissions and a lower price for those point of sale devices. One of the things that you can expect us in the future to spend a lot more time on and invest a lot more in is our enterprise payments business. It's key to our success. Then Avafin. I mentioned up front that Avafin has contributed really nicely. They've contributed 121 million rand to our group earnings in the first six months of this year. And they continue to focus on making the credit offer exceptional in the five markets in which we operate. So we're staying focused on those five markets, staying focused on online consumer lending, but improving the credit offer and improving the processes to serve those clients. And because of that, we're now up to 250,000 clients and advanced 303 million euros worth of credit to those clients in Europe and Mexico. Group OPEX. Our strong financial position allows us to accelerate investment in new technologies. So looking at the middle, our investments in technologies and the people required to implement those technologies has gone up by 30% and we've brought that forward. We can see all of the value that we create for ourselves and our clients in investing faster there. In addition to that, by tapping into the world's best, and I'm talking here of the world's best providers of cloud technology, of all forms of AI including Gen AI. We have partnered with the best and we're able to benefit. Now because of that there's a natural shift from CapEx to OpEx and you see that in this result. If you look at the increase in salaries, that's gone up by 12% as we continue to invest in our people and all of the other expenses are a pretty muted growth of only 9%. Our continued focus, so what are we looking forward to? We're going to continue innovating. Some of those recent innovations include what you see up on screen here. So it's in-app calling. Now, in-app calling is the ability from a client from within their app, when they're making the transaction, when they see the item that they need to ask a question on, pressing a button and being connected with a human being. It is safer for the client. The client knows for sure that they are talking to us, and we know for sure that they're talking to the client. But in addition to that, it saves them money. It saves them airtime. And just in the last six months, we've saved our clients five million rands worth in airtime. And it's also a better experience. Calls don't drop. The quality of the call is better. So we're able to serve our clients better. Our self-service terminals continue to take load of our service consultants in the branches. When clients come in and they only need a very quick transaction, they can do it at a self-service terminal, leaving more time for our very important people to serve our clients. Because that humanness, that serving humans with humans is actually an advantage, it's a superpower. We also save them time with our branch chatbots So we have put available all of the questions that a person normally asks through calling Help Desk. And the person in the branch can now ask those questions, have them answered by a branch chatbot. And what that does again is saves them time. It saves them time they would have otherwise spent on the phone. And that's time that the client is with them. So in saving our client's time, we're also serving our customers better. Then generative AI, we have done so much here. I had a fantastic demonstration two days ago on Neo, our fantastic new tool for faster first-time resolution of all client queries, anything that a client needs to ask, and we will be enabling our branch and our call center staff to use that tool to be able to answer those questions more thoroughly and more quickly. We also have a solution which we use to automate the verification of trustees. For those of you who watch Suits, it's called Mike Ross. And more and more. And through that and the huge uptake of Copilot, we've seen 95 million rands in savings. And we're saving our people's time. We're not saving our time. so that we can reduce the number of people. We're reducing the time so that we can do even more with those people. One of those things is reducing some of the need for automated testing. I said that wrongly. We still have a very strong need for automated testing. Some of the demand on a person to test accomplish automated testing. So, very roughly speaking, the time it would have taken to put a used test case together and to implement it would have been four and a half hours, and now using our new home-built tool, it takes less than an hour. Massive saving there. And allows us to focus on what human genius is better for. And one of the things that that's better for is protecting our clients. The most important application of all of the new technologies is always going to be protecting our clients. We have over 400 people now working in different parts of the bank, in a task force, to make sure we're doing everything that we can to protect our clients. And that includes implementing new technologies like a graph database. And what this has done is it has enabled us to identify more and more of the unreported fraud and make connections between the bad actors to shut them down more quickly and more thoroughly. Because of this, we've reduced client losses significantly faster than the rest of the industry. And that's according to Sabrec. We are contributing to the prosecution of many crime syndicates stealing from people in South Africa. We blocked more than 70,000 mule accounts and saved more than 200 million rand for clients that would otherwise have been lost. Some of the innovations include AI warnings that have stopped scam payments. where the client felt sure that they wanted to do that thing, but we helped them understand they were making a mistake. And feature locks, which stop people doing things they don't want to do. And we have been first in market with a variety of different innovations, including active call identification and real-time contextual warnings. So the specific client sees the message that's relevant to them to help them understand how to protect themselves. Looking forward to the future, what I'm going to show you on this slide is something you'll have seen before. And that's important because this is a reminder of the key focus areas that we shared with you in February. We will reinforce our culture. Our client-first, highly energized, ownership-taking culture. Because it's one of getting things done. All bank strategies, largely speaking, look the same. We win because we actually execute, because we get things done, and we do so by working together. And that is something that we're going to reinforce. We will continue with the virtuous cycle of developing the ecosystem, bringing the power of our 24 million personal banking clients together with our businesses, and creating a virtuous cycle between them that helps both grow. We will become the leading payment provider in South Africa and as I said earlier you can expect to see a lot from us on that. We will grow business banking. In growing business banking we will grow the country around us and grow employment. In order to do that well we need to be able to serve all of our clients everywhere. And that's why we have such a strong focus on our single service platform, which will enable a business client, retail client to move onto any app, any channel, move and walk into a branch, call any number and be served in the same way. We will continue to invest heavily in making sure that we have the most data, but also that we're best using that data, actually implementing it for creating value for our clients. And then finally, Aberfan is fantastic, but it's a small step. We are just starting now to craft the strategy to take Capitec Global. That is our future. Thank you very much, everybody. Thank you. Thank you to all the 17,000 people who made this happen. Thank you to our clients. Everything starts with you. And thank you to our excellent board of directors and all of the shareholders that they represent. I appreciate your support. Thank you everyone. So now I'm going to ask Grant Hardy to come and join me on stage and we will take some questions from our investors.

