Fusion Finance Ltd · NSE:FUSION
Fusion Finance — Fusion Micro Finance — Q2 FY23 Earnings Presentation
40 slides from Fusion Finance's earnings presentation, Nov 28, 2022
Slide 1: Submission of Earnings Presentation to stock exchanges
Date: 28.11.2022 Letter No. FMFL/SEC/2022-23/SE-73 The Manager The Manager Listing Department Listing Department National Stock Exchange of India Limited BSE Limited Exchange Plaza, Plot No. C/1, G Block Phiroze Jeejeebhoy Towers Bandra Kurla Complex, Bandra (E), Mumbai - 400 051 Dalal Street, Mumba
Slide 2: Investor Presentation Q2'FY23
Creating Opportunities… Creating Investor Presentation Opportunities… Q2’FY23 Fusion Micro Finance Limited
Slide 3: Disclaimer
Disclaimer Creating Opportunities… By attending the meeting where this Presentation (“Presentation”) is made, or by reading the Presentation materials, you agree to be bound by the limitations contained herein and to maintain absolute confidentiality regarding the information disclosed in this Prese
Slide 4: Presentation Path
Presentation Path Creating Opportunities… Vision, Mission Business Executive Summary Overview & Values Our Presence Key Strengths Performance 1 2 33 44 5 6 November 28, 2022 | © Fusion Micro Finance Limited | Proprietary & Confidential 3
Slide 5: Executive Summary
Creating Opportunities… Executive Summary 1 November 28, 2022 | © Fusion Micro Finance Limited | Proprietary & Confidential 4
Slide 6: Executive Summary
Executive Summary Creating Opportunities… Strong H1 for the Company with consistent portfolio growth, highest PAT and largely normalized Asset quality. Continue to maintain balance between existing and new clients with ~0.5 Mn new client addition in H1. Further strengthened our liability profile, st
Slide 7: Performance Highlights – H1 FY'23
Performance Highlights – H1 FY’23 Creating Opportunities… ECL Cost to Income Net worth* CRAR NNPA ₹ 2,851 Mn 39.98% 20.97% Including Management ₹ 15,137 Mn 1.12% overlay of INR 174.74 Mn Total Income NII OPEX Cost of Borrowing PPOP ₹ 8,128 Mn ₹ 4,257 Mn 5.52% 10.12% ₹ 3,075 Mn YoY growth 108% * It d
Slide 8: Collection Efficiency for Portfolio disbursed b/w Apr'21 & Sep'22
Collection Efficiency for Portfolio disbursed b/w Apr’21 & Sep’22 Creating Opportunities… Collection efficiency excluding Pre-payment collection Pre-Mar-21 Portfolio Size as of H1 FY’23 ₹ 5,085 mn 6.5% of MFI-AUM Post Mar-21 Portfolio Size as of H1 FY’23 ₹ 73,476 mn 93.5% of MFI-AUM 98.7% 99.4% 99.1
Slide 9: Impact of Credit Cost
Impact of Credit Cost Creating Opportunities… ₹ in Million Understanding the Credit Cost Impact Q2 FY23 Q1 FY 23 H1 FY 23 FY 22 - Opening ECL- [A] 2,442.74 3,603.50 3,603.50 2,853.02 - Provisions as per ECL [B] 610.88 200.24 811.12 3,684.87 - Reversals (on account of write-off) [C] 202.79 1,361.00 1
Slide 10: Overview
Creating Opportunities… Overview 2 November 28, 2022 | © Fusion Micro Finance Limited | Proprietary & Confidential 9
Slide 11: 12+ years of robust performance
12+ years of robust performance Creating Opportunities… Diversified Client Growth AUM Growth Organically diversified 31% for last 5 years 51% for last 5 years since beginning Technology Cost of Funds Ranking On Cloud since 2013 Reduced by 335 bps in 2nd largest NBFC – MFI last 5 years Marquee Invest
Slide 12: Vision, Mission & Values
Creating Opportunities… Vision, Mission & Values November 28, 2022 | © Fusion Micro Finance Limited | Proprietary & Confidential 11
Slide 13: Vision, Mission and Values
Vision, Mission and Values Creating Opportunities… Vision: “Fusion Micro Finance with a social vision and business orientation aims to provide underprivileged women with economic opportunities to transform the quality of Mission: their lives.” “A self sustainable financial institution which leverage
Slide 14: Our Presence
Creating Opportunities… Our Presence 44 November 28, 2022 | © Fusion Micro Finance Limited | Proprietary & Confidential 13
Slide 15: Our Presence
