Edelweiss Financial Services Limited · NSE:EDELWEISS
Edelweiss Financial Services — Q2 FY2023 Earnings Presentation
63 slides from Edelweiss Financial Services's earnings presentation, Nov 9, 2022
Slide 1: Cover letter to stock exchanges
EW/Sec/2022/212 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
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 INR 8,419 Cr INR 133 Cr INR 72 (FV ₹1) Liquidity Customer Assets INR 5,350 Cr INR 3,90,200 Cr 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 INR 40,000 Cr; GI GWP 2 Slide 11-12 increases ~70% YoY, GDPI growth rate is 2nd highest in the
Slide 8: Healthy profitability across businesses
1 Healthy profitability across businesses Profit After Tax for the quarter in INR Cr EFSL Asset Asset ex-Insurance Credit Management Reconstruction 133 75 113 70 41 40 32 23 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 INR Cr Business Sep 22 Sep 21 NBFC 35 16 Housing Finance 6 16 Mutual Fund 8 11 Alternatives Asset Management 32 12 Asset Reconstruction 75 70 Life Insurance (47) (59) General Insurance (35) (26) EFSL share in Wealth Management 37 36 BMU & Corporate (35) (11) (Less
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 INR 1,700 Cr in the half year • Awarded with Best Risk Management initiative & Best Data Analytic
Slide 11: Strong operating performance (2)
1 Strong operating performance (2) Asset • Steady quarterly recoveries of INR 1,577 Cr; 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 • Awar
Slide 12: Alternatives AUM crosses INR 40,000 Cr
2 Alternatives AUM crosses INR 40,000 Cr Total Customer Alternative Reach AUM Fee Paying (in Lakhs) (INR Cr) Alternative AUM (INR Cr) 40,000 20,400 29,500 30,200 14,600 11,600 19,800 8,350 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
Slide 13: General Insurance GWP increases 70% YoY
2 General Insurance GWP increases 70% YoY GI Gross written premium (INR Cr) 162 96 59 36 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 (in Lakhs) (INR Cr) Customer Reach (# in lakhs) 3,90,200 59 3,24,100 47 2,49,100 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 ~INR 7,100 Cr over last 2 years Credit assets are conservatively provided Comfortable liquidity of INR 5,350 Cr at 22% of debt Strong capitalization across businesses 16
Slide 18: Debt reduced by ~INR 7,100 Cr over last 2 years
4 Debt reduced by ~INR 7,100 Cr over last 2 years Debt (INR Cr) Net D/E 31,950 3.3 24,830 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 (INR Cr) Business Sep 22 NBFC 9,220 Housing Finance 1,930 Alternatives 135 Asset Reconstruction 2,980 Wealth Management 4,930 BMU & Corporate 5,635 Gross Debt 24,830 (Less) Available liquidity 5,350 Net Debt 19,480 18
Slide 20: Credit assets are conservatively provided for
4 Credit assets are conservatively provided for Balance Sheet Provisions (INR Cr) IRAC Provisions IndAS Provisions 768 518 481 154 165 136 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 INR Cr Oct 22 to Sep 23 Opening Available Liquidity (A) 5,350 Inflows Expected Inflows 10,600 Fresh Borrowings 4,600 Total Inflows (B) 15,200 Outflows Repayments 11,600 Disbursements 3,300 Total Outflows (C) 14,900 Closing Available Liquidity (A+B-C) 5,650 20
Slide 22: Assets in each tenor range adequately cover liabilities
4 Assets in each tenor range adequately cover liabilities INR Cr Assets Liabilities Excess / (Gap) Upto 1 year 13,700 12,100 1,600 1-3 years 10,100 7,000 3,100 3 years+ 12,300 9,400 2,900 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 (INR Cr) Alternative Asset Mgt AUM (INR Cr) 92,000 40,000 71,000 29,800 30,200 43,700 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 (INR Cr) GI – Gross Premium for the quarter (INR Cr) 381 162 340 285 96 59 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 (INR Cr) 11,900 Improved macro environment and sell down capabilities driving faster book reduction 8,500 • Housing demand remains at elevated levels • Total inflows of INR 1,700 Cr in H1 FY23 2,900 • Expect inflows
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 INR 4,789 Cr ~INR 15,400 Cr INR 41 Cr 30
Slide 32: NBFC: Business performance snapshot
NBFC NBFC: Business performance snapshot Key Metrics for the quarter Business Update Equity (INR Cr) 4,001 • Focus continues on asset light business model o Steady disbursal under CLM program with Central Bank AUM (INR Cr) 11,230 of India; first NBFC to get approval for business loan products under
Slide 33: NBFC: Financial performance snapshot
NBFC NBFC: Financial performance snapshot INR Cr For the quarter ended Sep 22 Sep 21 Credit Assets 10,761 13,705 Gross Loan book 5,934 8,614 Equity 4,001 3,850 Gross Revenue 397 472 Net Revenue 121 88 Opex 68 91 Credit Cost 11 (18) Profit After Tax 35 16 GNPA 2.72% 2.63% NNPA 1.90% 2.13% Total Provi
