Capitec Bank Hldgs Ltd

Good morning everyone. Thank you. It has been a strong year. 25 actually. 25 years of meaningful innovation. 25 years in which we have continued to earn and deepen the trust of what is now more than 26 million active clients. And that's because of you. So So thank you. Thank you to you, all of our people, wherever you are. It is your energy, the energy that you bring, and the ownership that you take and your client's obsession which brings these results, which makes our business strong. Thank you. We want to make a meaningful difference. We want to make a real difference in people's lives and our role is enabling them to grow. All of the building that we do, the new solutions we bring to market, they unlock growth. They provide economic opportunity and they are based on the same founding principles that we've always had. Our fundamentals are clear and they speak to how we treat our clients, to how we design for them. And of course our CEO culture. 25 years in, our culture is still our most important competitive advantage. The CEO is how we show up, how we make decisions. And it starts with the client. It starts with putting the client first and setting for the client and understanding what they need. Our results come by putting our clients first. We put our clients first over and above short-term profits. Because we know that creating shareholder value comes from creating client value, not the other way around. It does feel a little bit like every year, as we're giving our annual results presentation, something significant has just happened in the world. Whether it is a war, a special operation, a global pandemic, there always seems to be some curveball that has just about happened. And the truth is, it will always be volatile. Our environment is always going to be uncertain around us and there will be ambiguity out there in the world. But here at Capitec, we are not uncertain. Together, what we need to work on together, that's not ambiguous. We are a resilient company and we are resilient by design. We build resilience each and every year and we make our choices deliberately to build that resilience. We build our business model to be able to take on all shocks and still serve our clients well despite. And that continues from here. It feeds into how we look at our financial statements and the prudency with which we provide. It speaks to how we train our people, to how we develop our systems. Because this environment will always be our reality. South Africa started the year really strongly from a global macro perspective. And of course we've seen that upended by the recent supply chain shocks, the recent oil price shocks. But that resilience that I talked about, that resilience that we built, that will bring us through and will bring us through strongly. Consumers and businesses in South Africa will remain under pressure and we will support them through that pressure. Clients vote with their feet. And we continue to grow our client base despite it already being so large. So 26 million clients now across all of our ecosystem including Aberfan. Even more pleasing than that total growth number is our growth in active app clients. That's up 19%. That's 15 million clients who are active on our app in the last 30 days. 15 million adults actually. And if you look at Stats SA, which shows that adults have a population of around 45 million, that means roughly a third, more than one in three of all adult South Africans use our app to bank in the last 30 days. Fully banked clients continue to grow and business and entrepreneurs, that's up 71%. The big number, quite literally, the big number in the middle, is 23%. Our headline earnings is up 23% to $16.8 billion. And this comes from balance growth. As you can see, that growth is balanced in both the net interest income as well as the non-interest income, what's coming from transactions and CNET and VAS and insurance. If you look at the balance between those, the proportions, just over two-thirds of all of our income from operations comes from the non-interest side. And the strong growth in credit is at good quality. The 8.1% credit loss ratio did tick up slightly, but that was within our plan, within our expectations, and it's a result of our book growth. And the change in mix, particularly in business bank, in lending more on the scored unsecured side. It's been really pleasing growth across all of Capita Connect, insurance, and value-added services. All of this was done Investing in the future with discipline, with cost-controlled discipline, which meant that our operational expenditure grew by only 12%. And that positive jaws that that creates means that our ROE grew to 31%. If you look at the detail of the income statement a little bit further, we're not going to go through everything. I just want to point out three things. So firstly, under the credit impairment charge, overall, the company went up 21%. But that was lifted quite a lot by ABAFA and the reason for that is the nature of the business, the nature of the business model which is short-term unsecured lending in which those loss ratios are expected, planned for and priced for. If you exclude them, then the critical payment charge for South Africa grew by 13%. Then there are two big numbers Total net insurance income up by 38% and the taxation up by 34%. This was the first full year in which we sold all of our new policies on our own license. And previously, in previous financial years, in the cell, there was a net out of the tax and the income. And so what you really see here is a grossing up of both, which is why both of those percentages are so high. And then overall, 23% growth. That's true both with and without Aberfan, if you see it across the board. The sources of our income are increasingly diversified. The personal bank remains our biggest contributor, both in terms of earnings contribution, but also because that's the launchpad. That is the launchpad from which all of our other businesses fly. Value-added services connect in insurance. That now makes up more than 50%. But I want to make the really important point again. That only comes from the data, the brand, the distribution and the clients of the personal bank. And then business banking and