Our Presence Creating Opportunities… ~3.2 19 J & K (2) Himachal Pradesh (8) Punjab (45) Uttarakhand (20) Mn Active Clients States Haryana (42) (including 2 UTs) Delhi (10) Assam (20) Uttar Pradesh (205) Rajasthan (95) 1031 Bihar(142) Jharkhand (47) Madhya Pradesh (106) Gujarat (37) West Bengal (16)
Slide 16: Key Strengths
Creating Opportunities… Key Strengths 5 November 28, 2022 | © Fusion Micro Finance Limited | Proprietary & Confidential 15
Slide 17: Key Strengths
Key Strengths Creating Opportunities… Diversification Liability Management Consistency Digital Orientation People Operational Prudence Strong Governance November 28, 2022 | © Fusion Micro Finance Limited | Proprietary & Confidential 16
Slide 18: Key Strengths: Diversification
Key Strengths : Diversification Creating Opportunities… YoY Network Distribution Top 5 states concentration Rural vs Urban Presence 74.0% 75.0% 86% 90% 91% 92% 93% 93% 93% 72.3% 1200 18 18 18 18 19 20 1000 14 1031 12 934 15 68.0% 800 66.8% 65.9% 65.3% 725 600 10 595 400 504 10 % 14% 5 375 9% 7% 7% 8
Slide 19: Key Strengths: Consistency
Key Strengths : Consistency Creating Opportunities… YoY ₹ in Million AUM Disbursement CAGR 51% CAGR 47% 80,472 61,798 67,860 40,350 46,378 35,740 37,103 36,065 28,204 26,414 17,276 15,556 8,780 8,272 17 18 19 20 21 22 H123 '17 '18 '19 '20 '21 '22 H1'23 QoQ AUM Disbursement Growth 27% Growth 55% 20,1
Slide 20: Key Strengths: Consistency (Contd…)
Key Strengths : Consistency (Contd…) Creating Opportunities… YoY AUM/ RO (₹ in Mn) AUM/Branch (₹ in Mn) Borrower/ Branch 13.2 3167 3223 11.9 739 794 3079 9.8 10.6 11.2 2987 3020 8.5 610 649 524 6.1 415 2779 2728 313 '17 '18 '19 '20 '21 '22 H1'23 '17 '18 '19 '20 '21 '22 H1'23 '17 '18 '19 '20 '21 '22
Slide 21: Key Strengths: Operational Prudence
Key Strengths : Operational Prudence Creating Opportunities… YoY Avg. Ticket Size (₹ in K) Borrowers (₹ in Lacs) Avg. OS / Borrower (₹ in K) CAGR 30.65% 35.7 36.3 31.9 24.5 24.6 29.8 32.1 27.2 21.7 26.5 21.2 19.4 21.3 23.6 18.7 16.0 17.5 15.5 12.1 10.2 7.3 17 18 19 20 21 22 H123 17 18 19 20 21 22 H1
Slide 22: Key Strengths: People
Key Strengths : People Creating Opportunities… Stable and Experienced core management team with avg. tenure of ~7 years in Fusion Strong second line with diversified experience and progressive orientation Focus on home grown talent K+ Work force Across 1000+ locations Awarded ‘Great Place to Work’ i
Slide 23: Key Strengths: Liability Management
Key Strengths : Liability Management Creating Opportunities… Marginal Cost of Borrowings & Avg Cost of Borrowing % Marginal Cost of Borrowings & Avg Cost of Borrowing % 11.0% 14.1% 10.7% 13.5% 12.7% 12.3% 10.5% 11.2% 10.3% 10.2% 10.4% 10.1% 10.3% 10.1% 10.1% 9.9% 9.8% YoY QoQ 9.7% FY'17 FY'18 FY'19
Slide 24: Key Strengths: Liability Management (Contd…)
Key Strengths : Liability Management (Contd…) Creating Opportunities… Positive ALM (in Months) 25.8 Tenure Ratings 23.0 23.7 22.2 22.4 A 20.4 18.8 18.2 16.5 17.5 FY 2023 (CRISIL) FY 2022 A- FY 2017 BBB+ FY'19 FY'20 FY'21 FY'22 H1FY'23 Average Maturity of Assets Average Maturity of Liabilities Loan M
Slide 25: Key Strengths: Digital Orientation
Key Strengths : Digital Orientation Creating Opportunities… Technology – Infrastructure Customer Experience Early Cloud adopters Digital onboarding improved from Scalable 30% in 2018 to 100% in 2022. Open API Cashless disbursement improved Architecture from 20% in 2018 to 97% in 2022. Efficiency Bus
Slide 26: Key Strengths: Digital Orientation (Building Future)
Key Strengths : Digital Orientation (Building Future) Creating Opportunities… Real-time insights with Data Lake and Analytics Driving operational efficiency with automated Credit Decisioning Continuous investment in core technology Best defence in depth to build competencies for cyber resilience Nov
Slide 27: Key Strengths: Strong Governance
Key Strengths : Strong Governance Creating Opportunities… Risk Management: Dedicated & Independent risk management function with strong focus on Credit, Operational, Market and other risk factors Strong governance mechanism consisting of Board Risk Mgmt. Committee (BRMC) & Mgmt. Risk committee (MRC)
Slide 28: ESG - seeking to be a responsible Financial Institution
