Bajaj Finserv Limited · NSE:BAJAJFINSV
Bajaj Finserv — Bajaj Finance — Q4 FY16 Earnings Presentation
48 slides from Bajaj Finserv's earnings presentation, May 24, 2016
Slide 1: Bajaj Finance Limited Q4 FY16 Presentation
BAJAJ FINANCE LIMITED Q4 FY16 Presentation 24th May 2016
Slide 2: Glossary
GLOSSARY 2W Two Wheeler IIP Index of Industrial Production 3W Three Wheeler IRR Internal Rate of Return ACMF Auto Components Manufacturer Financing LAP Loan Against Property AR Assets Receivable LAS Loan Against Securities ARU Activation, Retention & Usage MF Mutual Fund ASC Authorized Service Cente
Slide 3: Presentation Path
PRESENTATION PATH • Bajaj group structure 4 • Bajaj Finserv group - Executive summary 5 • What do we stand for 6 • Bajaj Finance Shareholder profile 7 • Financial snapshot 8 • Bajaj Finance Limited product suite 9 • Business/Product launch journey 10 • Executive summary 11 • Customer franchise 13 •
Slide 4: Bajaj Group Structure
BAJAJ GROUP STRUCTURE Bajaj Holdings and Investment Limited (Listed) 1 31.49% 2 39.16% Bajaj Auto Limited Bajaj Finserv Limited (Listed) (Listed) Auto Business Arm Financial Services Arm 3 57.28% 74% 74% Bajaj Finance Limited Bajaj Allianz life Insurance Bajaj Allianz General (Listed) Company Limite
Slide 5: Bajaj Finserv Group - Executive Summary
BAJAJ FINSERV GROUP - EXECUTIVE SUMMARY Bajaj Finserv is the financial services arm of the Bajaj group Bajaj Allianz General Bajaj Allianz Life Bajaj Finance Limited Insurance Company* Insurance Company* A 29 year old non bank finance 2nd largest private General insurer in Amongst top 4 private play
Slide 6: What Do We Stand For
WHAT DO WE STAND FOR envisages an optimal mix of risk and profit to deliver a sustainable business model a sustainable ROA of 3% and ROE of 18-20% in the medium term 6
Slide 7: Bajaj Finance Shareholder Profile
BAJAJ FINANCE SHAREHOLDER PROFILE Top 20 investors & their holdings As on As on Others S.No Name of Shareholder Mar'15 Mar'16 1.53% 1 BAJAJ FINSERV LTD 61.53% 57.28% 2 MAHARASHTRA SCOOTERS LIMITED 3.78% 3.52% Corporates 3 GOVERNMENT OF SINGAPORE - 2.37% 6.52% 4 SMALLCAP WORLD FUND, INC - 1.13% MF 5
Slide 8: Financial Snapshot
FINANCIAL SNAPSHOT ` in Crore YoY CAGR Financials snapshot FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 (8 years) Assets under management 2,539 4,032 7,573 13,107 17,517 24,061 32,410 44,229 36% 50% Income from operations 599 916 1,406 2,172 3,110 4,073 5,418 7,384 36% 43% Interest expenses 164 201 371 7
Slide 9: Bajaj Finance Limited Product Suite
BAJAJ FINANCE LIMITED PRODUCT SUITE Bajaj Finance Limited Small Consumer Commercial Rural Distribution Business Relationships Lending Lending Lending Services Lending Consumer Durable Business Loans Infrastructure Consumer Durable Loan Cross Sell CRISIL Rating Financing Financing * Financing Digital
Slide 10: Business/Product Launch Journey
BUSINESS/PRODUCT LAUNCH JOURNEY Retail SME +32 Commercial Rural Fee Commercial Products Fee Products +6 +6 EMI Card Urban Gold +5 +5 Loans Extended Consumer *Co-branded Corporate Warranty Financial Credit Card Finance Cross Sell Fitness Business Report Vendor *Infrastructure Light CRISIL SME Financi
Slide 11: Executive Summary
EXECUTIVE SUMMARY Bajaj • 29 year old non bank with a demonstrated track record of profitability Finance • Focused on Consumer, SME & Commercial lines of businesses • Strategic business unit organization design supported by horizontal common utility support functions to drive domain expertise, scala
Slide 12: Executive Summary (Contd.)
