Edelweiss Financial Services Limited · NSE:EDELWEISS
Edelweiss Financial Services — Q2 FY2022 Earnings Presentation
55 slides from Edelweiss Financial Services's earnings presentation, Oct 28, 2021
Slide 1: Cover letter to stock exchanges
EW/Sec/2021/186 October 28, 2021 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 21
US $ version Edelweiss Financial Services Limited Earnings update – Quarter ended Sep 21
Slide 3: Contents
Contents 1 Overview & Highlights 3 2 Update on Key Priorities 19 3 Business Performance 26 4 Governance and Corporate Responsibility 48 2
Slide 4: Overview & Highlights
Overview & Highlights Quarter ended Sep 21
Slide 5: Edelweiss at a glance – Quarter ended Sep 21
Edelweiss at a glance – Quarter ended Sep 21 Net Worth Ex-Insurance PAT $1,164 Mn $15 Mn Liquidity Customer Assets BVPS $687 Mn $43,647 Mn $1 (FV ₹1) 4
Slide 6: We are a diversified company with nine businesses
We are a diversified company with nine businesses Edelweiss Financial Services Ltd (EFSL) Housing Mutual Alternative Life General Insurance Wealth NBFC ARC Finance Fund Asset Mgt Insurance Insurance Broking Management ECL Finance Edelweiss Edelweiss Edelweiss Edelweiss Edelweiss Edelweiss Edelweiss
Slide 7: Performance overview – Quarter ended Sep 21
Performance overview – Quarter ended Sep 21 1 Steady performance across businesses – upward trend across key metrics Slide 7 - 9 2 Strong growth continues in customer franchise Slide 10 - 12 3 Robust balance sheet with well-capitalised businesses Slide 13 - 18 4 On track on our 3 priorities for the
Slide 8: Steady performance across businesses (1)
1 Steady performance across businesses (1) • Returned to profitability this quarter and poised for a steady trend hereon NBFC • Retail Collection efficiency stood at 94% • Gradual scale-up in disbursements; Continued focus on asset light model Housing Finance • Retail Collection efficiency back to n
Slide 9: Steady performance across businesses (2)
1 Steady performance across businesses (2) Asset • Robust recoveries at $121 Mn; $22 Mn from retail portfolio Reconstruction • Acquired assets of $175 Mn • Gross premium grew by 59% QoQ Life Insurance • Active client base increased by ~9% YoY General • Gross premium grew by 52% QoQ Insurance • Partn
Slide 10: Healthy profitability across businesses
1 Healthy profitability across businesses $ Mn Quarter ended Quarter ended Sep 21 Sep 20 NBFC 2 4 Housing Finance 2 2 Asset Reconstruction 9 6 Mutual Fund 1 - Alternative Asset Mgt 2 - Insurance Broking 0 - Life Insurance (8) (8) General Insurance (4) (4) BMU & Corporate (2) (20) Total Business PAT
Slide 11: Strong growth continues in customer assets
2 Strong growth continues in customer assets Customer Assets ($ Mn) 43,647 33,547 25,682 Sep 19 Sep 20 Sep 21 Customer assets grew ~2x in last two years, 7% growth in this quarter 10
Slide 12: Customer franchise grew ~3x in last two years
2 Customer franchise grew ~3x in last two years Total Customer Reach (in Lakhs) 47 29 16 Sep 19 Sep 20 Sep 21 Addition of ~3 lakh customers within this quarter 11 Customer reach includes individuals covered under Group Insurance policies
Slide 13: Contributed by Mutual Fund and Insurance businesses
2 Contributed by Mutual Fund and Insurance businesses No of Customers (in lakhs) Mutual Fund Life Insurance General Insurance 19 10 9 9 6 6 3 2 1 Sep 19 Sep 20 Sep 21 Sep 19 Sep 20 Sep 21 Sep 19 Sep 20 Sep 21 12 Customer reach includes individuals covered under Group Insurance policies
Slide 14: Robust balance sheet with well-capitalised businesses
3 Robust balance sheet with well-capitalised businesses Borrowings declined by 36% since Sep 19 to $3,334 Mn; D/E stands at 2.1x Strong capitalization across businesses Adequate liquidity of $687 Mn at 21% of borrowings Credit assets remain conservatively provided, well above IRAC norms 13
Slide 15: Borrowings declined ~36% over last 2 years
3 Borrowings declined ~36% over last 2 years Borrowings ($ Mn) D/E (Excl Treasury Assets) 5,211 3.4 3.1 4,154 3,334 2.1 Sep 19 Sep 20 Sep 21 Sep 19 Sep 20 Sep 21 14
Slide 16: Strong capitalization across businesses
3 Strong capitalization across businesses Businesses Metric Value NBFC Capital Adequacy 26.1% Housing Finance Capital Adequacy 22.0% Asset Reconstruction Capital Adequacy 36.0% Life Insurance Solvency Ratio 206% General Insurance Solvency Ratio 179% 15
