Edelweiss Financial Services Limited · NSE:EDELWEISS
Edelweiss Financial Services — Q4 FY21 Earnings Presentation
53 slides from Edelweiss Financial Services's earnings presentation, Jun 12, 2021
Slide 1: Investor Presentation cover letter to NSE
EW/Sec/2021/109 June 12, 2021 National Stock Exchange of India Limited Exchange Plaza, Bandra Kurla Complex, Bandra (E), Mumbai – 400 051. Dear Sirs, Ref.:- Symbol: EDELWEISS Sub: Investor Presentation Please find enclosed the Investor Presentation in US Dollar on Earnings Updates for the financial
Slide 2: Q4FY21 & FY21 Earnings Update
US $ version Edelweiss Financial Services Limited Q4FY21 & FY21 Earnings Update
Slide 3: Contents
Contents 1 Q4FY21 & FY21 Highlights 3 2 Update on Key Focus Areas and Outlook 12 3 Business Update 21 4 Balance Sheet Highlights 42 5 Governance and Sustainability 46 2
Slide 4: Q4FY21 & FY21 Highlights
Q4FY21 & FY21 Highlights oO Edelweiss Ideas create, values protect
Slide 5: Edelweiss at a Glance – FY21
Edelweiss at a Glance – FY21 Net Worth Liquidity $1,162 Mn $925 Mn Customer Assets Book Value $38,200 Mn $1 Face Value $0.01 4
Slide 6: We Are A Diversified Company Across Ten Key Entities
We Are A Diversified Company Across Ten Key Entities Edelweiss Financial Services Ltd (EFSL) Housing Mutual Life General Insurance NBFC Alternatives ARC Wealth Mgt Finance Fund Insurance Insurance Broking • ECL • Edelweiss • Edelweiss • Edelweiss • Edelweiss • Edelweiss • Edelweiss • Edelweiss • Ede
Slide 7: Well-Capitalised Businesses And Robust Customer Franchise
Well-Capitalised Businesses And Robust Customer Franchise Businesses Equity ($ Mn) Metric Value NBFC 522 Capital Adequacy 27.5% Housing Finance 104 Capital Adequacy 26.5% Mutual Fund 22 AUM ~$7,500 Mn Alternatives Asset Mgt 21 AUM ~$4,080 Mn Asset Reconstruction 302 Capital Adequacy 37.4% Life Insur
Slide 8: Distribution of Earnings Across Businesses
Distribution of Earnings Across Businesses Businesses ($ Mn) Edelweiss Holding Q4FY21 FY21 NBFC 100% 18 4 Housing Finance 100% (1) 1 Mutual Fund 100% - 1 Alternatives Asset Management 100% - 2 Asset Reconstruction 60% 6 25 Insurance Broking 70% 1 2 Wealth Management 38.5% 9 33 BMU & Corporate 62 7 T
Slide 9: Increasing Contribution of Fee Income
Increasing Contribution of Fee Income Fee Income ($ Mn) 74 65 63 56 52 Q4FY20 Q1FY21 Q2FY21 Q3FY21 Q4FY21 8
Slide 10: FY21 Results Highlights (1)
FY21 Results Highlights (1) • Retail collection efficiency improved to 94% in Mar’21 NBFC • Workouts on-going in wholesale book for recoveries and resolution • Collection efficiency improved to 99% of pre-covid levels in Mar’21 Housing Finance • Asset Light model with securitization of ~$120 Mn in F
Slide 11: FY21 Results Highlights (2)
FY21 Results Highlights (2) • Robust recoveries of ~$735 Mn in FY21 from 179 borrowers Asset Reconstruction • Reduced net debt by ~22% YoY as deleveraging continued • 25% YoY growth in Individual APE Life Insurance • ETLI is the only life insurer that grew every month in FY21 General • 49% YoY GDPI
Slide 12: Prioritised Employee and Community Well-being During Covid
Prioritised Employee and Community Well-being During Covid • Safety for all employees and families • Onsite - Vaccination Drives and reimbursements for all employees and their families • 24*7 Counselling support, outreach and wellness initiatives for mental well-being • Stood strong with affected em
Slide 13: Update on Key Focus Areas and Outlook
Update on Key Focus Areas and Outlook
Slide 14: Update On Our Key Focus Areas
Update On Our Key Focus Areas 1 Value unlocking in Edelweiss Wealth Management 2 Strengthened Balance Sheet 3 Reduced Wholesale Credit Exposure 4 Maintained Asset Quality 5 Reduced Fixed Costs 13
Slide 15: Value Unlocking in Edelweiss Wealth Management (EWM)
