Spandana Sphoorty Financial Limited · NSE:SPANDANA
Spandana Sphoorty Financial — Q3 FY2021 Earnings Presentation
52 slides from Spandana Sphoorty Financial's earnings presentation, Feb 9, 2021
Slide 1: Cover letter to stock exchanges: Investors' Presentation Q3/9M FY2021
Ref: SSFL/Stock Exchange/2020-21/124 Date: February 09, 2021 To To BSE Limited, National Stock Exchange of India Limited, Department of Corporate Services Listing Department P. J. Towers, 25th Floor, Exchange Plaza, C-1, Block G Dalal Street, Bandra Kurla Complex, Bandra (E) Mumbai – 400001 Mumbai –
Slide 2: Spandana Sphoorty Financial Limited Investor Presentation
Spandana Sphoorty Financial Limited ….Committed to low-income households Investor Presentation February 2021 17 Years Q3 FY21
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: Business Update, Key Operating Metrics, Key Financial Metrics
1 Business Update 2 Key Operating Metrics 3 Key Financial Metrics Overview of Criss Financial (Subsidiary) & 4 Borrowing Profile 5 Abhiram (Associate Co.) Strong Management Team & Risk 6 7 Annexure Management Processes All the data are on Consolidated basis Criss Financials Holdings Limited became s
Slide 5: Executive Summary
Executive Summary Overview Collection Efficiency nearing Pre-Covid levels Quarterly Disbursements reaching historical highs ▪ 2nd largest microfinance company in India with an AUM of Rs. Rs crore 7,764 crore and an active customer base of 25.5 lakhs 97.2% 99.3% 99.7% 99.5% 96.2% 2,317 ▪ Best in clas
Slide 6: Q3 FY21 – Performance Highlights
Q3 FY21 – Performance Highlights ▪ Assets under management grew by 32.1% YoY and 5.6% QoQ - Rs 7,764 crore Industry Leading ▪ Disbursements touched historical high of Rs 2,317 crore; up by 18% YoY and 42% QoQ Growth ▪ Ranked as No.1 NBFC - MFI in Disbursements & AUM growth in Q2 FY21* ▪ Best in clas
Slide 7: Spandana has always shown consistent growth, profitability and sustainability
Spandana has always shown consistent growth, profitability and sustainability… Growth Profitability Sustainability Robust AUM (Rs crore) Industry Leading NIM (%) Limited Concentration Risk – Top 3 States 7,764 16.5% 63% 6,829 16.2% 53% 47% 47% 4,372 15.6% 3,166 15.3% FY18 FY19 FY20 9MFY21 FY18 FY19
Slide 8: …with its 'all-weather' team having successfully navigated multiple cycles
…with its ‘all-weather’ team having successfully navigated multiple cycles… AP Crisis: 2010 Measures Taken Increase in Cumulative Collections from Old AP Book each year ✓ Kept on-ground presence in AP by keeping branches open and engaging with customers 976 1,015 1,018 1,022 1,033 1,040 1,046 896 93
Slide 9: …and Covid19 is another demonstration of this same ability
…and Covid19 is another demonstration of this same ability First MFI to resume ▪ First MFI to resume business post-lockdown, opening branches across 18 states in April 2020 – significant advantage in collections effort operations ▪ Quickly moved branches from ‘red’ to nearby ‘green’ zones to enable
Slide 10: Portfolio Has Show Strong Post-Covid Recovery
Portfolio Has Show Strong Post-Covid Recovery Total Portfolio Break-up Almost All Borrowers Have Resumed Repayments 6.4% 4.1% 2.9% 2.2% 7.0% 6.3% 9.0% 10.0% Pre-Covid Portfolio 49.7% 50.3% Post-Covid Portfolio 90.0% 91.5% 83.7% 86.9% Post Covid disbursements Rs. in Crore PAR % Current Portfolio 3,85
Slide 11: Conservative Provisioning Levels
Conservative Provisioning Levels Cumulative Provisions of Rs 411 crores which accounts for 5.9% of the On-Balance Sheet Portfolio Cumulative Provision as per Particulars (Rs crore) Q4 FY20 Q1 FY21 Q2 FY21 Q3FY21 Balance sheet as on Dec 31, 2020 Standard Provisions 30 22 8 0.2 49 COVID & Other Provis
