Edelweiss Financial Services Limited · NSE:EDELWEISS
Edelweiss Financial Services — Q1 FY2019 Earnings Presentation
127 slides from Edelweiss Financial Services's earnings presentation, Aug 9, 2018
Slide 1: Cover letter to BSE on Investor Presentation
EW/Sec/2018/271 August 9, 2018 BSE Limited P J Towers, Dalal Street, Fort, Mumbai – 400 001. Dear Sirs, Ref.:- Scrip Code: 532922 Sub: Investor Presentation This is to inform you that in continuation of our letters of yesterday on the subject matter, please find enclosed the following Investor Prese
Slide 2: Q1FY19 Earnings Update (US $ version)
US $ version Edelweiss Financial Services Limited Q1FY19 Earnings Update
Slide 3: Contents
Contents 1 Quarterly Performance Highlights 2 Business Approach 3 Business Update 4 Impact of Transition to IndAS 5 ESG at Edelweiss 2
Slide 4: Quarterly Performance Highlights – Consolidated
Quarterly Performance Highlights – Consolidated Numbers and ratios in this section for all periods are as per IndAS and Post Minority Interest
Slide 5: Q1FY19 Consolidated PAT $ Mn
Q1FY19 Consolidated PAT $ 38 Mn Profit after Tax Ex-Insurance PAT Consolidated PAT 45 45 ($ Mn) 40 34 31 32 38 36 27 34 24 30 22 23 29 19 25 18 15 16 21 23 13 13 14 20 10 10 9 10 11 18 7 7 7 8 13 14 15 5 4 5 11 12 12 13 7 8 8 9 6 6 6 7 7 5 4 4 Q1FY12 Q2FY12 Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13
Slide 6: Overview of Q1FY19
Overview of Q1FY19 • Strong quarter for the credit businesses • Capacity expansion and scale up under way in Retail Credit Credit • Good opportunities for risk aware growth in Corporate Credit • Distressed Credit: Good momentum in recoveries • Capacity expansion under way in Wealth Management Franch
Slide 7: Q1FY19 Performance Highlights
Q1FY19 Performance Highlights Consistent growth in profits… 1 • Consolidated PAT growth of 31% YoY • Ex-Insurance PAT growth of 37% YoY …Distributed across businesses 2 • Credit business grew 94% YoY • Franchise & Advisory business grew 25% YoY Key performance parameters • Consolidated RoE 15.2% Ex-
Slide 8: Consolidated Q1FY19 PAT Growth of 31%...
1 Consolidated Q1FY19 PAT Growth of 31%... Y-o-Y ($ Mn) Q1FY18 Q1FY19 Growth PAT 30 38 31% Consolidated PAT 45 33 37% Ex-Insurance Balance 9,010 6,406 41% Sheet 7
Slide 9: …Across Businesses
2 …Across Businesses PAT PAT EOP Equity ($ Mn) Y-o-Y Growth Q1FY18 Q1FY19 Q1FY19 Total Consolidated 30 38 31% 1,065 Credit 18 35 94% 839 Franchise & Advisory 9 12 25% 31 Insurance (3) (7) 98 BMU, Corp & Others 5 (2) 97 8
Slide 10: Key Performance Parameters
3 Key Performance Parameters Key Ratios Consolidated Q1FY18 Q1FY19 FY18 RoE 17.0% 15.2% 16.2% RoA 2.2% 1.9% 2.0% Cost to Income Ratio 56% 61% 59% Ex-Insurance Q1FY18 Q1FY19 FY18 RoE 20.7% 19.8% 20.7% RoA 2.7% 2.5% 2.6% Cost to Income Ratio 47% 49% 46% RoA is Pre Minority Interest 9
Slide 11: Quarterly Performance Highlights – Business
Quarterly Performance Highlights – Business Numbers and ratios in this section for all periods are as per IndAS and Pre Minority Interest
Slide 12: Financial Snapshot – Q1FY19
Financial Snapshot – Q1FY19 ($ Mn) EOP Equity Profit after Tax RoE RoA Pre Minority Credit 896 40 19.2% 2.6% Franchise & Advisory 31 12 Life & General Insurance 173 (12) BMU, Corp & Others 99 (2) Minority Interest (MI) (134) 0.1 Total Consolidated Post MI 1,065 38 15.2% 1.9% Total Ex-Insurance Post
Slide 13: Credit Business at a Glance
Credit Business at a Glance Credit Business ($ Mn) Q1FY18 Q1FY19 Capital Employed 4,388 6,592 Average Interest Yield 16.7% 16.0% Average Cost of Borrowing 10.1% 9.6% Net Interest Margin 7.8% 7.8% Net Revenue 85 120 Cost to Income 35% 36% Provisions & Write Offs 17 16 PAT 24 40 RoE 19.1% 19.2% RoA 2.
