Edelweiss Financial Services Limited · NSE:EDELWEISS
Edelweiss Financial Services — Q3 FY2017 Earnings Presentation
53 slides from Edelweiss Financial Services's earnings presentation, January 2017
Slide 1: Edelweiss Financial Services Limited Q3FY17 Investor Presentation
Edelweiss Financial Services Limited Q3FY17 Investor Presentation
Slide 2: Contents
Contents 1 Overview & Business Approach 2 Performance Highlights 3 Business Highlights 4 Enterprise Update 5 Detailed Financials 2
Slide 3: Overview & Business Approach
Overview & Business Approach
Slide 4: Our Vision
Our Vision “To be a Respected Financial Services firm with a Portfolio of High Quality Growth Businesses” 4
Slide 5: Our Business Approach
Our Business Approach Leadership Culture Diversification Risk & Governance Culture that promotes De-risked model Zero tolerance policy entrepreneurship and enhances sustainability towards Compliance & innovation without Risk compromising on institutionalization Good mix of Strong Enterprise Wholesal
Slide 6: Diversification Strategy Led to a Unique Business Model
Diversification Strategy Led to a Unique Business Model… EDELWEISS Credit Non Credit Insurance WELL DIVERSIFIED Scalable, Stable and Profitable 6
Slide 7: Diversified Mix of Businesses
Diversified Mix of Businesses CREDIT NON CREDIT INSURANCE Present across: Strong product franchise One of the fastest growing Retail serving diverse client needs: life insurance companies • Retail Mortgage • Wealth Management • Agri & Rural Finance • Asset Management • Loan Against Shares • Capital
Slide 8: One of the Leading Diversified Financial Services Firms
One of the Leading Diversified Financial Services Firms (INR) On Balance Sheet Assets ~ 37,200 Cr Distressed Assets AUM ~31,600 Cr Assets under Advice (Wealth AUA) ~ 53,700 Cr Funds under Management ~ 17,200 Cr # of clients ~ 11,00,000 # of employees 6,902 # of offices 249 8
Slide 9: Q3FY17 Performance Highlights
Q3FY17 PERFORMANCE HIGHLIGHTS
Slide 10: Key Financial Highlights – Q3FY17
Key Financial Highlights – Q3FY17 Consolidated PAT growth of 47% Consolidated RoE: 15.4% Ex-Insurance PAT growth of 40% Ex-Insurance RoE: 20.9% Ex-Insurance PAT CAGR of 37% for last 5 years Book Value / Share: INR 51.7 10
Slide 11: Consolidated Q3 PAT Growth of 47%
Consolidated Q3 PAT Growth of 47% (INR Cr) Q3FY17 Q3FY16 YoY Growth FY16 FY15 PAT 155 106 47% 414 329 Consolidated PAT Ex-Insurance 187 133 40% 519 381 ..... With 17% growth in Assets Balance 31,900 37,245 17% 32,145 27,072 Sheet Non-Linear growth in Profitability 11
Slide 12: Key Performance Parameters (Ex-Insurance)
Key Performance Parameters (Ex-Insurance) (INR Cr) Q3FY17 Q2FY17 Q1FY17 FY16 FY15 FY14 PAT 187 166 155 519 381 272 Net Revenue/ Average Assets 9.9% 9.3% 8.6% 7.8% 8.5% 7.2% RoE 20.9% 19.9% 19.4% 18.6% 15.6% 12.2% RoA 2.5% 2.2% 2.0% 1.8% 1.9% 1.9% Cost to Income Ratio 53% 57% 57% 60% 60% 59% Gross NP
Slide 13: Key Performance Parameters vs. Peers
Key Performance Parameters vs. Peers Edelweiss For Q3FY17 (Ex-Insurance) Private Banks NBFC/ DFS PAT growth (YoY) 40% 22% 15% Credit Book Growth (YoY) 14%* 13% 17% Net Revenue / Average Assets 9.9% 6.0% 8.8% RoA 2.5% 1.8% 2.5% RoE 20.9% 14.7% 14.1% Cost to Income Ratio 53% 45% 37% Gross NPA 1.53% 1.