other things are still early in their growth journeys. They are big opportunities for the future. I'm going to let that big number sink in with you all for a second. Our business model is one that scales because of our clients. That scale creates economies and we share those economies back with our clients. In the last financial year, the total amount that was given back to our clients is one billion rand in client savings. Now that breaks down like this. In the fees we dropped from last year to this year, we gave back $228 million in reduced fees. That left $228 million real rands in all of our real clients' real pockets. In addition to that, we reduced the prices of our card machines. We made our discount rates not just transparent, but lowered them significantly. And that gave back $213 million We dropped our international card fees and we charged zero forex margin. That contributed another 61 million. Then if you look to Connect. Capital Connect and the data that it brings is one of the most valuable rewards our clients can receive. We lowered our Connect prices from the last financial year and that saved our clients 330 million. And in the rewards that we gave, it summed to 108 million. Then finally our 1% give back on our credit card. That saves $107 million. All of that totals to really quite a significant number. The personal bank is our heart. And that also has diversified income. The earnings in personal bank are well diversified between both the net interest income and the net transaction income. Overall, Both are up just over, well, one's up 16, one's up 17%, and you can see the steady growth over the course of the last couple of years. Both great growth on top of a really, really large base. One of the reasons, one of the drivers of that was the continued acceleration in digital payments, digital transactions. As you can see on the left-hand side, cash volumes are only up 10% and a driver of that was cash send. I'll come back to that in a second. Whereas card and digital volumes are up much more significantly. Digital alone, the lighter blue, is up 25% in the year. There is steeper growth in send cash and one of the reasons for that is that it's increasingly being used as a mechanism for the clients to do a cardless cash withdrawal. If you unpack the non-cash payments, looking at the non-cash payments in total, digital payments now make up more than half. The strongest growth you see in the paywallets, that is Apple Pay, Google Pay, Samsung Pay. But you also see really pleasing growth in every single mechanism by which clients make payments. E-commerce up 32%, international and cross-border, our clients transacting outside of South Africa, that's up 29%. The lowest is in traditional plastic. Connectivity has become a utility. It's a basic human need, really, to live, to learn, to connect, obviously, but also to bank in this world. And with Capitec Connect, we've designed a mobile solution, a mobile connectivity solution that stays true to the Capitec fundamentals. If you look at our active three client base, that's up by 67% in the last year. That's incredible growth. And the usage is up even more. It's up three times. 40.5 petabytes. I know in the past we've played with how many songs and movies and that is, but I mean the number by itself is just astounding. What's also really great to see is our voice calls are also going up significantly. And the reason why that's so important is that's an indicator. It's an indication of the client using that SIM as their primary SIM. We've also just launched, right now, free connect-to-connect calling. So one connect client will be able to call another connect client completely free of charge. And then... You guys can feel free to jump in with applause at any time. It works for me. And then just looking at part of that give back, the 78 million of free data, that was three petabytes that we gave to our clients. We couldn't just stop at bringing connectivity. You have to put the device itself into our clients' hands and so we've launched Connect Devices. A highly curated, carefully chosen set of devices which we know are the highest quality, but it's come entry, mid, and upper end. And we've made that incredibly simple to use, incredibly simple to order, and a great experience to receive. It's available in cash, but it's also available on credit, and our credit pricing is transparent. There isn't a deposit. There isn't that first payment due after seven days. Just very simple, easy to understand, R181 a month at its lowest. And we back that up. Not just with the free calling, so all of your voice, cap-a-dick to cap-a-dick is free, but also five gigabytes free a month. So pretty much it's your first year of connectivity taken care of with no network locking. Credit is at the heart of our business and we manage the associated costs and risks prudently. If you look at our credit loss ratio, It's where we want it to be. We have good growth off a large base at good quality. The book growth this year was 9.4% in personal bank credit, but the real growth story is in the credit card, which was 32%. If you look at the disbursements, 27% to 68.7 billion rand. That's driven both by applications from new clients, as well as annuity disbursements. And I think there's a really important point to make. What's most important is that this is driven by the quality of the data that we have. It's driven by the sophistication of our models. And we are saying yes to more clients. Not because we've lowered the bar, but because we know them better. We've continued to diversify where clients get that credit and who those clients are. Purpose Lending has been a real success in the last couple of years and FY26 was no exception. It's up 94% and this speaks to the great experience clients get when they are able to fund what they need in the place that they are buying their car or buying the materials that they're going to use to build their home and increasingly their education. More and more of it is done self-service on the app by making it more available, more accessible. That in itself leads to growth. And because of those, because of those interventions, innovations and more, we also continue to increase the number of clients who choose to bank with