Capitec Bank Holdings Limited (CPI) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. It is my great privilege to bring you the half-year results for Capitec for 2022. There's the website where you can actually ask questions. I think it's important that during the presentation, you can also post questions and we'll answer at the end of the presentation. I'm going to start with the changing economic environment. I think everyone knows what is happening in the economy. If I'll go to the first slide, it is -- when we started the year in January, I think if you look back, nobody thought really that Ukraine is actually going to take place. And if it takes place, that it will be so long. I think the whole tightening or what is happening in Europe and America with very high inflation rates and then the Fed that is very aggressive on increasing interest rates. So the economy where everyone was thinking that maybe by September, October, we will start seeing inflation coming back. Interest rates, it may be easing from next year. It looks all that it's going to go much longer. So I think it's going to be a very uncertain year and probably for the first 6 to 12 months, next year as well. So one needs to manage the environment very carefully. I think in South Africa, I think the biggest problem we're facing now is ESKOM. I think if you look at our reading this morning, again, permanent level 4 load sharing for this week. If you're a business, especially a small business, if you're losing 5, 6, 7 hours a day to electricity has got a massive impact. I think at this stage, we're surviving, but I think it's going to have an impact going forward. And I think the other very important point for me is the lack of urgency in meaningful structural reform. We've seen with ESKOM, how long does it actually take to actually get through reforms. And the one that concerns me quite a lot is education. There's a war on talent. And we are in South Africa not producing the right quality of people and the right degrees. And I think that's one area that we need to seriously look at and make certain that we reform our education system and make certain that we can actually deliver the right candidates. I think the ANC elections at the end of the year is also going to be interesting. So I think it's a tough economic environment and that one needs to manage very carefully. If I look at despite that economy, there is green shoots. It's interesting if I look at the business banking side of our business, we're actually seeing some positive signs. I use our Merchant Services division. If we look at the turnover of our merchants, they are about 14% up year-on-year. If I talk to friends and families, that's got businesses, building, doctors, et cetera. A lot of them saying they've got very good results. So I think one needs to look at it. But I think where the pressure is in South Africa is actually on the smaller businesses and then also on the client itself. Interest rates has been increased, inflation has been increased, and I think one can really see that effect coming through later this year and early next year. There are some positive signs. I think the first one is, if you look at the SARS revenue up ZAR 1.5 trillion or ZAR 300 billion up. I think that's a positive sign driven in the mining industry. I think it's still a very positive terms of trade, also driven by the mining industry. It's interesting if you look at when we export now suddenly at '18, there are some companies that's really going to benefit. But then if you import, you're all importing at ZAR 18 to the dollar, and that's going to have an impact on inflation. Household consumption expenditure, you can see there's a steady increase from COVID. So people are starting to spend and you can see it, especially in the restaurants, hospitality industry, people are starting to spend in that particular area. 2 interesting slides here, you can see savings on disposable income of households was negative before COVID. And then with COVID was very positive. And then it's now starting to come back to basically 0 level. So I think that people are using their savings actually to survive. Interesting, if you look at your debt to disposable income of households. Before COVID, it was 64%, it's still now 64%. So that's fairly flat. What is happening with Capitec? I think if you look at Capitec, we look at people as cash stress. So people that's got less than 20% left after their obligations. And we're seeing there an increase of pre-COVID about 11%. Last year of August, it was 12% and it's gone up to 13%. So there's definitely stress coming through from our clients, and that is what we need to manage going forward. Our financial review. I think we're quite pleased with the number of 17% growth year-on-year. I think it's a very strong performance, dividends of ZAR 14 per share. So I think that is also very strong for me. And more importantly, is actually the 5-year growth of over 17%. There was very tough times. We had to manage COVID. We had to manage the gazillion hotels unrest, then the floods. And I think to be 17% over a 5-year period, I think it shows on how resilient and the quality of our earnings. Interesting, if