Good morning, ladies and gentlemen. It's nice to see all of you face us. The head office is basically full. I'm glad COVID is gone, and we've got everyone at work, so that's quite nice. It's a privilege for me to bring to you the financial results of 2024. I think if I look at the year, what stands out for me: exceptional growth in the second six months, 25%. I think the ability to move our clients to digital and electronic payments away from cash, and how hardly we've diversified the company stands out. But I'll go through that in detail. There's the questions. If you want to ask questions, Anton is on standby. He's ready to bring those questions to us afterwards. Hopefully, we answer all those questions in the presentation. If I look at the last three years, what have we done?
We've invested ZAR 6.3 billion in diversifying the company, over a three-year period. We've emphasized that in every single presentation that we've invested money, we're diversifying, we're going doing certain things. We see if we look at what we've done is we've replatformed our IT platforms. I said last time, we've actually now our SAP company, Microsoft company, AWS company, a company, and a Salesforce company, and that enables us, our IT people, to really focus on delivering on our client needs. We've migrated all our data to AWS, and that's on that roadmap to make certain that we are becoming a data company. We've developed very innovative payment solutions, and then we've built about three new businesses. So it's just going to look at that. I think retail bank, we know, included in retail's profit of ZAR 7 billion is the strategic initiatives income.
But if I look at what we've done is we've built the leading digital bank in Africa. We've optimized client value by bringing new products to our client, client base. I think the area that we've done exceptionally well is on the creative side, where we've been extremely agile, extremely quick to the market, and reacted to what's happened in the last couple of years. And then we've leveraged very strongly on our 846 branches. It's still a very key, it's very key for us in our success, and I'll elaborate on that. Then strategic initiatives brought in ZAR 2.9 billion in profits. What is tremendous is it's an extra ZAR 1 billion from last year, and it's all the new value-added services that we've launched. I'll unpack that in detail. I think the one that stands out or is part of it is Capitec Pay.
We've actually taken payments and put a completely new dimension on Capitec Pay. And then on wallets, if you look at what we've done with Apple Pay, Samsung Pay, Google Pay, Garmin Pay, all the Pays are in it, and we've done a tremendous amount of volumes in that. Then if I look at insurance income of ZAR 3.1 billion, I think what we are doing is decide how do we optimize our own license, our insurance license. As you all know, we've received our license about a year ago. How do we build our own systems? We've exited with Sanlam. 1st of November is the due date. How do we bring all that data on, and then how are we going to develop new products? And then business banking, the exciting one, we've promised that we will rebrand 1st of March. We've done that.
We've built a completely new digital platform for business banking. We've launched a completely new app and online capabilities on it. Everything is in the cloud, so all our systems, all our data, etc., is all on the cloud. So that's what we've built with the ZAR 6.3 billion. If you really look at it, there's tremendous opportunity still in strategic initiatives on insurance and business banking, which will make certain that we can continue producing the results that we've done over the last couple of years. If I look at the income statement, I think the big number that everyone was looking at is the arrears number or the impairments number. I think in red there you can see what has happened. Impairments was at a high at ZAR 4.7 billion in August.
We told the market it's coming, it's our pullbacks is working, and we're starting to bring that back, and you can see the ZAR 3.9 billion. So there is a ±ZAR 800 million improvement in our payment cycle, and we'll unpack that further. I think the one that will probably surprise the market, the market was expecting about 18%-19% growth in transactional income. We came out of 29%, and a big driver of that is our strategic initiatives that has come through. So, net non-interest income has grown with 26%. And then if you look at our performance, we came in with a 16% growth year-on-year. And then, I think the one that we can be extremely proud with is 25% growth in the last six months versus the previous six months.
There's not a lot of companies that can say over a year, the last six months you grow 25%, stronger in the last six months. If I look at our profitability, our key ratios, I think the one that stands out is I remember when we started the bank, we were 100% dependent on credit. All our income was coming from credit, so you were very dependent on the different economic cycles and what is taking place. It's difficult to grow credit when the economy is stuck, but now 72% of our income is coming from other income, transactional income, VAS, Connect, etc., etc. So a big portion that shows how we've diversified over the last couple of years, that 72% of our income is now coming from other income. Cost-to-income ratio 39%.
Our OpEx grew with 17%, but to still come in at 39% shows how we manage cost and how we keep everything down. Return on equity, we always promised the market at 25%. We came out at 26%, so we'll have to give back another 1% to our client base, and I'll show you later that we definitely are going to do it and make certain that we get to our 25% ROE. Balance sheet, I think the important one is the one marked in red, is how our deposits has grown. The market has grown with about 7%-8%. We're at about 7%.
We're managing and make certain that we are in line with the market, but yeah, we've got ZAR 156 billion that is invested with ourselves, where people are trusting us with their money. And then credit loss ratios, you can see, in retail bank, we came out at 10.1%. The second half, we were at 9.2% through the cycle. We're normally about 8.5%-11% at average, so that shows the improvement we've done to come in at 10.1%. And then business banking at 1.9%. A big driver of that was the rental business that took strain during the economy, as one can expect it. And then on capital adequacy, we've got enough capital.
