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Edited Transcript of CPI.J earnings conference call or presentation 29-Mar-17 3:30pm GMT

Thomson Reuters StreetEvents

Q4 2016/2017 Capitec Bank Holdings Ltd Earnings Call

Mar 29, 2017 (Thomson StreetEvents) -- Edited Transcript of Capitec Bank Holdings Ltd earnings conference call or presentation Wednesday, March 29, 2017 at 3:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Gerrie Fourie

Capitec Bank Holdings Limited - CEO

* Andre du Plessis

Capitec Bank Holdings Limited - CFO

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Conference Call Participants

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* David Justice

CWI - Analyst

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to the Capitec Bank 2017 Financial Results Conference Call hosted by Macquarie Equities. All participants are currently in listen-only mode. And there will be an opportunity for you to ask questions later during the conference.

(Operator instructions) Please also note that this call is being recorded.

I would now like to turn the conference over to (inaudible). Please go ahead, sir.

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Unidentified Company Representative [2]

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Hi, good evening, ladies and gentlemen. Thanks for joining the Capitec 2017 Financial Results Conference. With me, I have Gerrie Fourie, the CEO and Andre du Plessis, the CFO, who will run you through the results presentation. And at the end, they will open up the line for questions. So, I'll be handing over to Fourie.

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Gerrie Fourie, Capitec Bank Holdings Limited - CEO [3]

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Good evening ladies and gentlemen. I'll start with -- or the areas that I'll cover is the key indicators, economic overview, banking clients, our service model, and then credit funding and then the international deal and then looking a little bit at the future.

I'll start off on page 4, a look at our earnings growth of 18% primarily driven by the increase in new clients, I think everyone has seen the number. Our new client has grown 18% or 1.3 million, the highest ever. We had a very good month on clients and I will elaborate on that a little bit later.

And I think on the credit side, given the economy, we managed that quite well. So I think, overall, I said -- last year this time I said, given the economy, people are going to look for value for money and we should see and make use of the opportunity to grow our client base, that has materialized. And on the credit side, we need to be conservative. If I look at the key indicators, by far, 27% on return on equity, a little bit higher than our expectations of 25%, or our targets of 25%, but we're still happy with that figure.

Cost to income ratio, in line, we aiming for 35%, but the last couple of six-month periods, we own 34%. So again, even with the increase in volumes and with our operating expenses going up, 18%, we manage to get our cost to income at 34%.

Net transactional fee income to operating expenses, that's up to 72%, I think it's a very nice performance, if you look at our transactional income, that's up 30%. I think the one thing that one needs to be careful, if you look at your transactional income, as we, and I will elaborate on that later on, and we're starting to see a big swing to self-help devices, the USSD and DNRs and in very simple terms, if a client transacts in the branch, that cost him ZAR5 per transaction and if I was doing it on a self-help device, it's ZAR150. So that will have effect on your transactional income, but then note, it will have a very positive effect again on your costing side. So we are very happy with the transactional income growth and you can see 37% of our income is coming through now from transactional side. So we're not that dependent on the credit side anymore.

I'll start off with the economic overview, I'm skipping over to page 11, I think if you look at the macroeconomy, a lot of unexpected things has happened. It was 18 months ago, I had a meeting with Mmusi Maimane, the DA leader and he said to me then that they're planning to talk before Metropolis in South Africa. I thought he was quite brave, as we know, that has happened. We know what has happened of Brexit, nobody predicted that. We know what's happened with Trump, nobody predicted that, and then in Africa, we've got the problem of gold and silver that keeps (inaudible) optimistic about the economy, and suddenly you're in an uncertain territory now.

So, if we look at what the effect of that is, if we go to the next page 12, you can see on the retrenchment side, you can see in the beginning of the year, we ran around about 14,000, retrenchments, 15,000 retrenchments per month. That has now dropped down to 800. So I think from a retrenchment point of view, we have seen a strong decline, so that is positive. But if you start looking at your debt review, you can clearly see debt review is up about -- roughly about 20%.

And what is quite concerning, it's more the high-income clients that's going under debt review, debt review gets advertisers quite heavily in South Africa at this stage and people think it's a easy way to get renovated debt and they don't understand the long-term consequences of that.

On the next page, page 13 is the inflation impact in South Africa. And you can clearly see what the food inflation has done. It's gone up from 4.4% to a record high of 12%, maize went up to 18% and that had a tremendous effect on your lower-income people. The expectation is that the 12% will drop to 6% by mid-year.