you look at key indicators, I think if you compare the banks, it's very difficult to do comparisons on how the profits are increasing because everyone is sitting with provisions and some is releasing and some is increasing. So we just thought it would be good to share with you what is happening if you take our provisionings out. And you can see we've got a 24% growth in earnings if you exclude the credit impairment. So you see very strong growth in the income side coming through. Then our net transaction income to operating expenses. We've always said we want to be covering 100% of our operating expenses through other income, not credit income. And you can see we're coming in at 108%, very strong growth from our insurance businesses coming through. And I think that's the figure to be watched because I think that figure is going to move more to 120 over time. I think also if you look at income -- transaction income to credit income, it's at 54%. So also very strong growth from our other income side. Cost to income, I think it's normalized around about 40%. We've always said we'd be aiming for 40%. Last year was abnormal given the incentives that was paid out coming from a very low base the previous year. So our cost-to-income ratio back to around about 40%. And then the capital adequacy, you can see we're still very strong on our capital side of 35%. That dropped from 37% to 35% is purely the dividend that was paid out in February to our shareholders. We've paid out an extraordinary dividend in February this year. I'm going to unpack the key drivers of our results. So I'm going to look at credit insured, transact and operating expenses. I think if you look at retail credit first, I've said it before, but I think the one thing that we're very proud of is our agile management of unsecured lending. If you give a secured loan, you actually grant it, you've got security and you actually don't manage it. In our case, we manage it on a continuous basis. We're basically making changes to our credit policy basically on a weekly basis. So we're very agile, and I think that shows in this year. We had very strong sales in disbursements, so very strong growth of 35% on our loans. And I think a very big driver in penetrating the new higher income clients and then very strong provisioning coming through, but I'll unpack that in detail. I think if you look at the first thing that is different to previous years is a very high demand for credit. Now that's probably a function of the economy where people are looking for credit, but you're seeing a big shift here. You're seeing a shift in our branches. There was only a 12% growth, but very strong growth in our digital space. So on our web, there was a 51% growth. And on our app, there's a 47% growth for applications on credit. And I think if we look at that, our Capitec direct - our online lending business has done capital disbursements of over ZAR 2 billion for the first 6 months. So very strong in that particular area. But interesting, if we look at. And I'll show the next slide, we've cut back on the credit side, but we're still seeing strong growth due to applications that's increasing. Everyone or - if we talk about agility and the economy, I think this is a very important slide. I'm going to first focus on the right-hand slide. And you can see, I'll take up a road of our clients, and this is not our accept rate. It's our take-up rate. So our accept rate is about ±50%. And then the client would say that maybe the term is to short or the rand value is not high enough, and then the take-up rate will be lower. But up to June, our take-up rate was about 25%. And then you can see we've cut back and has dropped to 20% and 19%, so ±20%. On the left-hand side, it's actually over the years. And you can see pre-COVID, we were at a 27%, 28% take-up right. And in COVID, we were on 21%. So you can actually see we are now stricter than what we were in COVID. And we're quite comfortable with that because we need to be conservative in managing our credit going forward. I think that's what you're seeing in the sales, so for the first 4 months, we've opened up and then cutting back quite a lot in July, August in our sales. Our sales are probably down 10%, 12%, cutting back, but you can see very strong growth of 35% to ZAR 26.5 billion. I think what is important is that it's causing our upfront provisioning of ZAR 480 million, which is just the way you account for it. So that is in our provisioning. And then you can see the very strong sales coming through from our access facility at close to ZAR 9.8 billion. Our term loans at ZAR 10.3 billion and our credit card at ZAR 6.2 billion coming through. This is, I think, a very positive slide as what is our composition looking. I think we've said a long time ago, we're actually going for quality clients, and we're changing from -- or we moved away from low-income clients. So if you earn less than ZAR 5,000, we hardly give any credit in that space. Everything is in the higher income space. So I think what is quite interesting is to see people that's earning ZAR 50,000 and more that is on net. So it's after tax. You are basically sitting at close to 10,000 new