Our capital adequacy of 36%, I think it's a tremendous performance to have a ROE of 25% on a capital adequacy of 36. We quickly got to look at a video that actually just sums up and gives more detail of all the new products that we've launched in the last couple of months.
In a world that moves at the speed of now, Capitec reimagines banking, where every innovation begins with a simple question: how can we make the lives of our clients better?
Our fundamentals of personal service and accessibility require that we serve our clients where they are, need us to be. We lead digital banking in South Africa with our digital largest and most popular banking app in the country, despite the ability of personal service that you can only get from speaking to another human face to face. We believe and continue to invest in the strength of our branches. The shift to digital, both on the app and the self-service terminals , creates additional human capacity that we use to serve our clients better.
Transactions are not just transactions. They're the pulse of life. Moving from the physical to the digital, we've engineered our services to be more intuitive, accessible, and empowering than ever before.
You make my life so much easier. I just tap with my phone or pay to a cell phone number. I don't even carry my wallet with me anymore.
We launched Capitec Pay, revolutionizing online shopping with security and simplicity at its core. With PayShap, we are the market leader in making more affordable, immediate payments. We are also expanding the boundaries of cashless payments with Apple Pay, Google Pay, Samsung Pay, and more. Our latest release, International Payments, makes payments into major international currency accounts much easier, faster, and more affordable.
I use my app to buy airtime and data, vouchers, and pay bills, and with Capitec Connect, I stream my music and movies for much less.
We've made renewing your vehicle license as easy as liking a photo. With our Capitec credit card, enjoy rewards that feel like a thank you every time you spend. Our credit products focus on delivering better solutions for the right purpose, such as education loans across all education levels at over 27,000 institutions in South Africa, vehicle finance, medical loans, home loans, and home improvement loans.
The responsible lending also means helping our clients to manage their credit better. It is for this reason that we introduce credit treatments on the app as well as on WhatsApp for clients experiencing financial stress. This is also one more way that we are helping our clients to live better.
The Money Up Chat financial education solution on WhatsApp gives hundreds of thousands of clients a chance to learn about money management actively.
Support from Capitec is only a WhatsApp away. No more call centers. It's like having a personal banker right in your pocket.
We introduced Capitec Business, making digitally-led relationship-based banking available to all businesses in SA.
Well, SME market is a very badly serviced segment in South Africa, so we built the new business bank on exactly the same fundamentals as Capitec Retail Bank, in that it's simple, affordable, accessible, and really good personalized service. So it doesn't matter if you're the smallest business in the country or the largest business, you all get treated the same. You get the same offering. And then from an affordability point of view, we're going to be the most affordable in the market by a long way. We estimate we'll probably save you about 50%-60% of your bank charges every month. From an accessibility point of view, you'll be able to open a business banking account at your home at night within four to five minutes.
You'll have access to an app, internet banking, and then if you really want to speak to an experienced banker, you just push a button, and there's a banker on call waiting for your call.
Hey, this new Capitec card machine is so lekker. It is fast, and it makes our job so easy.
At Capitec, innovation is not just about the next big thing. It's about improving your everyday life. Capitec. Better never rests.
Yeah. Yeah, I think we can be proud about all the innovations and everything we've done, and I think the challenge is to keep up with that and make certain that we deliver on the client's needs. If I look at the retail bank, I think the first thing that I want to emphasize is if I look at our client base, we've grown our client base with six million clients in the last three years. It's actually, if you look at the last five years, 10 million clients. So it's quite scary if you look at five years and you're saying you've actually really doubled your client base. I'll give up where the clients are going to grow to when we reach 15 million, and we still brought in 160,000 new clients in the last months. The one that I'm excited about is client inflows.
That's your net inflows. Every salary in South Africa is about ZAR 15,000 a month. That's your net salary after your taxes and your deductions, and we've grown that with 61% to 2.9 million clients. Then on the spending on the app has grown with 95%. You can see the uptake of the client base, and that 45% of all clients, what they're spending, they're spending it on the app, using the app to spend. We've reduced cash from 24% to 17%, so only 17% of all our transactions are now cash. We all know how important it is to move people to electronic because then we better understand the client and we can create value. Clients are making 3.5 x more online purchases than in 2001, so a tremendous adoption in the digital space.
And if I look at where people are spending their money, Takealot , Checkers Sixty60 , Mr D Food is important. Netflix, Showmax, Bolt and Uber. For me, it's still interesting. I don't know Bolt, but Bolt is bigger than Uber under the Capitec clients, so that's still, for me, an amazing stat. If I look at our client base, what does our client base look like? We've seen with 11.2 million active app clients. Our client base on app is growing with about 180,000-190,000 clients per month, fully banked. That's where you've got your salary in. You've got debit orders. You are using the app, 7.8 million app, 13%. Our savings clients, 8.5 million. The figure that always people don't understand because I think we're borrowing money to everyone, only 1.4 million of our clients are credit clients.
