Aditya Birla Capital Ltd. · NSE:ABCAPITAL
Aditya Birla Capital — Q2 FY20 Earnings Presentation
49 slides from Aditya Birla Capital's earnings presentation, Nov 7, 2019
Slide 1: Investor Presentation: Financial Results Q2 FY20
Investor Presentation FINANCIAL RESULTS – Q2 FY20 MUMBAI 7th November 2019 A Leading Financial Services Conglomerate Aditya Birla Capital Limited
Slide 2: Table of contents
Table of contents 1 | Overview Pg. 3 - 10 2 | Business-wise Performance Pg. 11 - 44 3 | Consolidated Financials & Other Annexures Pg. 45 - 49 NOTE 1: The financials of Aditya Birla Capital Ltd are consolidated financials prepared based on Ind AS unless otherwise specified NOTE 2: The financial figur
Slide 3: Diversified portfolio delivering returns across economic cycles
Diversified portfolio delivering returns across economic cycles Figures in Rs Crore ABCL Aggregate PBT (IGAAP) vs India GDP Growth % 8.0% 8.0% 7.9% 6.9% 7.2% 6.9% 6.6% 6.1% 5.2% 5.4% 4.3% 5 YR CAGR: 21% | 2 YR CAGR: 29% 1,913 1,554 1,150 995 849 761 727 600 472 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY1
Slide 4: A strong track record of delivery across businesses
A strong track record of delivery across businesses Figures in Rs Crore PROTECTING INVESTING FY14 H1 FY20 3 Year Aspiration FY14 H1 FY20 3 Year Aspiration Total Gross Premium1 4,833 8,0082 ➢ LI Protection 10-12 % AMC: Domestic AAUM 82,767 2,53,897 LI: Gross VNB Margin 16.2%3 36.3% ➢ LI Net VNB ~ 18-
Slide 5: Disciplined approach in a challenging business environment
Disciplined approach in a challenging business environment Securing Long-term Growth Capital Strategically Managing Risk Maintaining Sufficient Liquidity 1 | Raised Rs 2,100 Crore of equity capital 1 | Greater diligence in underwriting with 1 | Raised LT borrowing of ~Rs 8,000 Crore in through prefe
Slide 6: Leveraging Technology for our Customers, Partners & Employees
Leveraging Technology for our Customers, Partners & Employees BETTER EXPERIENCE GREATER REVENUE IMPROVED OPERATING MODEL 1. One million customers with One ABC ID; One 1. Analytics driven persona-based suitable upsell 1. Video KYC, online validations and AI based OCR Call in number & cross sell offer
Slide 7: Fostering innovation through BizLabs Fintech Program
Fostering innovation through BizLabs Fintech Program ➢ Aiming to fuel innovation culture through collaboration with startups ➢ Platform to leverage innovation ecosystem to address our key focus areas through advanced fintech capabilities ➢ 3 month fast-track program which saw 570+ start-ups targetin
Slide 8: Key highlights
Key highlights H1 Ind. APE1 grew by 20% in Life Insurance, NBFC Q2 NIM3 expanded by 64 bps to 5.28%; ✓ higher than industry (ex-LIC) at 11% ✓ Q2 NII3 grew by 20% y-o-y Life Insurance Net VNB margin improved by NBFC H1 PAT4 grew by 24% y-o-y; YTD RoE4,5 ✓ 250 bps in H1; EV grew by 14.4% y-o-y ✓ at 15
Slide 9: Q2 FY20: Key Financials
Q2 FY20: Key Financials C O N S O L I D AT E D Figures in Rs Crore Quarter 2 ∆ LY% FY 18-19 FY 19-20 Businesses (Aggregated on 100% basis) (PY) (CY) 8% 37% NBFC 317 317 256 Asset Management 155 175 13% 4,299 Life Insurance (2) 41 3,978 186 Housing 21 36 1.7x General Insurance Broking 8 11 35% Stock
Slide 10: H1 FY20: Key Financials
H1 FY20: Key Financials C O N S O L I D AT E D Figures in Rs Crore Half Year ∆ LY% FY 18-19 FY 19-20 Businesses (Aggregated on 100% basis) (PY) (CY) 12% 32% NBFC 652 718 10% 526 Asset Management 301 351 17% 8,260 Life Insurance 20 66 3.3x 7,402 399 Housing 34 74 2.2x General Insurance Broking 23 35
Slide 11: Aditya Birla Finance Limited
Aditya Birla Finance Limited 11
Slide 12: A 5-year perspective: Resilience through changing times
A 5-year perspective: Resilience through changing times Figures in Rs Crore FY14 What the Industry witnessed? H1 FY20 3 Year Aspiration Loan Book 11,735 Factors impacting credit quality 48,368 ➢ Increase in defaults across multiple ➢ Continue to grow retail loan book NIM (incl. Fees) % 5.10% sectors