If we look at the February figure that was released last week, the drop percent already dropped to 9%. So I think the 6% is definitely on, and then the expectation is that inflation, generally, will drop to a 4%, 5%. The interesting aspect that one doesn't know is what is going to happen with political risk. We all know that the exchange rate has deteriorated from about ZAR12.52 to around about ZAR13 this week already.

If we look at the next page, page 14, and that's a very interesting one. What we're doing here is, we're trying to see what is happening of our banking clients. What is the inflows that's coming through. Remember that the net inflow after taxes has been deducted. So that is what we actually have seen, what was coming into the bank accounts. We've adjusted it for inflation, and what is important is this is 2.7 million clients, of the 2.7 million clients, 700,000 clients that know inflow.

So where they've received a salary, the salary was -- they were -- they stopped earning a salary or maybe they reverted to another bank. So it's important to take that income consideration but, we're seeing a very small portion of reverters. So, the biggest portion is, a person is getting unemployed. And you can clearly see the effect, if you compare all different income brackets that there is a marked deterioration in income coming through right across and that's in line with we experiencing of a bigger reduction on over time and on bonuses. If you look at the current income and we classify that as purely over time and bonuses, on average it's about -- 27% of a person's income is coming from those two elements and there is a big cutback on that side.

If we look at page 15, what we've done, we've shown that in September -- but we're just showing you, again, 535,000 clients is exactly the same clients is a year ago. And you can see the stress that the private sectors has taken where 40% cash available has deteriorated from 84% to 70%. And you can clearly see that is and predominantly in the people earning less than ZAR5,000. So what we clearly are seeing is, coming a little bit to credit, is that the lower income people are taking a strain, we've cut back seriously on low-income side and then we've seen -- on the small and tiny companies, we've seen quite a lot of companies closing down paying not the full salaries. So from that stance, we've cut back quite a lot on the so-called small and tiny companies, anyone can expect it. And the current economy is in a situation where it is now -- there is a company that normally takes a beating and we've adjusted our credit policies in line of what we've seen.

If we move on to page 18, that is our growth in our client base, a record of 1.3 million clients that has joined us. And what is quite amazing to me is, January was a record month on a gross basis, 170,000 new clients have joined us, February, [150,000] clients had joined us and I've just been on telephone to our operational exec and he is saying, we're going to come in March very close to 150,000 new clients again.

So, I think everyone is looking for value for money, our pricing structure that's very simplistic and people understand what they pay for, people are looking for value for money and you can clearly see it's working for ourself. And then very importantly, it's the banking clients, the people that actually deposit their salary with ourselves. That's grown from 3.3% to 3.9%. We're quite pleased with the client numbers and that's driving our transactional income.

On page 19, what we're trying to do here -- pushing ends is not producing any figures anymore. So this is December 2015 stats. One important point that I would like to highlight here is just if you look at the income distribution of people in South Africa, we signed these 690,000 people as earning more than ZAR30,000 per month, between ZAR10,000 and ZAR30,000 there is 4 million, and then below ZAR10,000 is 14.7 million.

In South Africa, the tax rate has been increased for people earning more than ZAR1.5 million per year from 41% to 45%. There is only 100,000 people in South Africa that is earning more than ZAR1.5 million and they contribute 50% of the personal tax base in South Africa. So that give you an indication on people that are earning income in South Africa. The important factor for us on this slide is, where our focus is, on that 10,000 to 30,000 clients, we've got about a 12%, 13% market share on that and we would like to increase that to at least up 20%. So that is a big focus area for us to increase the quality clients.

On the next slide, we just identified what we believe is a quality client, and that's a client that is -- there is cash coming in. He's swiping his card, he's using the app or USSD, and he's got debit orders going off. So we believe there is quite a lot of stickiness with that particular client. So if you look at that 3.9 million clients, 2.5 million clients is actually qualifying as good quality clients, that is making use of all four of those aspects of transacting.

So, if we move on to service, if I go to page 23, the branches, we said we're going to open up about 80 branches, we've opened up 76. So, 796 branches in total, a big focus on the new look, upgrading of our existing branches 148 that was being upgraded. And then on ATM side, we've in total, increased our ATM numbers were plus-minus about 420. In total, we've got about 4,000 ATMs.