Slide 14: Asset Quality at a Glance
Asset Quality at a Glance At the end of June 30, 2018 ($ Mn) Q1FY18 Q1FY19 Credit Book 3,610 5,638 Of which Stage 3 62 99 ECL Provision 82 111 Of which Stage 3 40 57 Specific Provision Cover 64% 58% Total Provision Cover 132% 113% Average Collateral cover on Corporate book 2.2x 2.0x Average Loan-To-
Slide 15: Credit Business Performance Snapshot
Credit Business Performance Snapshot Credit Business Q1FY19 Total Y-o-Y Retail Y-o-Y Corporate Y-o-Y Distressed Y-o-Y ($ Mn) EOP Capital Employed 6,592 51% 2,693 80% 2,946 39% 954 27% EOP Equity 896 53% 265 91% 437 43% 194 36% Net Interest Income 120 46% 32 61% 66 45% 22 32% PAT 40 70% 8 40% 21 88%
Slide 16: Franchise & Advisory Business at a Glance
Franchise & Advisory Business at a Glance Franchise & Advisory ($ Mn) Q1FY18 Q1FY19 Net Revenue 46 49 Cost to Income 68% 66% PAT 9 12 Credit Franchise & Advisory Life Insurance 15
Slide 17: Franchise & Advisory Business Performance Snapshot
Franchise & Advisory Business Performance Snapshot Franchise & Advisory Wealth Asset Capital Total Y-o-Y Y-o-Y Y-o-Y Y-o-Y Business Q1FY19 ($ Mn) Mgmt Mgmt Mkts Net Revenue 49 8% 27 37% 7 77% 16 (29%) PAT 12 27% 6 68% 2 130% 4 (25%) Cost to Income 66% 66% 59% 68% Assets under Assets under Assets und
Slide 18: Life Insurance Business at a Glance
Life Insurance Business at a Glance ($ Mn) Q1FY18 Q1FY19 Net Premium Income 9 17 Investment Income and Other Income 8 5 Total Business 17 22 Profit After Tax (6) (10) Minority (3) (5) Edelweiss’ Share in PAT (3) (5) Net Worth 107 154 Indian Embedded Value 151 233 Credit Franchise & Advisory Life Ins
Slide 19: Business Approach
Business Approach Numbers and ratios in this section for Q1 FY19 are as per IndAS and for prior periods it is as per IGAAP
Slide 20: Today we are a Bank-like Financial Services Company
Today we are a Bank-like Financial Services Company Credit Diversified across Credit, Wealth and Asset Management, • Retail Credit Capital Markets and Insurance • Corporate Credit • Distressed Credit Multiple vectors of growth aligned with macro tailwinds Franchise & Advisory • Wealth Management Cap
Slide 21: Our Asset Base is a Mix of Own and Customer Related Assets
Our Asset Base is a Mix of Own and Customer Related Assets As on 30th June’18 $ Bn YoY Growth Balance Sheet Assets 9.0 42% Customer Assets 26.0 39% Distressed Credit (ARC Assets) 5.4 2% Assets Under Advice (Wealth Management) 14.0 46% Funds under Management (Asset Management) 4.6 59% Assets under Cu
Slide 22: Customer Assets have Helped us Grow our Profitability
Customer Assets have Helped us Grow our Profitability Customer Assets ($ Mn) RoE Ex-Insurance RoA Ex-Insurance 25,986 2.5% 19.8% 1.2% 7.3% 1,094 FY12 Q1FY19 FY12 Q1FY19 FY12 Q1FY19 …without requiring us to grow the Balance Sheet proportionately Franchise & Advisory businesses have provided the RoE f
Slide 23: Our Diversified Model Delivers Consistent Growth
Our Diversified Model Delivers Consistent Growth PAT ($ Mn) Balance Sheet ($ Bn) 9.0 154* 8.0 130 5.6 4.7 89 3.9 60 154 48 2.4 1.9 2.1 32 19 26 38 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Q1FY19 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Q1FY19 28% growth in balance sheet assets supported a 35% growth in profits
Slide 24: Capacity Expansion is Under way in Retail Credit
Capacity Expansion is Under way in Retail Credit Retail Credit - Capital Employed ($ Mn) 3,000 2,693 2,500 2,361 2,000 1,500 1,305 1,000 879 611 500 408 308 224 - FY12 FY13 FY14 FY15 FY16 FY17 FY18 Q1FY19 Retail credit is now 41% of the total credit book Key vectors for our growth will be SME Loans
Slide 25: …and also in Wealth Management
…and also in Wealth Management Wealth Management AUA ($ Mn) 16,0 00 14,043 14,0 00 13,139 12,0 00 10,0 00 8,793 8,00 0 6,00 0 4,302 4,00 0 2,581 2,00 0 1,021 1,298 700 - FY12 FY13 FY14 FY15 FY16 FY17 FY18 Q1FY19 We cater to UHNI as well as the fast-growing Affluent segments 24
Slide 26: Life Insurance is Scaling to Plan
Life Insurance is Scaling to Plan Number of Policies in force 1,76,210 1,67,791 1,17,323 81,424 54,738 40,214 23,418 6,315 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Q1FY19 Increasing share of business from Direct channel, now at 24% 25
Slide 27: Scale Benefits will follow Capacity Expansion…
Scale Benefits will follow Capacity Expansion… Cost to income ratio (Ex-Insurance) 70% 65% 59% 59% 60% 54% 49% 47% FY12 FY13 FY14 FY15 FY16 FY17 FY18 Q1FY19 Cost to Income ratio reflects the investments made in Retail Credit & Wealth Management 26
Slide 28: …Aided by Technology Initiatives across Businesses