Slide 13: Diversified portfolio with value accretive growth
Diversified portfolio with value accretive growth Figures in Rs Crore SME + Retail + HNI Large + Mid Corporate Others SME + Retail Loan Book grew by 14% y-o-y 48,061 48,368 Continue to diversify loan book with focus on higher Loan book 2% 3% margin segments shift 49% 46% underway 49% 51% +2% Q2 Net
Slide 14: Multiple products catering to a range of customer needs
Multiple products catering to a range of customer needs SME (Grew 5% y-o-y) Retail (Grew 32% y-o-y) HNI + Others % Mix 26% 27% 28% % Mix 12% 15% 16% % Mix 12% 11% 10% Broker Funding 3% 2% 2% LAS 10% 7% 6% 13% 23% 26% 12% 11% 10% Treasury Supply Chain 25% 23% 23% Unsecured 53% 53% Finance 52% LRD and
Slide 15: Portfolio Update: Large and Mid Corporate Loan Book
Portfolio Update: Large and Mid Corporate Loan Book Figures in Rs Crore Large & Mid Corporate (De-grew 6% y-o-y) Portfolio Update Large & Mid Corporate Concentration Ticket Size Range # of Customer % of Total Book ➢ ~Rs 1,700 Crore run down of structured finance % Mix 49% 47% 46% book over 1 year (d
Slide 16: Strong focus on growth with quality of loan book
Strong focus on growth with quality of loan book Figures in Rs Crore Maintaining asset quality Stage-wise assets and ECL Provisioning Gross Stage 3 (excl. IL&FS) at 1.39% Asset Quality Q1 FY20 Q2 FY20 Gross Stage 3 exposure for all segments (ex- Gross Stage 1 & 2 98.31% 98.15% retail) below overall
Slide 17: Consistent margin expansion across quarters
Consistent margin expansion across quarters Optimised borrowing cost in a volatile interest rate environment 8.25% 8.24% 8.26% 8.24% 7.96% 8.04% Cost of 7.84% +40 bps Borrowing Factors contributing to margin expansion: ▪ Increasing product mix towards retail and SME Q4 FY18 Q1 FY19 Q2 FY19 Q3 FY19 Q
Slide 18: Well matched ALM with diversified borrowing mix
Well matched ALM with diversified borrowing mix ALM optimised for liquidity and costs Diversification across instruments and investors Cumulative Outflows Cumulative Inflows Borrowing Mix % Sourcing Mix % 100% 100% 76% 75% Term Loan 41% Bank 54% NCD 38% 31% 33% 41% Mutual Fund 9% 6% 13% 9% 16% 11% 2
Slide 19: Key Financials – Aditya Birla Finance Limited
Key Financials – Aditya Birla Finance Limited ∆ LY% Quarter 2 Figures in Rs Crore Half Year ∆ LY% FY 18-19 FY 19-20 Key Performance Parameters FY 18-19 FY 19-20 (PY) (CY) (PY) (CY) 48,061 48,368 Lending book 48,061 48,368 +118 bps 11.59% 12.76% Average yield (Incl. Fee Income) 11.66% 12.73% +107 bps
Slide 20: Aditya Birla Housing Finance Limited
Aditya Birla Housing Finance Limited 20
Slide 21: Delivery in line with stated targets
Delivery in line with stated targets Figures in Rs Crore Lending book at ~Rs 12,079 Cr (Retail: 94%) 12,079 Overall growth 22% y-o-y Strong growth 9,884 Affordable book at ~ Rs. 1,900 Crore in Lending Book Improvement in Cost Income Ratio y-o-y Q2 FY19 Q2 FY20 Led by scale and operating efficiency 7
Slide 22: Systematic approach to build a healthy portfolio mix
Systematic approach to build a healthy portfolio mix Segment Mix (%) ▪ ATS for Affordable Home Loans ~ Rs 12 Lacs Affordable Loans ▪ 27% of affordable HL portfolio backed by IMGC (PQ: 21%) and 48% eligible 8% 6% for PMAY subsidy (PQ: 39%) CF 25% 24% LAP (Retail) ▪ ATS: Rs 51 Lacs (PY: Rs 63 Lacs) 9%
Slide 23: Pan India distribution network
Pan India distribution network Stable Geographic Mix (%) Focus on increasing reach and building retail granularity Home Loan Book Home Loan Book (Metros) (Non-Metros) 39% 41% 21% 36% 3,685 4,553 14% 12% 3,748 18% 19% 2,716 29% 28% Q2 FY19 Q2 FY20 Q2 FY19 Q2 FY20 Q2 FY19 Q2 FY20 North South East West
Slide 24: Maintaining margins through interest rate cycles