If I look at our funeral plan clients, 2.7 million clients, and then VAS, 9.5 million clients has actually taken up VAS on the VAS products. I believe there's still a massive potential to grow that client base to a much bigger figure. On Capitec Pay, 4.6 million clients within a year using Capitec Pay, whereby if you do online purchase, you rather use Capitec Pay than screen scraping. And then PayShap, we're sitting with 60% of the market share on PayShap, within a six to eight months period. If I look at our, our service model, what is our service model? Everyone is asking me every time, "Why is the branch so, so important?" because we believe that personal service is, is, is, important. You can see our one-on-one interactions with clients was 38 million.
Interestingly, in 2014, we did 90 million transactions in the branches, but we had no SST and we had no app. What is done now with the SST, the self-service device in the branch, we've taken all the volumes away. So what our consultants are really doing now well is whenever we bring out a product, they are selling to a client. All the transactions have moved either to the SST or to the app, enabling us that when we bring out a new product, we see a massive takeup on that product, product range. So the branch for us is a very important aspect. Digital is there to take the client in control, but that real selling of a product happens with our consultants. If we look at our cash availability, 8,000, 8,300 ATMs, volumes just up 5%.
I would love to have those volumes at zero, but that's probably a long shot, but you can see how it's actually stagnant given our client base. If you look at the cash per client, that has come down quite a quite a lot. The one that's for us very interesting is our chat-based support, 60%-65% in February, of all the chats were in WeChat, all with a bot, enabling our people, again, to give that personal service to a client where there's more complex queries or questions that's coming, coming through. On digital banking, I don't think we realize it, 40 million messages per month. That's about 1.2-1.3 messages per day that's going out to our clients, making certain the best offers going out to our clients, making certain we're engaging with our client in a proper manner.
1.6 billion financial transactions has been done in the last year on the app. It's quite interesting. We're sitting at any hour with about 500,000 people on the app, doing transactions or doing something on the app. Interesting, if you look at electronic payments, the card payments, it's still 2.4 billion, up 32%. If you compare the app at 1.7 billion, that gives you a comparison of what the how important the card is still. And then ZAR 1.6 billion that's been spent on wallets that are Apple Pay, Samsung Pay, etc., that's coming through. Interesting, Apple Pay is about 80%-90% of those volumes is coming from Apple Pay. I think that's probably the most important aspect. If you look at what is happening here, it's giving us, in a year, 2.02 trillion data points.
I don't even know how big is trillion, but it gives you an indication of how do we understand our clients because all of this is happening, and we can understand what is our clients doing, and we can advise our clients of what's taking place, and that's helping in our value-added services. It's happening, happening in our next best actions. It's happening in our credit side. So 2.2 trillion data points that we are working through and making certain that we optimize, and as I said, all of this is basically in the cloud currently. The biggest bank, the biggest app in South Africa, 28% of South Africans over the age of 18 is actually on the app, so we've got a dominant market share on, on the app.
Why is it so important for us or why people love it is you can open an account within minutes. Carl has shown in the video we can open a business account in four to five minutes. On average, about 25-30 minutes. There's over 70 features of products in that particular area. In-app means the next best action where we actually prompt the client and say, "What is your next best action that you need to, to take?" And then if I look at fraud prevention and education, a very important part of it, as you all know, we brought in selfie into the app, so if you do a transaction to a new beneficiary or a big amount, you need to take a selfie.
We're actually saying to our clients, actually, if you're Amazon Connect, we can make certain that we know you're talking to one of our agents and we're telling yourself that you're talking to a Capitec agent, making certain that the client actually trusts the brand and trusts the transactions. All our clients use it, 180,000 new app clients per month, 11 million logins per day. It's quite scary, 11 million logins per day. On a peak day, close to 6,000 transactions per second that's taking place, and on the app, ZAR 1.2 trillion has been processed through the app.
If I look at our new products, that we've launched, or new digital products, all of VAS products, Connect, Airtime, I think the first one, if you can look at the old, older products, prepaid electricity and prepaid Airtime, it's grown from ZAR 1.1 billion to ZAR 1.2 billion. We're controlling now 26% of the prepaid electricity and 39% of the pre-time, prepaid Airtime and data, in South Africa has actually bought through ourselves. Then if I look at Lotto vouchers, bill payments, and license renewals, it's gone up to the growth is about ZAR 800 million. We launched, license renewals, in February, and within a month and a half, we've got 48,000 clients that's actually renewed their licenses, via Capitec. I'm one of those clients, and I was extremely happy with the service.
