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Innovative Thinking

Innovative Thinking. in Retail Banking. Investor Pre - Roadshow Presentation April 2008. Individuals in need of basic low cost banking. Our Focus. We deliver on four core needs:. Accessibility Affordability Simplicity Personal Service. 3. The Unique Business Model.

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Innovative Thinking

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  1. Innovative Thinking in Retail Banking Investor Pre - Roadshow Presentation April 2008

  2. Individuals in need of basic low cost banking Our Focus

  3. We deliver on four core needs: • Accessibility • Affordability • Simplicity • Personal Service 3

  4. The Unique Business Model Unique / Innovative Technology Providing Simplified / Focused Product Range Via Customer Focused – Low Cost Delivery Channels Transactions Annuity ATM POS INTERNET CAD CELL Branches Mobile Bank 4

  5. The Capitec Bank Revolution Our Technology Platform • Features • Paperless • Process Driven • Real Time Delivery • Cashless • Central Control – no branch back office • Handle high volume transactions efficiently • Structure • Open Platform • Windows-based • Scaleable 5

  6. Simplified Focused Product Offer • - Structure • Transactions • Purchases • Transfers • Debit orders • Stop orders Multi loan Savings Account 1 / 3 / 6 month loans Focus Save Accounts 12 / 18 / 24 / 36 month term loans Cash Wallet 6

  7. Simplified Focused Product Offer • - Price • Savings and Transactions • Aggressive • Loans • Competitive 7

  8. Our People • Cultural alignment • Service driven • Recruit for potential, train for skill • Team approach • Zero to hero in 7 weeks • Firm Foundations • Ongoing investment in competency • E Learning 8

  9. The Market Average Income Spread Target Market 17m * Household Income after statutory deductions 9

  10. Client Base 10

  11. 41.83 45 40 35 27.23 30 25 % 20 15.74 15 10 6.58 5.73 2.90 5 - 18 - 20 21 - 30 31 - 40 41 - 50 51 - 60 61+ Salary ClientsAge 11

  12. 40 35 30 25 % 20 15 10 5 - 60+ 18 - 20 21 - 30 31 - 40 41 - 50 51 - 60 Male Female Loan ClientsAge 12

  13. 30 25 20 Male % 15 Female 10 5 - 14999 R15000+ R10000 - R1- R999 No Prediction R1000 - R1999 R2000 - R2999 R3000 - R3999 R4000 - R4999 R5000 - R7499 R7500 - R9990 Loan ClientsIncome Level 13

  14. History • Microlending • Bank (2000/1) • - Management team • - Determining strategy • - Bank licence • - PASA membership • - IT platform • Conversion • - Microlending to bank • - Deposit taking • - Client conversion to bank with Capitec • 4. Growth Strategy 14

  15. Group & Operations Structure Management 8.79% PSG Group 34.9% BEE groups & individuals 15.99% Other 24.53% Non-ex directors (excl black directors) 15.79% CAPITEC BANK HOLDINGS (CBHL) Listed and registered as a bank controlling company 100% 100% 75% Key Distributors (FMCG wholesaler) Capitec Bank (Retail bank) Other (No activity) 15

  16. Management • CEO Riaan Stassen (54) • CFO Andre du Plessis (46) • Other Executives: - IT Chris Oosthuizen (53) - Risk Christian van Schalkwyk (52) - Human Resources Leon Venter (46) - Operations/Sales Gerrie Fourie (44) - Marketing & Corporate Affairs Carl Fischer (51) - Credit Risk Jaco Carstens (39) Ian Abrahams (39) - Card Services & Business Support Andre Olivier (40) Faick Davids (31) 16

  17. Employment Equity Profile 17

  18. Key Risks and Mitigants • Credit • Liquidity • Regulatory • Systems • Interest rate • Taxation 18

  19. Liquidity Management - Banking Crisis 2000/1 - Philosophy • Caution : top priority (even over profitability) • Retail deposits - payout when requested • - cash usage • - short term loans • Facilities - don't bank on it • - used for convenience • Fixed vs fluctuating rates • Forex - cover all positions • - no appetite • Simplicity / no complex structures 19

  20. Liquidity - History • Initial strategy – Self funding • Build trust – Retail savings deposit base • Wholesale funding agreements • Un-published ratings • Preference shares • Published ratings • BBEE • Short term corporate paper • DMTN • Retail term deposit base 20

  21. Basel II – Pillar 1 Minimum Regulatory Capital Requirement 21

  22. Basel II – Pillar 2 The Supervisory Review Process • Supervisory Review and Evaluation Process (SREP) • Risk Management • Capital Management • Capitec Internal Capital Assessment Process (CICAAP) • Foundation Internal Ratings Based approach (FIRB)for credit risk 22

  23. Basel II – Pillar 3 • Market Discipline • Regulation 43 Public disclosures • Quarterly, Bi-annual and Annual disclosures • Dedicated Website Page under Investor relations 23

  24. National Credit Act (NCA) • Act • Income components & ceilings • Procedures, rules & output • Debt counseling & mediation • VAT leakage • Opportunity • Strategy (pre-empting effect) 24

  25. Financial Highlights

  26. Holdings vs Bank results - IFRS Holdings : Equity settled in Statement of Changes in Shareholders Equity Bank : Cash settled through Income Statement 26

  27. Loans Advanced 6,000 5,162 4,500 3,449 2,863 2,259 3,000 Rm 1,904 1,477 1,500 0 2003 2004 2005 2006 2007 2008 27

  28. 3155 3500 2924 3000 2617 2650 2454 2486 2500 2000 '000 1500 1000 500 0 2003 2004 2005 2006 2007 2008 Number of Loans Advanced 28

  29. Loans advanced per product 29

  30. Impairment per product 30

  31. 90 79 80 70 60 50 35 R'm 40 30 15 20 0 4 10 0 0 2003 2004 2005 2006 2007 2008 • Net Transaction Fee Income 31

  32. 838 900 800 700 554 600 500 R'm 400 314 300 200 74 4 100 0 0 2003 2004 2005 2006 2007 2008 Value of Savings Deposits 32

  33. Operations

  34. 400 331 280 300 253 251 200 148 100 44 0 2003 2004 2005 2006 2007 2008 Number Bank Branches 34

  35. ATMs 35

  36. Employees 36

  37. Profitability

  38. 250 212 200 160 150 116 R'm 100 70 47 30 50 0 2003 2004 2005 2006 2007 2008 Headline Earnings 38

  39. Headline Earnings per Share 300 259 250 222 200 165 150 Cents 101 100 70 45 50 0 2003 2004 2005 2006 2007 2008 39

  40. 30 26 22 23 20 16 12 % 8 10 0 2003 2004 2005 2006 2007 2008 Return on Equity 40

  41. Cost to Income Ratio 41

  42. Shareholder Funds 1,217 1,117 1200 900 564 R'm 600 473 426 384 300 0 2003 2004 2005 2006 2007 2008 42

  43. 4000 3,195 3500 3,031 3000 2,233 2500 2000 R'm 1500 1,072 1000 399 164 500 0 2003 2004 2005 2006 2007 2008 Market Capitalisation 43

  44. 2,937 3000 2500 2,191 2000 1,251 1500 R'm 805 1000 512 434 500 0 2003 2004 2005 2006 2007 2008 Total Assets 44

  45. Going Forward

  46. Going forward Investment • Distribution - +25 Branches - +75 Mobile Banks - +50 ATMs - +2 250 POS devices • Technology - Branch Streamlining Challenges • Cash-plastic • Economy • Competitors • Funding • Crime 46

  47. Thank You Questions ?

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