Edelweiss Financial Services Limited · NSE:EDELWEISS
Edelweiss Financial Services — Q2 FY23 Earnings Presentation
63 slides from Edelweiss Financial Services's earnings presentation, Nov 9, 2022
Slide 1: Cover letter to stock exchanges
EW/Sec/2022/213 November 9, 2022 BSE Limited National Stock Exchange of India Limited P J Towers, Exchange Plaza, Dalal Street, Fort, Bandra Kurla Complex, Bandra (E), Mumbai – 400 001. Mumbai – 400 051. Scrip Code: 532922 Symbol: EDELWEISS Dear Sir/Madam, Sub: Investor Presentation Please find atta
Slide 2: Earnings update – Quarter ended Sep 22
US $ version Edelweiss Financial Services Limited Earnings update – Quarter ended Sep 22
Slide 3: Contents
Contents 1 Overview & highlights of quarter ended Sep 22 3 2 Update on key priorities for FY23 23 3 Business performance 29 4 Governance & corporate responsibility 55 Addendum – Update on Wealth Management 2
Slide 4: Overview & Highlights
Overview & Highlights Quarter ended Sep 22
Slide 5: Edelweiss at a glance – quarter ended Sep 22
Edelweiss at a glance – quarter ended Sep 22 Net Worth Ex-Insurance PAT BVPS $1,032 Mn $16 Mn $1 (FV $0.01) Liquidity Customer Assets $656 Mn $47,847 Mn 4
Slide 6: We are a diversified company across eight businesses
We are a diversified company across eight businesses Edelweiss Financial Services Ltd (EFSL) Credit Asset Management Insurance Asset Wealth Housing Alternative Reconstruction General Management NBFC Mutual Fund Life Insurance Finance Asset Mgt Insurance ECL Finance Edelweiss Edelweiss Edelweiss Edel
Slide 7: Performance overview – quarter ended Sep 22
Performance overview – quarter ended Sep 22 1 Healthy profitability across businesses; ex-insurance and consol PAT higher by 18% YoY Slide 7 - 10 Strong growth in key businesses - Alternatives AUM crosses $4,905 Mn; GI GWP increases 2 Slide 11-12 ~70% YoY, GDPI growth rate is 2nd highest in the indu
Slide 8: Healthy profitability across businesses
1 Healthy profitability across businesses Profit After Tax for the quarter in $ Mn EFSL Asset Asset ex-Insurance Credit Management Reconstruction 16 9 9 5 5 4 3 14 Sep 21 Sep 22 Sep 21 Sep 22 Sep 21 Sep 22 Sep 21 Sep 22 18% YoY 28% YoY 74% YoY 7% YoY 7
Slide 9: Consolidated PAT grows at 18% YoY
1 Consolidated PAT grows at 18% YoY $ Mn Business Sep 22 Sep 21 NBFC 4 2 Housing Finance 1 2 Mutual Fund 1 1 Alternatives Asset Management 4 1 Asset Reconstruction 9 9 Life Insurance (6) (7) General Insurance (4) (3) EFSL share in Wealth Management 5 4 BMU & Corporate (4) (1) (Less) Minority shareho
Slide 10: Strong operating performance (1)
1 Strong operating performance (1) • Focus on asset light model with steady disbursals with CBI and IDFC first bank; in NBFC advanced conversations with two other leading banks • Wholesale recoveries of $208 Mn in the half year • Awarded with Best Risk Management initiative & Best Data Analytics HFC
Slide 11: Strong operating performance (2)
1 Strong operating performance (2) Asset • Steady quarterly recoveries of $193 Mn; of which 15% was from retail portfolio Reconstruction • Capital employed in retail assets increased by 32% YoY • Individual APE growing at a 5-year CAGR of 19% against industry growth of 10% Life Insurance • Awarded w
Slide 12: Alternatives AUM crosses $4900 Mn
2 Alternatives AUM crosses $4900 Mn Total Customer Alternative Reach AUM Fee Paying (in Lakhs) ($ Mn) Alternative AUM ($ Mn) 4,905 2,501 3,617 3,703 1,790 1,422 2,428 1,024 Sep 19 Sep 20 Sep 21 Sep 22 Sep 19 Sep 20 Sep 21 Sep 22 AUM more than doubled in three years Fee-Paying AUM is 2.5x over Sep 19