clients that we've acquired versus 6,000 last year and between 25% and 50%, we've seen a growth from 28% to 45%. So very strong growth in the high-income brackets. And you must take in consideration after tax. The average salary in South Africa is about ZAR 17,000 to ZAR 18,000. So we're very happy with the quality of the book that has improved. I think if you look at our retail -- our book, a couple of points that I want to highlight here, you can see that our term loans are basically flat. I think it's important we all ask the question is, what is the effect of the interest rate increases on our term book? Because it's fixed and the interest rates doesn't get adjusted at all. So there's no impact on the people that had existing loans. People that's got new loans is getting it at a higher right. But you can see basically the term loan book is basically flat. You see growth of 11% in the credit card and then very strong growth in the access facility up to close to ZAR 20 billion, (sic) [ ZAR 19.8 billion ]. What is quite nice about the access facility is the fact that we can manage the access facility. We can manage the risk -- because if you look at your term loan, your credit card, if you grant that credit, it's in your belly, you can do nothing about it. But in the access facility, we've got the ability to reduce the term or reduce the exposure to the client. So it's a very nice product to actually manage credit risk over these tough periods, and we have pulled back where we've seen stress with the particular clients. I think the other interesting one is to look at our interest income growth of only 11%, and that's purely a fact of your grant loans and the interest will actually really materialize in the next 6 months or in next year because it's a portion that's coming through. I think the other important thing is on your term loans, if you look at your caps now, your NCR caps, it's around about 25%. Your access facility is now around about 20%. So your access facility is granted at a lower interest rate. But the other important thing about the access facility is the client, if he's up to date, doesn't need to come into the branch again to come and take up a loan. So your operating cost is much lower with your access facility. If we look at orders, the book looking, if you look at Stage 1, Stage 2, and Stage 3, I think the first one is the Booker state, pretty much the same. I think if you add up to date with SICR so there's people were that was rescheduled but is up to date, but it's classified still as SICR. If you add that, our book is now 75% is up to date. So the up-to-date book is stayed pretty much the same. The one that didn't improve or deteriorate is our Stage 3. That's the 13% to 14% and there's about 3 or 4 big factors that's playing there. The first is there's a Sibanye strike. That's about ZAR 100 million. And that's starting to come -- it's getting lower and lower every month. So that's about ZAR 100 million. And then we had our system problems in August. That's also ± ZAR 100 million. And then we're seeing, especially in our old book, we see people rolling through to Stage 3. And that is why we've built back in certain areas, and then we see an increase in debt review. So all of this, I think, strong up-to-date book, but we're managing very strongly the Stage 3 phase of the book. Then if I look at our provisions, I think your provisions, I think the first point is that we released ZAR 800 million on our economic provision. So as you took a view of the economy, we saw stress coming through. You had upfront economic provision. And as the higher arrears coming through, you could release on your economic provision. But I think the important thing is if you look at the 23.5%, the 23.5% is still 2% higher than August '19. And even if you go to August '18, at 5% higher. We had a peak of August '20 of 28%, and that was in COVID. So we start seeing that were returning to normal levels. I think if we look at insurance, very strong performance coming through from the insurance side. Our claims on retrenchments and death has drop, you can see it's gone from 15.5% to 13.7%. So there's a big drop in the number of clients that's actually been retrenched and death claims. Very interesting to see what happens with retrenchments in the next couple of months given the economy. There's the IBNR provision of Guardrisk, which was released about ZAR 250 million. And that's purely because we're seeing lower debt claims and lower retrenchment. So you should actually take the ZAR 912 million, and you should reduce that by ZAR 250 million. But I think overall, a very strong performance from our credit life side. And then on the funeral side, also exceptionally strong performance. You can see when we started that product in August '18, we had 8,000 clients. Now, we're on 2 million clients. And I think what is more important is there's 8.9 million lives in South Africa that's covered by the Capitec funeral product. Our market share on sum assured is 34%. And our new policies issued at 17%. The persistency ratio at 61% and the premium increased from ZAR 238 to ZAR 251, so a very strong performance in the funeral space. Transact, probably the