Thank you.

Good morning, Graham. Good morning, Grant. We've got a few questions. The first one is from Sean. He's asking, when will Capitec be launching VAZ on its card machines?

Okay, thank you for the question, Sean. It's something we're actively working on and are progressing on. We haven't yet confirmed the exact date, but it is something that we are working very hard on delivering as soon as we possibly can.

Our clients can expect to see it early next year.

Thank you. Then we've got two questions from Charles Russell. First one, can you elaborate on the lower capital adequacy ratio and more specifically the impact on ROE? Okay.

So as we've communicated to the market, Basel IV became effective on the 1st of July, and that impacted our capital adequacy ratio. We expected the decrease to be between 3 and 5, and it's come in within that range. Secondly, we also have to deconsolidate Capitec Ints. This is also required by regulation. From an RAE impact, we still have more than sufficient capital, so it won't change the ultimate dividend policy, so it won't have an impact ultimately on RAE. The dividend payout ratio is as communicated to the market, 55% for the full year.

Thank you. A second question from Charles Russell. Can you expand on the strategy to reduce interest expense, which was down 8% despite an 11% increase in deposits?

Thanks, Charles. It was an interesting one because when we actually made the call, we actually expected to pay clients more interest. We actually increased the interest rates across our anytime access accounts so a client can open up to 10 of those and increased on the notice side so we became market leaders in those areas. So the thinking behind it was to actually provide more value and drive more deliberate savings. But the migration from the main accounts into these savings pockets has been slower than what we expected. We are still paying 2% on the main accounts. which is 2% more than the market. But we'll continue trying to educate clients and really show them the extra interest and value that they can create by moving funds into the anytime access and notice savings deposits.

Thanks, Grant. Two questions from Ross Krieger from Investec. First one, do you expect to maintain a stable personal banking credit loss ratio for the full year relative to H1?

Yes. It's well within our range and that's what we expect to see, let's say, going into the second half of the financial year. It does all depend on how the economy plays out, just given that the unsecured lending on the personal banking side is very much determined by what we see and how the economy performs.

Second question from Ross. With regards to client givebacks in the business banking, Do you expect this pricing activity to be fully in the base now, or will H226 also be impacted relative to the prior year?

This is now fully in the base in terms of the big part coming from the merchant's commission rates. So those were changed from the 1st of September 2024, so it's now in the base from last year. So yes, it is fully in.

Thank you. Then a question from Harry Bueta from Merrill Lynch. In business banking... What has cross-selling been like to merchant customers that Capitec has acquired?

So for a lot of clients from a business bank perspective, your first entry into business bank would be, let's say, a point-of-sale device. And from there, we deposit, let's say, the funds that you put through the device into a Capitec business bank account. And from there, they do start using other services. So it's a good entry point for us. They start seeing the value we can provide, the level of service, So it is a good cross-selling opportunity and something that we continue to grow and work on.

Thank you. We've got two questions from Nitin Sehgal from Cora Management. First one, he says this is a question about your first love, Graham Credit. Grant, what is a good range of through the cycle credit loss ratio relative to where you are today?

So I think you've got to look at it by business unit. So if we go look at retail, we've communicated that we expect retail to run 8 to 8.5. We're coming in just below there. From a business banking perspective, we're within where we expect to be at 2.1%. And Aberfan is much higher, but we price for that. So Aberfan is also where we expect to be given the current loan mix. As we've started to fund Aberfan, what we do want to do is reduce the interest rates and extend the term. So you can expect over time that credit loss ratio to come down. Also important, on the elephant side, we have six months' worth of results in for this year versus four months last year. So that does increase the credit loss ratio because you have a six-month charge as opposed to a four.

Can I just add to that? In addition... In business banking, you can expect that longer term, the unsecured lending to small businesses, the CLR will approach that of the personal bank. So as the mix changes, the business bank overall will go up, but as Grant says, if you split it out into the different types of businesses, they will remain consistent.

Thank you. Then one last question from Nitin. Congratulations on your return on equity. How do you think about this champagne problem? Are there any newer areas you are considering investing in? Or are you thinking about changing the payout policy in the future?

It gives us optionality. At this point in time, we're not looking at changing the payout policy. There is so many opportunities to still grow our business, to deploy our capital and to grow it. One of the ways that we will do that is by using our economies of scale and sharing the benefits of that back to our clients. And that will bring the RE down a little.

Okay. Just to add on to that, I mean, you already see some of the givebacks we've given to clients this year. We'll continue to challenge ourselves to make sure that we're providing true value to our clients. And as Graham says, we've always had the principle of giving back the benefit of scale. So we'll continue to focus on that. But it just gives us optionality to make sure we can continue to provide value to our clients.

Thank you, Graham. Thank you, Grant. No further questions.

Thank you. Thank you very much, everyone. Thank you.