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 (INR Cr) 788 o Ongoing CLM disbursals with State Bank of India, Standard Chartered Bank AUM (INR Cr) 4,154 o Securitization and direct assignment t
Slide 35: Housing Finance: Financial performance snapshot
Housing Finance Housing Finance: Financial performance snapshot INR Cr For the quarter ended Sep 22 Sep 21 Credit Assets 3,251 3,755 Gross Loan book 3,036 3,544 Equity 788 766 Gross Revenue 112 135 Net Revenue 41 50 Opex 32 27 Credit Cost 1 4 Profit After Tax 6 16 GNPA 2.52% 3.41% NNPA 1.99% 2.95% T
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 INR 466 Cr INR 132,000 Cr INR 40 Cr Fee Income INR 115 Cr 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 (INR Cr) 194 • Net inflows of INR 3,020 for the quarter with total net inflows of INR 9,000 Cr for the half year • Equity AUM grew by 27
Slide 39: Mutual Fund: Financial performance snapshot
Mutual Fund Mutual Fund: Financial performance snapshot INR Cr For the quarter ended Sep 22 Sep 21 AUM 92,000 71,000 Net New Money 3,020 7,300 Equity 194 179 Revenue 48 44 Opex 40 33 Profit After Tax 8 11 38
Slide 40: Consistent expansion of investor and partner reach
Mutual Fund Consistent expansion of investor and partner reach MF Equity AUM (INR Cr) Unique active mutual fund distributors (EoP) (#) 21,000 4,252 4,076 16,600 2,150 5,900 Sep 20 Sep 21 Sep 22 Sep 20 Sep 21 Sep 22 SIP Book (INR Cr) Active Folios (# in Lakhs) 162 10.8 139 8.2 60 4.3 Sep 20 Sep 21 Se
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 (INR Cr) 272 • Raised AUM of INR 7,500 Cr in half year ended Sep 22 • PAT for the quarter grew 1.6x YoY aided by growing annuity AUM
Slide 42: Alternative Asset Mgt: Financial performance snapshot
Alternative Asset Mgt Alternative Asset Mgt: Financial performance snapshot INR Cr For the quarter ended Sep 22 Sep 21 AUM 40,000 30,200 Fee Paying AUM 20,400 14,600 Equity 272 174 Net Revenue 93 55 Opex 54 42 Profit After Tax 32 12 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% INR 40,000 Cr INR 20,400 Cr INR 40,000 Cr 17% 22% 19% 82% 26% Sepacial Situations Sepacial Situations Asset Over 3 year duration Structured Credit Structured Cre
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 (INR Cr) 2,616 • Robust recoveries of INR 3,328 Cr for the half year, of which 17% was from retail portfolio AUM (INR Cr) 38,000 • Deployed INR 288 Cr in the quarter and INR 763 Cr in the half
Slide 46: Asset Reconstruction: Financial performance snapshot
ARC Asset Reconstruction: Financial performance snapshot INR Cr For the quarter ended Sep 22 Sep 21 AUM 38,000 42,800 Capital Employed 5,190 5,500 Wholesale assets 4,530 5,000 Retail assets 660 500 Equity 2,616 2,343 Gross Revenue 247 231 Opex 35 20 Profit After Tax 75 70 Edelweiss’ share in PAT 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 INR 543 Cr # 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 (INR Cr) 737 • Individual APE grew at a 5-year CAGR of 19% against industry growth at 10% Individual APE (INR Cr) 100 • Gross premium growth of 12% YoY to INR 381 Cr • Launched Edelweiss T
Slide 50: Life Insurance: Financial performance snapshot
Life Insurance Life Insurance: Financial performance snapshot INR Cr For the quarter ended Sep 22 Sep 21 Net Premium Income 372 332 Investment Income & Other 250 216 Income Total Income 622 548 Policy benefits & insurance policy 507 455 liability Other expenses 162 152 Profit After Tax (47) (59) Ede
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 (INR Cr) 145 • First Insurance Company to have successfully completed A
Slide 52: General Insurance: Financial performance snapshot
General Insurance General Insurance: Financial performance snapshot INR Cr For the quarter ended Sep 22 Sep 21 Net Premium Income 74 60 Investment Income & Other 22 12 Income Total Income 96 72 Policy benefits & insurance policy 59 62 liability Other expenses 69 39 Profit After Tax (35) (26) 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 (INR Cr) 2,20,200 Wealth Management limited; transition of other subsidiaries expected by quarter ended Dec 22 LAS loan book 3,100 • AuA g
Slide 55: Wealth Management: Financial performance snapshot
Wealth Mgt Wealth Management: Financial performance snapshot INR Cr For the quarter ended Sep 22 Sep 21 AUA 220,200 1,80,100 Equity 2,065 1,716 Gross Revenue 566 443 Net Revenue 464 383 Opex 351 273 Profit After Tax 85 93 Edelweiss’ share in PAT * 37 36 54 * Edelweiss stake in Edelweiss Wealth Manag
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 ~INR 710 Cr 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 av
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 INR 54 Cr 31,000 schools reached 1,300 wate
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 INR 866 Cr 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 in
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