Slide 13: General Insurance GWP increases 70% YoY
2 General Insurance GWP increases 70% YoY GI Gross written premium ($ Mn) 20 12 7 4 Sep 19 Sep 20 Sep 21 Sep 22 GWP growing at a 3-year CAGR of 65% 12
Slide 14: Robust growth in customer franchise continues
3 Robust growth in customer franchise continues Total Customer Customer AssetsReach ($ Mn)(in Lakhs) Customer Reach (# in lakhs) 47,847 59 39,741 47 30,545 29 Sep 20 Sep 21 Sep 22 Sep 20 Sep 21 Sep 22 Growth of 25% YoY Growth of 20% YoY 13
Slide 15: Driven by innovative products
3 Driven by innovative products Products launched during the half year Mutual Funds • Edelweiss Focused Equity Fund • Edelweiss Gold and Silver ETF Fund of Fund • Edelweiss Crisil IBX 50:50 Gilt Plus SDL Apr 2037 Index Fund Life Insurance • Edelweiss Tokio Flexi Savings Plan • Edelweiss Tokio Guaran
Slide 16: And synergistic partnerships
3 And synergistic partnerships New partnerships in General Insurance Quarterly update on asset light co-lending • Maruti Insurance Broking • Ongoing CLM disbursals with State Bank of India, Standard • Repco Home Finance Chartered Bank, IDFC Bank and Central Bank of India • Securitization and direct
Slide 17: Strong balance sheet with well-capitalized businesses
4 Strong balance sheet with well-capitalized businesses Debt reduced by ~$871 Mn over last 2 years Credit assets are conservatively provided Comfortable liquidity of $656 Mn at 22% of debt Strong capitalization across businesses 16
Slide 18: Debt reduced by $871 Mn over last 2 years
4 Debt reduced by $871 Mn over last 2 years Debt ($ Mn) Net D/E 3,918 3.3 3,045 2.1 Sep 20 Sep 22 Sep 20 Sep 22 Debt reduction expected to continue at the same pace given our asset light strategy 17
Slide 19: Debt distribution across businesses
4 Debt distribution across businesses Debt ($ Mn) Business Sep 22 NBFC 1,131 Housing Finance 237 Alternatives 17 Asset Reconstruction 365 Wealth Management 605 BMU & Corporate 691 Gross Debt 3,045 (Less) Available liquidity 656 Net Debt 2,389 18
Slide 20: Credit assets are conservatively provided for
4 Credit assets are conservatively provided for Balance Sheet Provisions ($ Mn) IRAC Provisions IndAS Provisions 94 64 59 19 20 17 Sep 20 Sep 21 Sep 22 We have consistently provided for higher than IRAC norms 19
Slide 21: Cash flow plan
4 Cash flow plan $ Mn Oct 22 to Sep 23 Opening Available Liquidity (A) 656 Inflows Expected Inflows 1,300 Fresh Borrowings 564 Total Inflows (B) 1,864 Outflows Repayments 1,422 Disbursements 405 Total Outflows (C) 1,827 Closing Available Liquidity (A+B-C) 693 20
Slide 22: Assets in each tenor range adequately cover liabilities
4 Assets in each tenor range adequately cover liabilities $ Mn Assets Liabilities Excess / (Gap) Upto 1 year 1,680 1,484 196 1-3 years 1,238 858 380 3 years+ 1,508 1,153 356 21
Slide 23: Strong capitalization across businesses
4 Strong capitalization across businesses Businesses Metric Value NBFC Capital Adequacy 34.1% Housing Finance Capital Adequacy 35.8% Asset Reconstruction Capital Adequacy 43.6% Life Insurance Solvency Ratio 211% General Insurance Solvency Ratio 165% 22
Slide 24: Update on Key Priorities for FY23
Update on Key Priorities for FY23
Slide 25: On track on our key priorities for the year
5 On track on our key priorities for the year Listing EWM and value unlocking for shareholders Create and enhance value through scale-up of the Asset Management and Insurance businesses Steady reduction of wholesale loan assets 24
