Edelweiss Financial Services Limited · NSE:EDELWEISS
Edelweiss Financial Services — Q1 FY2017 Earnings Presentation
65 slides from Edelweiss Financial Services's earnings presentation, Aug 9, 2016
Slide 1: BSE filing cover letter for investor presentation
@ Edelweiss Ideas create, values protect EW/Sec/2016/144 August 9, 2016 BSE Limited P J Towers, Dalal Street, Fort, Mumbai - 400 001. Dear Sirs, Ref.:- Scrip Code:- 532922 Sub: Investor Presentation Please find enclosed the Investor presentation in respect of the First Quarter of the Financial Year
Slide 2: Edelweiss Financial Services Limited Q1FY17 Investor Presentation
Edelweiss Financial Services Limited Q1FY17 Investor Presentation
Slide 3: Contents
Contents 1 OVERVIEW & BUSINESS APPROACH 2 PERFORMANCE HIGHLIGHTS 3 BUSINESS HIGHLIGHTS 4 ENTERPRISE UPDATE 5 DETAILED FINANCIALS 2
Slide 4: Overview & Business Approach
OVERVIEW & BUSINESS APPROACH
Slide 5: Our Vision
Our Vision “To be a Respected Financial Services firm with a Portfolio of High Quality Growth Businesses” 4
Slide 6: Our Business Approach
Our Business Approach Leadership Culture Culture that promotes Risk & Governance entrepreneurship and Zero tolerance policy innovation without towards Compliance & Risk compromising on institutionalization Diversification De risked model enhances sustainability Good mix of Strong Enterprise Wholesal
Slide 7: Diversification Strategy Led to a Unique Business Model
Diversification Strategy Led to a Unique Business Model… EDELWEISS Credit Non Credit Insurance WELL DIVERSIFIED Unique Model that is “Scalable, Stable and Profitable” 6
Slide 8: One of the Leading Diversified Financial Services Firms
One of the Leading Diversified Financial Services Firms CREDIT BUSINESSES Present across the spectrum of One of the top 5 Diversified Financial Wholesale Retail Services Firms • Structured Collateralized Credit • Retail Mortgage • Distressed Assets Credit • Agri & Rural Finance • Wholesale Mortgage
Slide 9: Four-year aims for diversified business model
As we stated in the FY16 investor presentation, over the next four years.. Our aim is to grow our diversified business model to achieve... • Grow PAT consistently at 25% • NPA below 2% • Consolidated RoE to 16-18% • Capital Adequacy Ratio >16% • Ex Insurance RoE to 19-20% • Enhance long term credit
Slide 10: Q1FY17 Performance Highlights
Q1FY17 PERFORMANCE HIGHLIGHTS
Slide 11: Key Financial Highlights – Q1FY17
Key Financial Highlights – Q1FY17 1 Consolidated YoY PAT growth of 53% 2 Ex Insurance YoY PAT growth of 39% 3 Consistent track record of growth – 38% Ex Insurance PAT CAGR over 4 years 4 Consolidated RoE improved to 15.1% 5 Ex Insurance RoE improved to 19.4% 10
Slide 12: Consolidated PAT Growth of 53% & Ex Insurance PAT Growth of 39%
Consolidated PAT Growth of 53% & Ex Insurance PAT Growth of 39% Growth over (INR Cr) Q1FY17 Q1FY16 Q1FY16 FY16 FY15 PAT 414 329 140 91 53% Consolidated PAT 39% 519 381 Ex Insurance 155 111 ..... with only 17% growth in Assets Balance 32,145 27,072 33,092 28,304 17% Sheet Non Linear growth in Profita
Slide 13: Key Performance Parameters (Ex Insurance)
Key Performance Parameters (Ex Insurance) (INR Cr) Q1FY17 FY16 FY15 FY14 PAT (Q1FY17) 155 519 381 272 Credit book 21,129 20,014 15,036 8,953 Net Revenue*/ Average Assets 8.6% 7.8% 8.5% 7.2% RoE 19.4% 18.6% 15.6% 12.2% RoA 2.0% 1.8% 1.9% 1.9% Cost to Income Ratio 57% 60% 60% 59% Gross NPA % 1.4% 1.4%
Slide 14: Key Performance Parameters vs Peers
Key Performance Parameters Edelweiss For Q1FY17 (Ex Insurance) Private Banks NBFC/ DFS PAT growth (YoY) 39% 23% 16% Credit Book Growth (YoY) 29% 22% 17% Net Revenue/ Average Assets 8.6% 5.9% 8.2% RoA 2.0% 1.7% 2.1% RoE 19.4% 13.8% 14.8% Cost to Income Ratio 57% 46% 39% Gross NPA 1.4% 1.6% 4.8% Net N