If I look at next year, we were planning to open up 45 branches, we're cutting back, and it's not because of self-help, that's predominantly that is about 300 branches that's still on the old look and feel, and we would like to upgrade those branches to make certain that our brand almost stays the same. Those branches are all 10, 12 years old and we need to spend money on that. So from a property construction point of view, the focus will be to revamp all the branches to make certain that -- and it is expended.

If I look at self-service banking, I think that's the one big success story of last year. Just to give you guys a feeling, if I look at clients since they take -- when they come into a branch, they take the tickets till they've been helped. In February, last year 24% of our clients waited longer than 15 minutes to be served. We've dropped that figure down to 7% in February 2017. So a tremendous focus on client service, and that has been achieved by on USSD, the banking app, self-service terminals that we've put in branches where the client can get a bank statement, he can get a balance inquiry, and then our DNR, where a person can deposit cash and you can withdraw cash.

If I look at branch 25, you can clearly see that in December 2016, just to get the effect of what self-service has done, 80 million transactions was done on self-help and 35 million was done in branch, you can see clearly how steep that curve is growing on the self-help side.

If I just look at the app, USSD and the self-help terminals in branch, the year-on-year growth in those particular areas were 70%. So that helped us to create capacity in the branch and to focus on selling better to our clients. What we seeing is or the aim is to take as much as possible transactional activity out of a branch, to self-help and let the branches focus on client into action and selling Global One optimally in branch.

If I look at the next page, page 27, very strong focus this year again on service, I've mentioned that. We're majoring our branches and our call centers, we've got most of the shoppers going in and most of the shoppers has hidden cameras, so we can observe the way our consultants are actually using the screens, the way they interact with the clients, and they get scores on that.

We've introduced in November last year a system made by our -- active client has been served, and he walks out of the branch, he gets SMS and the SMS, he needs to write our service and if that service is not according to standard, then we maintain contact with that client to find out what went wrong and from there, we get our last score on a branch to understand if the branch has done well or not and I think that gets reflected. If you look at the South African Consumer Satisfaction Index, we won that now four years in a row. And if you look at the Ask Afrika Orange Index, on service, we won that now five years in a row, which then actually justify why we say we're spending such a lot of time on service.

A big portion of service is people, page 27. We're still appointing roughly about 400 people per month, we now have got over 13,000 people working for ourselves, a big portion, 12,000 people attended training courses. And if you go to the next page, you'll see in total, we had 54,000 training interventions, of that 54,000 training interventions, 44,000 was electronically done and 10,000 was done by attending courses.

You can clearly see on the functional and technical side, that big spike that we had was due to the credit card that was launched in September, October. So, a massive amount of training that went into making our people understand the credit card. You can see our leadership, extra 400 people went on leadership training attending courses, and then a very strong focus on compliance. So very big focus on developing our people, and making sure our people has got the necessary skills to serve our clients.

If I move on to credit, (inaudible). On the regulatory side, this may be an update, and the new credit loss regulations has come out, it needs to be implemented in middle of August. The regulations are quite badly drafted. We had a legal opinion on that and our legal opinion says, the way it's drafted, we should actually ask trade life on a declining basis. We currently are using the [450] on a declining basis, had interactions with the NCR, DTI and Treasury.

And I say, the intention is that you can go declining or you can go straight line. It doesn't make sense to us, because if you are straight line, then say your client has got ZAR100,000 land loan. He didn't -- but it ZAR450 on a ZAR100,000 land loan, is that loan is re-priced and this ZAR20,000, he gets with paying. He's not going to get ZAR100,000, he's only going to get ZAR20,000.

So we working all with DTI and NCR to see what we can do about it. The reason why we would like it to be on declining because credit life has been misused in the past where people have taken too much risk or extra profit. So we would like to standardize it so that we can have stabilization in the unsecured lending space.

If I move on to page 31, the interesting thing about the year that we've experienced is on the number of applications. You can see the number of applications roughly went up about to about 100,000 extra applications. I think a big factor of that is the September 2014 when the new affordability guidelines was put in, but then -- a tremendous amount of new people coming in.

You can see on the accept rate, it was 57%, we've dropped it down to 39%. And the take-up rate is dropped from 42% to 31% and that's in line with changes that we've made on our credit policy. So, what we say now is, it there's a client's 100 clients coming through the door of the branch, we will accept 39 and the take-up rate is only 31%. The take-up rate in February was 27%. And the major changes we've made was in the high-risk industries and then specifically small and tiny and lower income level clients and that's reflected on to the next page.