Slide 17: Cash flow plan
3 Cash flow plan $ Mn Oct 21 to Mar 22 Apr 22 to Sep 22 Opening Available Liquidity (A) 687 606 Inflows Expected Inflows 862 539 Fresh Borrowings 471 323 Total Inflows (B) 1,333 862 Outflows Repayments 1,077 579 Disbursements 337 337 Total Outflows (C) 1,414 916 Closing Available Liquidity (A+B-C) 6
Slide 18: Assets in each tenor range adequately cover liabilities
3 Assets in each tenor range adequately cover liabilities $ Mn Assets Liabilities Gap Upto 1 year 2,370 2,054 316 1-3 years 1,791 1,421 370 3 years+ 1,778 1,414 364 17
Slide 19: Credit assets remain conservatively provided
3 Credit assets remain conservatively provided Balance Sheet Provisions IRAC Provisions IndAS Provisions ($ Mn) 102 103 70 56 21 18 Sep 19 Sep 20 Sep 21 We have consistently provided higher than IRAC norms 18
Slide 20: Update on Key Priorities
Update on Key Priorities oO Edelweiss Ideas create, values protect
Slide 21: Key priorities for the next 15 months
Key priorities for the next 15 months 1 Demerger and listing of Edelweiss Wealth Management 2 Reduce wholesale credit assets 3 Scale up our Asset Management and Insurance businesses 20
Slide 22: Demerger and listing of Edelweiss Wealth Management
1 Demerger and listing of Edelweiss Wealth Management Phase I • PAG’s strategic investment in Edelweiss Wealth Management • Segregation of Edelweiss Wealth Management business after regulatory Oct-Dec 21 Phase II approvals (on track) • Filing of regulatory applications for demerger and listing Phase
Slide 23: Reduction in wholesale credit assets by 33% over 2 years
2 Reduction in wholesale credit assets by 33% over 2 years ECLF wholesale loan assets ($ Mn) 2,144 1,440 660 Sep 19 Sep 21 Sep 23 Improvement in reduction of wholesale credit assets expected over next 2 years as Covid impact subsides 22
Slide 24: Successful workouts > $400 Mn in the past 18 months
2 Successful workouts > $400 Mn in the past 18 months Change of Developer Strengthening the developer group through addition or replacement of developers Projects Ensuring project progress by way of last mile financing and sales support for renewed Streamlining buyer interest Cash flow Improved cash
Slide 25: Significant growth in Asset Management business
3 Significant growth in Asset Management business Mutual Fund AUM ($ Mn) Alternative Asset Mgt AUM ($ Mn) 4,013 4,067 9,562 2,666 5,885 2,168 Sep 19 Sep 20 Sep 21 Sep 19 Sep 20 Sep 21 Asset Management AUM crossed $13,400 Mn in this quarter 24
Slide 26: Insurance businesses continue to scale up
3 Insurance businesses continue to scale up LI – Gross Premium for the quarter ($ Mn) GI – Gross Premium for the quarter ($ Mn) 46 13 38 31 8 5 Sep 19 Sep 20 Sep 21 Sep 19 Sep 20 Sep 21 Gross Premium growth of 59% in LI and 52% in GI since last quarter 25
Slide 27: Business Performance
Business Performance oO Edelweiss Ideas create, values protect
Slide 28: NBFC: Business performance snapshot
NBFC NBFC: Business performance snapshot Key Metrics for the quarter Business Update • Edelweiss SME - “Best Digital Strategy” award at the Equity ($ Mn) 518 Digital Customer Experience Summit & Awards 2021 • Focus continues on asset light business model: Credit Assets ($ Mn) 1,936 o Initiated origi
Slide 29: NBFC: Financial performance snapshot
NBFC NBFC: Financial performance snapshot $ Mn Quarter ended Quarter ended Sep 21 Sep 20 AUM 1,250 1,754 Loan book 1,115 1,606 Equity 518 497 Gross Revenue 64 96 Net Revenue 12 40 Opex 12 26 Credit Costs (2) 9 Profit After Tax 2 4 GNPA 2.7% 3.3% NNPA 2.2% 2.7% Total Provision Cover 203.3% 182.4% Cap
Slide 30: Housing Finance: Business performance snapshot
Housing Finance Housing Finance: Business performance snapshot Key Metrics for the quarter Business Update • Gradual scale up in disbursements Equity ($ Mn) 103 o $40 Mn disbursed during the quarter Credit Assets ($ Mn) 619 • Collection efficiency back to normalcy at 99% for the current quarter Capi
Slide 31: Housing Finance: Financial performance snapshot
Housing Finance Housing Finance: Financial performance snapshot $ Mn Quarter ended Quarter ended Sep 21 Sep 20 AUM 591 667 Loan book 453 514 Equity 103 105 Gross Revenue 18 22 Net Revenue 7 8 Opex 4 4 Credit Costs 1 1 Profit After Tax 2 2 GNPA 3.6% 2.4% NNPA 3.2% 2.1% Total Provision Cover 47.7% 56.