Slide 15: PAT growth trajectory
PAT growth trajectory Profit after Tax INR Cr 154 155 133 120 98 103 111 140 89 90 122 70 69 68 72 106 57 62 88 91 96 48 51 78 79 83 56 58 61 46 51 46 40 42 Q1'FY13 Q2'FY13 Q3'FY13 Q4'FY13 Q1'FY14 Q2'FY14 Q3'FY14 Q4'FY14 Q1'FY15 Q2'FY15 Q3'FY15 Q4'FY15 Q2'FY16 Q3'FY16 Q4'FY16 Q1'FY17 Q1'FY16 Ex-Insu
Slide 16: RoA Attribution (Ex Insurance)
RoA Attribution (Ex Insurance) Q1FY17 FY16 FY15 Net Interest Income 6.0% 5.1% 5.5% Interest 12.8% 12.8% 12.0% Treasury 2.0% 1.2% 2.2% Interest Cost -8.8% -8.8% -8.6% Non-interest income 2.5% 2.7% 2.9% Fee & commission 2.1% 2.4% 2.7% Other income 0.4% 0.3% 0.2% Expenses -5.5% -5.2% -5.7% Employee cos
Slide 17: Both credit and non-credit PAT witnessing steady growth
Both credit and non-credit PAT witnessing steady growth PAT INR Cr Credit Non Credit Insurance 140 2-year CAGR 91 96 35% 78 65 53 47 59 26% 37 -11 -16 -20 Q1FY15 Q1FY16 Q1FY17 16
Slide 18: Business Highlights
BUSINESS HIGHLIGHTS € Edelweiss S 2016 INDIAN OLYMPIC TEAM BGs
Slide 19: Diversified Mix of Businesses
Diversified Mix of Businesses CREDIT NON CREDIT INSURANCE Present across : Strong product franchise One of the fastest serving diverse client growing life insurance Wholesale needs: companies • Structured Collateralized Credit • Capital Markets • Distressed Assets • Wealth Management Credit • Wholes
Slide 20: Financial Snapshot
Financial Snapshot Profit (INR Cr) EoP Equity After Tax RoE% Credit Business 2,441 96 17.9% Non Credit 1,125 59 22.3% Total (Ex Insurance) 3,566 155 19.4% Insurance 915 -16 - Consolidated 4,481 140 15.1% • Based on Management Estimates • EoP Equity includes minority (603 Cr.), advance to Employee We
Slide 21: Business Highlights – Credit
BUSINESS HIGHLIGHTS – CREDIT
Slide 22: Credit Business at a glance – Q1FY17
Credit Business at a glance – Q1FY17 Credit Business INR (Cr) Capital Employed 21,129 Net Interest Margin 6.9% Net Interest Income 355 Cost to Income 41% Provisions 52 PAT 96 Gross NPA 1.4% Net NPA 0.5% RoE 17.9% RoA 2.0% Credit Non Credit Insurance Balance Sheet 21 Numbers are Management Estimates
Slide 23: Credit Portfolio is a Mix of Differentiated and Scalable Assets
Credit Portfolio is a Mix of Differentiated and Scalable Assets Structured • Customized credit solutions, with high collateral Loan Against cover Collateralized Credit Shares 1,191 Structured Agri & Rural 6% SME & Others Collateralized • Largest Asset Reconstruction Company in India, Finance 1,361 C
Slide 24: Present across Retail, SME and Wholesale segments
Present across Retail, SME and Wholesale segments Wholesale Credit Retail & SME Credit • Comprises of • Comprises of • Collateralized Lending to Corporate • Retail Mortgage • Distressed Assets Credit • Agri & Rural Financing • Wholesale Mortgage • Loan Against Shares • Began credit operations in 200
Slide 25: Business Strengths
Business Strengths Client Centric Solutions • Ability to understand client needs and structure products to suit their needs • Strong client relations Proactive Risk Management • Three tier risk management approach – Business risk team supplemented by Global risk team & Global Risk Committee • Robust
Slide 26: Credit – Improving Parameters
Credit – Improving Parameters At the end of Q1FY17 Q1FY16 FY16 FY15 Average Interest Yield 16.2% 16.1% 16.2% 15.8% Average Cost of Borrowing 10.5% 10.8% 10.7% 10.9% Interest Spread 5.7% 5.3% 5.5% 4.9% Net Interest Margin 6.9% 6.7% 6.8% 6.7% 45 cities & 41 cities & 45 cities & 36 cities & Retail Cred
Slide 27: Credit: Robust Asset Quality