us, including with credit. Clients earning more than 50,000 Rand who took credit with us. That value went up by more than 50%. That robust growth came on the back of robust credit card growth. So new limit sales and annuity disbursements are pretty evenly matched from a percentage growth perspective and we've created access to more than 120, sorry 110,000 new credit clients through changing how we look at them, how we look at repayments and how we look at their exposure, which means that we've been able to bring in young adults, 147,000 of them, to help them grow their credit score and grow credit disciplines. And that credit card really is the best one for travel. Why? Because there are no international fees. There are no forex margins or commissions, and that means that when you travel with our card, it's the best rates in the market. We have We of course give the normal package of other rewards that goes along with that, but that 1% cashback on top of the zero international fees or margin means that our clients save a great deal when they use our card to travel rather than another. We encourage and support savings. We have a deliberate pricing strategy to encourage clients to be more deliberate, more purposeful in how they save. And that deliberation has led to a growth in our market share. So we now have 13% market share across all fixed and notice deposits. And that really came because of our strategy, how we communicated, how we communicated with our clients, why it's better for them to plan for their savings, to be deliberate in their savings. And that meant that all of our savings plans grew by 15 billion rand. Mostly that was supported by the really strong growth in the notice deposits This is new to us, and what you can see is really strong growth across both, but particularly in that seven-day product. When we first discussed launching this, there was a lot of questions about the value of that product, and clearly clients are voting with their feet again. This creates a real ability for clients without a long-term commitment to save more, earn more interest, and make their money safer. And because of that, we paid 858 million interest to our clients just for notice counts in the year. Insurance is deeply embedded in our business now. This is the first full year in which all of our sales have been on our own licenses and it has been an incredible effort, an incredible journey by probably most of the people in this auditorium right now. Lives insured in funeral cover is the best way, I think, to look at the organic growth. So we've had a great year and we need to unpack that, but there are a lot of moving parts. Lives insured are now 16.6 million and that's clear and easy to understand. The total sum of insured is now more than 508 billion rand and all of our policies solved now. All of the new policies are on our own license. And with the transition, 43% of everything is now on our own licence. The net insurance results for funeral cover grew really significantly. 58%. But as I said, there were a lot of moving parts to that. So this is one of the more complex slides in the deck. But it's really important to understand that this waterfall helps us break down all of those moving parts. So in moving from the 1.8 billion that we had in FY25 to the 2.9 billion that we had for FY26, you can see the left hand side together. That 33% growth is the business being better. That is in growing our book, growing the number of clients, growing the lives assured, but it's also improvement. It's also improvement in our operations, in our claims, and in our collections, which makes that business more profitable. If you look more to the right-hand side, those are the moving parts that are largely in the income statement itself. That reinsurance, that very significant number, that is the description of the additional earnings we've gained in taking over control of funeral cover, the whole book of funeral cover from Sunland. That was largely cancelled out by yield curves moves late in the year. And we're looking carefully at what the impact of the yield curve is in the years looking forward. But just in the first month, we've seen a significant reverse effect as a result of changes in the interest rates. Moving on to life cover. This is still young for us. But already, we are over 100 billion Rand in summer short. And if you look at how clients choose to use that, and remember we give our clients a choice. Our clients can choose when they set up their policy how it's going to be paid out to their beneficiaries. Whether it's going to be paid out in a lump sum, whether their children's education and needs is going to be taken care of through a trust, or whether it's going to create a monthly income for their family to keep taking care of their family after they're gone. And as you can see from that pie chart, a little over half is in the lump sum, with the risk spread between the children's needs and the monthly income. Moving on to business banking. The byline says it all. We were debating as we prepared these slides that that appeared to be a little bit wordy. But I really like it. It says what we need to. We are empowering business. That's our goal. That's our purpose. And we're doing it with a very simple combination of more affordable, better service, faster credit. And the market has responded well to that offering. If you look back, two years, to February 24th, we had 174,000 active clients. And that was when we rebranded. We rebranded from Mercantile to Capitech Business. And we grew on the back of that to 266,000 one year ago. That's when we simplified our pricing. But we didn't just simplify it. We didn't just simplify it. We made it the same as personal banking. That's a dramatic change, a very significant cost in the fees we charge, in the fees that our clients pay, and it is a first and only in the market. Every business pays just the same as what a personal bank client pays. And we saw the strong growth in that. Then in December, we launched our entrepreneur account. More on that in a second. And there you can see the tick up from there, so that we ended the year with 456,000 active clients split between established businesses entrepreneurs, merchants and forex clients. All of