1 Value Unlocking in Edelweiss Wealth Management (EWM) Completed the stake sale to PAG in March 2021 at a valuation of ~$600 Mn Strong equity base for growth in EWM from Primary Equity infusion of ~$55 Mn EFSL will hold 38.5% stake in EWM with an option to increase it to ~44% Demerger progressing we
Slide 16: Strengthened Balance Sheet With Conservative Provisioning
2 Strengthened Balance Sheet With Conservative Provisioning Balance Sheet Provisions IRAC Provisions IndAS Provisions ($ Mn) 123 103 104 87 57 21 21 23 H1FY20 H2FY20 H1FY21 H2FY21 We have consistently provided higher than IRAC norms 15
Slide 17: Borrowings Declined By 41%, Debt Equity Ratio Declined Further
Borrowings Declined By 41%, Debt Equity Ratio Declined 2 Further Borrowings ($ Mn) D/E (Excl Treasury Assets) 5,877 4.4 4,592 3.5 3,496 2.5 FY19 FY20 FY21 FY19 FY20 FY21 16
Slide 18: Wholesale Credit Exposure Continues To Scale Down
3 Wholesale Credit Exposure Continues To Scale Down ECLF Wholesale Loan Assets ($ Mn) 2,405 1,765 1,553 FY19 FY20 FY21 17
Slide 19: Retail Collection Efficiency Is Strong
4 Retail Collection Efficiency Is Strong Total Retail Credit Collections ($ Mn) 152 147 117 61 Q1FY21 Q2FY21 Q3FY21 Q4FY21 Increased digital customer engagement has improved total retail collection efficiency to 96% in Mar’21 18
Slide 20: Cost Rationalisation Measures Under Way
5 Cost Rationalisation Measures Under Way FY21 Fixed Cost comparison ($ Mn) • Achieved overall fixed cost reduction of ~23% in FY21 over FY20 cost base 300 • Key saving drivers in FY21 vs. FY20: 230 • Fixed People Cost : Decrease of ~18% driven by process efficiencies • Premises Cost : Lower by ~40%
Slide 21: FY22 Outlook
FY22 Outlook 1 Continue to focus on balance sheet and liquidity strengthening 2 Invest and scale up our Retail Credit, Asset Management and Insurance businesses 3 Progress & complete EWM demerger to prepare for listing by Sept-Dec 22 4 Expect subdued profitability for the year due to : • Likely impa
Slide 22: Business Update
4 ° 3 ' - ‘ : ; : : f : je : ; 4 ' : ' : t be Business Update oO Edelweiss Ideas create, values protect
Slide 23: NBFC : ECLF and ERFL
NBFC NBFC : ECLF and ERFL FY21 Key Metrics Business Update Retail Credit ECLF & ERFL • Robust collection infrastructure Equity ($ Mn) 522 • Total collections was at ~$90 Mn in Q4FY21 and ~$280 Mn in FY21 AUM ($ Mn) 1,432 • Maintained conservative stance on disbursements • Disbursed ~$20 Mn in Q4FY21
Slide 24: Business Performance Snapshot : ECLF and ERFL
NBFC Business Performance Snapshot : ECLF and ERFL $ Mn Q4FY21 FY21 Credit Assets 2,073 2,073 Equity 522 522 Net Revenue 1 60 Opex 15 79 Credit Costs (16) (1) Profit After Tax 18 4 NIM 0.2% 2.6% Gross Stage 3 loans 106 106 Total Provision Cover 76% 76% Capital Adequacy 27.5% 27.5% Significant improv
Slide 25: Housing Finance : EHFL
Housing Finance Housing Finance : EHFL FY21 Key Metrics Business Update • Maintained collection efficiency of 99% in Mar’21 Equity ($ Mn) 104 • Collections of ~$60 Mn in Q4FY21 and ~$200 Mn in FY21 • Adopted conservative stance on disbursements AUM ($ Mn) 597 • Disbursed ~$30 Mn in Q4FY21 and ~$60 M
Slide 26: Business Performance Snapshot : EHFL
Housing Finance Business Performance Snapshot : EHFL $ Mn Q4FY21 FY21 Credit Assets 618 618 Equity 104 104 Net Revenue 5 22 Opex 4 16 Credit Costs 2 7 Profit After Tax (1) 1 NIM 3.7% 3.5% Gross Stage 3 loans 17 17 Total Provision Cover 39% 39% Capital Adequacy 26.5% 26.5% 25
Slide 27: Mutual Fund : EAML
Mutual Fund Mutual Fund : EAML FY21 Key Metrics Business Update • AUM has nearly doubled in FY21 Equity ($ Mn) 22 • Crossed ~$1,360 Mn of equity assets • Net equity Q4FY21 inflows of ~$270 Mn against industry outflows of ~$610 Mn AUM ($ Mn) ~7,500 • Launched India’s first passively managed low-cost