one that surprised the market and yourselves. We came in at an 8% growth. I think everyone is used to 18% to 20% growth. Interesting enough, it's 100% in line with our budget. So it's 100% in line with what we expected, and we expected the 108%. I think it's driven by strong growth in digital and then transactional income that follows from there. So let's just unpack it. I think the first point is the 19 million clients. We're up from 18 million clients. So it's quite clear to think that we're sitting now with 19 million clients in the bank. A little bit drop where we normally acquire about 180,000 to 190,000 clients per month. This 6 months was 165,000 plants, but it's in line with our expectations. I don't think you can keep on growing with 200,000. I think the more important one for me is the quality banking client, which that's actually where we're focusing on. And that's grown from 4.4 million clients to 5.1 million. And then the one that we're very proud of is the 10.8 million digital clients. So 56% of our clients that we've got is on a digital platform. There's not many banks that can say that. So I think very strong growth in the digital space, and it's 100% in line with our strategy. If I look at the transactions, we've got a big drive to actually move away from cash, and we want people to actually transact on an electronic basis. You can see our bank app transactions, a very strong increase, 623 million transactions to 791 million transactions. Real Time Clearing, that is up 63%, 28 million transactions taking place. We've got a market share of 41%. And maybe just to explain that is, if you withdraw cash with Capitec, you buy ZAR 8 per 1,000. So if you were to a ZAR 2,000, you pay ZAR 16. With RTC, you pay ZAR 750 irrespective of the rand value that you actually withdraw. So where you actually want cash where you want to pay a builder or a car or whatever are ZAR 40,000, ZAR 50,000, ZAR 60,000. It's a very good incentive to rather use Real Time Clearing because it appears imminently in other clients bank account. Remember, if you pay Capitec to Capitec, that is also immediately and that's for free. So it's part of our whole trying to actually move away from cash. I think if you take cash transactions and you actually divide it by the number of clients per client cash is coming down. And then you can see the self-service terminals. And maybe it's the first time that we're really showing that, but your branch has actually divided up in the front in self-service terminals and at the back where you've got your service consultants servicing the clients. And the whole purpose of that self-service terminals is actually make certain that the clients get the experience of how to operate on the app, how to go digital. So we assist the client there. And from there, the client actually moves over to using the app on its own. So very strong growth and a big movement away from cash to electronic transactions, which is 100% in line with what we wanted to achieve. If I think look at the net transaction income, there's basically 4 big drivers while we ended up at 9% growth. The first one is a massive switch from to digital away from branch and cash. Then on the income side, we've reduced our SMS fee from ZAR 0.40 to ZAR 0.25. And we're driving in-app communication to the client, which is for free. So again, making -- creating value for the client and putting the client in control. The cost of that is about ZAR 250 million. So if you add the ZAR 250 million to the 7351, you're getting a 21% growth. And then on the expense side, you can see the expenses going up by 46%. We had an abnormal rebate last year of ZAR 143 million once-off and then Live Better, the cost of Live Better at ZAR 97 million, and that's actually got to the point, if you look combines all that's why transaction income only grew of 9%. But if you look at the basis of it, it's very healthy, and we believe we will get back to the normal 18% to 19% growth that we are used to. Operating expenses, maybe just to unpack operating expenses. If we look at our salaries, salaries is up by 12%, headcount up over 1,400 people, 20% of that is IT and data specialists, so roughly about 300 people. Self-incentive, you can see the incentive and share appreciation, the normalization of that is about ZAR 400 million, very big investment in IT. And then I think the other important thing is you can see the effect of digital migration, which has actually dropped by roughly about ZAR 200 million. You can see it's coming down from ZAR 2 billion to ZAR 1.8 billion. So we're quite happy with it. As I've mentioned, our cost-to-income ratio was at 40%, in line with our expectations. If I look at the future, there is 5 areas that we're focusing on. Digital, I've spoken about. There's Live Better. There's the Business Bank, Capital Connect, which was launched this week. And then what we call our Foundations for growth, and going to unpack that. I think if I look at digital, I think the easiest way to explain what is happening in that space is to show you a video on the payment side and the ease that we've created to make it for the client much easier to pay on an electronic basis. [Presentation]