Slide 12: Agile Risk Management Has Always Helped Avoid Over-Leveraged Areas
Agile Risk Management Has Always Helped Avoid Over-Leveraged Areas Strong History of Pre-Emptively Managing Exposure to Risky Geographies Current Footprint Reflects Same Experience and Agility Paused UP in 2016 as borrowers were over-leveraged, and chose not to expand in Slowly expanded into WB, but
Slide 13: Normalization in Business Trajectory to Pre-Covid levels
Normalization in Business Trajectory to Pre-Covid levels Company’s Conservative Practices and Seasoned Team Have Enabled Us To Resume Normalcy AUM on Growth Path (Rs crore) Disbursements reached pre- Industry leading Opex (%) Strong Capital Adequacy Ratio % Covid levels in Q3 FY21 (Rs crore) 7,764 3
Slide 14: Business Update, Key Operating Metrics, Key Financial Metrics
1 Business Update 2 Key Operating Metrics 3 Key Financial Metrics Overview of Criss Financial (Subsidiary) & 4 Borrowing Profile 5 Abhiram (Associate Co.) Strong Management Team & Risk 6 7 Annexure Management Processes All the data are on Consolidated b2asis Criss Financials Holdings Limited became
Slide 15: Operational Summary
Operational Summary AUM (Rs crore) Disbursements (Rs crore) Borrowers (In lakhs) Off-Book On-Book* Off-Book On-Book* CAGR CAGR 8,004 +35% Disbursements 7,764 +44% back to Pre- CAGR 25.7 25.5 +47% 6,830 COVID levels 24.6 4,969 4,372 3,858 4,000 15.9 4,914 6,817 3,166 10.6 4,232 3,166 1,916 140 947 0
Slide 16: Rising Employee Productivity has led to Opex Efficiency
Rising Employee Productivity has led to Opex Efficiency Active Borrowers/Branch (#) AUM/Employee (Rs crore) Cost To Income (%) CAGR Interest de-recognitiion +5% Excl. Trainees Incl. Trainees and lower DA income in 30.4% 9M FY21 2,658 1.12 2,541 2,506 2,468 1.05 24.9% 2,285 23.4% 0.92 19.9% 21.2% 0.8
Slide 17: Industry-Leading Geographic Diversification at State, District and Branch Levels
Industry-Leading Geographic Diversification at State, District and Branch Levels State-wise Concentration Well diversified portfolio across States Well dispersed district level exposure ensures low impact from region-specific Top States AUM Concentration issues Madhya Pradesh 17.3% District wise Con
Slide 18: Continued Focus on Further Increasing Diversification, Without Compromising Rural Focus
Continued Focus on Further Increasing Diversification, Without Compromising Rural Focus State-wise AUM Mix – Greater Diversification Concentration (by AUM) of Top 3 States is Reducing 17.3% 63.0% Madhya Pradesh 20.0% 62.0% 54.7% 16.8% 48.4% 46.9% Orissa 20.0% 12.8% Karnataka 13.5% 11.5% Maharashtra
Slide 19: Successful Transition to Monthly Repayment
Successful Transition to Monthly Repayment ▪ Company started transition to monthly repayment in late-2019, in response to customer demand, driven by a lower time commitment from their side ▪ Industry has evolved, where more frequent borrower meetings were once required to maintain discipline – no lo
Slide 20: Business Update, Key Operating Metrics, Key Financial Metrics
1 Business Update 2 Key Operating Metrics 3 Key Financial Metrics Overview of Criss Financial (Subsidiary) & 4 Borrowing Profile 5 Abhiram (Associate Co.) Strong Management Team & Risk 6 7 Annexure Management Processes All the data are on Consolidated basis Criss Financials Holdings Limited became s
Slide 21: Financial Performance
Financial Performance Total Income (Rs crore) Net Interest Income (Rs crore) Yield (%) Cost of Borrowings (%) +288% +310% -170 bps +700 bps 1,470 906 20.3% 25.7 25.7% 26.2% 756 740 24.0% 24.8% 23.3% 1,049 1,030 1,025 623 14.2% 13.5% 11.9% 12.2% 11.1% 588 341 379 221 FY17 FY18 FY19 FY20 9MFY20 9MFY11