Slide 14: PAT Growth Trajectory
PAT Growth Trajectory Profit after Tax Ex-Insurance PAT Consol PAT 187 (INR Cr) 166 154 155 133 155 120 140 144 111 98 103 122 89 90 106 70 69 68 72 91 96 62 88 57 78 79 83 46 48 51 56 58 61 46 51 46 39 40 42 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15
Slide 15: Business Highlights – 9MFY17
BUSINESS HIGHLIGHTS – 9MFY17
Slide 16: Financial Snapshot – 9MFY17
Financial Snapshot – 9MFY17 EoP Profit RoE RoA (INR Cr) Equity After Tax Credit Business 3,430 321 18.2% 2.1% Non Credit 949 187 24.4% 2.5% Total (Ex-Insurance) 4,379 508 20.1% 2.3% Insurance 810 -68 - - Consolidated 5,189 439 15.2% 1.7% Based on Management Estimates; 16 RoE is calculated on Average
Slide 17: Business Highlights – Credit
BUSINESS HIGHLIGHTS – 9MFY 17 CREDIT
Slide 18: Credit Business at a Glance – 9MFY17
Credit Business at a Glance – 9MFY17 Credit Business (INR Cr) Capital Employed 24,972 Net Interest Margin 7.0% Net Interest Income 1,178 Cost to Income 39% Provisions 179 PAT 321 Gross NPA 1.53% Net NPA 0.55% RoE 18.2% RoA 2.1% Credit Non Credit Insurance Balance Sheet 18 Based on Management Estimat
Slide 19: Credit Business is a Mix of Diversified and Scalable Assets
Credit Business is a Mix of Diversified and Scalable Assets % Share of (INR Cr) Total Book Description Retail Mortgage 2,997 12% Catering to retail home buyers and business owners Loan Against Shares 1,725 7% Caters to retail customers in Capital Market Highly scalable, unoccupied by institutional p
Slide 20: Improving NIMs
Improving NIMs At the end of 9MFY17 9MFY16 FY16 FY15 Average Interest Yield 16.1% 16.1% 16.2% 15.8% Average Cost of Borrowing 10.4% 10.7% 10.7% 10.9% Interest Spread 5.8% 5.3% 5.5% 4.9% Net Interest Margin 7.0% 6.7% 6.8% 6.7% Credit Non Credit Insurance Balance Sheet 20
Slide 21: Robust Asset Quality
Robust Asset Quality At the end of (INR Cr) 9MFY17 9MFY16 FY16 FY15 Pvt. Banks NBFCs Credit Book* 21,429 18,866 20,014 15,036 Gross NPA 328 272 281 196 Gross NPA % 1.53% 1.44% 1.40% 1.31% 1.58% 3.15% Net NPA % 0.55% 0.50% 0.47% 0.38% 0.66% 0.65% Total Provision Held 290 233 247 184 Total Provision C
Slide 22: Retail Credit – Our Approach
Retail Credit – Our Approach Capital Employed Strong Business Growth with Well-Calibrated Risk Management (INR Cr) Approach 7,823 6,022 • Present in large, underpenetrated and growing customer 4,188 segment 2,798 • Risk validated proposition, ready for scale up • At an inflection point with scale, c
Slide 23: Expanding Distressed Assets Business
Expanding Distressed Assets Business Capital Employed • Total Distressed Assets being managed by Edelweiss, ~INR (INR Cr) 3,543 31,600 Cr., acquired from 52 Banks/Financial Institutions. Currently EARC* is the largest asset reconstruction company in 2,641 India. 1,550 • Focused on delivering a long
Slide 24: Business Highlights – Non Credit
BUSINESS HIGHLIGHTS – 9MFY17 NON CREDIT
Slide 25: Non Credit Business at a Glance – 9MFY17
Non Credit Business at a Glance – 9MFY17 Non Credit (INR Cr) Capital Employed 8,824 Net Revenue 1,090 Cost to Income 74% PBT 288 PAT 187 RoE 24.4% RoA 2.5% Credit Non Credit Insurance Balance Sheet 25 Numbers are Management Estimates
Slide 26: Non Credit Business Mix
Non Credit Business Mix • Multi asset class platform offering structured customized solutions • Focus on OPDO (Owner, Promoter, Director, Officer) segment Wealth Management • Present in Ultra High Net worth/ High Net worth/ Mass Affluent segment • Total AuA (INR Cr): 53,700 (UHNI: 37,300/HNI 5,700/M
Slide 27: Wealth Management AUA Continues to Scale Up
Wealth Management AUA Continues to Scale Up Wealth Management Assets Under Advice (INR Cr) No. of No of AUA 53,700 As on Dec ’16 clients RMs (INR Cr) 29,500 UHNI 350+ 53 37,300 17,750 8,900 HNIs 5,500+ 98 5,700 FY 14 FY 15 FY 16 9M FY 17 Mass Affluent 370,000 650 10,700 • Rapid growth in AUA continu
