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Quarterly Disclosure In Terms Of Regulation 43 Of The Regulations Relating To Banks
Capitec Bank Holdings Limited
Registration number: 1999/025903/06
Registered bank controlling company
Incorporated in the Republic of South Africa
JSE ordinary share code: CPI ISIN code: ZAE000035861
JSE preference share code: CPIP ISIN code: ZAE000083838
(“Capitec”)
QUARTERLY DISCLOSURE IN TERMS OF REGULATION 43 OF THE REGULATIONS RELATING
TO BANKS
Capitec and its subsidiaries (“the group”) have complied with Regulation 43
of the Regulations relating to banks, which incorporates the requirements of
Basel.
In terms of Pillar 3 of the Basel rules, the consolidated group is required
to disclose quantitative information on its capital adequacy, leverage and
liquidity ratios on a quarterly basis.
Capitec Bank Limited (“Capitec Bank”), the wholly-owned subsidiary of
Capitec, acquired 100% of the issued share capital of Mercantile Bank
Holdings Limited (“Mercantile Holdings”) on 7 November 2019, the date on
which the final purchase price was paid. On 12 November 2019, the assets and
liabilities of Mercantile Holdings were transferred to Capitec Bank.
Mercantile Bank Limited (“Mercantile”) is now the direct, wholly-owned
subsidiary of Capitec Bank. Mercantile Holdings is in the process of being
deregistered.
Mercantile is consolidated in the disclosures in respect of the 3rd quarter
of the 2020 financial year ended on 30 November 2019. Both Capitec and
Mercantile apply the standardised approach to calculate capital adequacy.
The acquisition of Mercantile has a significant impact on Capitec’s capital
adequacy ratio, as Capitec’s qualifying capital is measured against the
combined risk weighted assets of Mercantile and Capitec.
The impact of the inclusion of Mercantile’s risk weighted assets resulted in
a decrease of 5.5% in the group capital adequacy ratio. Of the total risk
weighted assets as at 30 November 2019, R13.0 billion is attributable to
Mercantile.
In terms of the Regulations relating to banks, goodwill and intangible
assets net of the related deferred tax liability, are treated as specified
adjustments and are deducted from Common Equity Tier 1 (“CET1”) capital and
reserve funds. The goodwill originating on the acquisition of Mercantile and
Mercantile’s intangible assets at acquisition therefore also reduce the
qualifying CET1 capital of Capitec on consolidation and resulted in a
further 1.2% decrease in the group capital adequacy ratio.
The impact of the acquisition of Mercantile on the capital adequacy ratio of
Capitec was partly offset by an increase in appropriated profits and the
placement of excess funds in investments with lower risk weightings such as
South African National Treasury bills.
Both Capitec and Capitec Bank have maintained healthy buffers above the
minimum capital adequacy requirement.
The group’s consolidated capital and liquidity positions at the end of the
third quarter for the 29 February 2020 financial year end are set out below:
3rd Quarter 2020 2nd Quarter 2020
30 November 2019 31 August 2019
Capital Capital
Adequacy Adequacy
R’000 Ratio % R’000 Ratio %
COMMON EQUITY TIER 1
CAPITAL (CET1) 22 571 738 27.4 22 563 756 32.6
Additional Tier 1 capital
(AT1)(1) 73 351 0.1 74 370 0.1
TIER 1 CAPITAL (T1) 22 645 089 27.5 22 638 126 32.7
General allowance for
credit impairment 751 682 647 418
TIER 2 CAPITAL (T2) 751 682 0.9 647 418 0.9
TOTAL QUALIFYING REGULATORY
CAPITAL 23 396 771 28.4 23 285 544 33.6
REQUIRED REGULATORY
CAPITAL(2) 9 476 453 7 970 042
(1)Starting 2013, the non-loss absorbent AT1 and T2 capital is subject to a
10% per annum phase-out in terms of Basel 3.
(2)This value is 11.500% of risk-weighted assets, being the Basel global
minimum requirement of 8.000%, the South African country-specific buffer of
1.000% and the Capital Conservation Buffer of 2.500%, disclosable in terms of
a SARB November 2016 directive in order to standardise reporting across
banks. In terms of the regulations relating to banks the Individual Capital
Requirement (“ICR”) is excluded.
3rd Quarter 2020 2nd Quarter 2020
30 November 2019 31 August 2019
LIQUIDITY COVERAGE RATIO (LCR)
High-Quality Liquid Assets(1) 32 586 019 26 628 505
Net Cash Outflows(2) 2 256 754 1 252 413
Actual LCR Ratio 1 444% 2 126%
Required LCR Ratio 100% 100%
(1)As at 30 November 2019, R935.8 million of the total High-Quality Liquid
Assets is attributable to Mercantile.
(2)Both Capitec and Mercantile, on an individual basis, have a net cash
inflow after applying the run-off weightings, therefore outflows for the
purpose of the ratio are deemed to be 25% of gross outflows.
As at 30 November 2019, R599.9 million of the total net cash outflows is
attributable to Mercantile.
3rd Quarter 2020 2nd Quarter 2020
30 November 2019 31 August 2019
NET STABLE FUNDING RATIO (“NSFR”)
Total Available Stable Funding(1) 120 498 615 103 892 429
Total Required Stable Funding(2) 64 628 215 51 546 784
Actual NSFR Ratio 186.4% 201.5%
Required NSFR Ratio 100% 100%
(1) Mercantile’s equity at acquisition eliminates against Capitec Bank’s
investment in the subsidiary. Assets and liabilities of Mercantile have been
aggregated in the disclosure above. As at 30 November 2019, R10.6 billion of
the Total Available Stable Funding is attributable to Mercantile.
(2) As at 30 November 2019, R8.5 billion of the Total Required Stable Funding
is attributable to Mercantile.
3rd Quarter 2020 2nd Quarter 2020
30 November 2019 31 August 2019
LEVERAGE RATIO
Tier 1 Capital(1) 22 645 089 22 638 126
Total Exposures(2) 136 377 222 114 226 273
Leverage Ratio 16.6% 19.8%
(1)The CET1 adjustments explained above attributable to the acquisition of
Mercantile reduced Capitec’s Tier 1 capital.
(2)As at 30 November 2019, R14.2 billion of the total exposures is
attributable to Mercantile.
For the detailed LCR, NSFR and leverage ratio calculations refer to the
“Banks Act Public Disclosure” section on our website at
www.capitecbank.co.za/investor-relations
By order of the Board
Stellenbosch
12 December 2019
Sponsor - PSG Capital
Date: 12-12-2019 08:00:00
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