Slide 22: Consolidated Profit & Loss Statement
Consolidated Profit & Loss Statement Particulars (Rs crore) 9M FY21 9M FY20 Q3 FY21 Q3 FY20 Q2 FY21 Revenue from Operations Interest income 959.7 871.6 332.6 292.0 317.3 Net gain on fair value changes 38.9 109.9 -0.4 46.8 23.8 Other Income 10.1 25.1 5.6 11.2 3.8 Total income from operations 1,008.7
Slide 23: Consolidated Balance Sheet
Consolidated Balance Sheet ASSETS (Rs crore) Dec 31, 2020 Mar 31, 2020 Dec 31, 2019 LIABILITIES & EQUITY (Rs crore) Dec 31, 2020 Mar 31, 2020 Dec 31, 2019 Financial Assets Financial Liabilities Cash and cash equivalents 775.8 59.6 491.3 Debt Securities 1,396.8 777.6 881.0 Bank Balances other than ca
Slide 24: Business Update, Key Operating Metrics, Key Financial Metrics
1 Business Update 2 Key Operating Metrics 3 Key Financial Metrics Overview of Criss Financial (Subsidiary) & 4 Borrowing Profile 5 Abhiram (Associate Co.) Strong Management Team & Risk 6 7 Annexure Management Processes All the data are on Consolidated basis Criss Financials Holdings Limited became s
Slide 25: Diversified Borrowing Profile
Diversified Borrowing Profile Borrowings (Rs crore)* ▪ Total borrowings raised since lockdown is Rs. 4,289 crore ▪ No moratorium availed from lenders -- paid both interest and principal in full and on time, even during the lockdown DA 5,575 PTC ▪ Further diversified the borrowing profile by tapping
Slide 26: Comfortable Liquidity Position Driven by Strong Track Record
Comfortable Liquidity Position Driven by Strong Track Record Positive ALM Mismatch (Rs crore) Assets 2,708 Liabilities 1,826 1,875 1,546 1,374 1,053 912 376 331 344 236 258 46 42 85 9 Upto 1 Month 1 to 2 Months 2 to 3 Months 3-6 Months 6 to 12 Months 1 to 3 Years 3 to 5 Years Over 5 Years Positive A
Slide 27: Strong Credit Rating – Upgraded to 'A' rating in Dec
Strong Credit Rating – Upgraded to ‘A’ rating in Dec, despite impact of Covid Rating Instrument Rating Agency Rating Consistent Rating Upgrades Ind-Ra* A (Stable) Bank Facilities ICRA A- (Stable) A/Stable (IndRa) Ind-Ra* A (Stable) Non-Convertible Debentures ICRA A- (Stable) A-/Stable (ICRA) Ind-Ra*
Slide 28: Steady reduction in Lending rate & Cost of Borrowing
Steady reduction in Lending rate & Cost of Borrowing ▪ Company’s strong track record and ratings upgrades have enabled it to continuously reduce it’s cost of borrowing ▪ Enabled to pass on benefits to customers, and lend at more competitive rates, while still maintaining the same 10% spread RBI-Defi
Slide 29: Business Update, Key Operating Metrics, Key Financial Metrics
1 Business Update 2 Key Operating Metrics 3 Key Financial Metrics Overview of Criss Financial (Subsidiary) & 4 Borrowing Profile 5 Abhiram (Associate Co.) Strong Management Team & Risk 6 7 Annexure Management Processes All the data are on Consolidated basis Criss Financials Holdings Limited became s
Slide 30: Overview of Criss Financial
Overview of Criss Financial ▪ Criss Financial Holdings Limited (CFL) is an NBFC, which is a 97.5% subsidiary of Spandana Sphoorty Financial Limited ▪ It was set up to operate in states / asset classes that SSFL itself could not, given its status as an NBFC-MFI ▪ CFL offers Loans against Gold, Loans
Slide 31: Criss Financial – Robust Financial Performance
Criss Financial – Robust Financial Performance AUM (Rs crore) Disbursements (Rs crore) Total Income (Rs crore) PBT (Rs crore) CAGR +26% CAGR CAGR +35% +22% 260 277 40 20 37 19 244 35 CAGR 197 206 15 +25% 168 186 13 140 22 22 11 108 103 FY18 FY19 FY20 9MFY20 9MFY21 FY18 FY19 FY20 9MFY20 9MFY21 FY18 F
Slide 32: Criss Financial – Q3 & 9M FY21 Profit & Loss Statement