Slide 28: Business Performance Snapshot
Mutual Fund Business Performance Snapshot $ Mn Q4FY21 FY21 AUM 7,500 7,500 Equity 22 22 Net Revenues 5 16 Operating costs 5 16 Profit before tax - 1 Profit after tax - 1 27
Slide 29: Consistent Rise in Equity Sales and SIPs
Mutual Fund Consistent Rise in Equity Sales and SIPs Mutual Fund Equity Gross Sales ($ Mn) Mutual Fund SIP Flows ($ Mn) 370 17 16 15 13 11 12 12 10 207 9 8 8 8 8 117 96 80 Q4FY20 Q1FY21 Q2FY21 Q3FY21 Q4FY21 Mar'20 May'20 Jul'20 Sep'20 Nov'20 Jan'21 Mar'21 Net equity inflows of ~$490 Mn in FY21 vs ou
Slide 30: Alternatives Asset Management : EAAA
Alternatives Alternatives Asset Management : EAAA FY21 Key Metrics Business Update • FY21 is the largest fund raise year for Alternatives Equity ($ Mn) 21 • Raised ~$900 Mn in ESOF III - largest fund raise in India in 2020 • Closed Infrastructure Yield fund at ~$450 Mn AUM ($ Mn) ~4,080 • Steady inc
Slide 31: Business Performance Snapshot : EAAA
Alternatives Business Performance Snapshot : EAAA $ Mn Q4FY21 FY21 AUM 4,080 4,080 Equity 21 21 Net Revenues 6 22 Operating costs 6 20 Profit before tax - 2 Profit after tax - 2 30
Slide 32: Robust Growth In Alternative Assets
Alternatives Robust Growth In Alternative Assets Alternatives AUM ($ Mn) Alternatives AUM – Strategy wise 4,080 11% 38% 19% $4,080 Mn 32% 460 Distressed Credit Fund Structured Debt Fund FY16 FY21 Real Estate Credit Fund Infrastructure Fund 31
Slide 33: Asset Reconstruction : EARC
ARC Asset Reconstruction : EARC FY21 Key Metrics Business Update Equity ($ Mn) 302 • Fee income remains robust • Gross recoveries of ~$735 Mn in FY21 from 179 borrowers AUM ($ Mn) ~5,550 • Q4FY21 recoveries at $245 Mn • Comfortable liquidity position of ~$70 Mn as on Recoveries ($ Mn) ~735 Mar’21 •
Slide 34: Business Performance Snapshot : EARC
ARC Business Performance Snapshot : EARC $ Mn Q4FY21 FY21 AUM 5,550 5,550 Capital Employed 694 694 Equity 302 302 Gross Revenues 29 118 Net Revenues 11 46 Operating costs 4 13 Profit before tax 7 33 Profit after tax 6 25 33
Slide 35: Life Insurance : ETLI
Life Insurance Life Insurance : ETLI FY21 Key Metrics Business Update Equity ($ Mn) 73 • Crossed ~$50 Mn APE milestone for the first time - registering a 25% YoY Growth Individual APE ($ Mn) 55 • Launched 2 new products in this quarter #Policies Issued ~80,200 in FY21 • Individual Claims settlement
Slide 36: Business Performance Snapshot : ETLI
Life Insurance Business Performance Snapshot : ETLI $ Mn Q4FY21 FY21 Net Premium Income 64 162 Investment Income & Other Income 13 92 Total Business 78 254 Profit After Tax (5) (28) Minority (3) (14) Edelweiss’ Share in PAT (3) (14) 35
Slide 37: Among The Fastest Growing In The Industry
Life Insurance Among The Fastest Growing In The Industry Individual APE CAGR Since FY16 vs Industry Individual APE - Outpaced Industry growth YoY in FY21 24% 25% 11% 10% 3% -3% Edelweiss Tokio Peer Set Industry Edelweiss Tokio Peer Set Industry Life Insurance Life Insurance 36
Slide 38: General Insurance : EGICL
General Insurance General Insurance : EGICL FY21 Key Metrics Business Update • Registered GDPI growth of 18% in Q4FY21 taking the Equity ($ Mn) 16 overall premium growth for FY21 to ~49% YoY • Consistent growth in our choice of segments : Health- Retail & Motor segments GWP ($ Mn) 31 • Adoption of v
Slide 39: Fastest Growing Player In The Industry Enabled By Digital Model
Fastest Growing Player In The Industry Enabled By General Insurance Digital Model Robust YoY growth in GDPI in FY21 Strong YoY GDPI performance in Retail Lines compared to the Industry in FY21 184% 49% 46% 25% 5% -2% Edelweiss General Industry Motor Retail Health Insurance Edelweiss General Insuranc
Slide 40: Wealth Management : ESL