Yes. I think I have to unpack digital banking, a couple of points that I want to highlight. I think there's always this question of the fintech companies that is welcome to us. I think the important point here is in the first 6 months of this year, we spent ZAR 213 million on digital banking. So you can see how serious we're taking it. There was 2,300 - 2,400 system enhancements that was delivered in the 6 months. So on average, we're spending about ZAR 500 million a year on digital banking. So you can see our series real, and we can see with the 10.8 million clients, the impact of that. I think what is important is the ability to handle scale and to handle payments. Our peak system transactions is 5,000 transactions per second. We can go up to 11,000 transactions per second. So there's a big focus to be able to handle the capability and efficiency on that. I think if we look at efficiency, it's efficiency and security, facial biometrics on our app. So you don't need to go to a branch anymore. You can sit at your home and you can open up the app. And I think very importantly, from a security point of view, everything gets confirmed with facial biometrics. Remember, these facial biometrics are linked to the Department of Home Affairs to verify that you are who you are. And I think the one point that a lot of people don't know is that if I look in branch, you don't sign a contract or anything anymore with a wet signature, it's signed by your biometrics. So we've got no paper in the branches are more. And yes, we've saved close to 9,000 trees in 6 months on that, a lot of efficiency coming through on that side. Then on the digital side, I think the video explains everything well. The one that I really enjoy is Pay Me, so I can actually sit here and I can send my QR to somebody in Joburg and you can click and you can actually pay myself directly. You don't need to enter your beneficiary details. A lot of people enter that incorrectly. So this takes that out. And I think what is important, 2 things on payments, it gives us a better understanding of our clients, so we can add value. And the app is also giving that platform to actually sell credit insurance and value-added services for ourselves. Live Better. We've got now 8 million clients registered at the end of August. It's the fastest-growing rewards program and biggest financial services in South Africa. We've paid out ZAR 97 million through clients. That's that 0.5% to debit order clients - debit card lines and 1.5% to credit card clients. And we're really starting to see a big movement happening from cash to card payments starting to come through, and that is long-term very beneficial. And on our credit card, we're seeing very strong behavior improvements on our credit card. So I'm quite excited where the whole of bidder is actually going to position ourselves and increasing the quality clients. For us, it's all about that Capitec must be first of wallet. So Live Better is a very big strategy to actually make certain that we take out and we make certain that we first of wallet. On the Spend Better, it just maybe Cash Bolt was launched in September. So you get 1% off if you buy a Cash Bolt. And then the interesting one is Bolt for me. Now if you ask me about a year ago, I didn't even know what Bolt was. Bolt is the competitor of Uber. And if I look at the clients in Capitec, Bolts is now, they were equal to Uber - no, they were actually below. They're now 3x bigger than Uber in our app, and it just shows you the power of our client base. And then Dis-Chem has grown by 47% over a year period. So a very strong partner growth that's coming through, and we're quite - we're very optimistic about the impact it that it's going to have. In Business Bank, the question I always get, are we on track? I think I'm quite excited. We're starting to put everything together here in October. We're going to start testing in November. So, so far, we're on track for a rebrand in March. So everything is running according to plan. I think remember that's a full digital business banking offered to our clients. So you're not going to have branches. Our profits are up 60% to ZAR 201 million. So I think, overall, we had a very strong performance in our business banking, and I'm very excited about the road map and what's going to happen in the next couple of months. I'm not going to unpack the key indicators, but you can see we've had very strong growth in our sales side and strong growth on our client side. I just want to emphasize again, up to March, our whole focus is to rebuild the business banking side so that we are ready when we rebrand. And from there on, we will focus on how do you really grow the business banking side. Then probably the one that I'm excited about is Capitec Connect, and it's the ability to disrupt the prepaid data and airtime in South Africa, the best interest of our clients. Why did we do it? We're sitting with 8 million Capitec clients that's buying prepaid every single month. So we've got a 30% market share of our people going on to app and actually buying prepaid. So we need to create value for themselves. And I think very important is to understand the data that's coming through that. So for us, it's a no-brainer. So if we've launched that. Interesting in the first 2 days, we've sold over 8,000 cells. So we're very optimistic, and we're really starting to drive that from next year -- for next month. I think if you look at that pricing at ZAR 45 per gig, it's the lowest in the market for prepaid and ZAR 0.90 per minute, if you call. So we're very excited about it. And I think the most important point is the fact that your data never expire. If you use your data within a 6-month period, it will forever and ever last as long as that's your money that's on it. So no expiry. I think that is a very important point for our client base. So we're quite excited about it. And what is for us very important is the data that we can get out of Capitec Connect. Then the foundations for growth, a very strong focus on, I think, 3 big areas or 4 big areas. The one is our leadership structures, our data, and technology side, and then our focus on our culture and our client. Leadership structure, we've restructured the retail side. Hank Lorenz was responsible for retail. He's now looking at strategic initiatives. That's areas like Connect, Live Better, et cetera. We've appointed Graham Lee to take over in heading and retail, and it's quite promising that our average age of our retail team is now 44 years old. So we've got a very young dynamic team that's coming through there. Then on data and technology, we will be having all our data from middle next year in cloud because we believe data is a very important role, important strategy going forward. And cloud is just going to get your speed to better understand your client. And then a very strong migration to Software as a Service. We're bringing in Salesforce, we're bringing in Ciena. We're bringing in quite a lot of other software services that we're bringing in to make certain that we could get to market and that we actually can deliver on the needs of the client. And then we will always focus on our culture and diversity. Our culture is the client, our people, and our delivery. And I think the most important of that is to make certain that we understand the client needs and experience and that we actually drive and deliver on that line needs and experiences. And then the last point, I think the important one is the fact that we're sitting with an asset of 90 million clients and how can we use that 90 million clients to create value in South Africa. Thank you very much, and it's open for questions.