Slide 26: Listing EWM and value unlock for shareholders
5 Listing EWM and value unlock for shareholders Phase I • PAG’s strategic investment in Edelweiss Wealth Management Phase II • NCLT order received and made effective for Phase 2 demerger scheme • Solicit share entitlement report and fairness opinion Completed Phase III • Demerger completion Expected
Slide 27: Asset Management AUM has grown by 30% YoY
5 Asset Management AUM has grown by 30% YoY Mutual Fund AUM ($ Mn) Alternative Asset Mgt AUM ($ Mn) 11,281 4,905 8,706 3,654 3,703 5,359 Sep 20 Sep 21 Sep 22 Sep 20 Sep 21 Sep 22 MF Equity AUM has growth 27% YoY and Alternatives FPAUM has grown 40% YoY 26
Slide 28: Strong premium growth in insurance businesses
5 Strong premium growth in insurance businesses LI – Gross Premium for the quarter ($ Mn) GI – Gross Premium for the quarter ($ Mn) 47 20 42 35 12 7 Sep 20 Sep 21 Sep 22 Sep 20 Sep 21 Sep 22 YoY premium growth at 12% for LI and 68% for GI 27
Slide 29: Wholesale loan assets reduced by ~30% over past 2 years
5 Wholesale loan assets reduced by ~30% over past 2 years ECLF wholesale loan assets ($ Mn) 1,459 Improved macro environment and sell down capabilities driving faster book reduction 1,042 • Housing demand remains at elevated levels • Total inflows of $208 Mn in H1 FY23 356 • Expect inflows of over ~
Slide 30: Business Performance – Credit
Business Performance Credit
Slide 31: Credit businesses at a glance
Credit Credit businesses at a glance Quarter ended Sep 22 Equity AUM Profit After Tax $587 Mn $1,888 Mn $5 Mn 30
Slide 32: NBFC: Business performance snapshot
NBFC NBFC: Business performance snapshot Key Metrics for the quarter Business Update Equity ($ Mn) 491 • Focus continues on asset light business model o Steady disbursal under CLM program with Central Bank AUM ($ Mn) 1,377 of India; first NBFC to get approval for business loan products under CLM o D
Slide 33: NBFC: Financial performance snapshot
NBFC NBFC: Financial performance snapshot $ Mn For the quarter ended Sep 22 Sep 21 Credit Assets 1,320 1,681 Gross Loan book 728 1,056 Equity 491 472 Gross Revenue 49 58 Net Revenue 15 11 Opex 8 11 Credit Cost 1 (2) Profit After Tax 4 2 GNPA 2.72% 2.63% NNPA 1.90% 2.13% Total Provision Cover 270% 20
Slide 34: Housing Finance: Business performance snapshot
Housing Finance Housing Finance: Business performance snapshot Key Metrics for the quarter Business Update • Focus on Asset Light Business Model: Equity ($ Mn) 97 o Ongoing CLM disbursals with State Bank of India, Standard Chartered Bank AUM ($ Mn) 509 o Securitization and direct assignment transact
Slide 35: Housing Finance: Financial performance snapshot
Housing Finance Housing Finance: Financial performance snapshot $ Mn For the quarter ended Sep 22 Sep 21 Credit Assets 399 460 Gross Loan book 372 435 Equity 97 94 Gross Revenue 14 17 Net Revenue 5 6 Opex 4 3 Credit Cost 0 0 Profit After Tax 1 2 GNPA 2.52% 3.41% NNPA 1.99% 2.95% Total Provision Cove
Slide 36: Business Performance – Asset Management
Business Performance Asset Management
Slide 37: Asset Management businesses at a glance
Asset Management Asset Management businesses at a glance Quarter ended Sep 22 Equity AUM Profit After Tax $57 Mn $16,186 Mn $5 Mn Fee Income $14 Mn 36
Slide 38: Mutual Fund: Business performance snapshot
Mutual Fund Mutual Fund: Business performance snapshot Key Metrics for the quarter Business Update • Fastest growing amongst the top 15 AMCs in the industry Equity ($ Mn) 24 • Net inflows of $370 Mn for the quarter with total net inflows of $1,104 Mn for the half year • Equity AUM grew by 27% YoY to