Credit: Robust Asset Quality At the end of (INR Cr) Q1FY17 Q1FY16 FY16 FY15 Total Credit Book 21,129 16,431 20,014 15,036 Pvt. Banks NBFCs Gross NPA 300 217 281 196 1.6% 4.8% Gross NPA % 1.4% 1.3% 1.4% 1.3% Net NPA % 0.5% 0.4% 0.5% 0.4% 0.7% 1.7% Total Provision Held* 268 210 247 184 Total Provision
Slide 28: Business Highlights – Non Credit
BUSINESS HIGHLIGHTS – NON CREDIT
Slide 29: Non Credit Business at a glance – Q1FY17
Non Credit Business at a glance-Q1FY17 Non Credit INR (Cr) Capital Employed 11,048 Net Revenue 332 Cost to Income 74% PBT 88 PAT 59 RoE 22.3% RoA 2.1% Credit Non Credit Insurance Balance Sheet 28 Numbers are Management Estimates
Slide 30: Non Credit Business Mix
Non Credit Business Mix • Entire spectrum of corporate advisory services - Fixed Income Advisory, Mergers & Acquisitions , Equity Capital Markets, Private Equity Syndication Capital Markets • Leader in Debt Capital Markets • One of the largest domestic institutional broking house with strong focus o
Slide 31: 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 6,000 • Robust fundamental research covering ~227 5,000 5,200 5,000 stocks among 27 sectors representing ~77% of total market cap 3,100 • Rated Best Br
Slide 32: Wealth and Asset Management – Rapidly gaining market share
Wealth and Asset Management – Rapidly gaining market share Wealth Management Assets Under Advice (INR Cr) • Servicing ~ 300 Ultra High-Net Worth & more than 1,100 High Net Worth Families 29,500 31,100 • Good mix of product and advisory solutions for 17,750 21,400 customized needs 8,900 • Best Privat
Slide 33: Expanding Asset Reconstruction and Agri Services businesses
Expanding Asset Reconstruction and Agri Services businesses Asset Reconstruction Company Assets Under Management (INR Cr) • Opportunity to tap the potential 4 lakh crore of stressed loans and revive them 27,100 29,300 • Started operations in 2009. Largest Asset Reconstruction Company in 20,000 20,30
Slide 34: Balance Sheet Management Unit
Balance Sheet Management Unit Balance Sheet Management Unit (INR Cr) KEY OBJECTIVES 4,266 • Liquidity management 2,070 • Asset Liability Management 1,097 337 • Manage Treasury assets Gsecs Liquidity Fixed & Tax Others • Corporate Fixed Assets and Investments cushion* Assets Balance Sheet Management
Slide 35: Business Highlights – Insurance
BUSINESS HIGHLIGHTS – INSURANCE
Slide 36: Key Milestones
Key Milestones Q1 2017 2013 71 Branches 45 Branches 16,303 Agents 3,401 Agents 1,985 Employees 1,275 Employees 26 Products 18 Products 57 Cr Q1 Gross Premium 55 Cr Premium Started Operations July 2011 Highest startup capital INR 550 Crs 2016 71 Branches 15,490 Agents 1,943 Employees 26 Products 310
Slide 37: Insurance Strategy
Insurance Strategy defined by Products • Boutique of products meeting variety of customer needs with superior features • Continued focus on Need Based Selling (Brand: Vijaypath) • Agency-led multi-channel distribution approach with emphasis on productivity Distribution • Focus on building direct cap
Slide 38: Fastest Growing Individual Annual Premium Equivalent
Fastest Growing Individual Annual Premium Equivalent Individual Annual Premium Equivalent CAGR Growth since FY13 42% • Individual Annual Premium Equivalent - INR 13% 18.9 Crs for Q1 FY17 7% Edelweiss Tokio Peer Set Industry Life Insurance Persistency (Individual & Group Business combined) • Best 13t
Slide 39: Customer centric approach – wide variety of products
Customer centric approach – wide variety of products Group 11% Unit Linked Insurance Plan 14% Traditional Non Product Mix Par 49% Traditional Par 25% Inception till date • Unique need based selling approach • Strong investment performance to provide superior returns to customers Customer centric • E