those savings, focusing just on business bank, saved $217 million for our clients and $172,000 of those $15 million at clients are now businesses. That entrepreneur account is so excited about this because What we have here is a bridge between our personal bank and our business bank. This is the account that we've launched for sole proprietors and people with a hustle. And people who want to do something meaningful with that hustle. Maybe even more than one. So that's free. We charge a client fee. We don't charge an account fee. We charge a client fee and this is part of of what you get as a client. In order to be able to manage your various different hustles clearly, well with transparency, you can open up up to four. There's no paperwork. You can run your business off it, including acquiring. And our clients have taken to it with all of the passion that we knew that they would. If you look now at lending, that 30.4 billion Rand book, that's a decent book now. Carl Kumbier, the CEO of our business bank, he was very deliberate in making sure that we highlighted that. And it is worth highlighting. Up 30%. The most exciting part, so we've grown our intuitive and more traditional secured book very significantly in the year. But I'm not focusing on that. I'm focusing on what's more transformational, which is the scored lending book. Our scored lending book Scored lending is automated, quick, fast. It is more accessible through our Scored Overdraft On app. It's available to more people. Those everyday earners through our Pay As You Trade, small amounts taken every day and that creates more accessibility. It creates more access to funding for small businesses who use that funding to grow their businesses. If you look back, $738 million in Feb 24, and then we launched in December, the pay as you trade, and you can see the tick there, so that we ended the year with a book of $3.1 billion, and we're not stopping there, because this is one of the ways in which we grow the country around us. Our merchant acquiring business is also growing fast. In the last year, we've grown significantly so that we now have 112,000 active merchants. Because we have the best machines, they're the fastest. Wherever you go and you ask a vendor, they will tell you. But it's also transparent pricing, easy to understand, and the lowest. Across the whole year, merchants trading on our merchant acquiring devices, our POS devices, did turnover of almost 100 billion rand. Moving on to Aberfan. I really am excited by the work being done in Aberfan and the work being done by the management at Aberfan. Aberfan gives us a solid foothold in all of the markets in which we're established. And I know that it has significant potential to create so much value for clients in all of those markets. If you look at the last year and focus on the profit, it will appear as if we had a year that went backwards. And you shouldn't see that. Because what you should see is that we are investing in the future. When we acquire other things, One aspect which was obvious immediately was that the rates were too high and we needed to rethink our product from the perspective of our clients. We need to increase the tenor and reduce prices and that we have done in FY26 across all markets. Now there have been mixed results to those experiments and to those new products but we iterate and we improve And we start to see real benefit coming, particularly in Latvia, where the book has doubled. And I think we created a blueprint for what we can do in the rest of the European markets. On the back of that, growth in the actual loan disbursements was very strong, 629 million euros just in the year. And we continue to invest in the future. An additional key challenge that we identified is the over reliance on third party online websites and API partners in order to bring us our distribution. It's a limiting factor, it's not good for the client and it pushes up prices. So our focus in the year ahead in addition to continuing to change the product for our clients and reduce prices is also increased distribution and to take control of direct distribution. Direct distribution through digital which you will see, for example, in Poland with the launch of the app that's coming. It's also physical distribution. Our engagement with Latvia Post in Latvia. our branches in Mexico, our cooperation with retailers in Mexico, to give us the physical presence that we need to be able to serve our clients directly and break that over-reliance on API partners and websites. And all of this we do leveraging the platform and the infrastructure that Capitec has, so that when Aberfin does, we are able to execute more effectively, more efficiently, and more securely. Focusing now on group ethics, we always reinvest in our future and we also always remain disciplined as we do so. Our total expenses increased by 12% to 20.2 billion rand. If you split that out, what you can see is that 7 billion of that is salaries. That's up by 12%. Growing and investing in people. If you look at all of our IT expenses, including salaries, that's up by 18%, with all others up by 10%. Now, all of these numbers are the whole group, including Aberfan. If you take Aberfan out and look just at South Africa, salaries excluding Aberfan are up 11%, and that other is up by only 7%. We are proud of the positive impact on communities and people. Through the Kapicek Foundation, we are working inside 33 public high schools with our whole school approach and that whole school approach is not one of workshops or days away. They are sustained, deliberate, multi-year efforts in which we have touched and improved the lines of nearly 23,000 learners, and made a meaningful difference, a meaningful lift, particularly in maths, maths results, and those maths outcomes, they come at scale. All of you, our employees, sure too, 3,400 people contributed to early childhood education. in more than 1,000 interventions. And then money up. Since its launch, South Africans have taken more than 3.7 million money up courses and micro lessons. Free, mobile, practical financial education, open and available everywhere, anytime. And this means something, because the better you understand the money, the better you are going to be able to