Yeah. Good morning, ladies and gentlemen. It's nice for me to be here and to present the results. It's actually quite a strange feeling. The last time I did results in front of people was in 2019, so yeah, six years later. No six years, six presentations later, it's actually nice to see faces and be able to enjoy interaction. For the investors, we're presenting from the Capitec campus, so it's quite nice for ourselves. Just again, if you've got any questions, as I go through, just send through your questions. We'll answer the questions right at the end. If I look at the Capitec story for the last year, it's a story about, really about a tough year, but it's also a story about building a future.
How are we building a future and how are we creating a unique company for the, that can last another 100 years. If I look at the results, there's four things that stands out. The first is earnings growth of 15% in a tough economy. I think we need to be proud of that. I think the other thing, a big milestone, is 20 million clients. I remember when we, in 2000, actually wrote the business plan. We spent seven, eight months writing the business plan, and we're still executing that business plan to the teeth, to the 100%, to what we've actually designed. I think we made one mistake. It's one zero. Because we said if we can get two million clients, we're happy. Now we're at 20 million clients. I think that's a big achievement.
In tough times, we've also given back to our clients. I think that's important. More than ZAR 800 million we've given back. Investing for the future. Over ZAR 1.4 billion that we've invested this year in the future. Let's unpack that. If I look at the ZAR 800 million, where is it coming from? We've dropped some of our fees. Our SMS fee, enabling the client actually to go onto in-app and get his notifications in-app. That cost us, we gave back about ZAR 500 million. If you look at Live Better, what we've actually given back to our clients is ZAR 256 million. Digital fees stayed flat for five years in a row.
I think the one that we don't emphasize enough is that on our retail clients, in the core deposits, normal banks call it lazy deposits, they pay no interest on it. We pay our average interest that we paid for this year was 4%, so we paid out ZAR 1.8 billion to our clients. To our people, probably the most important, our dividend because of our BEE empowerment scheme, we paid our dividends of ZAR 21 million in August, September. On staff rebates, for example, if our staff actually does a transaction on digital, it's for free. We've paid back ZAR 27 million. Our social responsibility, we've paid back about ZAR 180 million.
I think it's not a lot of companies that say that they can actually give back in tough times. I think investing in the future, there's a ZAR 1.4 billion. Now, just to put it in context, last year we spent ZAR 800 million. It's a ZAR 600 million increase that we've actually spent more this year in investing in the future. I think the big spend comes in if we look at business banking, Insure all the new payment solutions, the value-added services. The big spend was actually done in the IT side on the cloud migration and bringing in new systems and processes like Salesforce, nCino, LivePerson, et cetera.
It's quite interesting, if you look at this, ZAR 600 million increase in our investment, if you say ZAR 800 million that you've given back to your clients, if we didn't do that's about ZAR 1.4 billion. If you say ZAR 100 million creates one earnings per share growth, we could have grown our earnings per share not by 15%, by 30%. That's if you don't think client and you don't think long term. That's what the company has actually done, is to really go and say, "We'd rather take that money and we invest it in the future.
We're giving back to our clients and make certain that we've got a healthy company going forward. I think if you look at major challenges, I don't want to talk too much about it. I think everyone knows about load shedding and Transnet and what's happened in the world economy. I think one needs to understand the phases. You had COVID was completely unexpected. Nobody actually really understood what COVID is going to happen. Everyone pulled back. I think in the world, money was pumped in to get the economies to grow again. I remember those days I said, "What is going to be the effect of this money that's getting pumped in?" Nobody could really give me an answer.
I think we've really started seeing it in this year, whereby inflation increased, interest rates increased. Every suddenly we're talking about a recession. We've seen what is happening in America. We've seen what is in Europe. I think then what, very strange was China. Because China had really opened up about March, April or about a month ago. That distorted the whole supply chain. I'm saying that if you look at this year that's coming, I think by the end of this year we'll get back to normalization or we'll start settling. I think what is interesting is there's the economy. I think what is a big challenge is what is happening at the workplace. We all suddenly had to work from home, working from office. What's the right thing?
I think there's big leadership challenges to make certain we lead our people in the new dynamics of a new world when we normalize from COVID. I think the most important is to say, what is the effect of this whole transformation that took place? What is the effect on our client, and how do you make certain that you satisfy the needs of the client? I think the big shift that we've actually seen is actually on moving to digital, moving to payments away from cash. Is how do you actually can get that to grow much faster? If I look at South Africa, I'm not gonna unpack load shedding, et cetera, et cetera. I think the biggest concern I've got in South Africa is what is happening in the education space.
'Cause if we wanna be a successful country, we need to invest in our education. We can't have a 30% matric pass rate. We need to maximize, certain that we get people with math, science, et cetera. I really would like us in South Africa to really start focusing on the education side and say, how can we actually make certain that we create the right skills so that we can really face the challenges of the future? I think if you look at, South Africa, our view on South Africa is firstly we see ourself that South Africa's got immense, potential and growth opportunities. I think that's why Capitec is in South Africa, wholly South Africa focused. We still see big opportunities in the retail space, the optimization of the 20 million clients.