Slide 40: Rapidly growing & stable platform
Rapidly growing & stable platform Corporate Agent Bancassurance 8% 9% Balanced channel Direct Business mix with focus on 9% agency Brokers 11% Agency 62% Inception till date • Winner, Agency Efficiency award at India Insurance Awards, 2016 • Winner, “Top 100 Infosec Maestros Awards” A Responsible in
Slide 41: Pan India Presence
Pan India Presence At the end of Q1FY17 FY16 FY15 FY14 Delhi (NCR) 6 branches Number of Personal 16,303 15,490 10,421 7,255 Financial Advisors Punjab / Himachal Pradesh 71 in 71 in 59 in 58 in Number of Branches / Uttarakhand Uttar 61 cities 61 cities 49 cities 48 cities 6 branches Pradesh 6 branche
Slide 42: Insurance
Insurance Edelweiss Tokio Life Insurance Company Limited Standalone (ETLI) (INR Cr) Q1FY17 Q1FY16 FY16 FY15 Gross Premium Income 57 32 310 193 Investment Income & Other Income 40 26 87 97 Total Income 97 58 397 290 Total Expenses 128 86 552 361 Profit Before Tax (31) (27) (155) (71) Profit After Tax
Slide 43: Balance Sheet
Tia ck jute teh Fetal inal eth BALANCE SHEET 2016 INDIAN OLYMPIC TEAM coo
Slide 44: Key Highlights – Balance Sheet
Key Highlights – Balance Sheet 1 On-Balance Sheet: INR~33,100 Cr; Total assets managed INR ~99,200 Cr 2 ALM maintained Balance 3 Comfortable capital adequacy ratio at 18.1% Sheet 4 Diversified Liability mix 5 Stable business model reflected in credit ratings Credit Non Credit Insurance Balance Sheet
Slide 45: ~$15.0 billion of Assets
1 ~ $15.0 billion of Assets As on 30 Jun 2016 INR Cr USD bn Assets on Balance Sheet 33,100 5.0 Distressed Assets Book (ARC Assets) 29,300 4.3 Funds under Management (Asset Management) 5,700 0.9 Assets Under Advice (Wealth Management) 31,100 4.6 Total Assets 99,200 14.8 Credit Non Credit Insurance Ba
Slide 46: Comfortable Asset-Liability Profile
2 Comfortable Asset-Liability Profile Jun’16: INR 33,092 Cr Assets Liabilities 100% % of Assets and Liabilities 76% 100% 57% 73% 33% 38% 55% 12% 32% 37% 12% Asset Specific 0-3 Mnth 3-6 Mnth 6-12 Mnth 1-3 years 3+ years Borrowing • Positive asset-liability matching across durations • Asset Liability
Slide 47: Strong capital position
3 Strong capital position Tier I Networth (INR Cr) Liability Structure, Jun’16 (INR Cr) 4,192 4,379 Tier I 4,379 3,434 3,557 Tier II 1,028 Total Capital 5,407 Risk Weighted Assets 29,854 FY15 FY16 Q1FY16 Q1FY17 • Steady growth in Net worth over the last several years • Sub Debt issued to improve Tie
Slide 48: Diversified Sources of Borrowings
4 Diversified Sources of Borrowings FY11 Q1FY17 Others* 5% 5% Retail 5% 14% Asset Specific Borrowing 14% 14% Bank 26% 32% Mutual Funds 50% 35% Total Borrowings INR 7,858 Cr INR 28,526 Cr • Steady diversification in sources of borrowings • Lower dependence on debt market borrowings • Exploring altern
Slide 49: Share of Long Term funds increasing
Share of Long Term funds increasing Long Term Liabilities INR (Cr) Long Term Liabilities Breakup Sub-debt 14,475 14,999 11% 11,473 6,641 Term Loan 31% NCD 58% FY14 FY15 FY16 Q1FY17 Long Term as % of Total 41% 43% 45% 45% Average Tenure (years) 3.3 Liabilities • Long Term Liabilities growing in line
Slide 50: Liquidity Cushion at ~INR 3,000 Cr is 9% of Balance Sheet
Liquidity Cushion at ~INR 3,000 Cr is 9% of Balance Sheet Including off Balance sheet lines INR (Cr) • A well diversified liquidity cushion comprising of: 2,900 3,000 • Banking Lines • Fixed Deposits 1,700 • Government Securities, Mutual Funds etc • Steady growth in liquidity cushion to provide for
Slide 51: Stable Business Model Reflected in Credit Ratings
5 Stable Business Model Reflected in Credit Ratings Rating agency Purpose (debt programme) Rating Short term CRISIL A1+ Short term CARE A1+ Short term [ICRA] A1+ Long term BWR AA+ Long term CARE AA Long term [ICRA] AA Credit Non Credit Insurance Balance Sheet 50