…Aided by Technology Initiatives across Businesses Retail Lending Life Insurance Wealth Management • Digital lending enabled • Lead management system • Paperless and immediate by India Stack across channels, digital account opening integrated with policy Digital Acquisition issuance systems Life Ins
Slide 29: Business Update – Credit
Business Update CREDIT Retail Credit – Corporate Credit – Distressed Credit Numbers in this section for Q1 FY19 are as per IndAS, prior periods as per IGAAP
Slide 30: Credit Business is a Mix of Diversified and Scalable Assets
Credit Business is a Mix of Diversified and Scalable Assets Capital Employed % As on 30th June’18 ($ Mn) Share Retail Credit 2,693 41% Retail Mortgage 1,097 17% Blend of loans to home owners and home buyers SME & Business Loans 555 8% Underserved and highly scalable, focus area for future Loan again
Slide 31: Retail Credit Scaling Rapidly
Retail Credit Scaling Rapidly Capital Employed Business Highlights ($ Mn) SME • Originations up 75% on Y-o-Y basis • Digital journey (Phygital) begun - Enhanced efficiency and client experience • Present at 100 locations up from 88 as on March’18 Retail Mortgage • Strong momentum in originations up
Slide 32: Robust Growth in Corporate Credit
Robust Growth in Corporate Credit Capital Employed Business Highlights ($ Mn) • Risk-management centered approach to collateralized lending • In house team of experts for carrying out detailed evaluations − Counterparty, Collateral and Cash flows 2,847 2,946 • Ring fenced structures and hybrid colla
Slide 33: Agri Credit Expected to Scale Up
Agri Credit Expected to Scale Up Collateral Value ($ Mn) Agri Credit Book Size ($ Mn) Collateral Manager Stock Storage Stock 509 620 519 107 116 109 129 125 403 401 513 75 Q1FY18 Q4FY18 Q1FY19 Q1FY18 Q4FY18 Q1FY19 Business Highlights • One of the few organized players providing end to end business s
Slide 34: Distressed Credit Performance on Track…
Distressed Credit Performance on Track… Capital Employed Business Highlights ($ Mn) • Focus on large operating and EBITDA earning assets that need financial restructuring • Strong focus on resolutions aided by changes in Insolvency and Bankruptcy Code norms • Leading resolutions of large cases under
Slide 35: …With Improvement in Recoveries
…With Improvement in Recoveries Top 10 industry exposure % by Acquisition price ARC Recoveries ($ Mn) Steel 209 Power 12% 8% Cement 151 19% Real Estate 7% Paper 7% Infrastructure 7% Textiles 76 22% Chemicals 6% 5% Ship Building 4% 4% Ports Others Q1FY18 Q4FY18 Q1FY19 Credit Franchise & Advisory Life
Slide 36: Business Performance Highlights – Franchise & Advisory
Business Performance Highlights FRANCHISE & ADVISORY Wealth Management – Asset Management – Capital Markets
Slide 37: Wealth Management AUA Continues to Scale Up…
Wealth Management AUA Continues to Scale Up… Assets Under Advice Business Highlights ($ Mn) • Among top 3* in Wealth Management in India with one of the fastest growing AUA • Yield on the AUA ~70-75 bps • Focused on adding capacity in Affluent segment - Added 90+ RMs in Q1FY19 • Invested in product
Slide 38: … with Steady Growth in Net New Flows
… with Steady Growth in Net New Flows Wealth AUA Breakup Wealth AUA Movement in Q1FY19 ($ Mn) Distribution Assets Advisory Assets 429 6% 11% 27% 26% 25% 475 14,043 94% 89% 73% 74% 75% 13,139 FY15 FY16 FY17 FY18 Q1FY19 Opening Net New Market Closing AUM AUM Money Movement Chart not to scale Credit Fr
Slide 39: Asset Management has Healthy Growth in AUM
Asset Management has Healthy Growth in AUM Alternative Assets ($ Mn) Business Highlights Alternative Assets • Launched EISAF II for domestic investors 2,581 2,931 • Raised ~ $ 292 Mn from onshore clients across Alternative 1,721 Assets Funds; including ~ 102 Mn in Edelweiss Infra Yield Fund • Deploy
Slide 40: Present Across Asset Classes in Alternatives Space
Present Across Asset Classes in Alternatives Space Alternative Assets AUM as on 30th June 2018 ($ Mn) Asset Management AUM Movement in Q1FY19 ($ Mn) 62 419 27% 34% $ 2,931 Mn 4,739 4,258 13% 15% 11% Opening AUM Net New Market and Closing AUM Distressed Assets Structured Debt Money Currency Infrastru
Slide 41: Capital Markets had a Slow Quarter
Capital Markets had a Slow Quarter Key Equity Capital Market Transactions Business Highlights Equity Capital Markets • Closed four capital market transactions during the quarter IPO: $ 507 Mn IPO: $ 87 Mn QIP: $ 58 Mn BRLM BRLM Left Lead Global • Increased block deals market share during the quarter
Slide 42: Business Performance Highlights – Life Insurance
Business Performance Highlights Life Insurance
Slide 43: Life Insurance – Long Term Value Creation
Life Insurance – Long Term Value Creation Product Mix Distribution New Business Premium Q1FY19 • Agency-led multi-channel distribution approach with 14% emphasis on productivity 27% • Share of direct business has gone up to 24% from 13% in Q4FY18 26% • 121 branches and ~33,000 PFAs across 93 locatio
