Capitec Bank Hldgs Ltd

Please welcome to the stage our CEO, Graham Lee.

Thank you.

Good morning everybody. Thank you for being here. Thank you to all of the Catholic people, all 7,781 of you for the excellent job that you've done. These results are yours. From client care to the branches, from tech and data, to our risk teams and finance teams and HR and everybody. The job you've done has been exceptional. Thank you so much. It's been a half in which there has been a little bit of global uncertainty and our approach has been to simply continue. To continue to calmly focus on our clients. to make a meaningful difference in now more than 26 million of those clients and to diversify our income and to focus on executing our business plan. And executing our business plan leads to clients being served well. We now have more than 26.6 million clients, that's up 7%. That's pretty cool. All of this was delivered as a team. All of these client numbers, all of the client experience that we're so proud of was delivered as a team. Because we delivered the results as a team, we're also going to be delivering this presentation as a team. So a little bit later on, Bassani and Dipesh and Carl will come up and speak on personal bank, insurance and business bank respectively. And if you are wondering why we're all dressed so similarly, It's because we are modeling for you. We are modeling for you our new branch uniform which will be in our branches from December. When you look at these client numbers, what pleases all of us most is the depth. 16.5 million people are active on our app now. Active on our app every single month. Highly engaged. And are fully banked clients. They're now at 10.4 million. That's the growth which really drives our business. And if you look at the segments which have the highest potential, High income earners, people who earn above 50,000 rand, that's up 22%, and multiple income earners. People working in the gig economy, people with hustles, entrepreneurs, that's up 138%, those client numbers, and then of course businesses. Businesses and entrepreneurs together now comprise 686,000 clients. And this is the base, these clients are our asset from which we will grow. All of our future businesses. At Capitec, what we build is for everyone. We don't discriminate. What we don't do is create something exclusive just for a few. We differentiate without discrimination. And our offer resonates with many different types of clients and you can see here just two of them. So, banking the youth is where we build the next 25 years. We now serve 4.9 million clients who are aged between 18 and 25. 78% of these are app clients. Clients taking credit card for the first time, a youth credit card, accessible credit card, is up 57%. And for young people that's an opportunity to build a score. To be able to develop their credit responsibly supported by rewards that are meaningful to them. And then our credit card remains the best card to travel with. It travels exceptionally well. No forex fees, no international commission, no forex margins, 1% cashback on everything, as well as the free lounge access, the free travel insurance that you'd expect. It now means that our card has been used in the last six months in 178 different countries. Clients respond to our fundamentals and the fact that we put them first. So, you've seen the slide before, as I mentioned last time, you'll see it again next time and the time after, that's the point. Our founding philosophy hasn't changed. Our fundamentals, how we design and build for our clients, of simplicity, affordability, Accessibility and personalised experience. They remind our watchwords. And how we show up, how we as individuals, employees of Captec, show up putting our client first with energy and with ownership, that's what sets us apart. The world around us changes, our principles don't. Our vision is to be the most trusted. In a world of AI-enabled crime, being the safest bank isn't hygiene, it's a competitive advantage. And so we put so much into continuing to develop everything we can to protect our clients. We use the world's best technologies, including but not limited to AI, to identify and categorise fraud as it emerges, at the level of individual conversations themselves. We see new patterns earlier. We create interventions earlier so that we can be there in the moment that our client needs us, not too late. The result of that is that in the last six months we have protected clients from themselves and prevented more than 229 million in scams by helping the client see it before it happens. and our clients notice. The banking division of the financial ombudsman has received more than 4,600 complaints from the banking industry in totality. Most of those relate to banking fraud, digital fraud mostly. Capitec is 18% of those complaints. Far too high but it is much lower than our market share. We have by far the lowest complaint to client ratio of any one of the significant banks. and we're never going to stop. We release improvements every single day and these are just a couple. So, secure safe. Hide your accounts on your app when you want to, when you never want it to be visible to anybody else. Malware alerts, now scan your entire phone and prevent dangerous apps from interacting with all of your other apps. ScanCheck now screens links and messages for you. That's a first in South Africa to help you identify when this is not legitimate. And then Trusted Approval is coming soon. That is the ability for you to ask somebody else for any high risk or high value payments to be part of the approval process so that you can be stronger than just yourself. Turning to the economy. It's given us some mixed signals. Formal market growth stumbled in the second quarter. And you can see that trade, manufacturing and mining all contracted. But what we see from our data is that this is not broad based across all of our clients. It's very much concentrated in specific sectors. And there are data points that we find encouraging. So firstly, non-salary inflows. In close coming, two people on a regular basis that are not from a formal employer. They continue to outgrow salaries. So 5.8% for the non-salary income compared to 3.5% growth for the salaries. That is the entrepreneurship and ingenuity of the emerging market at work. We also take great comfort in all of the great work being done as part of the collaboration between government and business. And we continue to make a difference together in