Fusion Finance Ltd · NSE:FUSION
Fusion Finance — Fusion Micro Finance — Q4 FY24 Earnings Presentation
46 slides from Fusion Finance's earnings presentation, May 6, 2024
Slide 1: Submission of Earnings Presentation cover letter
Letter No. FMFL/SEC/2024-25/SE-14 Date: 06.05.2024 The Manager The Manager Listing Department Listing Department National Stock Exchange of India Limited BSE Limited Exchange Plaza, Plot No. C/1, G Block Bandra Phiroze Jeejeebhoy Towers Kurla Complex, Bandra (E), Mumbai - 400 051 Dalal Street, Mumba
Slide 2: Investor Presentation Q4 & FY24
Creating Opportunities… Creating Investor Presentation Opportunities… Q4 & FY24 Fusion Micro Finance Limited
Slide 3: Disclaimer
Disclaimer Creating Opportunities… By attending the meeting where this 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 Presentation. Any fail
Slide 4: Presentation Path
Presentation Path Creating Opportunities… Vision, Mission Financial Executive Summary Overview & Values Our Presence Key Strengths Performance 1 2 33 44 5 6 May 6, 2024 | © Fusion Micro Finance Limited 3
Slide 5: Executive Summary
Creating Opportunities… Executive Summary 1 May 6, 2024 | © Fusion Micro Finance Limited 4
Slide 6: Executive Summary FY24
Executive Summary FY24 Creating Opportunities… Consistent AUM growth, YoY increase of 23.45% Highest ever PAT at ₹505.29 Cr Expansion in NIM by 107 bps Sustained focus on new clients, added ~5.15 lakh ~14.0% YoY Reduction in Cost to Income by 184 bps Consistent ROA & ROE AUM PAT NIM Cost to Income R
Slide 7: Executive Summary Q4 FY24
Executive Summary Q4 FY24 Creating Opportunities… Disbursement growth of 8.85% QoQ, 24.45% YoY Expansion in NIM Reduction in Marginal Cost of Funds PPOP stands at ₹290.68 Cr Profit after Tax of ₹132.69 Cr Network Expansion – 55 branches added Disbursement NIM Marginal Cost of Funds CRAR Network 22 S
Slide 8: Performance Highlights
Performance Highlights Creating Opportunities… Key Metrics Q4 QoQ FY’24 YoY Total Income (₹ Cr) 675.14 10.09% 2,412.42 34.03% NII (₹ Cr) 359.98 6.75% 1,295.80 36.80% NIM 11.59% 5 bps 11.22% 107 bps Cost to Income 36.84% 4 bps 36.60% 184 bps PPOP (₹ Cr) 290.68 11.69% 1,028.12 44.33% Net worth (₹ Cr)
Slide 9: Collection Efficiency
Collection Efficiency Creating Opportunities… 98.4% 98.3% (Ex – Punjab) (Ex – Punjab) 97.9% 97.6% 97.3% 97.3% 96.9% 96.8% 96.5% 95.4% Q1 FY 23 Q2 FY 23 Q3 FY 23 Q4 FY 23 Q1 FY 24 Q2 FY 24 Q3 FY24 Q4'24 Including Arrears May 6, 2024 | © Fusion Micro Finance Limited 8
Slide 10: Punjab Impact
Punjab Impact Creating Opportunities… Corrective Measures Month Punjab AUM (₹ Cr) % Contribution to Total AUM Collection Efficiency Collection efficiency stabilized Mar'23 479 5.2% 93.7% No new business being sourced across all branches since Dec’23 Dec’23 382 3.6% 84.4% Troubled areas continue to b
Slide 11: Overview
Creating Opportunities… Overview 2 May 6, 2024 | © Fusion Micro Finance Limited 10
Slide 12: Credit Cost
Credit Cost Creating Opportunities… (₹ Cr) Particulars , Q3 FY 24 Q4 FY 24 FY 24 Opening ECL [A] 300.24 311.85 312.66 - Provisions as per ECL [B] 92.92 117.80 361.08 Reversals (on account of write-off) [C] 81.31 75.11 319.20 Closing ECL [D = A+B-C] 311.85 354.54 354.54 Impairment [F] 92.92 117.80 36
