Capitec Bank Holdings Limited

[Presentation] Ladies and gentlemen, please put your hands together for our CEO, Graham Lee.

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 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 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, 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, obsessing 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 built 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, that -- 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've continued to grow our client base despite it already being so large.

So 26 million clients now across all of our ecosystem, including Avafin. 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 around 45 million.

That means roughly 1/3, more than 1 in 3 of all adult South Africans used 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 ZAR 16.8 billion.

And this comes from balanced growth. As you can see, that growth is balanced in both the net interest income as well as the noninterest income, what's coming from transactions and Connect and VAS and insurance.

If you look at the balance between those, the proportions, just over 2/3 of all of our income from operations comes from the noninterest 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 Capitec Connect, insurance and value-added services.

All of this was done investing in the future with discipline, with cost control 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 3 things.

So firstly, under the credit impairment charge, overall, the company had went up 21%, but that was lifted quite a lot by Avafin. 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 credit impairment charge for South Africa grew by 13%. Then there are 2 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, there was -- in the sale, 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 Avafin, 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 launch pad. That is the launch pad from which all of our other businesses fly.

Value-added services, connect and 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 Avafin are still early in their growth journeys. They are our 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 ZAR 1 billion in client savings.

Now that breaks down like this. In the fees we dropped from last year to this year, we gave back ZAR 228 million in reduced fees.

That left ZAR 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 ZAR 213 million.

We dropped our international card fees, and we charged 0 Forex margin. That contributed another ZAR 61 million.

Then if you look to Connect, Capitec 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 ZAR 330 million.

And in the rewards that we gave, it summed to ZAR 108 million. Then finally, our 1% giveback on our credit card.

That saved ZAR 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 noncash payments, looking at the noncash payments in total, digital payments now make up more than half.

The strongest growth you see in the pay wallets, 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 is 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 3 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 3x, 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 bytes 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 to Connect client completely free of charge. And then -- you guys can feel free to jump in with the applause at any time.

It works for me. And then just looking at part of that giveback, the 78 million of free data, that was 3 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 have the highest quality, but which 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 7 days, just very simple, easy to understand, ZAR 181 a month at its lowest.

And we back that up, not just with the free calling. So all of your voice Capitec to Capitec is free, but also 5 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 ZAR 68.7 billion.

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 credits and who those clients are.

Purpose lending has been a real success in the last couple of years, and FY '26 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 has 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 ZAR 50,000 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, of course, give the normal package of other rewards that goes along with that, but that 1% cash back on top of the 0 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 communicate it, how we communicate with our clients, why it's better for them to be -- to plan for their savings, to be deliberate in their savings. And that means that all of our savings plans grew by ZAR 15 billion.

Mostly that was supported by the really strong growth in the notice deposit. This is new to us.

And what you can see is really strong growth across both, but particularly in that 7-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 ZAR 858 million interest to our clients just for notice accounts 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 assured 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, there are now 16.6 million, and that's clear and easy to understand.

The total sum assured is now more than ZAR 508 billion, and all of our policies sold now. All of the new policies are on our own license.

And with the transition, 43% of everything is now on our own license. The net insurance result for funeral cover grew really significantly.

58%. But as I said, there are 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 ZAR 1.8 billion that we had in FY '25 to the ZAR 2.9 billion that we have for FY '26, 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 their 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, a very significant number. That is the description of what -- of the additional earnings we've gained in taking over control of funeral cover, the whole book of funeral cover from Sanlam.

That was largely canceled out by yield curve moves later in the year. And we've been 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 of that 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 ZAR 100 billion in sum assured.

And if you look at how clients choose to use that, and remember, we give our clients 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 rest 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 2 years to February '24, we had 174,000 active clients, and that was when we rebranded.

We rebranded from Mercantile to Capitec business. And we grew on the back of that to 266,000, 1 year ago.