SendCash, we brought our PEP accountants, so there's quite a lot of new retailers that are involved in the whole SendCash action. Capitec Pay, close to ZAR 200 million. I think that's an exciting space where we've actually kind of taken screen scraping away and the complexity of doing transactions online and making it a two-step process, quick and secured through it. And then Capitec Connect, brought in ZAR 35 million. I'm very excited about Capitec Connect. We're bringing out quite a lot of new products. It's going to come out in the next couple of months. And like I said, for us, it's an important part of here is actually understanding the client better and using the data to optimize the client experience. Credit, I think the difficult one, given the economy, we all know what's happened with the economy.
I'm not going to go through it, but I'm quickly going to touch on the economy, how did we respond, what was the results, and how we've diversified in the last couple of months. If I look at the economy, the one that we all hate, the repo, interesting, if you look at the repo, it's only 2% higher than February 2020, before COVID. At COVID, the Reserve Bank dropped by 4%, but it's at 8.3% versus 6.3%. All we thought interest rates was going to drop here from a May, June, July point of view, but I think it's more going to be now September, October. I think the critical one to look at is what is going to happen on inflation, and I see that dark blue.
I think that's the one that had the massive or the biggest impact on inflation is our food inflation, especially on your people that's earning less. Food inflation is high as 14%, and it's dropped to 6.1%. The March figures came out, or February figures came out, and that was actually at 5.1%. So I'm very optimistic. We've seen now for the last month, basically now, load shedding. Load shedding had a massive impact on inflation. I think the question that we need to ask is what is going to happen in the Middle East and what's going to happen with oil and what's going to happen with the rand-dollar because those things impact inflation generally. I think the one that we track quite a lot in the credit space is insufficient funds, so that's where our clients are transacting. They've got debit orders.
They go to an ATM. They swipe their cards. What is happening where we get the message, "Insufficient funds?" And you can see that is coming down. At peak, in February 2023, at 10.7%, and it's coming down to 9.8%, so there is about a 2% swing, that's taking place. We're still not at the February 2020 levels at 7.3%, but there's big improvements coming through. And I think what load shedding is going to do, food inflation, these type of things, is going to cause that figure to come down to about a 7%. What are we seeing in returns? I think it's important to look at the August 2019 figure and compare it to the February 2023 figure. You've seen basically all the industries are lower than 2019 or February 2020.
You see the big peak there with COVID. Retrenchments coming through. I think we've all seen what is done in the tourism and hospitality industry with overseas people coming into South Africa, big spending taking place. I think the difficult one is in the mining sector, where the platinum, gold, coal is under tremendous pressure, and we've seen in the last couple of months a big spike in retrenchments coming through in those companies, and I expect that to actually increase even further in the next two, three months. We all know what has happened with Sibanye. What have we done, from a Capitec point of view? This is the NCR that we've done. We've taken out the Capitec stats so we can compare what our competitors have done.
Basically, on average, they've cut back about 9% given what is happening in the economy. What have we done? We've gone much stronger. We've cut back 32%, so we were very conservative in this period. We've made 141 behavioral risk changes, close to 2,000 employer risk specific changes that we've done on employer, and you can see the big cut that we've done is actually on the IF. We've basically cut it with 81%. What we are currently looking at is to say where are we, maybe we were too aggressive, and given the performance that we're seeing, should we open up in certain pockets, but it will only be in certain pockets that we believe we will open up, to make certain that we're in line of what we're seeing in the economy.
If I look at our response, I think this is an important slide, and I don't think a lot of our people understand it, but we realize that if your client base is under financial strain, education is critical. So, we've focused on 750,000 people that was under financial strain. We've used Live Better Academy and MoneyUp to actually make certain that those persons these people understand their financial lives better. They budget better. They start saving, and, what's interesting, 82% of the people we surveyed had a very positive response. So a massive investment in financial education. The one that still concerns us is debt review. If you look at the total market, we're the one in the red. You can see we've grown ZAR 5.5 billion-ZAR 6.3 billion.
The market is up from ZAR 51 billion- ZAR 77 billion, so if you include us, that's about ZAR 56 billion to about ZAR 83 billion. We believe there's a lot of people that unnecessarily go into debt review that we, as a bank and other financial institutions, should help first, and that's what we focused on. You can see we had a tremendous focus on debt review education on social media, and all other media platforms. We had pre-delinquency campaigns that we run, we might restructuring through our app possible, and we brought out rewards programming. You can see our market share has dropped from about 9% to 7.6%. Our credit market share is around about 28%, so it just gives you a feeling on it, but this, for me, is still a big concern in the industry.
There's a place for debt review, but only if you are in extreme debt stress. First come to your bank and make certain that we can see if we can't assist. If I look at our results, you can see the book basically February 2023 at ZAR 82 billion and at February 2024 ZAR 83 billion, so no growth in the book which you'll expect given what is happening in the economy. You've also seen stage three increasing from ZAR 18 billion to ZAR 22 billion, and that's predominantly due to the old transfers that we've given given a completely different outlook in the economy, so that's why we've seen a big turn to the stage three coming through. And if I look at our expected credit loss coverage ratio is at a high of 25.5%.