Slide 13: 14+ years of proven track record
14+ years of proven track record Creating Opportunities… Diversified Client Growth AUM Growth Organically diversified ~20% over last 5 Years ~34% over last 5 years since inception Technology Robust Liability Marquee Investor On Cloud since 2013 Warburg Pincus - 2018 Management Ratings IPO New Produc
Slide 14: Vision, Mission & Values
Creating Opportunities… Vision, Mission & Values May 6, 2024 | © Fusion Micro Finance Limited 13
Slide 15: 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 16: Our Presence
Creating Opportunities… Our Presence 44 May 6, 2024 | © Fusion Micro Finance Limited 15
Slide 17: Our Presence
Our Presence Creating Opportunities… J & K (2) Himachal Pradesh (9) Punjab (55) Uttarakhand (21) Haryana (47) Assam Assam (28)(20) Delhi (9) Uttar Pradesh (236) Rajasthan (104) FY 10-15 FY 16 FY24 Bihar(162) States 5 9 22 Madhya Pradesh (132) Jharkhand (55) Districts 38 88 453 Branches 75 173 1297 G
Slide 18: Key Strengths
Creating Opportunities… Key Strengths 5 May 6, 2024 | © Fusion Micro Finance Limited 17
Slide 19: Key Strengths
Key Strengths Creating Opportunities… Diversification Liability Management Consistency Digital Orientation People Operational Prudence Strong Governance May 6, 2024 | © Fusion Micro Finance Limited 18
Slide 20: Key Strengths: Diversification
Key Strengths : Diversification Creating Opportunities… QoQ Network Distribution Top 5 states concentration Rural vs Urban Presence 94% 70.4% 70.4% 93% 94% 93% 93% 22 22 22 69.8% 70.1% 1350 20 20 1297 22 69.0% 1250 1164 1242 20 1150 1086 1103 18 16 1050 14 950 12 850 10 750 8 650 6 7% 6% 7% 7% 6% 55
Slide 21: Key Strengths: Consistency
Key Strengths : Consistency Creating Opportunities… (₹ Cr) QoQ AUM Disbursement Growth 23.45% Growth 24.44% 11,476 2,953 10,693 2,713 9,712 10,026 2,373 9,296 2,285 2344 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 AUM YoY Disbursement CAGR 33.56% CAGR 30.27% 11,476 10,294 9,296 8,596
Slide 22: Key Strengths: Consistency (Contd…)
Key Strengths : Consistency (Contd…) Creating Opportunities… For MFI Vertical QoQ AUM/ RO (₹ Cr) AUM/Branch (₹ Cr) Borrower/ Branch 1.4 1.4 1.4 9.1 3,452 3,513 1.3 1.3 3,381 9.1 3,260 3,204 8.9 8.8 8.8 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 YoY AUM/
Slide 23: Key Strengths: Operational Prudence
Key Strengths : Operational Prudence Creating Opportunities… For MFI Vertical QoQ Avg. Ticket Size (₹ K) Active Borrowers (Lakh) Avg. OS / Borrower (₹ K) Growth 9.46% 44.7 38.6 28.5 43.8 37.8 36.9 27.2 42.4 42.2 36.4 26.2 41.2 35.3 25.8 25.6 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q4'23 Q1'24 Q2'24 Q3'24 Q4'2
Slide 24: Branch Vintage
Branch Vintage Creating Opportunities… For MFI Vertical Branch Vintage Mar’22 Mar’23 Mar’24 (Years) Branches POS Contribution Branches POS Contribution Branches POS Contribution <1 Yrs 190 7% 121 4% 181 4% 1 - 2 Yrs 119 10% 190 14% 121 7% 2 - 3 Yrs 87 9% 118 11% 190 15% > 3 Yrs 504 74% 590 71% 708 7
Slide 25: Key Strengths: People
Key Strengths : People Creating Opportunities… Stable and experienced core management team with an average tenure of almost 8 years Strong second line with diverse experience with a healthy balance of home-grown and new talent Team Size Performance driven culture with differentiated rewards for high