ESG - seeking to be a responsible Financial Institution Creating Opportunities… Responsible approach towards environment , community and employees as well as towards internal governance standards Continuous Engagement with Community and Employees Governance Standards Established approximately 1,320
Slide 29: Corporate Social Responsibility
Corporate Social Responsibility Creating Opportunities… COVID19 Welfare Program Flood relief work Menstrual Hygiene Eye-care Program Beneficiaries: 5,07,263 Beneficiaries: 58,543 Beneficiaries: 6,653 Beneficiaries: 7,245 Programs: 1,953 Programs: 109 Programs: 8 Programs: 7 Wheelchair Distribution F
Slide 30: Business Performance
Creating Opportunities… Business Performance 6 November 28, 2022 | © Fusion Micro Finance Limited | Proprietary & Confidential 29
Slide 31: Profit and Loss Statement
Profit and Loss Statement Creating Opportunities… ₹ in Million Profit & Loss Statement Q2 FY 23 Q2 FY 22 YoY % Q1 FY 23 QoQ % H1 FY 23 H1 FY 22 YoY % FY22 Revenue from operations - Interest income 3,997.6 2,302.3 73.6% 3,293.6 21.4% 7,291.2 4,802.0 51.8% 10,643.2 - Other than interest income 399.3 2
Slide 32: Balance Sheet
Balance Sheet Creating Opportunities… ₹ in Million Financial Position Q2 FY 23 Q2 FY 22 YoY % Q1 FY 23 QoQ% H1 FY 23 H1 FY 22 FY22 Financial and Non financial assets - Cash & Other Bank Balances 9,167.0 6,901.8 32.8% 6738.1 36.0% 9,167.0 6,901.8 10,113.7 - Bank balances other than cash and cash equi
Slide 33: Key Ratios
Key Ratios Creating Opportunities… YoY Margin Analysis % Cost to Income Opex 24.1% 73.4% 9.2% 65.6% 63.4% 8.1% 21.7% 22.4% 21.2% 20.5% 7.3% 18.8% 19.9% 50.9% 44.3% 6.4% 14.1% 13.5% 12.7% 44.3% 39.9% 5.3% 5.5% 5.5% 12.3% 11.2% 10.4% 10.1% 10.0% 8.2% 9.7% 8.8% 9.2% 8.4% 9.8% FY'17 FY'18 FY'19 FY'20 FY
Slide 34: Key Ratios
Key Ratios Creating Opportunities… GNPA NNPA 5.5% 5.7% 2.2% 4.0% 3.8% 1.6% 1.1% 1.5% 0.6% 1.1% 0.4% 0.4% 0.1% 0.2% FY'17 FY'18 FY'19 FY'20 FY'21 FY'22 H1FY'23 FY'17 FY'18 FY'19 FY'20 FY'21 FY'22 H1FY'23 ROA (On Avg. AUM) ROA (On Avg. Assets) ROE 4.4% 4.6% 23.9% 2.4% 2.2% 1.8% 1.8% 11.5% 1.1% 7.6% 0.
Slide 35: MSME Business
MSME Business Creating Opportunities… MSME vertical launched in Dec 2019 to tap the potential of the ‘missing middle’ Building credit assessment capability …nucleus of our MSME strategy Clear focus on mapping adjacencies and potential thereof Business Update ( As of H1’FY23) : Total Clients : 7284 G
Slide 36: Highly Experienced Board with Strong Governance
Highly Experienced Board with Strong Governance Creating Opportunities… Experienced Board of Directors Chairperson of the governing board of Managing Director at Warburg Pincus India Microfinance Institutions Network Limited Served on the board of Creditaccess Grameen and Muthoot Microfinance,
Slide 37: Stable & Experienced Management Team
Stable & Experienced Management Team Creating Opportunities… Founded Fusion in 2009-10 Chairperson of the governing board of Microfinance Institutions Network Over 26 years of experience in service industry sector Devesh Sachdev Holds a Post-Graduate Certificate from XLRI, Promoter, MD & CEO
Slide 38: Abbreviations
Abbreviations Creating Opportunities… AUM Asset Under Management PAT Profit After Tax NIM Net Interest Margin ROE Return of Equity ROA Return on Assets ECL Expected Credit Loss CRAR Capital Risk Adequacy Ratio GNPA Gross Non-Performing Assets NNPA Net Non-Performing Assets NII Net Interest Income PP
Slide 39: Definitions
Definitions Creating Opportunities… • AUM represents the aggregate of principal outstanding for all loans to customers and assets pertaining to securitization, assignment and business correspondent portfolio, as of the last day of the relevant period/year • Net Interest Margin represents net interes
Slide 40: Thank You
Creating Opportunities… Creating Thank You Opportunities… For Investor queries contact: Mr. Deepak Madaan| Email: investor.relations@fusionmicrofinance.com | +91-9289224563 November 28, 2022 | © Fusion Micro Finance Limited | Proprietary & Confidential 39