manage your life and for you to be as more resilient. What makes me personally most proud is when our people grow in their careers. If you look at all of the interventions we've put in place in the last couple of years, particularly learning and development and training people to not just do the job that they're doing really well, but to be able to take the next step in their careers and the step after that and the step after that. If you look at what we've done on wellness, And the opportunities we create through internal mobility, what that's led to, amongst other things, is a really significant drop in our attrition rate to 8.89%. That internal mobility program, the deliberate support and reaching out for people to be able to take the next step in their careers, even if that step is completely different to what they're doing today, has led to promotions. And that means an internal hire rate of more than two-thirds. We continue to invest in hiring youth. 87% of all of our external hires are youth and we invest in their training with more than a thousand learnerships, bursaries, graduate development programs. Changing gear, I would like to share with you some of the creative solutions that are enabling us to serve our clients better and to protect them better. So, forward prevention. Making sure that our clients are safe, their money is safe, their data is safe is our top priority and we've made significant strides. More than 650 of our best people, people in this room, work on this. That's how important it is to us. We've made significant strides and our interventions saved our clients. 673 million rand in fraud that was stopped before it happened in the last year. Looking at what we've either just launched or is coming soon, additional simple solutions that create value on our clients' lives, available on our app. We have CapTech pay live in third-party apps, including Checker 6060. You will soon, in the next day or two, or three, see bus tickets, intricate bus tickets, live on our app for the first time, our next value added service, bringing the affordability, simplicity to our clients when they travel. This is the first of our travel offerings. And you can now send money through our cross-border remittances to 26 countries. We recently have spent a lot of time talking about the Smart ID process that we've launched together in partnership with the Department of Home Affairs. And this application process in our branches, I think, is an excellent example of the public and private sectors working together brilliantly for the benefit of South Africans. We are live now in 86 branches and we will soon be in 100. Our plan... The plan we're working towards is to be in over 350 by the end of the year. We've had 71,000 successful applications to date. And that is going to grow and grow as we roll out more branches and word gets out. Looking at what we're doing with respect to AI. I think there are so many important points on this one. But firstly, the most important point to lead with is this is not a future aspiration. This is real in our lives now and it is already at work, at work for us. We've invested significantly and we have active and valuable implementations across the whole business that create value by personalizing service for our clients, by protecting them, protecting them from fraud and all manner of financial crime, and protecting them in the moments that need it, and empowering them, empowering all of us. Almost every single person working at Capitec touches a GenAI tool every day, whether it's in the branches of the BSC through Neo and Pulse. Those abilities to understand our clients in context and serve them more quickly, more thoroughly, more correctly. But also directly. Almost 5,000 people are using these GenAI tools split across Cloud Copilot and Mitrop 365 Copilot and ChatGCB. All of those 5,000 people on average using it four times a day and we're not stopping clearly now. More and more and more will happen and there's a very important message. What we are not trying to do here is save costs. Our strategy is not to save or reduce headcount. Our strategy is to use these tools to make all of us so much more. To be able to serve all of our clients so much more and get to that big vision in the future without scaling costs. Looking at that big vision in the future, the next 25 years starts, as always, every day. And we first protect and grow what has made us strong. We protect and grow our personal bank and we do so by making sure that we prioritize those things which make our system stable and keep our clients secure and develop, deliver beautiful client experiences to them in the moments that really matter to them. Looking slightly further on, we are acting now. Significant action today. Significant execution today. To accelerate our key businesses that will create so much of our growth in the one to three year time horizon. Slightly further into our earning future, we are delivering and growing embedded finance and our enterprise payments businesses that will then kick up our growth significance in three to five years. And then looking even further beyond that, we have already started to build and capacitate our new businesses. What Capitech means outside of South Africa, in addition to everything, as well as data and media business, and insights on media business, really, that can bring new value to all of our clients, especially our business clients. And all of it, of course, is built on that foundation that we started with. Our culture. Who we are. the platforms that we use and our business model, our approach to seeing and serving the whole person that is our client. And so I would like to end as I began with very sincere gratitude. Thank you to all of our teams, all of our people. Again, it is through you that we've delivered these results and I'm very privileged to be able to stand here with you to deliver them. Thank you also to our board members for your excellent guidance, to our shareholders for your support, and to our clients. Thank you for continuing to trust us. Thank you. So we have covered a lot in a short space of time. And so Grant is joining me up on stage and we will together do our very best to answer any questions that you might have.