EXECUTIVE SUMMARY (CONTD.) SME • Focused on high net worth SMEs with an average annual sales of ` 25 Crores with established Business financials & demonstrated borrowing track records • Offer a range of working capital & growth capital products • Offer full range of mortgage (Loan against property,
Slide 13: Customer Franchise
CUSTOMER FRANCHISE Mar 2015 Mar 2016 Total Franchise 12.89 million 16.07 million Credit segment filter 7.97 million 10.57 million 7.77 million Overall Cross sell franchise 10.32 million Non delinquent 7.32 million customers 9.48 million Cross sell franchise 6.25 million 8.49 million New to Bajaj cus
Slide 14: Key Portfolio Metrics
KEY PORTFOLIO METRICS AUM (₹ Crores) Deployments IRR (%) Ticket Quarter Business Segment Q1 FY16 Q2 FY16 Q3 FY 16 Q4 FY 16 YoY Q4 FY16 FY16 Range (Lacs) gone by 1. 2W & 3W finance 3,315 3,387 3,647 3,773 14% 860 3,315 22.0-28.0 0.50 2. Consumer durable finance 5,147 4,916 5,935 5,556 33% 2,715 12,97
Slide 15: Strong Distribution Reach
STRONG DISTRIBUTION REACH Geographic Presence (No. of branches) Active Distribution (Points of sale) Business Line FY12 FY13 FY14 FY15 FY16 Business Line FY12 FY13 FY14 FY15 FY16 Consumer durable Consumer durable 2,800+ 3,500+ 4,900+ 7,000+ 9,400+ 82 91 114 161 193 branches Digital - 850+ 1,600+ 2,6
Slide 16: Key Performance Highlights for Q4 FY16
KEY PERFORMANCE HIGHLIGHTS FOR Q4 FY16 • Customers acquired during Q4 FY16 36% to 15,82,954 from 11,62,742 in Q4 FY15 • Total income for Q4 FY16 35% to `1,957 Crores from ` 1,445 Crores in Q4 FY15 • Loan losses and provisions for Q4 FY16 37% to ` 156 Crores as against ` 114 Crores in Q4 FY15.
Slide 17: Key Performance Highlights for FY16
KEY PERFORMANCE HIGHLIGHTS FOR FY16 • Customers acquired during FY16 39% to 68,34,762 from 49,24,448 in FY15 • Assets Under Management during FY16 36% to ` 44,229 Crores from ₹ 32,410 Crores in FY15 • Total income for FY16 36% to ₹ 7,384 Crores from ` 5,418 Crores in FY15 • Loan losses and pro
Slide 18: Summary Financial Statement
SUMMARY FINANCIAL STATEMENT ₹ in Crores Financials snapshot Q4'15 YoY FY'16 FY'15 YoY FY'14 Assets under finance (AUF) 44,229 32,410 35% 44,229 32,410 35% 22,971 Assets under management (AUM) 42,756 31,199 37% 42,756 31,199 37% 24,061 Total Interest & fee Income 1,957 1,445 35% 7,384 5,418 36% 4,073
Slide 19: Management Discussion
MANAGEMENT DISCUSSION Market Assessment : • Economic indicators showed some improvement Parameters IIP -1.5% 2.0% 0.1% - CPI 5.69% 5.26% 4.83% 5.39% WPI -1.07% -0.91% -0.85% 0.34% • Consumer durables and Consumer non-durables have a recorded growth of 9.7% and -4.2% percent respectively, with the ov
Slide 20: Management Discussion (Contd.)
MANAGEMENT DISCUSSION (CONTD.) 2 Wheeler & 3 • 2 Wheeler financing business disbursed 143K accounts in the quarter (24% YoY) Wheeler Financing • 3 Wheeler financing business disbursed 9.2K accounts in the quarter (125% YoY) • Disbursed: 860 Crs 30.9% from 30.8% in Q4 FY15 (38% YoY) • improved to 14%
Slide 21: Management Discussion (Contd.)
MANAGEMENT DISCUSSION (CONTD.) • Furniture remains the largest lifestyle finance category. EMI card franchise continues to Lifestyle Finance contribute 42% of the total business done • Entered Life Care finance segment, financing elective medical procedures like dental Disbursed: 45.9 K procedures,
Slide 22: Management Discussion (Contd.)
MANAGEMENT DISCUSSION (CONTD.) Salaried Personal Loans • Expanded presence to 55 cities with addition of 15 new locations in Q4 FY16 • Business is facing intense competition from private sector banks Disbursed: 582 Crs (Growth: 21% YoY) • Pure flexi product launched to offer better value proposition
Slide 23: Management Discussion (Contd.)