Slide 44: The Fastest Growing Life Insurer in Individual APE
The Fastest Growing Life Insurer in Individual Annual Premium Equivalent Collected Individual Annual Premium Equivalent Number of Policies Issued CAGR growth since Q1FY16 (Individual Business) (In '000) 45% 31 26% 16% 13 8 Edelweiss Tokio Peer Set Industry Q1 FY18 Q4 FY18 Q1 FY19 Life Insurance Busi
Slide 45: Balance Sheet
Balance Sheet oO Edelweiss Ideas create, values protect
Slide 46: Key Highlights – Balance Sheet
Key Highlights – Balance Sheet 1 Matched Asset-Liability profile 2 Comfortable capital adequacy ratio at 16.63% 3 Diversified borrowings mix 4 Liquidity cushion at 9% of Balance Sheet 5 Stable business model reflected in credit ratings 45
Slide 47: Matched Asset-Liability Profile
1 Matched Asset - Liability Profile Assets Liabilities 100% 100% % of Assets and Liabilities 68% 50% 68% 41% 32% 41% 27% 31% 7% 7% Asset Specific 0-3 Mnth 3-6 Mnth 6-12 Mnth 1-3 years 3+ years Borrowing • Positive asset-liability matching across durations • BMU manages ALM under the aegis of Asset L
Slide 48: Comfortable Capital Adequacy Ratio
2 Comfortable Capital Adequacy Ratio Capital Structure as on 30th June 2018 ($ Mn) Tier I 1,181 Capital Adequacy Ratio 16.63% Tier II 256 Total Capital 1,437 Debt/Equity : 4.9 (excluding Treasury assets) Risk Weighted Assets 8,644 82% of gross assets of $ 10,519 Mn Capital Adequacy Ratio is based on
Slide 49: Diversified Sources of Borrowing
3 Diversified Sources of Borrowing Sources of Borrowings as on 30th June’18 Others Retail 9% 12% Mutual Funds 35% Asset Specific Borrowing Total Borrowings 8% $ 7,380 Mn Banks 36% 48
Slide 50: Liquidity Cushion at 9% of Balance Sheet
4 Liquidity Cushion at 9% of Balance Sheet Liquidity Cushion • A well diversified liquidity ($ Mn) cushion comprising: 802 − Banking Lines 758 − Fixed Deposits 591 357 437 − Government Securities, 423 197 Mutual Funds etc 248 238 • Steady growth in liquidity 134 394 401 365 cushion to provide for an
Slide 51: Stable Business Model Reflected in Credit Ratings
5 Stable Business Model Reflected in Credit Ratings Purpose (Debt Programme) Rating agency Rating Short term CRISIL A1+ Short term CARE A1+ Short term ICRA A1+ Long term BWR AA+ CARE revised its Long term outlook from ‘Stable’ to Long term CARE AA ‘Positive’ Long term CRISIL AA Long term ICRA AA Lon
Slide 52: Significant Institutional Ownership
Significant Institutional Ownership Key Shareholders above 1% (As on 30th June’18) Shareholding Pattern Name Percent Employee 1 BIH SA 4.2% Trust 2 HDFC Mutual Fund 2.5% DIIs, Non 4.9% Promoters Institutions 3 Fidelity Management & Research 1.9% & Employees & Others 4 Steadview Capital Management 1.
Slide 53: Impact of Transition to IndAS
Impact of Transition to IndAS
Slide 54: IndAS Transition has not Materially Impacted the Financials of the Group
IndAS Transition has not Materially Impacted the Financials of the Group • First time implementation from April 1, 2018 with corresponding previous year beginning from April 1, 2017 IndAS • Key areas of impact on financials Transition • Effective interest on financial assets and liabilities Impact •
Slide 55: Impact on Key Financial Metrics
Impact on Key Financial Metrics Q1FY18 FY18 Q1FY19 ($ Mn) IGAAP Ind AS IGAAP Ind AS IGAAP Ind AS Net Worth 816 854 1,132 1,158 1,187 1,200 PAT 29 30 130 133 38 38 Credit provisions held 55 82 74 107 78 111 Increase in Provisions under IndAS is mainly on account of Provisions for Stage 1 and Stage 2
Slide 56: Impact of Accounting Policy changes to Net Worth
Impact of Accounting Policy changes to Net Worth ($ Mn) FY17 FY18 Q1FY19 Net Worth per IGAAP 771 1,132 1,187 Effective interest rate on financial assets (4) (5) (3) Effective interest rate on financial liabilities 4 10 9 Expected credit loss provision (27) (33) (33) Fair valuation of financial asset
Slide 57: Impact of Accounting Policy changes to Profits
Impact of Accounting Policy changes to Profits ($ Mn) Q1FY18 Q1FY19 FY18 Post MI PAT per IGAAP 29 38 130 Effective interest rate on financial assets (Net) 1 3 (3) Effective interest rate on financial liabilities (0.3) (1) (3) Expected credit loss provision - - (7) Fair valuation of assets and liabil
Slide 58: ESG at Edelweiss
ESG at Edelweiss oO Edelweiss Ideas create, values protect
Slide 59: Our ESG Framework is based on the UN Sustainable Development Goals
Our ESG Framework is based on the United Nations Sustainable Development Goals People Focused Goals No Poverty, Zero Hunger & Partnerships Economic Growth Quality Education Gender Equality Planet Focused Goals Affordable & Clean Energy Responsible Consumption Climate Support 58