You can see when we had COVID, it was at 26.9%, so we'll provide it, but a big driver of that is the stage three areas where we basically fully provide for that particular client. We expect this to, by the end of this year, come back to normal levels of about 23%-24%, as you'll see a stronger growth in your stage 1 coming through. And then on our credit loss ratio, we were in February 2023 at 8.5%, half-year at 11%. Signs were coming through that we're improving, and we ended the year at 9.2%, which I think is excellent performance. I think, through the cycle, our history is about 8.5%, and we're optimistic that we'll get to that 8.5% rate. What have we also done in the credit space?
We diversified our approach, our products in that particular space. You can see, client earning more than 50,000, how that has grown. It's grown 56% over two years, very strong growth in that particular area, and a very strong focus on the credit, credit card which has grown also 56%, 57% over a two-year period. And then our channels that we actually sell through, Capitec Direct. I think, the market doesn't know, this isn't direct competition of DirectAxis . We've sold over ZAR 4 billion in last year in Capitec Direct, a business, strong growth of 59%. An important channel for us where people can actually just phone Capitec Direct and actually do their whole loan application through Capitec Direct. And then the app. We've launched the app about October 2023. You can see it's up 173%.
That's a big focus for us, where the person can actually go onto his app. If he banks with us, we can automatically score the client, and we can automatically provide credit to the client, and that's up 173%. And then, the two areas that, for me, is very important is purpose. If I look at our purpose, that's our education loans. It's our vehicle loans. It's our relationship with Cashbuild, CTM, where people are using credit in the right manner, in a purposeful manner. We struggled to get that off, but I think we've gained that momentum. You can see a very strong growth coming through in 2024. This is a big focus area for ourselves. And then multiple income. That's where a person has got a salary, but he has got side hustles.
He's got other income coming through, and we've just done over ZAR 1 billion for ourselves, so that's another big focus area for us to say how do we actually make certain that people with other income is recognized and we can provide credit to those particular client. If I move on to insurance, I think credit life has been flat in line with your book. You can't expect anything on that particular product. It's 100% in line with that. What is important is close to 600,000 policies have been sold on our new system. We're testing the system. We're busy migrating from Guardrisk. We should be by July, August, be fully migrated, and then should all the policies be on our own system, and then we'll work from there.
Funeral, and the number of policies we sold grew with 23%- 2.7 million, but interestingly, we're covering 12 million lives in South Africa, so if you say South Africa's got 60 million people, take out the people below, let's say 18%, that's about 35%-36%, so that gives you a feeling of the people we are insured with funeral, and we've got a 35% market share of new. And then on life, Capitec Life, we are in staff pilot. It's going extremely well. About 15% of our staff has taken up the product, and we're very excited, our first product on our own license that we're launching on the 9th of June. I think if I look at insurance, it's for us all about our new systems that we're building.
It is bringing the whole small business across, making certain we're ready for new products that we can actually attack the market from next year on. Business Banking, I think the big moment has arrived. 1st of March was the big D date where we rebranded from Mercantile to Capitec. You can see the business card there. We've got a full, you can open up your account within a couple of minutes. On average, it's about 25-30 minutes. A lot of people have done it in four minutes. If you've got a very simplistic sole prop or company with one director, it's a very slick, easy process. We've got a completely new app with online banking, and it's interesting. If you go in the Capitec retail app, you swipe left, it's Capitec retail.
You swipe right, and you've got business banking, so it's one access to everything. And then there's a relationship banker available 24 hours to service your particular need with full client history and available to that relationship manager to tell them what the person has done. I think everyone always focuses on business banking and say, "Yeah, we've got a business bank," but what they don't realize is it actually consists of our merchant commerce business, and I will elaborate on that now. We've got about 40,000 point-of-sale machines that's out in the market, and that's for us is a big market opportunity. We've got rental finance. We've got payment services, payment services where we collect for on behalf of other people. If you take ADT, for example, it's got debit orders. How do you collect for ADT on those debit orders? And then Forex.
In the video, we've said we've just launched international payments for people to use your million-rand allowances, and that's going to be a massive take-up for us in that big area. So if you look at business banking, you need to look at those divisions in totality to understand the growth that's going to come through. I think the point I'm trying to make here, everyone asked me, "Are we happy with the buy versus build decision?" I've just looked at a couple of businesses that decided to build, and I can promise you all of them are not making a profit after three, four, five years. We've decided to buy Mercantile. We paid ZAR 3.6 billion for Mercantile. In the first year, that's now before we've taken them over, their profit was ZAR 240 million-ZAR 249 million.