We see big opportunities in business banking. We see big opportunities in insure. I think if we really wanna get it right, then we as South Africans needs to take ownership of our destiny. I talk about individuals. I see too many people that says, "The government must do this. The company must do this." I'm not taking ownership of my own destiny by developing myself and growing myself. Becoming an entrepreneur, making certain that I'm ready for the challenges of the economy. I think if I look at the companies, I think there's a lot that companies can do. I think partnerships. If I look at education, for example, we're giving ZAR 100 million, ZAR 200 million a year on education. Let's put 10 companies together.
Suddenly you've got ZAR 1 billion, ZAR 2 billion, and we really can go in and make a difference. I think it's a different mindset that we need to have. It comes back to what I'm saying here is that there is opportunities, but you'll never find those opportunities if you're negative. Unfortunately, if I look at our media, everything is negative. You need to make certain. That's why I don't read media over the weekends. I'll focus on what is positive, preparing myself for the week. I really wanna challenge each of you yourself, take ownership, look for the opportunities, and let's be positive. I think the most important thing is that we don't always realize, is that we've got our own economy. 20 million clients.
The immense data and insight we've actually got out of these 20 million clients gives us a very big strategic advantage going forward. There's not a lot of companies that can say they've got a client base of 20 million clients. What is this client base looking like? Interesting, if you can compare it over the last couple of years, you will see that 62% of this client base is under the age of 40. It's a relatively young client base. Our target from a marketing perspective is 35 years old, but you can see strong growth coming in between 41 and 60, 14%. Interesting, 60 and older, 21% growth. You can see we're starting to get insights in a big portion of the population.
What is this client actually doing? I think 11 million clients is on digital. You're sitting with 56%-57% of our client base that is performing digital transactions. Our savings clients is up to 7.6 million. Our quality clients, that we really drive, salaries, making transactions, doing digital payments, 5.1 million. Funeral, a very big number, ZAR 2.2 billion, and I'll unpack that later on. Our credit clients. Everyone has always got this perception, all 20 million clients takes credit from ourself, but only 1.3 million clients is actually taking credit from ourself. What are we seeing from these clients? What is the economy doing? I think we all know about interest rates and the effect of interest rates, and you can clearly see what's happening here.
Home loans, if we look at the debit orders that's coming through, you can see home loans is up 20% year-on-year. That's a 3.5% repo rate that's come through. On vehicle financing, 15%. Personal loans, 12%. Interesting cutback on education. You can see there's pressure what the client is actually doing. It's cutting back on it. Debt collection, 5%. Investments, 3%. That's concerning because that is your long-term implications that you need to invest now for what comes 20, 30 years from now. Communication, that's data, up 12%. Overall, if you look at this area, an increase of 12% year-on-year. That's the pressure that's coming through to our client base. What do we see on groceries?
The people are spending only 8%. Inflation on groceries is somewhere between 12%-13%. What's this telling you? People are buying down. They're buying differently. They're buying different products. Fuel, up 16%. Again, that impact of fuel. Home maintenance, down 13%. Suddenly we're cutting back on home maintenance. If you go and look at COVID, there was a big spike in home maintenance coming through. Cell phones, 10%. Alcohol, that's a positive one, down 9%. There's some positive news, yeah. The combined effect is about 5% increase. You see, looking at that 12%, you're looking at the 5% increase in the expenses of clients. If you look at insufficient funds, what is happening on the insufficient funds? It was, in February, 27.3%.
It's up to 10.7%. If I look at our inflows that we're seeing, it's up 4% this year. Previous year it was 10%. If I look at overtime and bonuses, it used to be 18%. It's now 15%. It's dropped. What are we seeing? You see pressure coming through in the expense side and in the income side actually coming down. I think the most important thing is, don't keep up with the Joneses. Live within your means and make certain that we can go through these difficult times. If I look at the financial results, we're gonna show quickly a quick video on what happened in the full year. All right, Joe.
As we emerge from the grips of COVID and two years of lockdown, riots and floods, we were challenged by a tough local and international economic climate. War in Ukraine and the impact of even worse load shedding affected everyone, and South Africa faces bigger challenges in education, employment, and economic inequality than ever before. Despite this, we made a difference in people's lives by fully embedding the leadership principles in all our people processes, namely how we hire, assess, develop, and recognize. Making a sustainable impact in communities where we stay, work, and employ from. This year, we managed to execute 114 community projects nationally, and 3,304 volunteers participated in these projects.
Launching Capitec Connect to disrupt the telecos and give people access to affordable data that does not expire. Enhancing our credit solutions with purpose credit and a new intuitive credit model called FTC7. New value-adding solutions on the app, like the ability to buy vouchers, lotto, and pay bills. New payment solutions like Apple Pay, Samsung Pay, personalized Pay Me QR codes, and Click to Pay, boosting Capitec as the leading brand in contactless payments in South Africa. Several enhancements on our business bank solutions in preparation for the rebrand and imminent launch of Capitec Business. A Live Better Academy widget on the app and MoneyUp chat, the country's leading financial education chat box on WhatsApp. Conversational banking with new chat technology that enables client service and credit granting on WhatsApp and social media. Currently handling over 600,000 chats per month.