That's when we simplified our pricing, but we didn't just simplified 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 ZAR 217 million for our clients, and 172,000 of those 15 million app clients are now businesses. That entrepreneur account, 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 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 to 4. 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 ZAR 30.4 billion book, that's a decent book now.

Karl 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 score 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, ZAR 738 million in Feb '24, and then we launched in December, the pay-as-you-trade, and you can see the kick there so that we ended the year with a book of ZAR 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 ZAR 100 billion. Moving on to Avafin.

I really am excited by the work being done in Avafin and the work being done by the management at Avafin. Avafin 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 acquired Avafin, 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 FY '26 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've 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, EUR 629 million just in the year, and we continue to invest in the future.

An additional key challenge that we identified is the overreliance 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 overreliance on API partners and websites.

And all of this we do, leveraging the platform and the infrastructure that Capitec has so that when Avafin does it, we are able to execute more effectively, more efficiently and more securely. Focusing now on group OpEx.

We always reinvest in our future, and we also always remain disciplined as we do so. Our total expenses increased by 12% to ZAR 20.2 billion.

If you split that out, what you can see is that ZAR 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 Avafin.

If you take Avafin out and look just at South Africa, salaries, excluding Avafin are up 11%, and that other is up by only 7%. We are proud of the positive impact on communities and people.

Through the Capitec Foundation, we are working inside 33 public high schools with our whole school approach. And that whole school approach is -- those are not one-off workshops or days away.

They are sustained, deliberate multiyear efforts in which we have touched and improved the lives 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 show up too, 3,400 people contributed to early childhood education in more than 1,000 interventions. And then MoneyUp.

Since its launch, South Africans have taken more than 3.7 million MoneyUp 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're 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 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 2/3. We continue to invest in hiring youth, 87% of all of our external are youth, and we invest in their training with more than 1,000 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 fraud prevention, making sure that our clients are safe, their money is safe, their data 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 ZAR 673 million 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 in our clients' lives available on our app.

We have Capitec Pay live in third-party apps, including Checkers Sixty60. You will soon in the next day or 2 or 3, see bus tickets, Intercape 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. 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 from fraud in 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 Gen AI tool every day, whether it's in the branches or 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 Gen AI tools split across Claude Copilot and Microsoft 365 Copilot and ChatGPT.

All of those 5,000 people on average using it 4 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 1- to 3-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 significantly in 3 to 5 years. And then looking even further beyond that, we have already started to build and capacitate our new businesses.

What Capitec means outside of South Africa in addition to Avafin as well as a data and media business and insights and 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 has joined 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, you can just send the mic on, yes, for Lange, please.

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.

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 amount 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 a higher interest 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.

Yes. Just to add to that, I mean the accounts that we highlight on 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 accounts to a flat rate. Remember that 2% is 2% more than the majority of the market is paying on many accounts, where it's actually closer to 0.

And then -- yes.

And then, of course, we also did have a declining interest rate trend in the year.

And then do you have a sense of the size of the addressable market for the simple life product, for the life?

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-outs 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 Krige at Investec. First question, are there any more major fee giveback plans in the pipeline for the coming year?

I think Graham highlighted in his presentation, giving back to our clients in 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 never stops.

Yes. 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're 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.

Well, 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 let's say, the 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 Starke. First question is on the expected credit loss coverage ratio, a decline from 25.5% -- declined to 25.5% from 27%, 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. So 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 we -- 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 tempo 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 is 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 1 is 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?

Sure. 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've started doing.

And 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 in 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 what 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 Avafin and its trajectory.

Avafin contributed ZAR 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 Avafin is about building the foundations of which 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 for success.

Perfect. And then a few questions, one from Muneer Ahmed.

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?

So really, what we're looking at is serving our clients better always, including being able to bring down prices, increased 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 that international payment to our clients' 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 clients.

And then the last question from Ross Krige, Investec. Please elaborate on the data and media solutions within future growth -- in the future growth slide 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 some -- 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, help -- 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 feed, and we'll move across to a town hall just with Capitec people. Thanks a lot.