Criss Financial – Q3 & 9M FY21 Profit & Loss Statement Particulars (Rs crore) 9M FY21 9M FY20 Q3 FY21 Q3 FY20 Q2 FY21 Revenue from Operations Interest income 34.9 20.5 13.9 7.3 10.4 Net gain on fair value changes - - - - - Others 0.9 1.2 0.5 0.7 0.4 Total income from operations 35.8 21.7 14.4 8.0 10
Slide 33: Criss Financial – Q3 FY21 & Balance Sheet
Criss Financial – Q3 FY21 & Balance Sheet ASSETS (Rs crore) Dec 31, 2020 Mar 31, 2020 Dec 31, 2019 LIABILITIES & EQUITY (Rs crore) Dec 31, 2020 Mar 31, 2020 Dec 31, 2019 Financial Assets Financial Liabilities Borrowings 182.0 113.4 73.8 Cash and cash equivalents 7.2 6.0 4.1 Subordinated Liabilities
Slide 34: Overview of Abhiram Marketing
Overview of Abhiram Marketing ▪ Abhiram Marketing is a consumer goods retail company, incubated by Spandana’s promoter – it is hence an associate company of Spandana Overview ▪ It purchases various consumer durables goods such as rice cookers, lamps, mobile phones, white goods, etc from OEMs, for sa
Slide 35: Insignificant Impact on Spandana's Opex due to Abhiram's Cost Sharing
Insignificant Impact on Spandana’s Opex due to Abhiram’s Cost Sharing ▪ Abhiram was incubated to help Spandana serve it’s customers more effectively, and hence does not seek to maximize its own profits ▪ Like all third-party retailers, it pays its partnering MFI a sales commission – this is ~13% for
Slide 36: Abhiram Marketing – Profit & Loss and Balance Sheet
Abhiram Marketing – Profit & Loss and Balance Sheet ▪ Abhiram is a relatively small entity, which enables Spandana to serve its borrowers more effectively, by providing them with access to consumer durables and similar products ▪ It does not have a substantial P&L or balance sheet of its own, and ha
Slide 37: Business Update, Key Operating Metrics, Key Financial Metrics
1 Business Update 2 Key Operating Metrics 3 Key Financial Metrics Overview of Criss Financial (Subsidiary) & 4 Borrowing Profile 5 Abhiram (Associate Co.) Strong Management Team & Risk 6 7 Annexure Management Processes All the data are on Consolidated basis Criss Financials Holdings Limited became s
Slide 38: Strong Top Management Team with Cross-Cycle Experience
Strong Top Management Team with Cross-Cycle Experience PADMAJA REDDY Managing Director Padmaja is the Promoter and Managing Director. She has an overall experience of 24 years in the ‘social development’ and ‘microfinance’ industry. She founded ‘Spandana’ in 1998 and promoted the Company in 2003. Un
Slide 39: Experienced Second Layer of Management
Experienced Second Layer of Management RAVI KUMAR KUKKAMALLA GOBIND PRASAD MOHANTY OMKAR NAMDEV BASAVARAJA PARAMESHWARAPPA VP & Business Head of Jharkhand & West VP & Business Head of VP - Business Head of Andhra Pradesh VP & Business Head of Karnataka Bengal Chhattisgarh Ravi has been associated wi
Slide 40: Strong Risk Management DNA
Strong Risk Management DNA Risk Management Key Risks Concentration Risk Political Risk Operational Risk Management Responsible Lending, Process Controls & Geographic & Lender Dependence Adherence to CoC Strategy and Fair pricing Non Negotiable Norms ▪ Portfolio caps based on net worth ▪ Continue to
Slide 41: Robust Internal Audit & FICM Functions
Robust Internal Audit & FICM Functions Exhaustive Scope for Internal Audit… Internal Audit Frequency of Audit is determined on Audit rating of the branch during the last Audit. Internal Audit Scope Process Followed • Platinum and Gold graded Branches are audited once in a ▪ Internal audit manager pr
Slide 42: Technology Leveraged for Superior Efficiency and Control
