Spandana Sphoorty Financial Limited · NSE:SPANDANA
Spandana Sphoorty Financial — Q4 FY2022 Earnings Presentation
36 slides from Spandana Sphoorty Financial's earnings presentation, Jul 11, 2022
Slide 1: Stock exchange cover letter
~, SPANDANA Ref: SSFI/Stock Exchange/2022-23/034 Date: July 11, 2022 To To BSE Limited, National Stock Exchange of India Limited, Department of Corporate Services Listing Department P. J. Towers, 25 th Floor, Exchange Plaza, C-1, Block G Dalal Street, BandraKurla Complex, Bandra (E) Mumbai - 400001
Slide 2: Spandana Sphoorty Financial Limited – Q4 2022 Update
Spandana Sphoorty Financial Limited ….Committed to low-income households Q4, 2022 Update 18 Years
Slide 3: Safe Harbor
Safe Harbor This presentation and the accompanying slides (the “Presentation”), which have been prepared by Spandana Sphoorty Financial Limited (the “Company”), have been prepared solely for information purposes and do not constitute any offer, recommendation or invitation to purchase or subscribe f
Slide 4: Q4 FY22 – Consolidation and Strengthening the Fundamentals
Q4 FY22 – Consolidation and Strengthening the Fundamentals Microfinance industry is poised to grow 4x over the next 8 years; Spandana best positioned to capitalize Tenured new leadership well placed to drive the business guided by highly experienced Board of Directors 2.0 Spandana 2.0 – Vision for n
Slide 5: Strengthening the business pillars- Q4 FY22
Strengthening the business pillars- Q4 FY22 ▪ Core team including CEO, CFO, CTO & CBO in place. Significant progress made in augmentation of bandwidth at senior & middle management ▪ CEO has 26+ years experience in Consumer Banking and Life Insurance industry. Prior to Spandana, he was the CEO of Bh
Slide 6: Management transition done successfully; focus on consolidation
Management Transition done successfully at the end of Q4. Focus on consolidation & meeting existing customer demand... 6,426 FY22 disrupted by Covid-19 and management transition 3,373 2,317 2,426 1,634 1,321 1,385 1,326 452 49 216 FY21 FY22 Q1FY21 Q2FY21 Q3FY21 Q4FY21 Q1FY22 Q2FY22 Q3FY22 Q4FY22 Q1F
Slide 7: Through strong existing branch and field force infrastructure
... Through strong existing branch and field force infrastructure Borrowers (In lakhs) No. of Branches^ State-wise Concentration Borrowers 2,291 2,659 2,545 2,329 2,097 Per Branch Top States AUM Concentration @ CAGR +13% Madhya Pradesh 17.5% CAGR +11% 1,052 1,120 Orissa 15.8% 1,010 925 Karnataka 11.
Slide 8: FY22 disbursement constitutes 44% of AUM
FY22 disbursement constitutes 44% of AUM – Good quality portfolio, tracking 110% collection efficiency in March On-book AUM Breakup Month on Month Disbursement Trends (₹ crore) 3,373 933 2,878 1,385 2,278 863 499 22 Jan-22 Feb-22 Mar-22 Q4FY22 FY22 FY22 Disbursement Pre-FY22 Non-Restructured Book Pr
Slide 9: Non-Restructured book collection efficiency 107% in March
Non-Restructured book has shown robust collection efficiency – 107% in March; Restructured book collections are showing encouraging results – 64% in the Quarter... Consolidated AuM Split Non-Restructured Book • Non-restructured book (~INR 5,408 crs) performing well at 100.3% CE for the quarter 107%
Slide 10: With adequate provisions existing on the balance sheet
...With adequate provisions existing on the balance sheet Total provisions on balance sheet of Rs.648 crore, accounts for 10.6% of the portfolio* Balance Sheet Particulars (Rs. crore) Q4FY22 Standard Provisions 34 Other than standard provision 614 Total Provisions on Balance Sheet 648 P&L Particular
Slide 11: Q1 FY23 improvement in collection efficiency and asset quality
Q1 FY23 has witnessed an improvement in collection efficiency and asset quality Non-Restructured Book • Non-restructured book (~INR 5,603 crs) 98% 100% 103% performing well at 103% CE for the quarter 87% FY22-Q3 FY22-Q4 FY23-Q1 ▪ Reducing quantum of Restructured Book (No moratorium) restructured boo
Slide 12: Comfortable liquidity position driven by strong track record