Maintaining margins through interest rate cycles Optimised borrowing cost in a volatile 8.4% 8.5% 8.4% 8.3% interest rate environment 7.9% 8.0% Cost of Borrowing Maintained margins across interest rate cycles Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Yield NIM (incl. Fees) Demonstrating abilit
Slide 25: Prudent asset liability management
Prudent asset liability management Optimised ALM for liquidity and cost1 Diversification in borrowing mix and investor profile1 Cumulative Outflows Cumulative Inflows Borrowing Mix % Sourcing Mix % 100%100% 89% 65% Term Loan 76% Bank 82% 27% 27% NCD 10% Mutual Fund 10% 22% 2% 10% 5% 12% 9% 13% 12% C
Slide 26: Key Financials – Aditya Birla Housing Finance Limited
Key Financials – Aditya Birla Housing Finance Limited ∆ LY% Quarter 2 Figures in Rs Crore Half Year ∆ LY% FY 18-19 FY 19-20 Key Performance Parameters FY 18-19 FY 19-20 (PY) (CY) (PY) (CY) 22% 9,884 12,079 Lending book 9,884 12,079 22% 35 bps 10.01% 10.36% Average yield (Incl. Fee Income) 9.86% 10.4
Slide 27: Aditya Birla Sun Life AMC Limited
Aditya Birla Sun Life AMC Limited 27
Slide 28: Profitable growth aided by robust asset mix
Profitable growth aided by robust asset mix Figures in Rs Crore Maintained domestic AAUM1 Market Share 2,71,556 2,69,393 Overall Domestic AAUM market share2 at 10.47% (PQ: 10.52%) 2,44,609 7,390 6,371 10,018 1,63,228 1,65,290 Fixed Income AAUM1 market share improved Growth in 1,56,058 Market share2
Slide 29: Continued focus on retail expansion
Continued focus on retail expansion Figures in Rs Crore Retail + HNI AUM1 at Rs ~1,20,000 Crore Increasing 1.15x 1,20,701 1,27,328 Retail 1,04,646 Penetration (AUM) Broad based penetration in B-30 cities with Sep'17 Sep'18 Sep'19 AUM1 at ~ Rs 35,600 Crore. Market Share2 at 8.90% (PQ : 9.11%) B-30 co
Slide 30: Balanced Distribution Network
Balanced Distribution Network AAUM Sourcing Mix (%) Distribution Scale Digital Tech enablement Overall Equity Customers 300 Locations ➢ Launched new investor portal with simplified UX 19% 20% Direct > 75% in B-30 cities 44% 47% ➢ Launched micro ticket size SIP product 22% 20% National ➢ Up-sell: Lau
Slide 31: Key Financials – Aditya Birla Sun Life AMC Limited
Key Financials – Aditya Birla Sun Life AMC Limited ∆ LY% Quarter 2 Figures in Rs Crore Half Year ∆ LY% FY 18-19 FY 19-20 Key Performance Parameters FY 18-19 FY 19-20 (PY) (CY) (PY) (CY) 2,54,207 2,53,828 Domestic AAUM 2,51,739 2,53,897 90,979 88,539 Domestic Equity AAUM 90,005 90,506 9,959 9,193 Alt
Slide 32: Aditya Birla Sun Life Insurance Limited
Aditya Birla Sun Life Insurance Limited 32
Slide 33: Fast growing franchise with significant value creation
Fast growing franchise with significant value creation Figures in Rs Crore Individual FYP1 grew by 20% y-o-y 39% 693 Significantly higher than industry growth 577 Industry2: 11% | Private2: 16% | Top 4 Private2: 17% Individual 361 FYP1 Growth Market share2 increased to 3.8% H1 FY18 H1 FY19 H1 FY20 M
Slide 34: Focus on value accretive product mix
Focus on value accretive product mix Figures in Rs Crore Continued focus on balanced product mix Improvement in VNB Margins1 6% 8% 7% 36.4% 36.3% Gross VNB grew 19% y-o-y Protection Q2FY20 Gross VNB at 37.7% (PY: 35.9%) 23% 259 Gross VNB 30% 42% Non-Par 34% Par 218 23% 23% H1 Net VNB Margin at 0.2%
Slide 35: Balanced sourcing strategy
Balanced sourcing strategy Figures in Rs Crore Driving growth through partnerships and Partnership Channel Proprietary Channel operating leverage in proprietary 361 313 331 ▪ 8 Banca tie-ups incl. HDFC Bank, DCB and KVB Ind. FYP 265 ▪ Pan India presence across 2,750+ cities through 87,000+ agents, 9
Slide 36: Focus on quality of business
Focus on quality of business Figures in Rs Crore Continuous improvement in persistency +6% +2% +1% +3% +4% across periods Persistency 74% 80% 63% 65% 13th Month persistency at 80% (PY: 74%) Ratios1 56% 56% 50% 53% 42% 46% HDFC Bank experience will lead to further improvement 13th month 25th month 37