Slide 28: Asset Management – Fund Closures Leading Growth in AUM
Asset Management – Fund Closures Leading Growth in AUM Asset Management Assets Under Management (INR Cr) • First closure of two funds Mutual Fund Alternative Assets • Edelweiss Real Estate Fund (EREF) - AUM of USD 380 mn • Edelweiss India Special Assets Fund (EISAF) II - AUM of 17,200 USD 260 mn • T
Slide 29: Capital Markets: Leadership Position in the Market
Capital Markets: Leadership Position in the Market Broking Average Daily Volume (INR Cr) • One of the largest domestic institutional broking company 6,700 • Rated Best Brokerage in India for Roadshows and 5,000 5,200 company visits 3,100 • Bull of the Year Award by Zee Business Market Analyst Awards
Slide 30: Expanding Agri Services Business
Expanding Agri Services Business Number of Warehouses Collateral Value (INR Cr) Collateral Manager Stock Storage Stock 365 2,431 265 1,681 794 122 735 739 108 1,637 631 946 FY15 FY16 9M FY17 FY15 FY16 9M FY17 • One of the few organised players providing end to end business solutions in the Agri valu
Slide 31: Balance Sheet Management Unit
Balance Sheet Management Unit Balance Sheet Management Unit (INR Cr) Key Objectives 3,317 • Create liquidity cushion through investment in High 2,453 Quality Liquid Assets 1,213 • Asset Liability Management 346 • Manage Treasury assets Government Liquidity Fixed & Tax Others Securities cushion Asset
Slide 32: Business Highlights – Insurance
BUSINESS HIGHLIGHTS – 9MFY17 INSURANCE
Slide 33: Fastest Growing Individual Annual Premium Equivalent
Fastest Growing Individual Annual Premium Equivalent Individual Annual Premium Equivalent CAGR Growth since FY13 32% 7% 0.2% • Individual Annual Premium Equivalent - INR 82 Cr for 9MFY17 Edelweiss Tokio Peer Set Industry • 10 new branches operational in Q3 Life Insurance Persistency (Individual & Gr
Slide 34: Customer Centric Approach – Wide Variety of Products
Customer Centric Approach – Wide Variety of Products Traditional Traditional Direct Par Non Par Business Agency 23% 51% 8% Brokers 62% 11% Product and Corporate Channel Mix Agent Group 8% 12% Banca ULIP 11% 15% • Unique need-based selling approach • Strong investment performance to provide superior
Slide 35: Insurance
Insurance Edelweiss Tokio Life Insurance Company Limited Standalone (ETLI) (INR Cr) 9MFY17 9MFY16 FY16 FY15 Gross Premium Income 236 159 310 193 Investment & Other Income 111 61 87 97 Total Income 347 220 397 290 Total Expenses 481 317 552 361 Profit After Tax -134 -97 -155 -71 Edelweiss’s Share in
Slide 36: Balance Sheet
BALANCE SHEET (x. Edelwei ISS s protect
Slide 37: Key Highlights – Balance Sheet
Key Highlights – Balance Sheet 1 On-Balance Sheet: INR~37,200 Cr; Total assets managed: INR ~139,700 Cr 2 Matched ALM 3 Comfortable capital adequacy ratio at 17.85% 4 Diversified Liability mix 5 Stable business model reflected in credit ratings Credit Non Credit Insurance Balance Sheet 37
Slide 38: ~$21.0 billion of Assets – On and Off Balance Sheet
1 ~ $21.0 billion of Assets – On and Off Balance Sheet As on 31 Dec 2016 INR Cr USD bn Assets on Balance Sheet 37,200 5.5 Distressed Assets (ARC Assets) 31,600 4.6 Assets Under Advice (Wealth Management) 53,700 7.9 Funds under Management (Asset Management) 17,200 2.5 Total Assets 139,700 20.5 Credit
Slide 39: Comfortable Asset - Liability Profile
2 Comfortable Asset - Liability Profile Dec’16: INR 37,245 Cr Assets Liabilities 100% % of Assets and Liabilities 75% 100% 53% 72% 38% 33% 49% 33% 37% 7% 7% Asset Specific 0-3 Mnth 3-6 Mnth 6-12 Mnth 1-3 years 3+ years Borrowing • Positive asset-liability matching across durations • BMU manages ALM
Slide 40: Comfortable Capital Adequacy Ratio
3 Comfortable Capital Adequacy Ratio Liability Structure, Dec’16 (INR Cr) Tier I 5,065 Capital Adequacy Ratio 17.85% Tier II 1,210 Total Capital 6,275 Debt/Equity : 5.0 (excluding Treasury assets) Risk Weighted 35,160 Assets 83% of gross assets Credit Non Credit Insurance Balance Sheet 40 Based on R