Live Better was enhanced on the app, making it easier for clients to manage and achieve their bank better, spend better, and save better goals. Now benefiting nearly 13 million clients. Just to reiterate the change that this has brought to the market, Capitec Live Better was named as the best loyalty program of 2022 in the financial services category. Sunday Times GenNext, the leading barometer of what SA's youth find on trend and aspirational, once again voted Capitec the coolest bank in South Africa. Another difficult year peppered with highlights and great achievements. Once again reiterating that if we stand together as one, we can help our clients and our people live better because we are Capitec.
I think we can be proud of the year that's passed. I think if you look at a summary quickly on the financial results, we're gonna go into quite a lot of detail, but it's something that's important to understand. Our headline earnings is up by 15% in difficult times. I think the fact that we've paid out a dividend of ZAR 42 per share, you should have Capitec shares. ROE 26% in line with our expectation. We targeting 25%, you can see right through, we actually run about 28%, 26%. I think we can be pleased with that performance. If I look at key indicators of our net income, 54% is coming from non-credit.
It used to be 49%. 54% of our income is coming from our transactional income, our VAS, our insurance products, et cetera. Operating expenses. We always say that our objective to say that 100% of our OpEx need to be covered by non-credit income, we're now at 110%. Our OpEx is fully covered by other income. Cost to income ratio, 39%. We always said we're targeting around about 40-41%. I think it's a very good achievement to come in at 39%. It's interesting, if you look at the digital journey that we went on. If you look at 2022, 1.3 billion transactions being done on digital. This year, 1.6 billion transactions that's been done.
You can see cash is basically flat because remember you've got an increase in client volumes. You can see cash to electronic. 22% of our volumes is done by cash, and 78% is done by electronic. A big move that's taking place in our client behavior. If I look at our income statement, I think a very strong growth in our income lines, especially on our lending side. For the first time we've opened up, and I think we were quite brave in November 2022 to open up. We had to close down again in June, July, when Ukraine happened, recession happened, et cetera, et cetera.
We took that chance and said, "We will open up." I think the transactional income only up 8%, but I'll unpack it, but I think it's very strong performance from that side. On other income, everyone will ask why the ZAR 400 million dropped to the ZAR 200 million. We received about ZAR 200 million in insurance claims with the riots in the previous year. You've got a ZAR 200 million actually abnormal normality taking place in February 2022. The one what everyone will worry about is the credit impairments, and I'll unpack that in detail. You can see 80% growth or ZAR 2.8 billion increase.
You need to look at over four years and actually really look and understand what COVID has done and the behavioral that's taking place, and I'll unpack that in detail. There's the 15%. I think the interesting one is on tax. It looks like we're not paying taxes, because there's only a 3% increase on tax. Your insurance taxes is deducted up front, on top, and not at the bottom. In total, our tax rate is 26%, but take that in consideration that the majority of the taxes on or all the taxes on the credit and funeral products as up front in the income statement. If I look at our deposits, I think a very strong performance, 9% up, ZAR 147 billion.
It's quite easy to lend money out, but to get confidence in people to actually invest with ourself, it's a big number, ZAR 147 billion. You can see your transactional call and other. That's what I referred to earlier on, where we pay up to 4% or on average 4%, where other banks pay nothing, is ZAR 100 billion. Then our fixed term savings, where people invest for a much longer period, is up 12%. Gross loans and advances. For the first time, you can actually see that's coming up. So that's up ZAR 14 billion, from ZAR 84 billion to ZAR 98 billion. That's the growth in the business banking as well as on the retail side. The effect of that is that our average investment portfolio actually decreased.
The first time we were actually funding our lending book from our deposits, which is a healthy thing. If I look at Credit Life and insurance, I think overall a tremendous performance. Credit Life up 23% in line with our growth in our lending business. Death claims down 18% and retrenchments down 3%. I think the interesting one is the death claims. It comes back to that stabilization of COVID coming through. On funeral, I think important in that 2021's market share, 34% of sum assured is our market share. 2.2 million policies, about 10 million people that's been covered by funeral. Average premium policy, ZAR 256.
I think, from a funeral side, we had a very good year. If I look at the transactional side, I know in September when we announced the half-year results, everyone was surprised by the growth of 8%, now it's 9%. Actually, if you really go and look at the growth and you take the abnormal things away, what we've given back with our SMS notification, what we've given back with Live Better, what we've done with the once-off Mastercard expenses, it's actually growth of 18%. You can see there on the digital and on the card side, very strong growth of 38% and 27%. Overall, we're quite relaxed on the transactional side.
We see double-digit growth for this year as the whole strategy of Live Better especially is kicking in. The one that we need to discuss is arrears or provisioning, making certain that we all understand standard. I think if you look at that ZAR 2.8 billion, the first thing that we need to understand is that ZAR 1.2 billion of that ZAR 2.8 billion is due to new sales where we open up. If we've got a new provision, new sales, we actually upfront provision of about 8%. On a book quality, there's about a ZAR 1.6 billion extra fee that can come through. Let's unpack that.