On page 32, where you can see, especially on up to 24 months we've got back, you can see a high of 18% in August, 2015, the one to 12 months, and then dropping back to 10%. And then you can see slightly opening up on the longer-term loans and you can start seeing now the effect of the credit card that is contributing 3% of what we've advanced, our leverage on the credit card is a little bit like that.

If you look at the next page, that is 31 -- 33, you can clearly see, I think the two things that stands out is that on rescheduling the book has increased with 10%, but on arrears rescheduling, we basically stayed flat at ZAR1.5 billion, and that's the changes we've made to make it certain that the client really should be rescheduled.

And then the clients, that's not in arrears, there is a big drop from ZAR1.8 billion to ZAR1 billion, so what we've done there is, clients that we believe is in good standing and we refuse that they be rescheduled. So in totality, if you look at our arrears plus, everything that was rescheduled and you take that as a percentage of gross loans and advances that has dropped from 13.8% to 12.2% and on the provisioning side, you can clearly see, if you look at arrears plus, you're looking at all the rescheduling, arrears coverage has gone up from 91% to 107%, which is in line with our approach being conservative.

If you look at the credit card, the credit card by the end of February and that's page 34, if you look at the credit card, and we've got a 100,000 clients and by the end of February, that's taken up the credit card and there is about 20,000 clients per month that is joining us on the credit card, it's in the line of our business plan. We have got a book of about ZAR520 million. We've made adjustments already to the credit card where the maximum amount was ZAR50,000 for debit order clients, we've increased that to ZAR80,000 in March and for NATO clients we've increased the limit from ZAR25,000 to ZAR50,000, and it's in line what we said, we said we will be conservative, we can lend the credit card and there we will see these opportunities, we will make changes. So I think for the next six months, seven months, we will continue on that part and we hopefully understand the credit card and the impact of the credit card.

If I move over to funding, I'm going to skip to page 37, you can clearly see we're well capitalized, our capital adequacy is 34%, you see very strong growth in both retail and retail fix. The retail call is going up from ZAR24 billion to ZAR30 billion and the retail fix is going up from ZAR13 billion to ZAR17 billion. So we had very strong growth in total that grows about ZAR700 million, ZAR800 million month-on-month.

So this reflects again the trust in the brand and people are comfortable to the positive savings with ourselves and then you can see it -- and also the funding side because we don't need the funding, we're cutting back but what we said is, we will stay in the market to make certain that people understand ourselves and what is happening. So everyone in the funding side will be quite happy with the progress we've made on that.

Then everyone has seen,now on page 39, seen our 40% acquisition on Creamfinance. Maybe just two, three points that I'll want to highlight and we've always had international aspirations, you can grow internationally with Capitec and bricks and mortar, and we realize that will be really expensive and you will have to take a lot of resources away.

We are growing in South Africa and we need to focus on South Africa, so Cream gives us the opportunity to gain international experience. They are currently operating in 46 countries and the evidential part about 30 countries that they can move into. So that will give us exposure on seeing what's happening on that side. On a lending side that using different credit scoring models than what we are using, so we see opportunities to learn from them from that particular side.

And then from our side, we've got the experience of bringing Capitec in from a very small company in 2000 when we started, we only had one month lend, very similar to Cream, and today we are a pretty good bank. So we've got that experience that we can bring to the table to themselves. So all roads, there will be strategic input with limited resources that we will send over to themselves maybe just from time to time of credit and IT people, we will share information, and myself and Andre will be on the board, but we're quite excited to say, let's grow the lending side on the business and then we can develop it over time.

If we look at the future, we just highlighted again our simplistic pricing model and you can see a very simplistic, some -- certain transactions are free and then ZAR150 if you guys self-help and in branch ZAR5 and then when you withdraw cash at our ATMs, ZAR6 and ZAR150if he use any other ATM in the country. So very simplistic, the solidarity report highlights, if you look at -- especially that 10,000 to 30,000 end market, we are at least 30% to 40% lower than the market and it's very transparent and very simplistic that's coming out.

To give you just an example of that, on the credit card, we're getting some criticism that our ZAR50 is too high, some of the market place is at between ZAR30 and ZAR40, but then what they're doing is, they have got a facility fee of ZAR20, ZAR30 that you must add and the client is underway of the additional fees that he is buying and that's against our whole model of transparency. So we believe to keep it simple and make certain that the client understands what is he trying for.