improving our economy and growing business confidence. And then if you look at the client level data itself, what we see is a picture of transactions across our client base remains healthy. And that gives us some cautious optimism for growth in the future. Clients themselves though do face headwinds if you look beyond what we're simply seeing in the data today. and look forward to 12 months and 18 months from now. So two of the great risks are a re-escalation of both global conflict and then from that the global rates and inflation at flow. There's also a risk that an exaggerated El Nino event will lead to higher food price inflation and both of those will weigh heavily on our clients and economy. The fuel and Transport, particularly tax inflation as you can see up on the screen at 20%, they are bad news for our clients both now because they are having to pay those costs but also because they are lead indicators of further inflation to follow because so much of our economy is based on logistics that travels on road. Households are responding in the way that they always do, by prioritising, by prioritising what's necessary and making the shifts that they need to do to manage their lives. and our data lets us see the different ways in which our clients are adapting. Youth under 25 and lower income owners are reducing the discretionary spend and concentrating it much more both in transport and groceries. Higher income owners, as a contrast, are spending much more on clothing. Two really interesting data points, although small, is that more affluent clients have a very significant increase in luxury brand clothing. That's up 16%. And the paid for use of AI, people using paid for AI subscriptions, that's gone up 122% from a very low base. Thinking of our business plan, we strategize and execute and think and plan all in multiple time frames in order to be able to diversify our income and serve our clients. We prioritize always protecting and growing what we have, our base. I've showed this to everyone before at the beginning of the year and the message is simply that we're continuing to execute our business plans. Our strategy remains unchanged. and executing our business plans together yields results. Our key indicators show quality growth. Our headline earnings are up 19% now to 9.5 billion rounds. That growth comes from all sides of the business. So if you look up on screen, we grew our net interest income by 7% to 12.7 billion and on the other side our non-interest income is up even more, 21% to 16.1 billion. That non-interest income now comprises 70% of all of our income from operations after taking credit and payments into account. Our credit and payments are up 21% to 5.7 billion. and our credit loss ratio has raised as a group from 7.9% to 8.4%. Now, these credit numbers are very important numbers that I'd like to explain clearly. Out of context, I can imagine that they would be cause for concern. But I'd like to give you assurance that these are sensible numbers that indicate that we are executing our business plan. And I'll tell you why. There are four drivers of these numbers. So the first is that we deliberately raised our forward-looking macroeconomic provisions early. Not because of the experience that we're having now, but looking ahead to 12 and 18 months where we think the macro is going to be tougher. That's proactive. The second is we planned to grow our loan sales and our credit book. We have. We have significantly grown our loan sales and our credit book and the implications of that in the short term are a large upfront provision and the book against which we're holding our provisions is much bigger. That's successfully executing our strategy. The third is there's been a change in the mix. A changing mix in our business bank, particularly towards more scored unsecured lending, for which we price. That's executing our plan. And then lastly, the driver is serving emerging markets. Bringing a business you pay as you earn that is appropriate to the small traders, the mechanics, the hairdressers and salons, all the emerging markets who need to pay differently. That's brand new business for us and we're providing prudently whilst we grow and learn. Those are the drivers of those two numbers. Funeral life cover is up very significantly, 32%. Dipesh will talk about that a little bit more. And operating expenses are up only 5% to 10.5 billion Rand. And we held our return on equity steady. If you look at where our income comes from, it's now even more evenly spread than previously. So we're not dependent on one single income stream. All are now significant in proportion. and are independent enough to provide quality diversification. Personal banking contributes 37%, as well as the platform of branches and service and people upon which our brand is based. FinTech, which has everything to do with Baz and Capitec Connect and the advances that go along with that, is now at 29%. Insurance, 27%. Business Banking 6% and all of those will be unpacked in detail just now. Avafin contributed 90 million rands to the heart's earnings. That's down from 120 million. And the reason for that, it's expected, is because the plan at Avafin is to increase term, reduce rates, and attract better quality clients, which in the short term means that we're earning less interest income. The proof point of that is that Aberfan's credit loss ratio has gone down by more than a third. Looking at our expenses in total as a group, overall the expense growth is very muted. What you can see if you look at the different components though is salaries go up by 10%. We have more people serving all of our clients. If you take all of our IT investments, that's The optics that we put directly into our systems, into our hardware, into our software, as well as all of the brilliant people who do so much of the work, that's up by 12%. Our incentives are down slightly, and that's driven largely by a small decrease in the share price since the beginning of the financial year, and then all of our expenses are flat. Just a thought, is that in the previous years, we invested very heavily, particularly in technology and data, We created new businesses, insurance and business banking. We invested very heavily in providing platforms that would scale in the future. And now those businesses are turning. Now the revenue of those businesses are growing far more than the expense of the platforms. I will now hand over to Bassani, who is going to take you through personal banking.