Technology Leveraged for Superior Efficiency and Control finS : In-house Developed CRM/ERP Application Efficiency ✓ Enables real-time paper-less processing of all loans, providing our borrowers with industry-leading TATs ✓ System / process design also leads to more efficiency Smart and User Highly C
Slide 43: Business Update, Key Operating Metrics, Key Financial Metrics
1 Business Update 2 Key Operating Metrics 3 Key Financial Metrics Overview of Criss Financial (Subsidiary) & 4 Borrowing Profile 5 Abhiram (Associate Co.) Strong Management Team & Risk 6 7 Annexure Management Processes All the data are on Consolidated basis Criss Financials Holdings Limited became s
Slide 44: Products
Products Product Name Purpose Interest Rate (%) Tenor Ticket Size (Rs.) Core Product: 98% of AUM • These unique loan products are designed especially for low- income households who aspire to improve their financial well- 95.4% Abhilasha / being 20.98% 12 to 30 Months 25,000 to 80,000 Chetana • The p
Slide 45: Shareholding Pattern
Shareholding Pattern As on Dec-20 Non-Promoter Investor Details % Holding 8.43% 8.16% Valiant Mauritius Partners* 7.31% 6.31% ICICI Prudential Life Insurance 4.75% 4.14% JM Financial India Trust 2.51% 10.60% Padmaja 62.36% Reddy Bajaj Allianz Life Insurance 1.56% + Edelweiss Alternative Investment 1
Slide 46: Experienced Board of Directors
Experienced Board of Directors Deepak Calian Vaidya | Chairman & Independent Director Ramachandra Kasargod Kamath | Nominee Director A fellow of ICA in England and Wales since 1979. Served as a BoD of He is a former Chairman & MD of PNB for 5 years. He was an ED at Bank of India for 01 Capricon Secu
Slide 47: Niche Business Model
Niche Business Model Business Model Processes HR policies ▪ Standardized systems and a front-end ▪ Group size of 6 to 10 women interface that gives real time ▪ Strict employee transfer policy with information on demand and collections adherence to operational risk control ▪ Loans given under Joint L
Slide 48: Efficient Business Process
Efficient Business Process Spandana Village Selection Branch Manager Survey a Village Group Formation (6-10 Clients) and Training Formation and training of groups Center Formation Credit Assistant Loan Repayment Financial Service at doorstep Services at the Door Borrowers Steps ▪ Loans are offered f
Slide 49: 'Spandana' – A People Focused Organization: CSR Initiatives
‘Spandana’ – A People Focused Organization: CSR Initiatives ‘Spandana’ is undertaking various CSR initiatives to promote better livelihood and quality of life for economically weaker section of people living in its areas of business presence. A brief overview of the major CSR activities has been giv
Slide 50: Awards & Accolades
Awards & Accolades NewsX - Excellence in Entrepreneurship NewsX placed Mrs Padmaja Reddy in India’s A-List for Excellence in Entrepreneurship AIWMI - India’s top 100 Women in Finance AIWMI placed Mrs Padmaja Reddy in India’s top 100 Women in Finance 2020 The Economic Times The Economic Times recogni
Slide 51: Glossary
Glossary Sr. No. Particulars Formula 1 Networth Shareholders Fund + Other Equity excluding Non controlling interest 2 Capital Adequacy Tier I ratio + Tier II ratio 3 Leverage Closing On Balance sheet Borrowings / Closing Net worth 4 Marginal Cost of Borrowing (Borrowings availed during the period *
Slide 52: Thank You
Contact Information Company : Investor Relations Advisor : Spandana Sphoorty Financial Limited Strategic Growth Advisors Pvt. Ltd. CIN: L65929TG2003PLC040648 CIN: U74140MH2010PTC204285 Mr. Aditya Kumar Mr. Mandar Kapse/Krunali Shah VP – Investor Relations E: Kapse.mandar@sgapl.net / krunali.shah@sga
Spandana Sphoorty Financial — Q3 FY2021 Earnings Presentation on 6ix