If we look at our objectives, there is basically six objectives. Service and people is two big areas. On the service side, we would like to have omni-channel approach, so that whatever the client experience online or experience at advance, or call centers, it's the same screen, same information. We're fully sure that clients -- that whenever you work with your client, you fully understand what transactions the client has got. If you had certain compliance or certain issues, it's available and we can actually help making certain to solve these problems, and into optimize that particular client.

As we are looking at efficiencies, we are constantly striving to get cost per minute down. Our cost per minute in the branch currently is ZAR10 and our call center is around about ZAR5. We believe, we're re-engineering projects in the branches, as well as our call centers as well as our head office where the big focus is to make certain that we're still cost effective and that we can produce quality service to the client as quickly as possible.

People, I'm not going to elaborate about, it's a big focus for ourselves. Business delivery, we've got now, we've mentioned that we're moving to Agile. We've got about 80% of our business development and IT people on Agile. It's actually going quite well on that side. We've set ourselves, our current project delivery time is 16 months. We've dropped that down to 12 months, objective in the next 18 months is to get to six months. And we're quite happy with the progress that we've made to produce much quicker.

And why that is important for us, the need of the client is changing much quicker and much faster. So you need to have the ability, and be agile enough to be able to adjust very quickly. So there is a big focus area for us to make certain that we can deliver to the needs of the client. Quality clients, that is going to be the big focus that's 10,000 to 30,000 client base, both from the credit side, as well as on the banking side.

Optimizing our clients and accepting that of -- those clients bank with themselves, so there is a continuous focus. And then, lastly, on the digital banking side, we've got about, roughly about 80 people, on the team that capacity is increasing -- [130] people. And we looking at by the end of the year, a new app, for example, the client can personalize the app, you can set it up to where you would like it to set up. We are looking at things, the whole electronic payment side is changing quite a lot in the world, what new technology will bring into those particular areas. We're looking at special recognition in the branches, if a client comes in, we recognize that client and we maintain how -- what products he's got, what he hasn't got and what we can sell to him. We looking at voice recognition and even emotional recognition to understand what strategy is. So there is quite a lot of things happening there, and as well as, on the financial literacy side to be able to connect with our client using big data and machine learning to optimize the clients.

So a very big focus on that, that team is completely separate. So it's not part of the normal IT and business development team, that's a separate focus team that is focusing on the digital banking platform of the future.

And then on the loss side, we, for the last couple of years, we had bank campaign, we're changing that now in May, where we're starting with the bank with better compliance and that's in line with all value-add that we actually offer to the client. We would love to feed him information and our Company actually bank better and look better. So you'll start seeing that on our advertising campaigns and all our communication with bank better, look better campaign.

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Unidentified Company Representative [4]

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Thank you, very much. I think at that point, we'd like to just open it up for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) David Justice, CWI.

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David Justice, CWI - Analyst [2]

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On page 41, where you were talking about the pricing, I always like your elegant pricing model basically pricing everything that's 25% ROE, and it seems as if you are moving away from that simplified pricing model. Can you say about why -- more about why are you doing that?

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Gerrie Fourie, Capitec Bank Holdings Limited - CEO [3]

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If we look at a lot of the, what actually what happened was, a lot of in branch fees, if you adjusted it with inflation going out of that [460, 385, 490], so we might use in March actually to simplify and that's why we rounded up to ZAR5. So you've actually if want to go back to the ROE, will get a slightly higher income, but then from a self-help side, we've kept ZAR150 flat for the last three years, we didn't have increase on the ZAR150, and that is where we see the benefits is actually on the cost savings, on the OpEx, in new branches. We are going to use later, people. So that was the whole pricing buying. So we've actually simplified it even better, if you look at pricing that we put in, in March.

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David Justice, CWI - Analyst [4]

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Okay, thank you. And then, can you explain ZAR50 credit card fee. How that side even was for a 25% ROE?

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Andre du Plessis, Capitec Bank Holdings Limited - CFO [5]

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Well, David, What we had to do is we've got a model and some clients are free riders, some clients only pay the minimum, and let's say in the middle of the road is 50% of the facilities on an ongoing basis. So we've looked at credit card over in nine years taking information from the bureaus, and we need some time to really understand what the behavior of the clients are going to be going forward.

What we didn't want to do is to enter the market with the lower fee, and if we didn't have enough income to then increase the market, the idea of that was opening special. So we thought it well to model the ZAR50, which is sufficient to give us a good return. Coming back to the 25%, and if over time it proves that we need less, we'll rather decrease the price.

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David Justice, CWI - Analyst [6]

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Okay, thank you. I've got lot of question, but I'll get back in line, and see whether there is time to ask it later.