If I look at the first one must understand, let's go and look at COVID over a four-year period when we analyze that. If you can look at sales, we opened up in February 2020 of about ZAR 2.8 billion, which is in line with our normal sales, where we open up. You can see new loans as a percentage of our average book was 4.7%. COVID happened, and you can see how we cut back on the new sales. The new sales dropped to 2.5% and the upfront provisioning only ZAR 1.6 billion. We opened up, that was just after COVID, to ZAR 2.7 billion, and the percentage was 4.1%.
You can see what we've done in this year is we've opened up till about June, and that led to extra ZAR 4 billion of provisioning. The new loans as a percentage is at 5.3%. Interesting what we've seen, and I'll unpack it now, is we've cut back on the credit sales, but the number of applications has increased, which kept the sales actually fairly flat. If you look at that ZAR 2.8 billion, ZAR 1.2 billion is due to new sales. That's accounting. You need to upfront provision on those new sales coming through. On the book quality, what's happened on the book quality? Again, one needs to understand what happened over the four-year period. If I look at the migration in the book, normally we do about ZAR 4 billion.
You can see what happened in February 2021, it was ZAR 5.9 billion. We've rescheduled about ZAR 7.5 billion people during the COVID period, which resulted in a ZAR 5.9 billion rolls to 2 and 3. Those reschedulings all came back, or a big portion of that came back, and that's the reduction that took place to 3.1. What you can see now is actually the increase in debt review and our book not performing 100% in line what we expected, and that's increased to 6.7%. Because the problem we're sitting is your book is also growing and you add COVID, so you need to express it as percentages.
That is if you look at the February 20%, it was 6.6%, now it's 8.8%, where it's normalized. It's 2% higher than what we would like it to be. I think if we look at that, what have we done? I think that's quite important to look at what we've done. We've implemented in November the FTC7, which is a new generation granting model using over 14,000 behaviors. It's still very new in our book. We've made, I must say we've made close to 1,000 cutbacks that we've done. We've done limit decreases on our AF. Our AF has grown to ZAR 18 billion. We've done limit decreases where last year we've done it ZAR 1.3 billion. We've limit decreases of ZAR 3.5 billion.
If I can explain that. If a person has got an AF of ZAR 100,000 and he's not performing well, we'll cut that limit to, let's say ZAR 80,000, or we even cut it to zero. We're sitting with, of that ZAR 3.4 billion-ZAR 4 billion, ZAR 2.5 billion of those loans were cut to zero. That shows you just how strict we were. We've made a call early in March that we discontinue exit facility on the one from three months to 18 months, and we rather provide term loans on it. If you look at the long-term performance of the product, it wasn't where we would like it to be.
I think if you look at the picture on the right, you can see what's happened is the approval rate, what percentage of loans do we approve? It's at 45%. It's at the lowest level ever in the history of the company's, that shows how aggressive we are with the cutbacks. You can see in February 20, it was at 54%. It's normally around about 55%. It's about a 10% cut. You can see what has happened with the clear applications, and I think that's the sign of the economy, where everyone is now suddenly looking for credit and you need to say no. We've seen much more people coming in asking for credit.
I think the other things we've done is increase our living expenses because the economy, you don't cut on a certain industry or a certain company, it's right across. Our living expenses increased with 18%. If I look at the graph on the right, the NCR gives certain guidelines, and unfortunately, these guidelines hasn't been updated for the last four or five years. We are now three times more stricter than the NCR three times more living expenses that we deduct to look at Affordability. There's a major focus on collections. We've increased our capacity in the collection space of over 20%. The area that we really are struggling with and really are trying to find a strategy on it is debt review.
If you look at debt review, it's been positioned in the market as it solves all your problems. Unfortunately, it doesn't. There's a certain amount of clients that needs to go onto debt review because they're really in a unhealthy space. There's a certain portion of clients that really should actually come to your bank and really come to ourselves, and we'll help them with rescheduling, et cetera. What people don't realize is you pay upfront for a debt counselor ZAR 9,000, and only then you start paying back on their loans. We're busy with a major campaign on that because we believe there is a space for it. Unfortunately, a big portion of debt counselors currently is not putting people under debt counseling that shouldn't be.
You can see it. 20% of debt review clients exit within 12 months, paying the ZAR 9,000 with no change in their indebtedness. A major challenge. What is quite interesting is Capitec is in 70% of the cases, not the last lender. Which shows that somebody else is overexposing that particular client. That is the challenges. We've pulled back on our propensity model on debt review as well as on our max takers. We're confident that will give us the right results. I think the other question that everyone asks is on the economic forward-looking. What have we done in the economic forward-looking? Now straightforward, if the economy looks good, you don't provide for the next 12 months. If it looks bad, you provide.
In very simple terms. We use BER to help us predict the economy. You can see February 2020, nobody know about COVID. As you can see how genuine it is. We only provided ZAR 288 million. COVID happened, and we had to provide an extra ZAR 2.5 billion. We were worried about Ukraine and the re-recession. We only released about ZAR 200 million of it. Given what we're seeing is, and that the economy will start normalizing in the later part of this years, we've actually released then ZAR 2.2 billion. You must offset the ZAR 2.2 billion, 'cause remember, you're looking at the book deterioration and the quality, minus the economic forward-looking to get to the total charge.