Wealth Mgt Wealth Management : ESL FY21 Key Metrics Business Update • Franchise continues to have dominant presence AUA ($ Mn) ~21,000 • AUA grew 36% and Clients grew 22% YoY • Enhanced client engagement driven by tech-first Net New Money ~1,150 approach ($ Mn) • Capital Market & Advisory: 12 deals
Slide 41: Business Performance Snapshot : ESL
Wealth Mgt Business Performance Snapshot : ESL $ Mn Q4FY21 FY21 AUA 21,000 21,000 Equity 213 213 Gross Revenues 56 175 Net Revenues 44 142 Operating costs 33 100 C/I Ratio 76% 70% Profit before tax 10 41 Profit after tax 9 33 40
Slide 42: Wealth Assets Continue To Maintain Robust Growth
Wealth Mgt Wealth Assets Continue To Maintain Robust Growth Wealth Management AUA ($ Mn) No of Clients (#) 702,600 21,000 375,000 4,000 FY16 FY21 FY16 FY21 41
Slide 43: Balance Sheet Highlights
Balance Sheet Highlights oO Edelweiss Ideas create, values protect
Slide 44: Liquidity & Cash Flow Plan
Liquidity & Cash Flow Plan Particulars ($ Mn) Apr’21-Sep’21 Oct’21-Mar’22 Opening Available Liquidity (A) 925 830 Inflows Expected Inflows 612 680 Fresh Borrowings 408 408 Total Inflows (B) 1,020 1,088 Outflows Repayments 789 966 Disbursements 327 245 Total Outflows (C) 1,116 1,211 Closing Available
Slide 45: Borrowing Profile
Borrowing Profile Borrowing Profile by Instruments Borrowing Profile by Source 2% 20% 33% 11% 43% 65% 26% Loans & OD NCDs CPs Banks Retail MF PF, Insurance & FIs $3,496 Mn $3,496 Mn 44
Slide 46: Assets in each Tenor Range Adequately Cover Liabilities
Assets in each Tenor Range Adequately Cover Liabilities ($ Mn) Assets Liabilities Gap Upto 1 year 1,843 1,694 150 1-3 years 1,714 1,360 354 3 years+ 1,918 1,360 558 Total gap represents our equity base 45
Slide 47: Governance and Sustainability
Governance and Sustainability
Slide 48: 12 Member Board Comprises Majority of Independent Directors
12 Member Board Comprises Majority of Independent Directors Mr. P N Venkatachalam Dr. Ashima Goyal Independent Director Independent Director • Banking sector expert and former member of the • Professor at Indira Gandhi Institute of Development Research Interim Pension Fund Regulatory Authority of In
Slide 49: Significant Institutional Ownership
Significant Institutional Ownership Shareholding Pattern as on 31st Mar,2021 Key Shareholders above 1% Percent 1 Pabrai Investment Funds 7.2% Employee Trust 2 BIH SA 5.2% DIIs, Non 4.8% Promoter Group Institutions 3 TIAA CREF funds 5.0% & Others 22.6% 32.9% 4 Baron Asset Management 3.4% 5 LIC 2.6% 6
Slide 50: Our Sustainability Efforts
Our Sustainability Efforts EdelGive Foundation’s commitment to Achieving the SDGs (Cumulative till FY21) 123 Districts Sustainable Women across 14 States Quality Education Livelihoods Empowerment $1.7 Mn* $12.6 Mn* $200,000* $17.7 Mn* 19.48 lakh Children 1,553 hectares of irrigated More than 1.74 la
Slide 51: EdelGive Funding Partners & Networks
EdelGive Funding Partners & Networks We have partnered with some of the largest Foundations, Corporates and HNIs through our innovative models focused on collaboration 50
Slide 52: Safe Harbour
Safe Harbour DISCLAIMER : This presentation and the discussion may contain certain words or phrases that are forward - looking statements, which are tentative, based on current expectations of the management of Edelweiss Financial Services Ltd. or any of its subsidiaries and associate companies (“Ed
Slide 53: Safe Harbour
Safe Harbour Slide 4,16 : Net worth is including MI and includes investment in CCD by CDPQ of $1 18 Mn; It excludes EWM equity as it ceased to be our subsidiary as on 26 th Mar’21 Slide 4,43 : Available Liquidity is calculated as on balance sheet liquidity, liquid able assets and undrawn bank lines;
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