Okay, Grant. A couple of questions from Warren Riley. The first one is about the sensitivity of the loan book to a 100 basis point increase in interest rates could we distinguish between the business and retail bank sensitivity?

I think if you look at -- I've mentioned it that our term loans are basically a fixed price. So if you have granted it, we've already taken that repair in consideration. So there is no effect on that. And the access facility and on the credit card, it's got an impact, but your interest rates increase as well so the client has to pay more. We've increased our living expenses of about 15% over the 6 months period. So to make certain that the client has got enough buffers to actually survive. So yes, it's a concern because it affects the money that client has got a buy over But we're quite comfortable where we are now.

And then could you talk to the opportunity that we see in business banking for market share, size of markets and the ramp-up post surficial launch next year?

We haven't looked at market share or what we want to achieve. The focus role now was actually to Bolt. But I think if you just look at the SME market because we said we were going to go into the SME market and not the commercial market, I think it's massive. So I don't want to commit to a number, but I think there's plenty of opportunities. For us, it's first now to Bolt, makes it when we're ready, then we rebrand make certain that we can handle the volumes, and then we'll take it from there.

Grant, there's a question from Johanna Rue around the abnormal rebate of ZAR 143 million that was referenced.

So that rebate is just directly linked to transaction volumes. So when we reach certain levels of transaction volumes, we receive rebates from our suppliers, and that obviously offsets against the cost.

And then I think, Grant, a question for you as well around provisioning from Gaborone. What's the outlook for provision given the economic challenges management described? Why did you release the macro overlay provisions in the current environment?

Okay. I think just starting with the second question. So the release from the forward-looking overlay is as we see our base provision model reacts to the deterioration we see in the economy, and we see that, let's say, charge increase we released from our forward-looking overlay. To the second point, I mean, look, I think that depends really what we see coming through the economy. I think what we can say, if you look at our coverage ratios, we are 23.5% in the retail book. So a lot more conservative than we were pre-COVID. So we'll actually see how the economy unfolds let's say in the next 6 to 12 months.