Slide 60: EdelGive Foundation - Unique Philanthropic Platform
EdelGive Foundation - Unique Philanthropic Platform PARTNERSHIPS CAPACITY BUILDING IMPACT Non-Financial Support Foundations Build Stronger Organizations Organizational Capacity Towards a high impact social sector EdelGive platforms EdelGive Non-Profit Corporates Foundation Organization Enhanced Soci
Slide 61: EdelGive Foundation - Key Metrics
EdelGive Foundation - Key Metrics Employee Engagement Employee Engagement % More than 85% engaged in financial and non financial giving Man Hours spent till date 30,000 hrs Field Visits till date 80 Capacity Building – Non financial support Employees provided skills and time pro bono in over 60 proj
Slide 62: Board Comprises Majority of Independent Directors
Board Comprises Majority of Independent Directors 6 out of 11 directors are independent Mr. P N Venkatachalam Mr. K Chinniah • Banking sector expert and former • Served as Managing Director & Global member of the Interim Pension Fund Head Infrastructure, Portfolio, Strategy Regulatory Authority of I
Slide 63: Awards and Recognition
Awards and Recognition Among India’s Top 50 Brands Best Financial Solutions - India 2018 Pitch Top 50 Brands 2018 Business Vision Awards 2018, UK Fastest Growing Housing Finance Silver for 360 degree media usage in a Company campaign – SME Loans Campaign Golden Globe Tiger Awards, Kuala Lumpur 2018
Slide 64: Safe Harbour
Safe Harbour 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 (“Ed
Slide 65: Edelweiss Financial Services Limited Q1FY19 (INR version)
Edelweiss Financial Services Limited Q1FY19 Earnings Update
Slide 66: Contents
Contents 1 Quarterly Performance Highlights 2 Business Approach 3 Business Update 4 Impact of Transition to IndAS 5 ESG at Edelweiss 2
Slide 67: Quarterly Performance Highlights – Consolidated
Quarterly Performance Highlights – Consolidated Numbers and ratios in this section for all periods are as per IndAS and Post Minority Interest
Slide 68: Q1FY19 Consolidated PAT INR Cr
Q1FY19 Consolidated PAT INR 264 Cr Profit after Tax (INR Cr) Ex-Insurance PAT Consolidated PAT 308 311 272 234 212 222 264 187 236 248 154 155 166 196 209 133 103 111 120 170 89 90 98 140 144 155 70 69 62 68 72 122 46 48 51 57 91 96 106 33 27 35 78 79 83 88 58 61 33 26 29 39 40 42 46 51 56 46 Q1FY12
Slide 69: Overview of Q1FY19
Overview of Q1FY19 • Strong quarter for the credit businesses • Capacity expansion and scale up under way in Retail Credit Credit • Good opportunities for risk aware growth in Corporate Credit • Distressed Credit: Good momentum in recoveries • Capacity expansion under way in Wealth Management Franch
Slide 70: Q1FY19 Performance Highlights
Q1FY19 Performance Highlights Consistent growth in profits… 1 • Consolidated PAT growth of 31% YoY • Ex-Insurance PAT growth of 37% YoY …Distributed across businesses 2 • Credit business grew 94% YoY • Franchise & Advisory business grew 25% YoY Key performance parameters • Consolidated RoE 15.2% Ex-
Slide 71: Consolidated Q1FY19 PAT Growth of 31%...
1 Consolidated Q1FY19 PAT Growth of 31%... Y-o-Y (INR Cr) Q1FY18 Q1FY19 Growth PAT 203 264 31% Consolidated PAT 311 226 37% Ex-Insurance Balance 61,785 43,926 41% Sheet 7
Slide 72: …Across Businesses
2 …Across Businesses PAT PAT Y-o-Y EOP Equity (INR Cr) Q1FY18 Q1FY19 Growth Q1FY19 Total Consolidated 203 264 31% 7,304 Credit 125 243 94% 5,756 Franchise & Advisory 65 81 25% 215 Insurance (24) (46) 670 BMU, Corp & Others 37 (14) 663 8
Slide 73: Key Performance Parameters
3 Key Performance Parameters Key Ratios Consolidated Q1FY18 Q1FY19 FY18 RoE 17.0% 15.2% 16.2% RoA 2.2% 1.9% 2.0% Cost to Income Ratio 56% 61% 59% Ex-Insurance Q1FY18 Q1FY19 FY18 RoE 20.7% 19.8% 20.7% RoA 2.7% 2.5% 2.6% Cost to Income Ratio 47% 49% 46% RoA is Pre Minority Interest 9
Slide 74: Quarterly Performance Highlights – Business
Quarterly Performance Highlights – Business Numbers and ratios in this section for all periods are as per IndAS and Pre Minority Interest
Slide 75: Financial Snapshot – Q1FY19
Financial Snapshot – Q1FY19 INR Cr EOP Equity Profit after Tax RoE RoA Pre Minority Credit 6,142 277 19.2% 2.6% Franchise & Advisory 215 81 Life & General Insurance 1,188 (80) BMU, Corp & Others 681 (15) Minority Interest (MI) (922) 1 Total Consolidated Post MI 7,304 264 15.2% 1.9% Total Ex-Insuranc
Slide 76: Credit Business at a Glance
Credit Business at a Glance Credit Business (INR Cr) Q1FY18 Q1FY19 Capital Employed 30,089 45,206 Average Interest Yield 16.7% 16.0% Average Cost of Borrowing 10.1% 9.6% Net Interest Margin 7.8% 7.8% Net Revenue 585 826 Cost to Income 35% 36% Provisions & Write Offs 118 110 PAT 166 277 RoE 19.1% 19.