You can deduct about ZAR 50 million off that because the first step we've done is pricing was at ZAR 10 a transaction. We dropped that to ZAR 5, so it's actually about ZAR 200 million. And then you can see we've continued to grow with about 20%-25% the business banking space while we're building the completely new platform. So we're extremely happy with our organization how it's gone. I'm excited in what is lying ahead in the business banking space, especially in the emerging market. Customer advances has grown with 23%- ZAR 19 billion, so a strong focus for us going forward as well is to look at the secured market while we're building the unsecured offer in the marketplace, so that's going to be a big focus for ourselves.
We've only got below 1% market share in this space, and how do we get to a 5% and 10% market share space over a period? And then if you look at our transactional side, only up 8%, but there's massive changes that we've done. You can see volume's up 16%, but merchant services, we've moved completely away from a rental model to a buy model. What has happened in the past, the person would actually rent a machine from us. That will cost them plus-minus about ZAR 400 a month. Now we're selling the machine to them for ZAR 1,000, and it's a once-off purchase, so he doesn't pay the 400 rand. It's got a big impact on our income, but we believe it's the right thing to do. There we go into digital commerce.
That's our new point-of-sale machines that we're coming out. The print we're selling for about ZAR 2,300 and the pro on, for ZAR 1,200. We see here's a lot of space to actually go into this particular area. The first step, we've done in the last week, two weeks is that now you can order these machines online, so you can sit at home, you order it, and you get the delivery. You pay for it, and you can set it up, and you can connect it and it can start transacting. You need to have a Capitec business account. You settle immediately, and what we've done is we're going to; we've got tiered pricing currently on depending on your turnover. We just want to make certain we can handle the volumes, and then we're going to be very aggressive on the commissioning space and then provide loans on those.
This is all part of our strategy to move people away from cash to card payments, so that we can understand your, your history and what you are, are doing. If we look at business banking, the call that we've made is to make business banking fees exactly the same as retail, apart from your monthly fee. Retail is ZAR 7.50. Yeah, it's ZAR 50 because you've got much more complicated transactions taking place, but our philosophy has always been transparent, simplicity, and why must a transaction for a retail client differs from a business banking client, 100% in line with what we've always done. A transaction cost is X. We're going to ask ZAR 1 for a transaction. So the retail space, and the business banking space, the transactional fees, the banking fees exactly the same. I think that's the first in, in banking has ever taken place.
I'm very excited about business banking. If I look at business banking, we've launched. We're still busy just making certain we can handle the capacity, and we, there's a couple of small errors that we're still fixing, and from about July, August, then it's a matter of let's go and grow the business and let's go and create value for our client base, out there. I think if I look at OpEx, everyone is asking us what we're expecting, or if I look at all the other banks, it's at a 6%-7% growth. We had a 17% growth.
Our average for the last couple of years has been 14%, so a little bit higher, but if you invest in business banking, if you invest in insurance, if you invest in cloud technology, if you invest in IT platforms, you are going to spend more, so 100% in line with what we would like to do, and I think we'll continue investing. If I look at the new businesses that we've launched, I can't see this trend to drop. We'll be in a 15% range, because we believe in what we're doing, and we believe investing in the future is important for the bank. Social impact, what do we do in the social impact? We must look at our clients and our environment as well.
I think, a big focus for us, what is important for us if I look at ESG, is to make certain that we do what makes business sense and what is best for our clients. Our carbon footprint has dropped to 3%, and I think the one we can be proud of about is, as you know, we're completely paperless, in our branches and basically about in head offices as well, so if you sign a contract, you do it with biometrics, so massive impact on the environment.
If I look at social, our investment in education, the one that we're proud of is, on the school side, we've basically affected about 24,000 people that is in grade seven, eight, nine, but we're actually spending quite a lot of time on our headmasters and our science and maths teachers to make certain that they are equipped to really take the schools to a next level because by just sponsoring and giving money to students, but the school is not properly run, doesn't make sense, and we've had tremendous successes in that space. The one that we started last year is community projects. A lot of you have been involved in these community projects, 152 community projects, 2,500 people involved giving back to our communities. The challenge here is how do you triple this figure for this coming year.
We've set aside more money because I believe it's important for our branch managers, our regional managers, and yourself to be involved in the community and give back into the community. And then on our clients, I bet we've paid back ZAR 540 million to our clients, and interestingly, if I look at the 3.5% that we pay on your savings account where other banks are basically paying 0%, we've paid back to our clients about ZAR 2.2 billion rand, which they actually received in that particular area. If I look at people, probably the most important, not probably, definitely the most important, sorry for that, I think if I look at we've done a lot on delivering new products, features, satisfying our client base.
You can't do it without your people, and I think we all know our culture of looking at the client first, then our people, and then delivery, the whole concept of CEO whereby we say each and every one of you are CEO, client first, and then energy, then ownership, so I'm very excited in all the programs and everything, and we are busy with on the leadership front. You can see on Leadership Academy, there's various academies for middle managers, senior managers, executive managers. We've just got now 15 very senior managers.