Slide 26: Key Strengths: Liability Management
Key Strengths : Liability Management Creating Opportunities… Average Cost of Borrowing Marginal & Average Cost of Borrowing 12.33% 10.74% 10.68% 11.23% 10.55% 10.57% 10.55% 10.43% 10.30% 10.42% 10.41% 10.45% 10.37% 10.24% YoY QoQ 10.18% '20 '21 '22 '23 '24 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Marginal Cost
Slide 27: Key Strengths: Liability Management (Contd…)
Key Strengths : Liability Management (Contd…) Creating Opportunities… Positive ALM (Months) Period Rating 23.7 24.2 17.5 23.0 18.8 20.4 22.2 17.6 17.5 23.1 Oct 2023 A+ Nov 2022 A FY 2019 A- FY 2017 BBB+ '20 '21 '22 '23 '24 Avg Maturity of Assets Avg Maturity of Liabilties Loan Maturity Rating Rating
Slide 28: Key Strengths: Digital Orientation
Key Strengths : Digital Orientation Creating Opportunities… Technology – Infrastructure Customer Experience Early Cloud adoption Digital onboarding since 2019 Scalable Cashless disbursement improved from Open API 20% in 2018 to 99.90% in Q4 FY24 Architecture Business Outcome Operational Efficiency “
Slide 29: Key Strengths: Digital Orientation (Building for future)
Key Strengths : Digital Orientation (Building for future) Creating Opportunities… Robotic Process Automation facilitating ▪ Automated credit decisioning Develop Technology Solutions Leverage Robotics ▪ Driving operational efficiency To proactively access opportunities To automate manual & repetitive
Slide 30: Key Strengths: Strong Governance
Key Strengths : Strong Governance Creating Opportunities… Independent Risk Independent Audit Function reporting Management Function to Board Audit Committee Extensive use of Au Strong reporting mechanism & Data Analytics nt d Comprehensive risk-based audits e it M nagem anage Automation driving opti
Slide 31: 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 Under 24 CSR programs, 424 activ
Slide 32: Corporate Social Responsibility
Corporate Social Responsibility Creating Opportunities… Creating a positive impact on the growth of disadvantaged communities through integrated and sustainable development initiatives May 6, 2024 | © Fusion Micro Finance Limited 31
Slide 33: Glimpses of CSR Programs
Glimpses of CSR Programs Creating Opportunities… Project: FSK Project : Beej Project : Jivika Project : Urja Health Camp Project : Haryali (Plantation) Distribution of Project : Shiksha Project : Nanhi Pahel Project : Jal Road Safety Awareness Project : Ojas Educational accessories May 6, 2024 | © F
Slide 34: Financial Performance
Creating Opportunities… Financial Performance 6 May 6, 2024 | © Fusion Micro Finance Limited 33
Slide 35: Profit and Loss Statement
Profit and Loss Statement Creating Opportunities… Profit & Loss Statement (₹ Cr) Q4 FY 24 Q4 FY 23 YoY % Q3 FY 24 QoQ% FY 24 FY 23 YoY % Revenue from operations - Interest income 576.06 450.74 27.80% 540.04 6.67% 2,091.90 1,600.10 30.74% - Other revenue from operations 69.93 50.15 39.44% 52.99 31.97
Slide 36: Balance Sheet
Balance Sheet Creating Opportunities… Financial Position (₹ Cr) Q4 FY 24 Q4 FY 23 YoY % Q3 FY 24 QoQ% Financial and Non-financial assets - Cash & Other Bank Balances 1,474.69 950.36 55.17% 1,357.66 8.62% - Bank balances other than cash and cash equivalents 78.50 114.67 (31.54)% 60.59 29.56% - Loans