MANAGEMENT DISCUSSION (CONTD.) Retail EMI • Company expanded its EMI card proposition to new categories of fashion, travel and small appliances • Customer can now avail easy EMI financing on purchase of apparels, eyewear, CIF: 5.5 MM accessories, small appliances and travel related expenditures • Cu
Slide 24: Management Discussion (Contd.)
MANAGEMENT DISCUSSION (CONTD.) Business Loans • Break 2 grow strategy implemented by dividing the markets into Prime, Growth and Emerging markets to provide sharper focus, balance risk and grow the business Disbursed: 891 Crs • Pure Flexi product has been launched to strengthen the value proposition
Slide 25: Management Discussion (Contd.)
MANAGEMENT DISCUSSION (CONTD.) Home Loans Self employed • transition lowered business volumes Disbursed: 245 Crs • As part of the ROE strategy for HL business, the company is building Developer finance (De-growth of 50% in a cautious and steady manner YoY) Commercial ACMF Lending Business • Elevated
Slide 26: Management Discussion (Contd.)
MANAGEMENT DISCUSSION (CONTD.) Infrastructure • Infra financing business continues to remain in pause mode due to sectoral stress Finance & CE • Outstanding portfolio of 311 Crs • Company made an additional principal provision of 43.9 Crs in one infra account due to continued delay in servicing of i
Slide 27: Management Discussion (Contd.)
MANAGEMENT DISCUSSION (CONTD.) Portfolio Metrics • GNPA: 1.23% in March 2016 as compared to 1.51% last year • NNPA: 0.28% in March 2016 as compared to 0.45% last year • Provisioning coverage ration stood at 77%. Company made a provision of ₹ 43.9 crore in one of its Infrastructure lending account in
Slide 28: Financial Performance Trends Q4 FY16
FINANCIAL PERFORMANCE TRENDS Q4 FY16 36% YoY AUM (` Crore) 36% YoY Revenue (` Crore) 35% YoY Net Interest Income (NII) (` Crore) 38% YoY 28
Slide 29: Financial Performance Trends Q4 FY16
FINANCIAL PERFORMANCE TRENDS Q4 FY16 Operating expenses % of NII Loan loss provision (₹ Crore) 37% YoY Net NPA & Provisioning coverage Profit Before Tax (` Crore) 42% YoY *The net NPA & provisioning coverage numbers for Q1FY16 are at 150 days over-dues while the same for previous quarters are at
Slide 30: Financial Performance Trends Q4 FY16
FINANCIAL PERFORMANCE TRENDS Q4 FY16 Capital adequacy ratio Earnings per share Basic (₹) 27% YoY Return on avg. assets under finance & Equity 30
Slide 31: Credit Quality Portfolio Composition
CREDIT QUALITY PORTFOLIO COMPOSITION Consumer durable loan portfolio Two & Three wheeler loan portfolio Lifestyle finance loan portfolio Digital product finance loan portfolio Legends indicate customers who are current/ no dues as of the month. 31
Slide 32: Credit Quality Portfolio Composition
CREDIT QUALITY PORTFOLIO COMPOSITION Personal loan cross sell portfolio Salaried personal loan portfolio Small business loan portfolio Loan against property portfolio Legends indicate customers who are current/ no dues as of the month. 32
Slide 33: Credit Quality Portfolio Composition
CREDIT QUALITY PORTFOLIO COMPOSITION Home loans portfolio Rural Lending portfolio Legends indicate customers who are current/ no dues as of the month. 33
Slide 34: Credit Quality Provisioning Coverage
CREDIT QUALITY PROVISIONING COVERAGE Business Segment AUM PCR GNPA NNPA GNPA NNPA Remarks (Values in ₹ Crs) (FY16) (%) (%) (%) 1. 2W & 3W finance 3,773 162 40 76% 4.28% 1.08% Repossessable asset 2. Consumer durable finance 5,556 85 4 96% 1.68% 0.07% 3. Lifestyle & Digital product finance 1,016 9 1 9
Slide 35: PR Coverage Highlights in Q4 FY16
PR COVERAGE HIGHLIGHTS IN Q4 FY16 Publication: 13th May, 2016 - Forbes India Article access: http://forbesindia.com/article/anniversary-special/how-sanjiv-bajaj-turned-bajaj-finserv-into-a-financial-powerhouse/43283/0 35
Slide 36: PR Coverage Highlights in Q4 FY16
PR COVERAGE HIGHLIGHTS IN Q4 FY16 Publication date: February 5, 2016, The Economic Times Multiple editions Article access: http://articles.economictimes.indiatimes.com/2016-02-05/news/70373622_1_sanjiv-bajaj-bajaj-finserv-68-crore 36
Slide 37: PR Coverage Highlights in Q4 FY16 (Contd.)