Can you hear me? Is it on?

Sorry, can you just turn the mic on here for Lingi, please?

There you go. The first question is from Harry Botha, Bank of America. Can you unpack the net interest income growth in the second half of 26? Were there any noteworthy headwinds, particularly in interest expense? And then the second question, do you want me to do it after? The second question is what percentage of your business bank relationships are likely primary relationships with consistent transactional account activity?

Okay, so the first question we did address partly at half year. What we did at the start of this year is on our main accounts, we had a tiered balance in the prior financial year. So we used to pay interest based on the amounts that was in your account, and we moved that from, let's say, a tiered approach to a flat rate, which is currently 2%. What that then allowed us to do is to pay higher interests on the various savings pockets. So anytime access accounts, notice deposits, as well as fixed. So that drop in the interest expense has effectively been caused by moving the main account balance to a flat rate. We didn't see any further acceleration of people moving balances faster in the second half of the year than the first half of the year.

Then answering the second question, by client number, the significant majority of small businesses have their primary relationship with us. And that is something that we expect to continue to see growing as a proportion.

Just to add to that, I mean the accounts that we highlight from the business bank side, those are active clients who are using those accounts. So there will be cases where they may or may not have credit elsewhere and obviously we then try to bring them across to be fully banked with Capitec from a business banking perspective.

And then the next set of questions are from Charles Russell at Standard Bank. First question, can you unpack the 9% higher deposits and funding versus the 8% lower interest expense?

Okay, I think that touches back to Harry's first question. So it is moving that main account to a flat rate. Remember that 2% is 2% more than the majority of the market is paying on main accounts, where it's actually closer to zero. And then, yeah.

And then, of course, we also did have a declining interest rate transfer, yeah.

And then do you have a sense of the size of the addressable market for the simple life products? For the life products.

It's a really interesting question that we consider really carefully ourselves all the time. When we're talking about simplified life, what we're not trying to do particularly is swap house with people who've already got existing life cover elsewhere. What we're looking to do is grow a brand new market. And exactly what that market is, it is quite hard to get your hands around exactly the size of it. But what we do know is significant. It's significantly bigger than what we have today.

A few questions from Ross Gricker at Embesic. First question, are there any more major give-back plans in the pipeline for the coming year?

I think Graham highlighted in his presentation giving back to our clients and growth work hand in hand. So we're consistently asking ourselves are we giving back enough? We want to make sure that the value we provide for our clients gets better and better. And the scale that we have we continue to pass that benefit back. So I don't think that is something that ever stops.

And then just to add to that, if you don't mind, we do have some plan, but even more importantly than that, the way that we set up both in terms of how we run the business but also how we think is we're going to continue to look for more opportunities and we'll be agile in those opportunities to give back.

And then, please comment on how you see the personal bank credit loss ratio evolving in the coming year in the face of rising macro uncertainty.

Look, I mean, that's a very, very tough one to answer. The unsecured lending book is really based on how the economy performs. There's a lot of, let's say, fluidity in that and what's happening globally. We, as always, try to be prudent and very agile in our approach to unsecured credit. I spend over 40% of my time specifically on It's an unsecured credit side. So we keep our ears to the ground and make changes as we can. At the moment, we think the book is well placed, but obviously as the year plays out, we'll have to adjust to that and see how that plays out.