Slide 37: Key Financials – Aditya Birla Sun Life Insurance Limited
Key Financials – Aditya Birla Sun Life Insurance Limited ∆ LY% Quarter 2 Figures in Rs Crore Half Year ∆ LY% FY 18-19 FY 19-20 Key Performance Parameters FY 18-19 FY 19-20 (PY) (CY) (PY) (CY) 12% 379 423 Individual First year Premium 627 745 19% 656 491 Group First year Premium 1,049 679 18% 771 911
Slide 38: Aditya Birla Health Insurance Limited
Aditya Birla Health Insurance Limited 38
Slide 39: Strong growth led by retail
Strong growth led by retail Figures in Rs Crore GWP grew 78% YoY with retail growth at 83% 3.3x 315 Retail GWP Mix: 67% (PY: 65%) Strong GWP 177 211 Retail growth led by 96 Retail 15 115 5+ million lives covered 104 Group 81 62 2.4 million lives through micro products H1 FY18 H1 FY19 H1 FY20 Grew ~
Slide 40: Driving Value through Scale and Diversification
Driving Value through Scale and Diversification One of the largest 3rd party distribution capacities H1 FY19 H1 FY20 ✓ 10 Bank tie-ups incl. HDFC Bank, Axis Bank (Q2 go-live) Cities 650+ 1,200+ ✓ 10,000+ bank branches through Banca channel Agents 18,100+ 22,500+ ✓ Monthly utilization of available ca
Slide 41: Expanding market through customer value proposition
Expanding market through customer value proposition Comprehensive Product suite enabling traditional & non traditional customer acquisition Expanding the Market Comprehensive Product Suite Outcome Average age 5 years lower than industry Customer Value Proposition enabling Activ Health / Assure: Indu
Slide 42: Key Financials – Aditya Birla Health Insurance Limited
Key Financials – Aditya Birla Health Insurance Limited ∆ LY% Quarter 2 Figures in Rs Crore Half Year ∆ LY% FY 18-19 FY 19-20 Key Performance Parameters1 FY 18-19 FY 19-20 (PY) (CY) (PY) (CY) 1.8x 70 123 Retail Premium 115 211 1.7x 32 53 Group Premium 62 104 1.6x 102 176 Gross Written Premium 177 315
Slide 43: Other Financial Services businesses
Other Financial Services businesses
Slide 44: Other Financial Services Businesses
Other Financial Services Businesses Quarter 2 Figures in Rs Crore Half Year FY 18-19 FY 19-20 Key Performance Parameters FY 18-19 FY 19-20 (PY) (CY) Other Financial Services Businesses1 (PY) (CY) 156 168 Aggregate Revenue 323 361 (4) 14 Aggregate Profit Before Tax (2) 39 General • Premium placement
Slide 45: Annexure A Consolidated Financials
Annexure A Consolidated Financials
Slide 46: Consolidated Profit & Loss
Consolidated Profit & Loss Figures in Rs Crore ∆ LY% Quarter 2 Figures in Rs Crore Half Year ∆ LY% FY 18-19 FY 19-20 Consolidated Profit & Loss FY 18-19 FY 19-20 (PY) (CY) (PY) (CY) 11% 3,591 3,976 Revenue 6,654 7,622 15% 231 296 Profit Before Tax (before share of profit/(loss) of JVs 513 675 53 75
Slide 47: A financial services conglomerate meeting the life time needs of its customers
A financial services conglomerate meeting the life time needs of its customers Life Insurance Mutual Funds Home Finance Online Personal Finance Health Insurance Wealth Management Personal Finance Management Motor Insurance Stocks and Securities SME Finance Money for Life Planner Corp General Insuran
Slide 48: Disclaimer
Disclaimer The information contained in this presentation is provided by Aditya Birla Capital Limited (“ABCL or the Company”), formerly known as Aditya Birla Financial Services Limited, to you solely for your reference. Any reference herein to "the Company" shall mean Aditya Birla Capital Limited, t
Slide 49: Glossary
Glossary ▪ AAUM – Quarterly Average Assets under Management ▪ GWP – Gross Written Premium ▪ Q1– April-June ▪ ALM – Asset Liability Management ▪ HL – Home Loan ▪ Q2 – July-September ▪ ANW – Adjusted Net Worth ▪ JV – Joint Ventures ▪ Q3 – October – December ▪ ATS – Average Ticket Size ▪ LAP – Loan Aga