Slide 39: Mutual Fund: Financial performance snapshot
Mutual Fund Mutual Fund: Financial performance snapshot $ Mn For the quarter ended Sep 22 Sep 21 AUM 11,281 8,706 Net New Money 370 895 Equity 24 22 Revenue 6 5 Opex 5 4 Profit After Tax 1 1 38
Slide 40: Consistent expansion of investor and partner reach
Mutual Fund Consistent expansion of investor and partner reach MF Equity AUM ($ Mn) Unique active mutual fund distributors (EoP) (#) 2,575 4,252 4,076 2,036 2,150 723 Sep 20 Sep 21 Sep 22 Sep 20 Sep 21 Sep 22 SIP Book ($ Mn) Active Folios (# in Lakhs) 20 10.8 17 8.2 7 4.3 Sep 20 Sep 21 Sep 22 Sep 20
Slide 41: Alternative Asset Mgt: Business performance snapshot
Alternative Asset Mgt Alternative Asset Mgt: Business performance snapshot Key Metrics for the quarter Business Update • AUM grew 32% YoY and FPAUM grew 40% YoY Equity ($ Mn) 33 • Raised AUM of $920 Mn in half year ended Sep 22 • PAT for the quarter grew 1.6x YoY aided by growing annuity AUM ($ Mn)
Slide 42: Alternative Asset Mgt: Financial performance snapshot
Alternative Asset Mgt Alternative Asset Mgt: Financial performance snapshot $ Mn For the quarter ended Sep 22 Sep 21 AUM 4,905 3,703 Fee Paying AUM 2,501 1,790 Equity 43 21 Net Revenue 11 7 Opex 7 5 Profit After Tax 4 1 41
Slide 43: Alternative assets overview
Alternative Asset Mgt Alternative assets overview AUM – Strategy wise Fee Paying AUM – Strategy wise AUM – Tenure wise 18% 18% 25% 34% 39% 17% $4,905 Mn $2,501 Mn $4,905 Mn 22% 82% 26% 19% Sepacial Situations Sepacial Situations Asset Over 3 year duration Structured Credit Structured Credit Asset le
Slide 44: Business Performance – Asset Reconstruction
Business Performance Asset Reconstruction
Slide 45: Asset Reconstruction: Business performance snapshot
ARC Asset Reconstruction: Business performance snapshot Key Metrics for the quarter Business Update Equity ($ Mn) 321 • Robust recoveries of $408 Mn for the half year, of which 17% was from retail portfolio AUM ($ Mn) 4,660 • Deployed $35 Mn in the quarter and $93 Mn in the half year Capital employe
Slide 46: Asset Reconstruction: Financial performance snapshot
ARC Asset Reconstruction: Financial performance snapshot $ Mn For the quarter ended Sep 22 Sep 21 AUM 4,600 5,248 Capital Employed 636 674 Wholesale assets 555 613 Retail assets 81 61 Equity 321 287 Gross Revenue 30 28 Opex 4 2 Profit After Tax 9 9 Edelweiss’ share in PAT 6 5 45
Slide 47: Business Performance – Insurance
Business Performance Insurance
Slide 48: Insurance businesses at a glance
Insurance Insurance businesses at a glance Quarter ended Sep 22 Gross Premium Policies Issued Customer Reach $67 Mn # 116,500 ~40 lakhs 47
Slide 49: Life Insurance: Business performance snapshot
Life Insurance Life Insurance: Business performance snapshot Key Metrics for the quarter Business Update Equity ($ Mn) 90 • Individual APE grew at a 5-year CAGR of 19% against industry growth at 10% Individual APE ($ Mn) 12 • Gross premium growth of 12% YoY to $47 Mn • Launched Edelweiss Tokio Flexi
Slide 50: Life Insurance: Financial performance snapshot
Life Insurance Life Insurance: Financial performance snapshot ($ Mn) For the quarter ended Sep 22 Sep 21 Net Premium Income 46 41 Investment Income & Other 31 26 Income Total Income 76 67 Policy benefits & insurance policy 62 56 liability Other expenses 20 19 Profit After Tax (6) (7) Edelweiss’ shar
Slide 51: General Insurance: Business performance snapshot