I think that gives you that indication. If you look at on the book, if you look at our total charge, then it's only 11% compared to 12% in 2020. I think this gives me quite a lot of confidence. If I look at our credit and payment charge, what we actually provide, we are at 22.9%. So we're still much higher than what we were in February 2020. So where we were at 20%, so we're still providing 2% more than what we normally would've provided in normal years. I think the other interesting one is the AF has grown from ZAR 5 billion to ZAR 18 billion. That people don't actually realize is that 60% of the AF are utilized. 40% is not utilized.
We providing on that full facility, you actually over providing. If you look at your credit loss ratio where it is 8%, and if you adjust it for your AF, then you're at 7.7%. OpEx. I'm gonna go quickly through our OpEx. It's 5% down, but it's very difficult to understand what has really happened. I think last year we paid out massive bonuses. We had the empowerment scheme. You can see the impact of the ZAR 1.8 billion that we've paid. You can see information technology increased 47% to ZAR 1.9 billion. That's part of the ZAR 1.4 billion investment into the future. Even there, I think we're getting a stabilization after the COVID year with a reduction of 5%.
If you take everything out and you just look at it normalized, OpEx grew of 10%, which is in line with our expectation. Business Bank. The question everyone will ask, what has happened in the Business Bank area? We were at half-year at around about ZAR 200 million, we were expecting ZAR 400 million+ . We've made adjustments. Certain costs that we believe is part of Business Banking, about ZAR 50 million, we've moved across to Business Banking. They came back, or the end figure is about ZAR 390 million. If you add the 50 on top of it gives you a true picture. I think we very happy with the Business Banking performance, what they have achieved.
I think gross loan and advances up 15%, 20% to ZAR 15 billion. Then active client base, and we haven't even started yet, at 160,000. It looks small to the 20 million, but it's a completely different base. We'll unpack business banking in totality going forward. I think the other question that everyone asks, SEG, what are we doing in the SEG space? Are we focusing on it? Is it a focus area for us? There's 17 criteria that's been defined internationally that one needs to look at. There's 10 that we are actually focusing on, and the 10 is that has been highlighted. I must really look at those 10.
If you look at our business plan of providing financial services to all people, it actually, it speaks to those 10 in totality. We quite pleased with our focus on what we're doing on the SEG space. If I think about on the environment, social and governance, what we've done in the last year, two that or a couple that I would like to handle, is if I look at our branches, four years back, we signed every single paper. Every single document was wet signed. Now everything is biometrics, so there's no paper in the branches anymore. We've saved 14,000 trees out of that. The one that I enjoy, I would like to take out all the printers here at head office, that we're all printer-less. I think a big areas.
Our carbon footprint decreased with 5%. Social, Capitec Foundation 300 principals that we've trained, 1,200 teachers that we've trained, 1.5 million learners that we've trained. Close to 100,000 people going through financial education and ZAR 19 million that we've donated for the disaster relief initiatives. On governments, on our BEE scorecard, we've missed this, the level 1 with 1.5 points. That was not a nice, but we were a level 4 two years ago. We're level 2, and we should be able to get to a level 1 in this year. I think the one thing that worries me if I look at ESG, there's over 100 agencies that scores you on ESG. Unfortunately, those 100 agencies' criteria and focus areas is completely different.
It changes from year on year. That makes it extremely difficult to say if you're a level what, where you are. I think that's really that something that the investment world must go and look at and to say that how do we standardize the ESG score and make certain that there's consistencies between companies when you are comparing companies, year on year. If I look at the future, I think we've gone through the results. Let's talk about the future. I think the biggest challenge is the 20 million clients. How do we unlock the potential of 20 million clients, and how are we gonna do it? There's the 20 million clients, I think the way we're gonna do it is using data and technology.
And I think up to now, strong technology drive, but data going forward is gonna be everything. I think everyone always talks about data is the new gold. We definitely are a big focus on the data side. A very strong focus on digital because even if you look at our 11 million digital clients on retail banking, business banking, complete digital, no branches. Big focus on that side. We're investing on these particular areas, Business Bank, Live Better, digital payments, which I'll unpack so that you can fully understand what we're investing in for the future. The moment everyone was waiting for is to see what are we gonna do with business banking.
We've put together a bit of a video just to share with you where we are going with business banking.
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Carl is sitting here in front of me. Carl, good luck with your venture. It's tight, but we're there. Basically, just, where we are, I think what we need to understand is we bought Mercantile in 2019. First year, we thought we're going to build a bank, and suddenly had to manage COVID. We had really been building for the last two years. If I look at January and February, we've rebranded Forex, payment service, and rental. Those rebrandings has taken place. If we look at business bank, the first 1,000 clients in April, existing clients, we've actually started moving across, making certain that we test the systems, making certain that it works.
The first week in May, we're starting with remote onboarding app, the web, et cetera, et cetera. We wanna be completed by end of July on all clients to be moved over. Everyone is gonna get the silver card. You're gonna have the black card for retail and the silver card for business banking. I must say, I think that silver card looks quite nice. Then we will go to market in August. I think watch this space if we're looking at pricing. I think it's gonna be quite interesting what we're doing on the pricing side. I'm quite excited. We're there. It's just that last bit that we need to get over the line. If I look at payments, it's interesting why is payments so important for us.