Slide 32: Mutual Fund: Business performance snapshot
Mutual Fund Mutual Fund: Business performance snapshot Key Metrics for the quarter Business Update • Total net inflows of $983 Mn during the quarter Equity ($ Mn) 24 • Strong net equity inflows of $337 Mn during the quarter driven by Balanced Advantage fund AUM ($ Mn) 9,562 • Equity AUM grew ~3x YoY
Slide 33: Mutual Fund: Financial performance snapshot
Mutual Fund Mutual Fund: Financial performance snapshot $ Mn Quarter ended Quarter ended Sep 21 Sep 20 AUM 9,562 5,926 Equity 24 22 Revenue 6 4 Opex 4 3 Profit After Tax 1 - 32
Slide 34: Consistent expansion of investor and partner reach
Mutual Fund Consistent expansion of investor and partner reach MF Equity AUM ($ Mn) Quarterly Equity Gross Sales ($ Mn) 2,236 471 795 633 121 54 Sep 19 Sep 20 Sep 21 Sep 19 Sep 20 Sep 21 SIP AUM ($ Mn) Active Folios (in Lakhs) 19 8.2 8 4.3 6 2.6 Sep 19 Sep 20 Sep 21 Sep 19 Sep 20 Sep 21 33
Slide 35: Alternative Asset Mgt: Business performance snapshot
Alternative Asset Mgt Alternative Asset Mgt: Business performance snapshot Key Metrics for the quarter Business Update • Robust investment pipeline Equity ($ Mn) 23 o Deployed $101 Mn during the quarter & $249 Mn in half year ended Sep 21 AUM ($ Mn) 4,067 • Ranked no. 3 in Asia in terms of AUM raise
Slide 36: Alternative Asset Mgt: Financial performance snapshot
Alternative Asset Mgt Alternative Asset Mgt: Financial performance snapshot $ Mn Quarter ended Quarter ended Sep 21 Sep 20 AUM 4,067 3,973 Deployed AUM 1,966 1,562 Equity 23 3 Revenue 8 5 Opex 7 5 Profit After Tax 2 - 35
Slide 37: Alternative assets overview
Alternative Asset Mgt Alternative assets overview Alternative Asset Mgt AUM – Strategy wise Deployed AUM – Strategy wise 11% 12% 38% 19% 44% $4,067 Mn 30% $1,966 Mn 32% 14% Distressed Credit Fund Structured Debt Fund Distressed Credit Fund Structured Debt Fund Real Estate Credit Fund Infrastructure
Slide 38: Asset Reconstruction: Business performance snapshot
ARC Asset Reconstruction: Business performance snapshot Key Metrics for the quarter Business Update Equity ($ Mn) 316 • Robust recoveries of $100 Mn from wholesale portfolio and $22 Mn from retail portfolio AUM ($ Mn) 5,764 • Acquired assets worth $175 Mn Capital employed 741 • Share of capital empl
Slide 39: Asset Reconstruction: Financial performance snapshot
ARC Asset Reconstruction: Financial performance snapshot $ Mn Quarter ended Quarter ended Sep 21 Sep 20 AUM 5,764 5,710 Capital Employed 741 714 Wholesale assets 673 700 Retail assets 68 14 Equity 316 286 Gross Revenue 31 29 Opex 3 3 Profit After Tax 9 6 Edelweiss’ share in PAT 6 4 38
Slide 40: Life Insurance: Business performance snapshot
Life Insurance Life Insurance: Business performance snapshot Key Metrics for the quarter Business Update Equity ($ Mn) 82 • Individual APE CAGR of 26% since FY17 against industry growth at 13% Individual APE ($ Mn) 13 • Launched 2 new products this quarter: ‘Total Protect Plus’ and ‘Premier Guarante
Slide 41: Life Insurance: Financial performance snapshot
Life Insurance Life Insurance: Financial performance snapshot $ Mn Quarter ended Quarter ended Sep 21 Sep 20 Net Premium Income 45 37 Investment Income & Other Income 29 16 Total Income 74 53 Policy benefits & insurance policy liability 61 41 Other expenses 20 20 Profit After Tax (8) (8) Edelweiss’
Slide 42: Customer base and gross premium continue to grow
Life Insurance Customer base and gross premium continue to grow No of Active Unique Clients (#) Gross Premium for the quarter ($ Mn) 46 339,400 38 312,500 31 268,200 Sep 19 Sep 20 Sep 21 Sep 19 Sep 20 Sep 21 41