Slide 77: Asset Quality at a Glance
Asset Quality at a Glance At the end of June 30, 2018 (INR Cr) Q1 FY18 Q1 FY19 Credit Book 24,757 38,666 Of which Stage 3 422 676 ECL Provision 559 762 Of which Stage 3 271 389 Specific Provision Cover 64% 58% Total Provision Cover 132% 113% Average Collateral cover on Corporate book 2.2x 2.0x Avera
Slide 78: Credit Business Performance Snapshot
Credit Business Performance Snapshot Credit Business Q1FY19 Total Y-o-Y Retail Y-o-Y Corporate Y-o-Y Distressed Y-o-Y (INR Cr) EOP Capital Employed 45,206 51% 18,465 80% 20,201 39% 6,540 27% EOP Equity 6,142 53% 1,816 91% 2,997 43% 1,329 36% Net Interest Income 826 46% 220 61% 452 45% 153 32% PAT 27
Slide 79: Franchise & Advisory Business at a Glance
Franchise & Advisory Business at a Glance Franchise & Advisory (INR Cr) Q1FY18 Q1FY19 Net Revenue 315 339 Cost to Income 68% 66% PAT 65 81 Credit Franchise & Advisory Life Insurance 15
Slide 80: Franchise & Advisory Business Performance Snapshot
Franchise & Advisory Business Performance Snapshot Franchise & Advisory Wealth Asset Capital Total Y-o-Y Y-o-Y Y-o-Y Y-o-Y Business Q1FY19 (INR Cr) Mgmt Mgmt Mkts Net Revenue 339 8% 183 37% 46 77% 110 (29%) PAT 81 27% 43 68% 13 130% 25 (25%) Cost to Income 66% 66% 59% 68% Assets under Assets under A
Slide 81: Life Insurance Business at a Glance
Life Insurance Business at a Glance (INR Cr) Q1 FY18 Q1 FY19 Net Premium Income 64 119 Investment Income and Other Income 52 32 Total Business 116 151 Profit After Tax (39) (69) Minority (19) (34) Edelweiss’ Share in PAT (20) (35) Net Worth 735 1,059 Indian Embedded Value 1,034 1,596 Credit Franchis
Slide 82: Business Approach
Business Approach Numbers and ratios in this section for Q1 FY19 are as per IndAS and for prior periods it is as per IGAAP
Slide 83: Today we are a Bank-like Financial Services Company
Today we are a Bank-like Financial Services Company Credit Diversified across Credit, Wealth and Asset Management, • Retail Credit Capital Markets and Insurance • Corporate Credit • Distressed Credit Multiple vectors of growth aligned with macro tailwinds Franchise & Advisory • Wealth Management Cap
Slide 84: Our Asset Base is a Mix of Own and Customer Related Assets
Our Asset Base is a Mix of Own and Customer Related Assets As on 30th June’18 (rounded off to nearest 100) INR Cr YoY Growth Balance Sheet Assets 61,800 42% Customer Assets 1,78,200 39% Distressed Credit (ARC Assets) 37,200 2% Assets Under Advice (Wealth Management) 96,300 46% Funds under Management
Slide 85: Customer Assets have Helped us Grow our Profitability
Customer Assets have Helped us Grow our Profitability Customer Assets (INR Cr) RoE Ex-Insurance RoA Ex-Insurance 1,78,200 2.5% 19.8% 1.2% 7.3% 7,500 FY12 Q1FY19 FY12 Q1FY19 FY12 Q1FY19 …without requiring us to grow the Balance Sheet proportionately Franchise & Advisory businesses have provided the R
Slide 86: Our Diversified Model Delivers Consistent Growth
Our Diversified Model Delivers Consistent Growth PAT (INR Cr) Balance Sheet (INR Cr) 61,785 1,056* 55,086 890 38,667 609 32,145 27,072 414 329 16,204 220 13,289 14,529 178 128 264 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Q1FY19 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Q1FY19 28% growth in balance sheet assets s
Slide 87: Capacity Expansion is Under way in Retail Credit
Capacity Expansion is Under way in Retail Credit Retail Credit - Capital Employed (INR Cr) 22,000 18,465 17,000 16,188 12,000 8,952 7,000 6,031 4,188 2,799 1,535 2,115 2,000 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Q1 FY19 -3,000 Retail credit is now 41% of the total credit book Key vectors for our growth
Slide 88: …and also in Wealth Management
…and also in Wealth Management Wealth Management AUA (INR Cr) 1,20 ,000 1,00 ,000 96,300 90,100 80,0 00 60,300 60,0 00 40,0 00 29,500 20,0 00 17,700 7,000 8,900 4,800 - FY12 FY13 FY14 FY15 FY16 FY17 FY18 Q1 FY19 We cater to UHNI as well as the fast-growing Affluent segments 24
Slide 89: Life Insurance is Scaling to Plan
Life Insurance is Scaling to Plan Number of Policies in force 1,76,210 1,67,791 1,17,323 81,424 54,738 40,214 23,418 6,315 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Q1FY19 Increasing share of business from Direct channel, now at 24% 25
Slide 90: Scale Benefits will follow Capacity Expansion…
Scale Benefits will follow Capacity Expansion… Cost to income ratio (Ex-Insurance) 70% 65% 59% 59% 60% 54% 49% 47% FY12 FY13 FY14 FY15 FY16 FY17 FY18 Q1FY19 Cost to Income ratio reflects the investments made in Retail Credit & Wealth Management 26
Slide 91: …Aided by Technology Initiatives across Businesses
…Aided by Technology Initiatives across Businesses Retail Lending Life Insurance Wealth Management • Digital lending enabled • Lead management system • Paperless and immediate by India Stack across channels, digital account opening integrated with policy Digital Acquisition issuance systems Life Ins
Slide 92: Business Update – Credit
Business Update CREDIT Retail Credit – Corporate Credit – Distressed Credit Numbers in this section for Q1 FY19 are as per IndAS, prior periods as per IGAAP
Slide 93: Credit Business is a Mix of Diversified and Scalable Assets