PR COVERAGE HIGHLIGHTS IN Q4 FY16 (CONTD.) Publication date: March 23, 2016, The Financial Express Article access: http://www.financialexpress.com/article/industry/banking-finance/bajaj-fin-enters-lifecare-financing-eyes-rs-1000-cr- revenue-in-5-years/228832/ 37
Slide 38: Awards & Accolades
AWARDS & ACCOLADES • The Company has been recognized as one of Best Workplaces 2016 by Great Place to Work Institute. The Company has improved its position to 16th best employer in India in 2016 versus 23rd in 2015. • The Company has also once again been recognized amongst 25 Employers in India, 201
Slide 39: Disclaimer
DISCLAIMER This presentation has been prepared by and is the sole responsibility of Bajaj Finance Limited (together with its subsidiaries, referred to as the Company or . By accessing this presentation, you are agreeing to be bound by the trailing restrictions. This presentation does not constitute
Slide 40: Thank You
BAJAJ FINANCE LIMITED Q4 FY16 Presentation THANK YOU
Slide 41: Annexure
ANNEXURE 41
Slide 42: Lending Industry Opportunity
LENDING INDUSTRY OPPORTUNITY India vs. Advanced Economies Bank Credit (US $ Bn) India vs. Advanced Economies - Household Debt/GDP (%) Denmark 129% US 11,290 Netherlands 115% Japan 3,700 Australia 113% 3,057 Canada 92% UK UK 86% Canada 2,706 Ireland 85% Italy 2,128 South Korea 81% India 1,057 US 77%
Slide 43: Key differentiators and capabilities
Low ticket high velocity collection Work flow based underwriting for SME 1 capability (~250K accounts per month) 2 businesses on cloud. Centre of Excellence for Analytics Direct cash collection model 3 across Sales, Pricing, Risk, Marketing, 4 for unbanked rural customers Collection & Service Flexi
Slide 44: Product Per Customer (PPC)
Product Per Customer (PPC) Product per Customer (PPC) is a measure of cumulative products bought by a customer over his/her lifetime. Retail SME Products PPC PPC PPC PPC Products PPC PPC PPC PPC offered Benchmark (12 MOB) (18 MOB) (24 MOB) offered Benchmark (12 MOB) (18 MOB) (24 MOB) 16 3 2.50* 2.67
Slide 45: Product Per Customer (PPC)
Product Per Customer (PPC) Retail Disbursed Value (` Crore) Fresh v/s Repeat Mix Product Per Customer (PPC) Fresh Repeat Loan Product Fee Product 5449 4672 5166 6711 2.50 2.67 2.82 100% 90% 80% 58% 1.10 1.12 1.13 70% 61% 59% 64% 60% 50% 40% 30% 1.56 1.69 1.41 20% 42% 39% 41% 36% 10% 0% Q1'16 Q2'16 Q
Slide 46: EMI Card Franchise
EMI CARD FRANCHISE What is EMI Card Progress till date • EMI Card refers to Existing Member Identification Card. 6,000 10,00,000 9,00,000 • The EMI card can be used to purchase consumer durables & lifestyle 5,000 8,00,000 products, by availing a loan from BFL without any documents. 7,00,000 4,000 •
Slide 47: ALM Strategy
ALM STRATEGY Borrowings ` 37,025 Crs) Borrowings Dec ` 34,214 Crs) Loan Book (` Crs) Behaviourilised ALM (` Crs) 47
Slide 48: NPA Provisioning Standards
NPA PROVISIONING STANDARDS 0.25% (from FY16 0.30%) Consumer Finance SME Finance Commercial Lending provision coverage provision coverage provision coverage Consumer Durables : Home Loan / Loan against Construction Equipment 3-5 Bucket - 75% Property : Finance : Above 5 - 100% 4-5 Bucket - 15% 4 -5 B