If I look at payments, Henk and myself was, Henk is our strategic initiative exec member that looks after payments. He, myself and him was in Brazil in February, what we're trying to do is to figure out what have they done because they've moved completely from cash to payments. The one thing we've realized in Brazil, working with numerous companies, numerous banks, is it's a total ecosystem and you can't force a client to do one type of payment. You need to give them a variety of payments, and you must make it as easy as possible. That's the journey we've been on the last couple of years, last two years.
The majority of those payments are getting launched or have been launched in the last year, making certain we can create Capitec Pay and make certain that the client, whatever he prefers, he can use that to pay. If I look at card payments, it's interesting ZAR 1.9 billion card payments has taken place up 30%. I think the interesting one is the 29 million international payments across 191 countries. We don't ask a commission fee on those transactions. The only bank that don't ask a commission fee. We've transacted last year just over ZAR 7 billion in international transactions. EFT and Pay to Cell, that's the interesting one, is the fact that you can pay another Capitec person by just entering his cell phone number.
We've just done over ZAR 400 million payments that you can pay somebody else by just using a cell phone. If you wanna pay a car guard or you're playing golf or whatever, just ask him, "What is your cell phone number?" 'Cause 80% of that particular market has got Capitec accounts, and you can just pay him straight away. Scan to pay and Pay Me. It's for me, still that amazing thing that I can now say to somebody else, "Please pay me." I'll send him a WhatsApp and a link, and he just goes on QR and he pays. That's grown to 1.9 million transactions. Other thing, the one that we not always talk about, it's just been launched, is Capitec Pay.
If you do an online payment, currently you need to go onto the internet. You use 21 active partners Pay@, Ozow, Payfast. What people don't understand, it's actually screen scraping that's actually taking place. What we've done is actually to put in Capitec Pay. So you just click on Capitec Pay and you do a seamless payment. So that security and the ease of payment will come through. You will start seeing that with all the online shops. You will start seeing that coming through. Interesting is that on the old way, the success rates were 45%. In last month, we, our success rate was over 80%, so quite a big improvement that we've made in that particular area. Contactless payment, Apple Pay, Samsung Pay, Google Pay, Huawei Pay, and Garmin Pay.
We're just waiting for Reserve Bank authorization. I'm paying with my Garmin watch. All those payments has gone through. RPP or PayShap. That was part of our trip to Brazil to see how they've implemented their RPP and to say, "How can, what can we do here to make certain that we've got that impact?" The whole PayShap for us is a very strong strategy in the payment space, and we'll focus quite a lot on that from July when we're going live. Capitec Insure, as you all know, we've got our insurance banking license. We've got a insure company now. There's the roadmap. We've built new systems and services.
We are going live with the first policy being written 7th May, with Credit Life being written on 7th of May, and then we're moving all the policies across on Credit Life. With Sanlam, we're still in negotiations, so I can't give you a roadmap. As you're aware, we wanna get out of that, and we wanna bring funeral onto our own platform. I think then the other one that people need to understand is IFRS 17. The IFRS standard. We've done all the calculations. We've busy auditing it. When we bring out our REG 43s in May, we'll make our opening adjustments. Our results in September, we will reinstate this year, so that you can compare it with next year. All that work has been done on IFRS 17.
I've already looked at the March results, that's including IFRS 17. I think that team has done extremely well. Live Better, it's quite scary. You launch a product a year later, you're sitting with 13.4 million clients that's making use of Live Better. It's also been voted the best loyalty program in the financial services within a year and a half. I think the big drive is actually to make certain that if you can look at that 737,000 clients that is doing the one-three-five, one product, three debit orders, five digital payments, to get that number up so that we can give back more to our clients. We will always be looking at that product and say: How can we actually optimize it?
How can we do it better? We'll probably make changes in August, but the focus is always gonna be on the simplicity and making certain that the client understand Live Better, because I think the majority of loyalty programs, people don't understand at all. Value-added services. I think that's a new one for the asset managers. They haven't always seen what we've done in value-added services. I think if you look at just the existing was prepaid electricity and data and airtime. We've done ZAR 29 billion in prepaid airtime and electricity, as well as ZAR 31 billion in cash send, where you send somebody else cash either to Pick n Pay, Shoprite or to our ATMs. Our contribution to our income is ZAR 1.5 billion.
We've created a new department that just focus us on VAS. We've launched three new products in the last year. Bill payments, vouchers, as well as lotto, that already contributed about ZAR 60 million to our bottom line. Interesting vouchers is, you see on the right the app with all the different type of vouchers is if I wanna send somebody, you don't wanna send cash because you don't wanna make certain he uses it for what you've sent. My eyes fall on Dis-Chem there. You send it, he actually spends the money at the voucher at Dis-Chem. I think we've got about 15, 20 partners on board, there's quite a lot that's onboarding later this year. Quite a lot of things that we're looking at the vouchering, at value added.
It'll be interesting to see the roadmap on value-added services for our 20 million client. Connect. The other big launch last year, September, is very straightforward. We had ZAR 45 a gig, straightforward, Capitec style, simplistic. Your data don't expire. We're by far the lowest in the market. We're selling about 5,000 SIMs a day, so you can do the sum. We're now over 500,000. I think the big take or the big thing here is actually people using those SIMs and activating those SIMs. We're sitting now at about a 55% take-up rate.