General Insurance General Insurance: Business performance snapshot Key Metrics for the quarter Business Update • Strong GDPI growth of 70% YoY against industry growth of 10%; 2nd highest in entire industry for the quarter Equity ($ Mn) 18 • First Insurance Company to have successfully completed Ayus
Slide 52: General Insurance: Financial performance snapshot
General Insurance General Insurance: Financial performance snapshot ($ Mn) For the quarter ended Sep 22 Sep 21 Net Premium Income 9 7 Investment Income & Other 3 1 Income Total Income 12 9 Policy benefits & insurance policy 7 8 liability Other expenses 8 5 Profit After Tax (4) (3) 51
Slide 53: Business Performance – Wealth
Business Performance Wealth
Slide 54: Wealth Management: Business performance snapshot
Wealth Mgt Wealth Management: Business performance snapshot Key Metrics for the quarter Business Update • Edelweiss Securities Limited transitioned to Nuvama AUA ($ Mn) 27,001 Wealth Management limited; transition of other subsidiaries expected by quarter ended Dec 22 LAS loan book 380 • AuA grew 22
Slide 55: Wealth Management: Financial performance snapshot
Wealth Mgt Wealth Management: Financial performance snapshot ($ Mn) For the quarter ended Sep 22 Sep 21 AUA 27,001 22,084 Equity 253 210 Gross Revenue 69 54 Net Revenue 57 47 Opex 43 33 Profit After Tax 10 11 Edelweiss’ share in PAT * 5 4 54 * Edelweiss stake in Edelweiss Wealth Management at ~44% i
Slide 56: Governance & Corporate Responsibility
Governance & Corporate Responsibility
Slide 57: 8 Member Board with 4 Independent Directors
8 Member Board with 4 Independent Directors Mr. Ashok Kini Independent Director • Former Managing Director (National Banking Group) State Bank of India • Served as an advisor to the Thorat Committee on Financial Inclusion at RBI • 35 years of banking experience Dr. Ashima Goyal Independent Director
Slide 58: Significant institutional ownership
Significant institutional ownership Shareholding Pattern as on Sep 30, 2022 Key Shareholders above 1% Percent 1 Pabrai Investment Funds 8.0% Employee Trust 2 BIH SA 5.1% DIIs, Non 4.8% Promoter Group Institutions 3 Baron Asset Management 4.3% & Others 32.6% 4 TIAA CREF funds 4.3% 25.5% 5 LIC 2.6% 6
Slide 59: Our contribution to building a more sustainable tomorrow
Our contribution to building a more sustainable tomorrow Under the leadership of EdelGive Foundation, we have… Over ~$87 Mn mobilized Partnered with over 158 Assisted over 60% of EdelGive’s Ensured long term through commitments high caliber NGOs NGO partners to grow at a CAGR association with averag
Slide 60: Our investment in communities
Our investment in communities EdelGive Foundation’s commitment to investing in communities 92 Districts Sustainable Women across 12 States Quality Education Livelihoods Empowerment 20 lakh children impacted 64,000 Individuals trained 2 lakh women supported $6.6 Mn 31,000 schools reached 1,300 waters
Slide 61: Trusted partner: EdelGive funding partners & networks
Trusted partner: EdelGive funding partners & networks Foundations, Corporates and HNIs partner with Edelgive Platform for their philanthropic allocation 60
Slide 62: 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 63: Safe Harbour
Safe Harbour Slide 4: Net worth includes MI, investment in CCD by CDPQ of $106 Mn and excludes EWM, Ex-Insurance PAT is post MI Slide 4: BVPS considers potential stake dilution from convertible instruments in NBFC Slide 4,16,18,20: Available Liquidity is calculated as on balance sheet date and inclu
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