That is part of our executive program. They're leaving to India and Singapore for two weeks now, beginning of May, to rub shoulders with the best in class in India, India, especially if we look at payments and what is happening in payment space, and in Singapore to look at what Capitec companies are doing in that particular space. Talent development. You can see 58% of all people are promoted from within. The target is for this year 65%. We've brought in and we're bringing our branches and our branch staff, giving their preference into our organization, and it's quite interesting to see the uptake. All the relationship managers now are coming from the branches.
We're bringing if, if we're looking for talent, we're looking internally for it, and I think then the last one is just if I look at business ownership, what makes us different. Somebody asked me that question the other day, and I think it's that accountability, that ownership of the different people taking full accountability of their business, but it's not a silo effect, because what we do is you take full accountability for it, but how does it fit into the total group, and where Capitec is going, and your, your objective is then measured against that particular area. So no silos, all working to same objective, but full accountability, and I think that is what you've seen in the delivery side. The future.
I think the first thing I know what asset managers are going to do and shareholders. They're going to think we're going to grow with 25%, going forward. I've told you we're under 26% ROE. We need to give back. That's the Capitec philosophy. These decisions have already been made. The first one is cash withdrawal fees has been dropped, so if you're on Saswitch or on Capitec ATM, you pay ZAR 10 per thousand. We're moving our payment streams away from RTC and then EFT to PayShap. The PayShap cost is much lower than RTC and EFT, and then we will lower the prices for our client base, so your whole drive is to make electronic transactions cheaper, make it lower, more affordable, and that we can score you and we can add value.
We've dropped the rate of the business banking fees to retail banking, so that was a big step. We've reduced the merchant commission, and changed the whole business model, and we will further reduce that, the merchant commission to one single rate irrespective of your turnover very soon in this coming year, and then we're investing quite a lot in our insurance business to take over all the Sanlam data and Sanlam policies. What is quite interesting, first of November, it's not a normal like a normal business where you take and you grow with the business. We're taking the full 2.7 million or, of course, let's say it's three million policies. We're taking it first of November, so we need to scale from that first moment. We need to scale. So, that's why we're investing into making certain we can handle that particular area.
As you know, we've actually got a double cost because you're paying 30% to Sanlam plus you're investing to make certain that we can handle it. Over time, the 30% of Sanlam will fall away. Then the one that we've just announced, about, I think it's three to four weeks away ago, Avafin, the Polish government has given us approval last week. We've paid the check on, on Friday, so Avafin, we control now 100%. On the slide, it says 97%. Management has got that difference. We're very excited about Avafin. It's interesting. We've been part of Avafin. That was the old Cream finance. We've been part of them for the last seven to eight years. We believe it's a massive opportunity. They operate in five countries, that gives us the opportunity to diversify.
I think the easiest way to sum it up, when Capitec started, we were a one-month lending business. This is a one-month online lending business, and with the support of Capitec, how do you actually build it to a full-fledged bank over time? So we're very excited about Avafin. If I look, and I've shown this slide before, but this is basically what we're doing. We create the ecosystem. Our strategy starts with the client, and our call to make certain we deliver on it. We've got 20.22 million clients. We've got 866 branches. How do you optimize that client base? If you want to optimize it, there's two critical areas. The one is to make certain you've got the right tech, and I think we've done it in the last three to four years. How do you make certain you've got data?
I've mentioned the two trillion data points that we've got, and how do you increase that, make certain that we better understand the client base? How is our personal, personal and digital service that we're bringing, in? And then how do you create an ecosystem, an ecosystem on, our four businesses and make certain that we actually can create value for our client base, because we're sitting with this 22 million clients. How do we actually move them to business banking? How do we make, move them to, insurance? How do we move them into, retail? And at the end, if you can see the big circle, it goes all about our culture, our culture of building and looking after our client end to end, making certain that we look at our people, our whole CEO principle, and our delivery.
So if I look at the future, we've built a big operation in the retail space. I'm very excited about strategic initiatives, what we can still do in that particular space, creating value for our client base, what is going to happen on business banking, especially in the emerging market space, the insurance side, how do you create and put this all together, and then long term, very long term, how do you take Capitec international?
Thank you very much for the presentation. Thanks.
Gr ant or myself will now Grant or myself will now answer questions from investors. I assume there's nothing, Anton.
I've deleted most of the difficult ones, Gerhard, but there are a few that are left. The first one is from Peter Cromberge , Grant, for you.
Following Capitec's successful bond auction in October, is there appetite for raising a larger quantum of capital through the DCM market, and when does Capitec next plan to issue local bonds?
Thanks for the question, Anton. So we have no plan for a debt issuance in the next financial year, so in 2025, with FLAC expected to become applicable in the 2026 financial year, our next issuance will probably be a FLAC issuance. So thank you. The next question's from Johan Le Roux. We stated that cash reduced from 24% - 17% of total spend. Does that mean that actual cash spend in rands reduced, or did it grow slower than card spend? Well, it's interesting. If you look at total cash spend, it's basically up 5%, but you've added two million more clients.