We're quite pleased with the product, and there's quite a lot of new products that we're working on that will come through later in this year that we'll be quite excited. I'm very excited about this because it all goes again about data, understanding the client and offering better value to the client. The one that we also doing quite a lot to transform what we're busy with is digital services. NBC, that's our business support center. Everything was agent-driven. What we've brought in there is LivePerson and WhatsApp bots to make certain we can provide better services to our clients. You can see there, we are already handling 20% of the call volumes with bots and with WhatsApp.
We're seeing a 10% more efficiency coming through on it. That whole conversational side is much more effective, and we're hoping to get to 50%-60% by end of this year. Speech analytics is evaluating the quality of calls. 'Cause in the past, you had to have people listening to calls and say that the agent handled that client well or not. Now you can actually say, if your voice pitch has gone up, there's a problem, analyze, see what's happening at space. All calls now are being evaluated with Speech Analytics, making certain that we provide quality to our clients. In our branches, we've taken our branches. Basically, you've got your channel of app, but in branch you add a cashier.
That has all been replaced by DNRs, where the client actually helps himself. The branches has now been divided up into segments. A self-service terminal. There's about two- in each branch, where basic transactions are performed by the client, and that look and feel is exactly the same as the app. The person can actually move out of the branch and go onto the app. We now have basically 40% of transactions that used to be re-performed by the consultant is now performed by the SST. The aim is by the end of this year is actually to get to 80%.
The whole aim is that your consultants are there to really sell products, informing the clients, adding value to the client, rather than doing just the boring transaction, and the client actually performs his own transactions. Client engagement. ZAR 35 million we've put in Salesforce. We just in July launching Airship, where by our us to actually do in-app communication to our clients, making certain that we can provide value to our clients and informing them on what is the best for them. I think if you looked at the video, you can see there was live chat and call with business bankers. That's also included. The big journey we started off last year was cloud. On a data side, we've got now about 50% of our data in the cloud.
The aim is by the end of this year is to have about 80% over in cloud. Then if I look at our core systems, processes, DR sites, is to have all of that also plus minus about 80% by the end of the year on cloud. That just gives us the capability to analyze our clients better, servicing our clients better, understanding our clients better. Massive investment in the cloud side. That comes to the last, and I think I've spoken a lot about it. If you really want to look at what we are doing is we are making banking simple and transparent. We're offering value for our clients, and we're using data and technology to really optimize the value of the client. That's the journey that we are.
If I look at the business banking insurer and the retail, 20 million clients, is how to optimize the value for that particular client. From my side, thank you very much to all of you, to my management team, to the board, to everyone, for the year that's gone. The year is gone, so we need to start fresh. I'm looking at the year that's lying ahead. There's nice opportunities. Special word of thanks to Grant and his team from a financial side. I don't think we appreciate we're basically a ZAR 200 billion market cap organization. To have your financial results, your regs, your year-ends, everything completed, a month and a half after year-end, I think that's a big achievement. Let's give Grant a big round.
We open for questions. Anton, I hope there's... Can't say. How many or.
Right. Morning, Gerrie. The first question from Paul Whitburn, around the Capitec Connect customers. How many Capitec Connect customers are there after year-end?
I said it's 5,000 clients per month, per day that we're selling, so you can do a sum from there. The question is, if you look at the 20 million, can you get to 20 million clients? You'll probably easily get to 10 million, 12 million. Question is, over what period?
Are these clients porting from other networks or are they new customers buying secondary S SIMs?
It is a combination. About 20% is porting, 80% is new.
Is it the intention of Capitec Connect to offer a full suite of mobile products like handsets, airtime credit, et cetera?
Over time, yes. Not now.
How useful is the data you can collect from the MVNO compared to the data you already have?
I think it's just supporting the data because you can now see with who the client is talking, vis-a-vis we can see transactional. You can't use the data in isolation, but it's how do you use it in combination to say, how do you create value for the client?
The next set of questions are from Jeremy [Gorvin]. Prior to 2022, deposit growth was north of 20% per annum. Over the last two years, deposit growth has been 11% and 9% respectively. Please help us understand the reason for the slowdown.
Well, I think if you look at, you know, everything becomes relative, because we've been growing with 2 million clients per year. If you add 2 million, your percentages is getting smaller and smaller. If you look at our client base has grown with 10%, 11%. Three, four years ago, it was growing with 20%. It's very dangerous to look at percentages, because if you start growing on a deposit base of ZAR 145 billion, you really need to grow if you really wanna grow, let's say 20%, 30%. I look at that deposit base, how it's growing, and be careful looking at percentages, because percentages on a high base is complete different as a percentage on a low base. It's like, business banking doubling its profit, but it's from a small base.
Given the change in mix in lending, what's the normalized level of the net impairment charge relative to gross loans?
Is this working? Yeah. That will, let's say, evolve over time as that mix changes between secured and unsecured. In the medium term, I think it's pretty stable as you see it now.
The NIMs, how are they expected to evolve considering the lending mix and then the raising rate cycle with fixed-term loans?