Slide 52: Enterprise Update
ENTERPRISE UPDATE Edelweiss — 2016 INDIAN OLYMPIC TEAM [R@{@,9)
Slide 53: Awards
Awards Marketing campaign of the Year 2016 - CMO Asia #iAmTeamIndia Olympics campaign wins Marketing campaign of the year 2016 Best Corporate Governance - India At CFI.co Corporate Governance Awards 2016 Best Equity Capital Markets House and Best Broker Award at the Finance Asia Country Awards 2016
Slide 54: TV Commercial Brand film with Saina Nehwal
TV Commercial Brand film with Saina Nehwal https://www.youtube.com/watch?v=NL2nUnO4my8 53
Slide 55: Edelweiss Olympics Campaign #iAmTeamIndia
Edelweiss Olympics Campaign #iAmTeamIndia # iAmTeamIndia campaign - https://www.youtube.com/watch?v=JHFZJWoRmPs E delweiss Photo E-book - https://www.youtube.com/watch?v=1DH8fLMKkmw Edelweiss RIO Olympics Anthem - https://youtu.be/2zBqO4pHWlY 54
Slide 56: Send off for the Indian Olympic Team & Launch of Anthem
Send off for the Indian Olympic Team & Launch of #iAmTeam India Anthem & Digital Book... 55
Slide 57: Technology Update
Technology Update Project with a global Information Technology major underway focussing on technology led business transformation for Wealth Management and Life Insurance businesses Partnered with IBM to launch competition to identify start-ups in Fintech space Engaging with select start-ups to iden
Slide 58: Key Human Resources Metrics
Key Human Resources Metrics At the end of Q1FY17 FY16 FY15 Head Count 6,361 6,227 5,555 Senior Hiring 33 81 113 Senior Attrition 15% 10% 17% During Q1FY17 FY16 FY15 Learning & Training man days 4,243 21,530 19,582 Development Employees covered 1,946 5,374 4,838 Building leadership capability through
Slide 59: EdelGive Foundation - Key Highlights
EdelGive Foundation - Key Highlights Impacted over 300,000 lives in 13 states Supported 85 Non-Governmental Organizations. Brought INR 60 crores into philanthropy Education Livelihood Women Empowerment Empowering children through Water and soil conservation, skill Promoting safety, gender justice, h
Slide 60: Shareholding Pattern
Shareholding Pattern Employee TOP INSTITUTIONAL SHAREHOLDERS ABOVE 1%* Trust (AS ON JUN 30, 2016) Non 5.5% Institutions Name Percent 18.2% 1 Carlyle 8.3% Promoters 2 Fidelity 5.7% 44.8% & Employees 3 BIH SA 5.3% 4 SAIF Advisors 3.1% 31.5% Foreign 5 Amansa Investments 1.4% Institutions 6 Abu Dhabi In
Slide 61: Detailed Financials
DETAILED FINANCIALS
Slide 62: Consolidated Financials – P&L
Consolidated Financials – P&L (INR Cr) FY17 FY16 FY16 FY15 Q1 Q1 Annual Annual Fee and Commission Income 171 163 697 573 Fund based Income 1,220 956 4,218 3,100 Premium from Life Insurance Business 53 30 300 187 Other Operating Income 27 14 87 38 Other Income 7 5 14 14 Total Revenue 1,478 1,168 5,31
Slide 63: Consolidated Financials – P&L (Ex Insurance)
Consolidated Financials – P&L (Ex Insurance) (INR Cr) FY17 FY16 FY16 FY15 Q1 Q1 Annual Annual Fee and Commission Income 171 163 697 573 Fund based Income 1,181 931 4,132 3,006 Other Operating Income 27 14 86 39 Other Income 6 4 13 10 Total Revenue 1,385 1,112 4,928 3,628 Employee Benefits Expense 21
Slide 64: Consolidated Financials – Balance Sheet
Consolidated Financials – Balance Sheet (INR Cr) June 16 Mar 16 June 15 Mar 15 Equity and Liabilities Shareholders’ Funds 3,963 3,760 3,369 3,246 Equity 3,878 3,675 3,284 3,161 Preference 85 85 85 85 Minority Interest 603 612 285 286 Borrowings 28,526 27,773 24,650 23,540 Total 33,092 32,145 28,304
Slide 65: 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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