Absolutely. And if you look at the drivers of that credit loss ratio this year and think through how it's going to unfold in the year ahead, one of the drivers is strong book growth. We are still growing that book strongly and you can expect it to tick up slightly as a result of that. One of the other drivers is the change in mix to more scored and unsecured lending in the business bank side. And that empowers small businesses so we're going to grow that book even faster and it will tick up slowly as a result of that in addition to I think the context of the question which was the global uncertainty. That will also add some upside I think to that number. but we definitely see it growing within our appetite and as per our plan.

And then a few questions from James Stark. First question is on the expected credit loss coverage ratio, a decline to 25.5% from 2017, partly reflecting the release of the forward-looking overlays. Could you outline the macroeconomic assumptions embedded in the provisioning model and what triggers could prompt a rebuild of overlays if the conditions deteriorate?

Thanks, James. I think firstly, it's also if you look at that Stage 3 book for the personal bank, you saw the percentage of the book in Stage 3 actually decrease. So you are seeing the book looking healthier, which is driving, let's say, a portion of that release. It was quite interesting because the U.S.-Iran conflict broke out on the 28th of Feb, which was in the day of our year-end. So we have built in a fourth severe scenario where we allocated probability to. That scenario specifically had oil being over $100 for an elongated period of time, so interest rates increasing as well as inflation and devaluation in the RAND. We adjust that as things move. I mean, even in March we've changed the weightings again and applied more to our severe scenario as well as our low scenario. So I think that situation is fluid and we manage it as we have more information.

And then another question from James. Business banking, loan and deposit volume growth has been impressive. How should we think about the temper of growth in this area going forward?

Look, we haven't provided guidance specifically on it. If you see it's grown at 30%, I think that should continue into the foreseeable future. We really focus on the product, making sure that it's right, making sure that the client's getting the best product, and the outcome then takes care of itself. But I think we should be able to continue the run rate that you're seeing come through at the moment.

Graham, I think this one's for you. On international expansion and acquisitions, please can you expand on the nature and extent of this ambition, touching on market segments, geographies, and lines of business?

So where we are right now is still properly planning for the future. What we knew is that in order to be able to take the second, third and fourth steps, we had to take the first step. And that first step is creating and filling a team of the best to focus only on developing the strategy. That we started doing. Part of the initial work is really filtering the world, filtering the world for what the opportunities are that are available to us, looking for both territories that suit us and our future strategies, as well as overlay what our strengths are compared to what are the gaps in the market. We're right at the beginning of that still. But the step we've taken forward is a dedication of really excellent people to that strategy.

And then the last question from James. This is about Aberfan and its trajectory. Aberfan contributed $128 million to headline earnings with a credit loss ratio of 53.2%. Please discuss the expected profitability growth path forward.

So the focus with Aberfan is about building the foundations of what to take the business forward. The business is profitable, but we're not focused on profitability in the short term. It's about making sure we set the business up right in the long term Graham mentioned some of the challenges we face in terms of API partners and how we currently acquire clients. So we are trialing things in some of the countries, for example, partnerships with retailers in Mexico, opening a few branches to see how those go in Mexico. So don't think about short-term profitability. For us, it's all about the long-term and making sure we set the business up with success.

Perfect. And then a few questions, one from the near armoured. Can you comment on the recently announced partnership with WISE? What benefit does the partnership bring that you didn't bring before in international payments?

Sure. Really what we're looking at is serving our clients better always, including being able to bring down prices, increase speed and so forth. In the international payment space, there is a lot of drag. There's a lot of drag in both time and in cost. And so one of the solutions is multiple rails and redundancy in those rails, making sure that we can select the best rail to bring the international payment to our client's account the fastest and at the lowest cost. And what you can expect is to continue to see an expansion in those choices available to us so that we can make the right decision for our client.

And then the last question from Roscoe Hood in Bestek. Please elaborate on the data and media solutions within future growth and the future growth side in terms of what that offering might look like.

Sure. So this is really far out. And thinking about it in the context of income is really much too early. But what we do know is this. We do know there will be significant power, significant value created when we bring together the strengths of our personal bank and our business bank. To a very large extent, we are doing that together already with a single service model, with serving entrepreneurs across both. One of the other ways that we bring additional momentum to the flywheel is bringing insights to our business clients, giving them the insights to enable their businesses to grow. We see ability to lower friction in their processes, saving them time and cost through properly curated data services and in helping them grow their business through getting to the right media, getting their messages out to the right audience.

And that is the last of the questions.

Thank you.

Thank you very much.

Thank you. So thank you very much everybody. We are now going to cut the external fees and we'll move across to a town hall just with capital people. Thanks a lot.