Slide 37: Key Ratios
Key Ratios Creating Opportunities… QoQ Margin Analysis Cost to Income Opex 21.9% 21.8% 6.1% 21.0% 21.5% 21.7% 36.8% 36.8% 5.9% 36.2% 36.3% 36.4% 5.6% 5.6% 5.6% 10.4% 10.6% 10.6% 10.4% 10.2% 10.6% 10.9% 11.1% 11.5% 11.6% Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q4'23 Q1'24 Q2'24 Q3
Slide 38: Key Ratios
Key Ratios Creating Opportunities… ROA (On Avg. AUM) ROA (On Avg. Assets) ROE 4.8% 4.9% 21.2% 4.6% 4.8% 19.5% 2.2% 1.8% 7.6% 1.1% 0.9% 3.6% 0.4% 0.3% 1.7% '20 '21 '22 '23 '24 '20 '21 '22 '23 '24 '20 '21 '22 '23 '24 GNPA NNPA 5.7% 2.2% 5.5% 1.6% 3.5% 2.9% 0.9% 0.6% 1.1% 0.4% '20 '21 '22 '23 '24 '20 '
Slide 39: MSME
MSME Creating Opportunities… MSME vertical launched in Dec 2019 as a dedicated business unit to address the ‘missing middle’ Building credit assessment capability …nucleus of our MSME strategy Business Updates FY24 Clients 17,336 Clear focus on mapping adjacencies and potential thereof AUM (₹ Cr) 53
Slide 40: Highly Experienced Board with Strong Governance
Highly Experienced Board with Strong Governance Creating Opportunities… ◼ Over 26+ years of experience in Service/ ◼ Managing Director, Head of India at Warburg Financial Services industry Pincus ◼ Served on the board of Creditaccess Grameen and Muthoot Microfinance, among ◼ Holds a Post-Graduate Ce
Slide 41: Stable & Experienced Management Team
Stable & Experienced Management Team Creating Opportunities… Tarun Mehndiratta Kamal Kumar Kaushik Sanjay Mahajan Gaurav Maheshwari Deepak Madaan COO – MFI COO- MSME CIO CFO CCO 2017 2019 2023 2016 2013 Ankush Ahluwalia Sanjay V Choudhary Satish Mani Pooja Mehta Vikas Jajoo CBO CRO CVO CHRO CAO 2015
Slide 42: Shareholder Profile
Shareholder Profile Creating Opportunities… Category Top Share Holders (As on date) Foreign Investment Co. THE NOMURA TRUST AND BANKING CO., LTD Foreign Investment Co. LAZARD EMERGING MARKETS SMALL CAP EQUITY TRUST 68.18% Alternate Investment Fund NUVAMA PRIVATE INVESTMENTS TRUST 57.71% Mutual Fund
Slide 43: Recent Awards & Accolades
Recent Awards & Accolades Creating Opportunities… “Best Data Analytics Initiative of the Year” (Micro Finance Company) “CRIF Data Excellence Award, 2023” “Most Influential Microfinance of the Year” May 6, 2024 | © Fusion Micro Finance Limited 42
Slide 44: Abbreviations
Abbreviations Creating Opportunities… AUM Asset Under Management FY Financial Year PAT Profit After Tax H Half Yearly NIM Net Interest Margin Bps Basis points ROE Return on Equity Q Quarter ROA Return on Assets ALM Asset Liability Management ECL Expected Credit Loss TAT Turn Around Time CRAR Capital
Slide 45: Definitions
Definitions Creating Opportunities… • AUM represents the aggregate of principal outstanding for all loans including the assigned portfolio as of the last day of the relevant period/year • Net Interest Income represents interest income on loan portfolio for the relevant period/year reduced by finance
Slide 46: Thank You
Creating Opportunities… Creating Thank You Opportunities… For Investor queries contact: Mr. Deepak Madaan| Email: investor.relations@fusionmicrofinance.com | +91-9289224563 May 6, 2024 | © Fusion Micro Finance Limited 45