And then we've got a few questions from James Starke. Can you maybe give us a sense on the uptake of the QR code and how that's progressing? And are there any learnings out of that?

Yes, I think it's the one thing that we -- the uptake is not that as what we wanted. We're talking about 50,000 transactions per month, but it's slowly increasing of about 20% per month. So there is an uptake. I think if you look at what I've shown is you've got the QR code, you've got Samsung, by Apple by coming through this RPP that's coming next year. So what we are doing for the client is to have 4, 5 options and whatever you want he chooses and what he prefers that he's comfortable. That is what that will drive. For us, it doesn't matter what he uses as long as he goes electronic and don't use cash. That's actually for us the big focus.

And then what's the outlook for dividends and internal capital demand given the strong ROE?

We've stated that our dividend policy is that we -- on 50% of earnings. And at this stage, we stick to it.

Question around OpEx. Has any of the insurance proceeds you received in the period relating to the ZAR 114 million of costs incurred in half 1 last year relative to civil unrest?

So those, let's say, cost in terms of the rights, the ZAR 114 million, those were all received in the second half of last year. So there's no impact coming through this year.

And is there any guidance around the tempo of balance sheet growth?

I think if you look -- if you go into the in the sense, you can clearly see the balance sheet growth because we're still seeing the strong growth in the savings side and fixed term savings, et cetera. So nothing has really changed. But all the details is available in the sense.

And then a question on rewards. Many years ago, Capitec was not seen on rewards programs. What's changed to bring us around to launch a program?

We've always said that - it's actually not true that we're not keen. We said rewards programs are complex and people don't understand it because you've got different tiers normally 4 or 5 tiers. And people don't understand what transactions they have to do to actually qualify. And what we've done has just gone in and made it very simplistic and transparent. So in our case, you need to have one product, you need to have 3 debit order or recurring subscriptions coming through, and you need to do 5 app transactions. So it's very simple, and then you qualify. So it's more the simplicity and the transparency that we were focusing on because I think my favorite example is airlines that gives you points that you can. But whenever you want to use those points, you can never book a flight. So it's more the simplicity and transparency and the directness that we are focusing on.

Are we confident that we can keep reinvesting in our business at a 25% ROE level? Question from Mark Dluge.

At this stage, we're comfortable. But I've also said in the last, I think, over 2 years, the Board is quite comfortable to go to lower levels of, let's say, 22% if there's opportunities. We're also sitting with a business bank that is lending out at Prime and Prime+1. So their ROE is lower than the retail bank. And as Business Bank is going to increase, you'll start seeing on the average ROE will drop. So for retail, quite comfortable at 25, business banking will come up. But we're quite comfortable to lower if we need to because you can lower the ROE, reduce the pricing, and attract more quality clients.

Then a question here from Siana Capital. What's the view of the SA economy in the short to long term? And what's your ticket size for business bank lending?

Well, I think if I look at the economy, I think one thing is economist has got the right to be always wrong. I think if anyone of you could tell me exactly where the economy is going to be 6 months from now, 12 months, I'll pay you quite a lot. We don't know. It's very uncertain. I think what is clear is that inflation worldwide and in South Africa is going to be there for longer. The Feds are going to increase. Are they going to increase with 1% or 2%? Why on we have to wait and see? And I think then a key thing is the whole Ukraine war. When is it going to stop? When is this is going to happen? Because energy supplies is another big driver of it. And then you need to look at what's happening in China. China had the whole thing about lockdowns. So I think we are uncertain, and we just need to manage it.

And then a question from Ross Krige around Live Better. Do we think that the investment in Live Better rewards will increase over the medium term? And will this affect net growth?

It will definitely change the number of quality clients. If I look at the business model, we said for the first year, you will make a loss, meaning that your behavior won't pay for your expense that you're doing. And then from year 2, 3, 4, you'll see a big uptick, and we start seeing very positive signs on client behavior that will benefit us in the long term.

Thanks, Gerrie and Grant. There are no other questions that haven't been answered already. Thank you.