So if you look at the cash spend per client, it's actually coming, coming down. I think what is what for me is important is 17% of our transactions is now cash. If a person withdraws ZAR 1,000, I don't know what the person does with the ZAR 1,000, but if he, if he swipes with his card or uses his app and he does 5 transactions, we understand it. So cash spend is basically total is flat, 5%, but the, if you divide it by number of clients, it's definitely down. The next question relates to the strategic decisions that we are making that will impact profitability in the short term and what the expected impact should be. I think if we if we look at what Harry alluded to, we manage to a 25% ROE.
So if you look beyond the guidance we've given, we consistently look to manage that to that 25% ROE.
Then we have a question from Sibusiso Dlamini . How is Capitec positioning itself in the township economy considering the emerging technologies that are coming out?
Well, I think the whole emerging market I alluded to it a couple of times when I spoke about business banking for us is important. How do we make it and if I look at, when we started, 60% of people weren't banked, and if I look at the emerging market now, probably about 70% of people are not banked.
So how do we make certain that we get the emerging market that they are banking, that they're swiping, that they're using the app, and then we provide business accounts for them and provide credit for them to grow the business? Because if I look at South Africa, we're not going to get unemployment down and get the economy growing via the government and private sector. It's the entrepreneurs that we need to support. So that's where the whole focus is for Business Banking is to go look at the small businesses. So it's a big focus for us.
Then we have three questions from Ross Krige . The first one around the planned life cover product. How will this be different to what is currently available in the SA market, and are there any other products in the market?
Wait till the 9th of June.
Just checking that the retail credit ratio, we expect that to come down to 8.5% in the next year. Correct. Is there going to be an acceleration in the retail loan book going forward, or you remain cautious in the process?
Yes, we'll remain cautious. If you look at the economy, we all know it's, I'm going to say thin ice. We, I remember, in August, I said, Ukraine and Russia are sorted out, looks like it's stabilized, nothing else has happened in the world, and then Israel happened, and now two, three weeks ago, Israel, Iran took place. So and that has all got an impact on South Africa. So we are our focus is to be on the credit side is, is going to be on business banking, on the secured side, but we will be very cautious on the retail space.
Thanks, Gerhard.
A question from Charles Russell. How do we feel comfortable with our stage three coverage of 64% in retail when this was much higher, in the 70s in 2019 and 2020?
Thank you for the question. I think firstly important when we look at that stage three book, we split the clients between paying and non-paying. If you look at the coverage we've held non-paying clients, that hasn't changed since 2019. It's been exactly the same. What we've then done and looked, if you look at the actual paying clients, when we used to allocate our overlays, we used to allocate them based on provision balance in the past. We've now adjusted for that. That means that they are now allocated on loan balance.
Furthermore, as we've had more data, we've been able to extend our recovery curves, and now you've obviously seen that benefit come through, and that's based on actuals that we've actually seen come through and we've now brought into our models. We've also been able to negotiate better commission rates, with our EDCs, with our external debt collectors, which obviously enhance our recoveries, and then finally just more granular modeling of that default book. So, splitting it on, you know, categories like debt review, terminated debt review segments on paying clients a lot better, and that's really what's driven that move ew, hold back, and handed over, and we actually understand the performance within tho ment.
Thanks, Grant. Then we've got two questions from James Starke . The first one around net transactional commission income, which grew impressively at 29% year-on-year.
Can you give us a sense of what sort of growth we expect over the medium term?
You're probably going to look at high tens because remember, you must take in consideration the strategic decisions we've taken, which is going to affect your pricing. If you look at the cash withdrawal pricing, if you look at the RTC to PayShap pricing, those are always going to have an impact. And then the second question from James is, what is the financial impact from migrating the credit life and funeral books to our own life license using the FY2024 numbers? So if you look on the credit life, it's the fee that we effectively pay Guard Risk, probably around sort of ZAR 4 million-ZAR 5 million a month, which we'll now save.
From the funeral side, we currently incur the cost of paying Sanlam to perform services, and we have our own team and system here, so we effectively have a double cost. So moving it onto our own license will remove, let's say, half of that cost effectively. You're going to cover 30% Sanlam and 30% and then our OpEx, and then from next year, the 30% falls away.
We've got a question from Harry Botha regarding the strong growth and vast income.
You've answered that already with the James Stark question. Maybe let's go to the question around excess capital. We'll still have meaningful excess capital after the Avafin and Sanlam transactions. Anything specific to note on excess capital deployment other than organic usage?
We will be conservative, as always.
I think just to highlight on that with Basel IV becoming applicable, not this financial year, the 2026 financial year, that'll also have an impact on capital required for operational risk, and that'll obviously reduce our capital by a few percentage points.
Question is how much can Colgrow ease business?
And that's all the questions that we have for now. Thank you.
Thank you very much.