Credit Business is a Mix of Diversified and Scalable Assets Capital Employed % As on 30th June’18 (INR Cr) Share Retail Credit 18,465 41% Retail Mortgage 7,521 17% Blend of loans to home owners and home buyers SME & Business Loans 3,806 8% Underserved and highly scalable, focus area for future Loan
Slide 94: Retail Credit Scaling Rapidly
Retail Credit Scaling Rapidly Capital Employed Business Highlights (INR Cr) SME • Originations up 75% on Y-o-Y basis • Digital journey (Phygital) begun - Enhanced efficiency and client experience 18,465 16,188 • Present at 100 locations up from 88 as on March’18 Retail Mortgage • Strong momentum in
Slide 95: Robust Growth in Corporate Credit
Robust Growth in Corporate Credit Capital Employed Business Highlights (INR Cr) • Risk-management centered approach to collateralized lending 20,201 19,525 • In house team of experts for carrying out detailed evaluations 14,491 − Counterparty, Collateral and Cash flows • Ring fenced structures and h
Slide 96: Agri Credit Expected to Scale Up
Agri Credit Expected to Scale Up Collateral Value (INR Cr) Agri Credit Book Size (INR Cr) Collateral Manager Stock Storage Stock 3,558 3,492 4,250 885 857 735 793 745 514 2,765 2,747 3,515 Q1FY18 Q4 FY18 Q1 FY19 Q1FY18 Q4FY18 Q1FY19 Business Highlights • One of the few organized players providing en
Slide 97: Distressed Credit Performance on Track…
Distressed Credit Performance on Track… Capital Employed Business Highlights (INR Cr) • Focus on large operating and EBITDA earning assets that need financial restructuring 6,297 6,540 • Strong focus on resolutions aided by changes in Insolvency and Bankruptcy Code norms 5,133 • Leading resolutions
Slide 98: …With Improvement in Recoveries
…With Improvement in Recoveries Top 10 industry exposure% by Acquisition price ARC Recoveries (INR Cr) Steel 1,433 Power 12% 8% Cement 1,036 19% Real Estate 7% Paper 7% Infrastructure 7% Textiles 520 22% Chemicals 6% 5% Ship Building 4% 4% Ports Others Q1FY18 Q4FY18 Q1FY19 Credit Franchise & Advisor
Slide 99: Business Performance Highlights – Franchise & Advisory
Business Performance Highlights FRANCHISE & ADVISORY Wealth Management – Asset Management – Capital Markets
Slide 100: Wealth Management AUA Continues to Scale Up…
Wealth Management AUA Continues to Scale Up… Assets Under Advice (INR Cr) Business Highlights • Among top 3* in Wealth Management in India with one of the fastest growing AUA • Yield on the AUA ~70-75 bps 96,300 90,100 • Focused on adding capacity in Affluent segment - Added 90+ RMs in Q1 FY19 65,90
Slide 101: … with Steady Growth in Net New Flows
… with Steady Growth in Net New Flows Wealth AUA Breakup Wealth AUA Movement in Q1FY19 (INR Cr) Distribution Assets Advisory Assets 2,943 6% 11% 27% 26% 25% 3,257 96,300 94% 89% 73% 74% 75% 90,100 FY15 FY16 FY17 FY18 Q1 FY19 Opening Net New Market Closing AUM AUM Money Movement Chart not to scale Cr
Slide 102: Asset Management has Healthy Growth in AUM
Asset Management has Healthy Growth in AUM Alternative Assets (INR Cr) Business Highlights Alternative Assets 20,100 17,700 • Launched EISAF II for domestic investors 11,800 • Raised ~INR 2,000 Cr from onshore clients across Alternative Assets Funds; including ~INR 700 Cr in Edelweiss Infra Yield Fu
Slide 103: Present Across Asset Classes in Alternatives Space
Present Across Asset Classes in Alternatives Space Alternative Assets AUM Asset Management AUM Movement in as on 30th June 2018 (INR Cr) Q1FY19 (INR Cr) 425 2,875 27% 34% INR 20,100 Cr 32,500 29,200 13% 15% 11% Distressed Assets Structured Debt Opening Net New Market and Closing AUM Infrastructure R
Slide 104: Capital Markets had a Slow Quarter
Capital Markets had a Slow Quarter Key Equity Capital Market Transactions Business Highlights Equity Capital Markets • Closed four capital market transactions during the quarter IPO: INR 3,480 cr IPO: INR 600 cr QIP: INR 400 cr BRLM BRLM Left Lead Global • Increased block deals market share during t
Slide 105: Business Performance Highlights – Life Insurance
Business Performance Highlights Life Insurance
Slide 106: Life Insurance – Long Term Value Creation
Life Insurance – Long Term Value Creation Product Mix Distribution New Business Premium Q1 FY19 • Agency-led multi-channel distribution approach with 14% emphasis on productivity 27% • Share of direct business has gone up to 24% from 13% in Q4FY18 26% • 121 branches and ~33,000 PFAs across 93 locati
Slide 107: The Fastest Growing Life Insurer in Individual APE
The Fastest Growing Life Insurer in Individual Annual Premium Equivalent Collected Individual Annual Premium Equivalent Number of Policies Issued CAGR growth since Q1 FY16 (Individual Business ) (In '000) 45% 31 26% 16% 13 8 Edelweiss Tokio Peer Set Industry Q1 FY18 Q4 FY18 Q1 FY19 Life Insurance Bu
Slide 108: Balance Sheet
Balance Sheet oO Edelweiss Ideas create, values protect
Slide 109: Key Highlights – Balance Sheet
Key Highlights – Balance Sheet 1 Matched Asset-Liability profile 2 Comfortable capital adequacy ratio at 16.63% 3 Diversified borrowings mix 4 Liquidity cushion at 9% of Balance Sheet 5 Stable business model reflected in credit ratings 45
Slide 110: Matched Asset-Liability Profile
1 Matched Asset - Liability Profile Assets Liabilities 100% 100% % of Assets and Liabilities 68% 50% 68% 41% 32% 41% 27% 31% 7% 7% Asset Specific 0-3 Mnth 3-6 Mnth 6-12 Mnth 1-3 years 3+ years Borrowing • Positive asset-liability matching across durations • BMU manages ALM under the aegis of Asset L