Comfortable liquidity position driven by strong track record Positive ALM (Rs. crore) High level of engagement with rating agencies by the Company Rs. crore1 Assets Rating Instrument 1,534 Rating Agency Rating Year Liabilities 1,385 1,483 1,490 Bank Facilities / NCD’s/ MLD’s Ind-Ra/ICRA A / A-* Mar
Slide 13: Diversified Borrowing Profile
Diversified Borrowing Profile Diversified Funding Mix (As on Mar-22) Borrowings (Rs. crore) DA PTC 6,194 5.1% NCD/MLD Term Loan 970 3.4% 19.3% 4,942 4,836 12.1% 750 594 4,135 194 1,916 441 1,310 74 3,108 1,738 140 540 1606 26.4% 2,332 772 238 33.8% 747 600 3,164 268 2,248 2,310 2014 1,596 1,317 PSU
Slide 14: Financial Performance – FY 2022
Financial Performance – FY 2022 Total Income (Rs. crore) Net Interest Income (Rs. crore) Yield (%) Cost of Borrowings (%) Yield has decreased on account of a) non-charging of delayed interest b) higher 90+ portfolio 1,470 1,506 1,480 1,082 25.7% 26.2% 14.2% 13.5% 947 24.0% 23.1% 906 20.4% 11.9% 11.4
Slide 15: Consolidated Profit & Loss Statement
Consolidated Profit & Loss Statement – Profit before credit costs continue to improve on quarterly basis Particulars (Rs. crore) FY22 FY21 Q4 FY22 Q3 FY22 Q4FY21 Revenue from Operations Interest income 1,336.5 1,362.7 260.8 328.5 403.0 Commission and incentive income 6.5 9.7 6.5 - 8.8 Net gain on fa
Slide 16: Consolidated Balance Sheet
Consolidated Balance Sheet – Networth of 3,088 Cr and capital adequacy of 50+% ASSETS (Rs. crore) Mar 31, 2022 Mar 31, 2021 LIABILITIES & EQUITY (Rs. crore) Mar 31, 2022 Mar 31, 2021 Financial Assets Financial Liabilities 727.2 1,135.2 Debt Securities 1,778.2 2,034.6 Cash and cash equivalents Borrow
Slide 17: Q4 FY22 – Consolidation and Strengthening the Fundamentals
Q4 FY22 – Consolidation and Strengthening the Fundamentals Microfinance industry is poised to grow 4x over the next 8 years; Spandana in best position to capitalize Tenured new leadership well placed to drive the business guided by highly experienced Board of Directors 2.0 Spandana 2.0 – Vision for
Slide 18: Industry is poised to grow 4x over next 8 years
Industry is poised to grow 4x over next 8 years aided by strong macro tail winds & economic growth Industry POS (in ₹ Bn, excluding SHG) CAGR: 16.6% 10,310 5,241 4,412 3,714 2,594 2,561 FY21 Q3 FY22 FY23 (F) FY24 (F) FY25 (F) FY30 (F) There are a lot of whitespaces for Spandana to grow profitably Mi
Slide 19: New MFI Regulations
New MFI regulation to give strong tail wind to Spandana ₹3L Household Income Cap Maximum FOIR of 50% • Increased coverage to a wider • Will aid in assessing borrower customer base in rural areas repayment capacity • Provides MFI’s with a level playing field • Lower delinquency levels expected as ind
Slide 20: Resilient DNA along with rural focus since inception
Resilient DNA along with rural focus since inception positions us well to deliver rapid growth Weathered multiple storms over the years Portfolio Outstanding (₹ Cr) Kerala & Odisha Floods. Covid-19 8,157 AP Microfinance Ordinance Demonetisation 6,829 6,581 4,372 2,851 2,704 3,166 2,130 2,223 2,107 2
Slide 21: Q4 FY22 – Consolidation and Strengthening the Fundamentals
Q4 FY22 – Consolidation and Strengthening the Fundamentals Microfinance industry is poised to grow 4x over the next 8 years; Spandana in best position to capitalize Tenured new leadership well placed to drive the business guided by highly experienced Board of Directors 2.0 Spandana 2.0 – Vision for
Slide 22: Spandana is being run by an Experienced Management Team
Spandana is being run by an Experienced Management Team Key Hires including CEO, CFO, CTO Completed.. Shalabh Saxena| Managing Director and CEO Ashish Damani| Chief Financial Officer ➢ 26+ years in Consumer Banking and Life Insurance industry ➢ Last assignment was as MD & CEO of Bharat Financial Inc
Slide 23: Guided by a highly experienced Board of Directors
Guided by a highly experienced Board of Directors Abanti Mitra | Non-Executive Chairman & Independent Director Bharat Shah| Independent Director ➢ Over a decade of rich experience in mass market, microfinance, credit ratings ➢ Has been with HDFC Bank Ltd since its inception and has played a key role
Slide 24: And a collective vision for the next 3 years
And a collective vision for the next 3 years.