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Unidentified Company Representative [7]

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David, you would like to ask a question, you can. We have no other questions in the queue, at the moment.

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David Justice, CWI - Analyst [8]

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Okay. So maybe we could talk a bit about more about [Creamfinance], the thinking behind that. Firstly, may be you can explain how long you've known about these guys, how much contact you've had with them, or how you decided to make this investment? And maybe where you think you can be with them five years down the road, what's your strategic vision behind this investment?

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Andre du Plessis, Capitec Bank Holdings Limited - CFO [9]

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Well, David. What happened was, Fourie and I went to Poland, at the end of 2015, when we went to a conference in London, we started to talk to the company, we met a couple of times to see what their plans are and what their gross trajectory was. We then needed Reserve Bank approval, which took some time. And then, we needed to convince the other shareholders in the business to vote it down and allow us to make a strategic investment in the Company.

So that's really the history of it. And on Friday afternoon, we have basically signed all the contracts and we got and started our forward covers and things like that when we obviously lost some money because of what happened in the market (inaudible). As far as, the strategy is concerned, it's obviously very difficult to go to different markets and wanting to open a bank because the barriers of entry is very high. The cost is also very high.

Creamfinance is a very exciting company, online it's a Fintech company and we feel that we can work with them. We feel that we can help them to take the business to new levels that obviously need capital, and with the capital, they'll be able to get the organization further. And as Fourie said, there is about 50 countries, that they have identified that there are opportunities in, and risk funding and risk capital, we'll be able to pursue it. And if any of these countries, sort of lashes out and gives us the idea that we can expand it into a banking model in a particular country, we'll obviously pursue that with management. At this point in time, the idea is not to have a controlling shareholding, the idea is to work with management. We believe they are smart. And it is a very low risk, while actually entering into the international market.

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David Justice, CWI - Analyst [10]

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And do you anticipate that you will be up at 49% over a period of years.

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Andre du Plessis, Capitec Bank Holdings Limited - CFO [11]

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Well, that really depends on the shareholders. So we have committed to 40% and another during this second or the third tranche, the other shareholders may elect to put an additional 9% on us, but it's too early to say what really will happen.

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David Justice, CWI - Analyst [12]

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And this will be a new capital for the Company, so new shares will be issued or you're buying some existing shares?

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Andre du Plessis, Capitec Bank Holdings Limited - CFO [13]

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It's that 90% of the amount will be fresh capital, and on the first tranche of [6.7, 1.7] will be to take shares from the current shareholding and to also help the management to increase the shareholding to 10% each, so that was a non-advisable fact to make sure that the -- as the management is really locked into the business and the additional ZAR5 million and thereafter, the total amount will go into the Company to strengthen the capital. In fact, the Company also isn't by any dividends or anything like that, because I get the money in the business.

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David Justice, CWI - Analyst [14]

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Okay. And can you tell us anything more about who the average shareholders in the business are?

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Andre du Plessis, Capitec Bank Holdings Limited - CFO [15]

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I think I disclosed it in the sales announcement of the top of my head, it's basic and something with (inaudible)and what the shareholders are but it's effectively a European and there is also Russian individual as part of the shareholding. We will have a meeting in May and basically, setting out to them exactly what our strategy is, going forward.

I have had a couple of discussions with the other shareholders and also many discussions with management. Management, the full management team, supplied a visit to us in February, basically updating us again in detail what they do and how they do and what they risk, I think it is -- all that operate on the IT side and we are very comfortable with them. And every time I've asked for information or any cooperation with our application to the Reserve Bank for instance as well, and we're very cooperative and I think they put a lot of value into working with them as a team.

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Operator [16]

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Thank you, ladies and gentlemen. (Operator Instructions) We'll pause a moment to see if we have any further questions. To the minute, it would appear that we do not have any further questions, do you have any closing comments?

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Gerrie Fourie, Capitec Bank Holdings Limited - CEO [17]

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No, I think just want to thank everybody for dialing in. There is a replay facility on this call that will be available over the next three days and yes, thank you.

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Andre du Plessis, Capitec Bank Holdings Limited - CFO [18]

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And if anybody has further questions and need email address, I think most people have it, otherwise it's on the Internet and you can actually ask through it as well if you need and gladly, I'll give you a call on to the email.

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Operator [19]

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Thank you very much sir. Ladies and gentlemen, that concludes this conference call and you may now disconnect your lines.