In terms of the NIMs, that'll evolve as that secured and unsecured mix changes. In the medium term, we see that as being pretty stable.
The net transaction and fee income?
I think what is just important on the NIMs is that people must understand the access facility is a floating rate, while the fixed term was a fixed rate. With access facility now, if interest rates go up or down, that will be affected. The book has changed quite a lot.
The net transaction and fee income, is that expected to accelerate now with the Live Better cost being in the base?
I've said that in presentation. We will go back to normal double digits growth.
Two questions from Craig Martin. The first one around bad debts being written off on business banking being up 156% year-on-year. Is this related to how credit is granted in the market?
Not related to how credit is granted at all. There were some one-off write-offs that took place, and then just a little bit that comes through from timing.
Secondly, Craig says that the first year is the first year that he notices that cash flow from operations is negative to the tune of ZAR 6.7 billion. Why is this occurring for the first time?
I think important to highlight there that our liquidity coverage ratio is still in excess of 2,000%, and the regulatory minimum is, let's say, 100%. What we've done is we've deliberately invested our excess cash or a portion of our excess cash in growing the loan book. As mentioned, you've seen slower growth in the deposit book, and that's really the result of what is mentioned.
We've got a question from Peter Cromberge. After successfully raising capital on the domestic bond market, can you elaborate on your short to medium stream strategy in terms of raising capital on the bond market?
We will stay in the market as we have done, with, let's say, relatively, small issuances, and we'll wait to see what the final regulations regarding FLAC are and take it from there.
I think if you go and look at the last five, six years, we've been raising between ZAR 500 million and ZAR 750 million. We actually don't need it, but we've done it to keep in the market and to have those relationships, and we will keep doing that.
A question from Gerhard van Rooyen. Please elaborate on the client numbers acquired post the Mercantile Bank acquisition versus the clients taken over.
Well, if you look at Mercantile, they used to call, and you can help me out here. About 500, 600 clients per month. When we rebranded, it shot up to about 2,000 clients per month. Remember, there's no branding, there's no drive. It's just natural client growth. You really need to look at those client numbers once we rebrand to see what it really does. There's a big uptick since we've acquired Mercantile.
Just going, on the same theme. We've got a question from Tertius [Loacher], around the profile of the Business Bank, new clients being significantly different from the old bank.
I think if you look at the profile, it's very much more in the SME space. We have a big focus on the S and the M, and that's in line with our strategy to service the smaller, the S and the M of the business banking environment. If you look at business banking overall, there's 2.5 million, 2.6 million SMEs, of which the majority, 2 million, is actually on the S and the M. I think the other question that you need to ask is, if you look at the emerging market, how big is that market? I think that 2.5 million is probably then 5.5 million, the market on SMEs.
Two questions from Ross Krige. The first one around SMS notification fee reduction. Will there be any further impact in FY 2024 from this? Are there other services which will move from paid for to free?
I think the biggest impact is if you look at the SMS fee, if you look at the pricing, we've actually increased it from ZAR 0.25 to ZAR 0.30. The big drive we're taking is how do we take the SMS fee away and that the person uses in-app 'cause in-app is for free. Because the more we can get people to use in-app, the more we can use that as our prime. It's not gonna be the reduction, it's more the movement of the client into in-app.
We've had two questions around the forward-looking macroeconomic provision. Are we able to give a sense of what the new forward-looking provision assumes in terms of macro variables?
We use the Bureau for Economic Research's economic forecasts, and they give us three forecasts, a baseline, a good, and a bad scenario. Those are all very well detailed in the financial statements in note three. I think if I start saying them here, I'm gonna keep you all day. If you just refer back to those, you'll be able to see exactly what they are there.
The BER is information is available. Just go and look at the BER. The BER is the basis of our economic forecast.
A question from Charles Russell. The coverage of arrears rescheduled and NPLs has dropped from 101% to 89% over the last year, with a significant drop in coverage on up-to-date retail loans. How comfortable are you with this trend, given the current environment?
The drop on up-to-date is really what we've seen happen with the forward-looking model. We've seen ZAR 2.2 billion migrate into later stages of the book, and that's what's really driven that, let's say, drop that you see on the up-to-date. That up-to-date coverage ratio is still very similar to what it was pre-COVID.
A question from Harry Botha around the rate of book migration to stage three. How do we see that happening in FY 2024?
Harry highlighted in his presentation, we've seen that, let's say, higher migration this year. We don't expect to see that continue at the same rate.
Just, it looks like a final question around Capitec Connect. We've spoken about the number of customers we are acquiring over the, you know, at the moment, the current run rate. What is the expectation over the year? Do we expect to be able to continue that?
ZAR 5,000 we can definitely continue. The question is how can we accelerate it? I think that's the question. What other products we can put behind it. When we started in September, we were first ZAR 1,000, then ZAR 2,000, then ZAR 3,000. It's actually quite interesting. Some of you do it and say there's 850 branches, there's about 10 consultants per branch, 12 consultants per branch. How much consultants can sell per day? We're quite comfortable with the ZAR 5,000. The ZAR 5,000, it's the take-up rate or how much are they using.
There are no further questions.
Okay, thank you very much. We'll switch off and switch to the staff discussion.