Slide 25: Q4 FY22 – Consolidation and Strengthening the Fundamentals
Q4 FY22 – Consolidation and Strengthening the Fundamentals Microfinance industry is poised to grow 4x over the next 8 years; Spandana in best position to capitalize Tenured new leadership well placed to drive the business guided by highly experienced Board of Directors 2.0 Spandana 2.0 – Vision for
Slide 26: Spandana 2.0 Vision 2025
Spandana 2.0 Vision 2025 Fulfilling dreams of an Aspirational India Growing the micro finance …fulfilling other financial portfolio… product needs (secured & unsecured) of the customer 25
Slide 27: Focus on growing microfinance book; AUM of ₹15,000 Cr by FY25
Spandana to focus on growing its microfinance book. Will deliver AUM of ₹15,000 Cr by FY25 Geographic expansion Continue to build new Improve Productivity lender relationships and Efficiency Risk, Internal controls and ₹15,000 Cr strong audit processes, Scale up employees Microfinance being consolid
Slide 28: Key priorities in the growth journey
Key priorities in the growth journey Meet customer needs Strengthen Managerial Team Audit, controls & monitoring Focus of Field Operations Technology upgrades Consolidate Governance, Control, Risk management & Processes Lending partners Explore partnership models Technology to drive Efficiency & Pro
Slide 29: Identified 7 additional states for quick scale up
Identified 7 additional states with favorable metrics for quick scale up of microfinance book. Will continue to grow organically in the existing states Focus on few states for accelerated growth by FY25, while avoiding concentration Branch count ~1,500 Credit Assistant 9,500 – 9,800 Employee count 1
Slide 30: Well defined strategy of new customer acquisition
Well defined strategy of new customer acquisition to deliver AuM Growth AUM growth FY22-FY25 New Customer Acquisition Strategy ▪ Focus to be on customer acquisition both through organic business operations and through BC / Co-lending model Total AUM – 15,000 ▪ Source customers from deep rural and se
Slide 31: Steering Progress through Technology
Steering Progress through Technology Current State Future State Core platforms and Web & mobile based technologies with Anytime + Anywhere access applications Overall System Compliance to all Regulatory requirements Comprehensive audit trail with robust maker-checker systems Architecture Digitizatio
Slide 32: To build ₹15,000 crore on-book Microfinance AUM by FY25
To build ₹15,000 crore on-book Microfinance AUM by FY25… Particulars FY22 FY23 FY25 No. of Branches 1,120 1,120 1,500 Customers (in L) 23.5 28 40 Disbursement 3,373 8,100 18,000 Average Ticket Size 32,000 33,000 47,800 AUM 6,581 9,243 18,164 NIM 12.5% 10.0% 10% Cost to Income 32.9% 43.7% 35.7% Opex
Slide 33: Partnerships for Co-lending & Banking Correspondent Models
We will also explore partnerships for Co-lending & Banking Correspondent Models* Co-lending Opportunities Banking Correspondent Model Enables quick scale-up of Spandana can earn BC fees from operations with some transfer banking partners with very of risk between lending partners limited risk exposu
Slide 34: India has a large aspirational population waiting to be served
India has a large aspirational population waiting to be served Poor Low Income Middle Income 134 m 1,162 m 66 m High Income 2m Upper Middle 16 m Share of Gross Bank Credit Segment of Banking Share of Gross Gross Bank Credit FY25 Industry Bank Credit (%) (in ₹ Crore) Ambition Microfinance 1.4% 1,67,0
Slide 35: Products that meet aspirations of rural India
We will explore products that meet aspirations of rural India; building a 10 – 15% secured portfolio Products To be Pursued Nano Enterprise (Micro loan to retailers) Affordable Housing, Home Improvement & LAP 2,000 Cr – 3,000 Cr Vehicle (2-Wheeler) Opportunity Gold Loan Individual Loans to Existing
Slide 36: Thank You
Thank You
Spandana Sphoorty Financial — Q4 FY2022 Earnings Presentation on 6ix