Slide 43: General Insurance: Business performance snapshot
General Insurance General Insurance: Business performance snapshot Key Metrics for the quarter Business Update • Robust GDPI growth of 62% YoY while industry grew at Equity ($ Mn) 17 12% in Sep 21 quarter • Multiple partner integrations via open API gateway went live with Mahindra Insurance Brokers,
Slide 44: General Insurance: Financial performance snapshot
General Insurance General Insurance: Financial performance snapshot $ Mn Quarter ended Quarter ended Sep 21 Sep 20 Net Premium Income 8 5 Investment Income & Other Income 2 1 Total Income 10 6 Policy benefits & insurance policy liability 8 5 Other expenses 5 5 Profit After Tax (4) (4) 43
Slide 45: Strong growth enabled by digital platform
General Insurance Strong growth enabled by digital platform No of Unique Clients (#) Gross Premium for the quarter ($ Mn) 13 214,300 150,700 8 5 56,200 Sep 19 Sep 20 Sep 21 Sep 19 Sep 20 Sep 21 44
Slide 46: Wealth Management: Business performance snapshot
Wealth Mgt Wealth Management: Business performance snapshot Key Metrics for the quarter Business Update • AuA grew ~7% QoQ with net new money for the quarter AUA ($ Mn) 24,254 over $360 Mn LAS loan book 269 • Strong quarterly financial performance with YoY revenue ($ Mn) growth of ~30% Net New Money
Slide 47: Wealth Management: Financial performance snapshot
Wealth Mgt Wealth Management: Financial performance snapshot $ Mn Quarter ended Quarter ended Sep 21 Sep 20 AUA 24,254 17,938 Equity 231 182 Gross Revenue 54 42 Net Revenue 46 34 Opex 31 21 Profit After Tax 13 11 Edelweiss’ share in PAT 5 11 46
Slide 48: Wealth assets continue to maintain robust growth
Wealth Mgt Wealth assets continue to maintain robust growth Wealth Management AUA ($ Mn) No of Clients (#) 752,600 24,254 647,400 17,938 14,518 527,700 Sep 19 Sep 20 Sep 21 Sep 19 Sep 20 Sep 21 47
Slide 49: Governance and Corporate Responsibility
Governance and Corporate Responsibility
Slide 50: 12 Member Board with 7 Independent Directors
12 Member Board with 7 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 India • Specialis
Slide 51: Significant institutional ownership
Significant institutional ownership Shareholding Pattern as on 30th Sep 21 Key Shareholders above 1% Percent 1 Pabrai Investment Funds 7.7% Employee Trust 2 BIH SA 5.1% DIIs, Non 4.8% Promoter Group 3 TIAA CREF funds 5.0% Institutions & Others 4 Baron Asset Management 4.4% 23.5% 32.8% 5 LIC 2.6% 6 V
Slide 52: Our investment in communities
Our investment in communities EdelGive Foundation’s commitment to investing in communities 97 Districts across 13 States Sustainable Women Quality Education Livelihoods Empowerment 19.49 lakh Children 2,200 hectares of irrigated 1.78 lakh women supported $9.8 Mn * supported land Committed 6,900 Gras
Slide 53: Trusted partner: EdelGive funding partners & networks
Trusted partner: EdelGive funding partners & networks Foundations, Corporates and HNIs partner with Edelgive Platform for their philanthropic allocation 52
Slide 54: 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 55: Safe Harbour
Safe Harbour Slide 4: Net worth is including MI, investment in CCD by CDPQ of $117 Mn and excluding Edelweiss Wealth Mgt equity Slide 4: Ex-Insurance PAT is excluding MI Slide 4: BVPS has been computed by taking into account potential stake dilution from convertible instruments in NBFC Slide 4,16: A
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