Slide 111: Comfortable Capital Adequacy Ratio
2 Comfortable Capital Adequacy Ratio Capital Structure as on 30th June 2018 (INR Cr) Tier I 8,101 Capital Adequacy Ratio Tier II 1,755 16.63% Total Capital 9,856 Debt/Equity : 4.9 (excluding Treasury assets) Risk Weighted 59,277 Assets 82% of gross assets of INR 72,137 Cr Capital Adequacy Ratio is b
Slide 112: Diversified Sources of Borrowing
3 Diversified Sources of Borrowing Sources of Borrowings As on 30th June’18 Others Retail 9% 12% Mutual Funds 35% Asset Specific Borrowing Total Borrowings 8% INR 50,609 Cr Banks 36% 48
Slide 113: Liquidity Cushion at 9% of Balance Sheet
4 Liquidity Cushion at 9% of Balance Sheet Liquidity Cushion • A well diversified liquidity INR Cr cushion comprising: 5,500 − Banking Lines 5,200 − Fixed Deposits 4,050 2,450 3,000 − Government Securities, 2,900 1,350 Mutual Funds etc 1,700 1,630 • Steady growth in liquidity 920 2,700 2,750 2,500 c
Slide 114: Stable Business Model Reflected in Credit Ratings
5 Stable Business Model Reflected in Credit Ratings Purpose (Debt Programme) Rating agency Rating Short term CRISIL A1+ Short term CARE A1+ Short term ICRA A1+ CARE revised its Long term BWR AA+ Long term outlook from ‘Stable’ to Long term CARE AA ‘Positive’ Long term CRISIL AA Long term ICRA AA Lon
Slide 115: Significant Institutional Ownership
Significant Institutional Ownership Key Shareholders above 1% (As on 30th June’18) Shareholding Pattern Name Percent Employee 1 BIH SA 4.2% Trust 2 HDFC Mutual Fund 2.5% DIIs, Non 4.9% Promoters Institutions 3 Fidelity Management & Research 1.9% & Employees & Others 4 Steadview Capital Management 1.
Slide 116: Impact of Transition to IndAS
Impact of Transition to IndAS
Slide 117: IndAS Transition has not Materially Impacted the Financials of the Group
IndAS Transition has not Materially Impacted the Financials of the Group • First time implementation from April 1, 2018 with corresponding previous year beginning from April 1, 2017 IndAS • Key areas of impact on financials Transition • Effective interest on financial assets and liabilities Impact •
Slide 118: Impact on Key Financial Metrics
Impact on Key Financial Metrics Q1FY18 FY18 Q1 FY19 INR Cr IGAAP Ind AS IGAAP Ind AS IGAAP Ind AS Net Worth 5,598 5,853 7,762 7,938 8,139 8,226 PAT 196 203 890 911 260 264 Credit provisions held 375 559 507 736 533 762 Increase in Provisions under IndAS is mainly on account of Provisions for Stage 1
Slide 119: Impact of Accounting Policy changes to Net Worth
Impact of Accounting Policy changes to Net Worth INR Cr FY17 FY18 Q1FY19 Net Worth per IGAAP 5,288 7,762 8,139 Effective interest rate on financial assets (25) (34) (18) Effective interest rate on financial liabilities 25 70 64 Expected credit loss provision (184) (229) (229) Fair valuation of finan
Slide 120: Impact of Accounting Policy changes to Profits
Impact of Accounting Policy changes to Profits INR Cr Q1FY18 Q1FY19 FY18 Post MI PAT per IGAAP 196 260 890 Effective interest rate on financial assets (Net) 8 18 (20) Effective interest rate on financial liabilities (2) (6) (20) Expected credit loss provision - - (45) Fair valuation of assets and li
Slide 121: ESG at Edelweiss
ESG at Edelweiss oO Edelweiss Ideas create, values protect
Slide 122: Our ESG Framework is based on the UN Sustainable Development Goals
Our ESG Framework is based on the United Nations Sustainable Development Goals People Focused Goals No Poverty, Zero Hunger & Partnerships Economic Growth Quality Education Gender Equality Planet Focused Goals Affordable & Clean Energy Responsible Consumption Climate Support 58
Slide 123: EdelGive Foundation - Unique Philanthropic Platform
EdelGive Foundation - Unique Philanthropic Platform PARTNERSHIPS CAPACITY BUILDING IMPACT Non-Financial Support Foundations Build Stronger Organizations Organizational Capacity Towards a high impact social sector EdelGive platforms EdelGive Non-Profit Corporates Foundation Organization Enhanced Soci
Slide 124: EdelGive Foundation - Key Metrics
EdelGive Foundation - Key Metrics Employee Engagement Employee Engagement % More than 85% engaged in financial and non financial giving Man Hours spent till date 30,000 hrs Field Visits till date 80 Capacity Building – Non financial support Employees provided skills and time pro bono in over 60 proj
Slide 125: Board Comprises Majority of Independent Directors
Board Comprises Majority of Independent Directors 6 out of 11 directors are independent Mr. P N Venkatachalam Mr. K Chinniah • Banking sector expert and former • Served as Managing Director & Global member of the Interim Pension Fund Head Infrastructure, Portfolio, Strategy Regulatory Authority of I
Slide 126: Awards and Recognition
Awards and Recognition Among India’s Top 50 Brands Best Financial Solutions - India 2018 Pitch Top 50 Brands 2018 Business Vision Awards 2018, UK Fastest Growing Housing Finance Silver for 360 degree media usage in a Company campaign – SME Loans Campaign Golden Globe Tiger Awards, Kuala Lumpur 2018
Slide 127: Safe Harbour
Safe Harbour 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 (“Ed
Edelweiss Financial Services — Q1 FY2019 Earnings Presentation on 6ix