Slide 41: Diversified Sources of Borrowing with 43% Long Term Liabilities
Diversified Sources of Borrowing with 43% Long Term 4 Liabilities Others* 5% 6% Retail 5% 16% Asset Specific Borrowing 15% 8% Bank 25% 30% Mutual Funds 50% 40% Total Borrowings Mar’ 11: INR 7,858 Cr Dec’ 16: INR 31,971 Cr Long Term Borrowings has grown from 5% in Mar’11 to 43% in Dec’16 Credit Non C
Slide 42: Share of Long Term funds increasing
4 Share of Long Term funds increasing Long Term Liabilities Long Term Liabilities Breakup INR (Cr) LT Borrowing % of Total Liabilities Sub-debt 16,000 100% 9% 13,694 12,000 10,103 75% 8,098 NCD 8,000 50% Term Loan 33% 58% 3,550 4,000 25% 0 0% FY14 FY15 FY16 Q3 FY17 Average Tenure (years) 3.16 Raised
Slide 43: Liquidity Cushion at ~INR 3500 Cr is 9.4% of Balance Sheet
4 Liquidity Cushion at ~INR 3500 Cr is 9.4% of Balance Sheet Including off Balance sheet lines INR (Cr) 3,500 2,900 • A well diversified liquidity cushion comprising of: • Banking Lines • Fixed Deposits • Government Securities, Mutual Funds etc 1,700 • Steady growth in liquidity cushion to provide f
Slide 44: Stable Business Model Reflected in Credit Ratings
5 Stable Business Model Reflected in Credit Ratings Purpose (debt programme) Rating agency Rating Short term CRISIL A1+ Short term CARE A1+ Short term [ICRA] A1+ Long term BWR AA+ Long term CARE AA Long term CRISIL AA Long term [ICRA] AA Credit Non Credit Insurance Balance Sheet 44
Slide 45: Enterprise Update
ENTERPRISE UPDATE (e. Edelweiss Ideas create, values protect
Slide 46: Awards and Recognition
Awards and Recognition EdelGive recognised for its efforts towards Edelweiss recognised for its Risk Management practices with optimally channelising CSR Budgets Golden Peacock Award for Risk Management (GPARM) at the CNBC TV18 Financial Inclusion Awards 2016 EdelGive recognised for its efforts towa
Slide 47: EdelGive Foundation - Key Highlights
EdelGive Foundation - Key Highlights Education Livelihood Women Empowerment Empowering children through Water and soil conservation, skill Promoting safety, gender holistic learning approach, life development, financial inclusion justice, and economic skill & research and advocacy livelihood generat
Slide 48: Shareholding Pattern
Shareholding Pattern Employee Top institutional shareholders above 1%* Trust (As on Dec 31, 2016) Non 5.4% Name Percent Institutions Promoters 1 Carlyle 8.2% 18.3% 44.8% & Employees 2 BIH SA 5.3% 3 Fidelity 4.0% 4 SAIF Advisors 3.1% 31.5% 5 Amansa Investments 1.4% Foreign Institutions 6 Ashoka PTE 1
Slide 49: Detailed Financials
Os cae of eS O: Og LU @) Detailed Financials
Slide 50: Consolidated Results
Consolidated Results (INR Cr) FY17 FY17 FY16 FY17 FY16 FY16 Q3 Q2 Q3 9M 9M Annual Fee and Commission Income 356 240 181 767 492 697 Fund based Income 1,130 1,232 1,094 3,583 3,076 4,218 Premium from Life Insurance Business 88 85 64 226 151 300 Other Operating Income 28 40 20 95 51 87 Other Income 7
Slide 51: Consolidated Results Ex-Insurance
Consolidated Results Ex-Insurance (INR Cr) FY17 FY17 FY16 FY17 FY16 FY16 Q3 Q2 Q3 9M 9M Annual Fee and Commission Income 356 240 181 767 492 697 Fund based Income 1,107 1,185 1,077 3,472 3,017 4,132 Other Operating Income 28 40 20 95 51 86 Other Income 7 4 2 18 6 13 Total Revenue 1,498 1,469 1,280 4
Slide 52: Consolidated Financials – Balance Sheet
Consolidated Financials – Balance Sheet (INR Cr) Dec16 Sep 16 Dec15 Mar 16 Equity and Liabilities Shareholders’ Funds 4,382 4,093 3,588 3,760 Equity 4,297 4,008 3,503 3,675 Preference 85 85 85 85 Minority Interest 892 755 270 612 Borrowings 31,971 30,974 28,042 27,773 Total 37,245 35,822 31,900 32,1
Slide 53: Safe Harbor
Safe Harbor DISCLAIMERS: 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 (“Ede
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