Bajaj Finance Limited · NSE:BAJFINANCE
Bajaj Finance — Q2 FY19 Earnings Presentation
48 slides from Bajaj Finance's earnings presentation, Oct 23, 2018
Slide 1: Cover letter to stock exchanges
BAJAJ FINANCE LIMITED SEC/BM/2018/388 23 October 20 18 THE MANAGER, THE MANAGER, BSELIMITED LISTING DEPARTMENT DCS-CRD NATIONAL STOCK EXCHANGE OF INDIA LTD. PHIROZE JEEJEEBHOY TOWERS EXCHANGE PLAZA, C-1. BLOCK G, DALAL STREET, BANDRA- KURLA COMPLEX, BANDRA (EAST) MUMBAI - 400 001 MUMBAI- 400 051 SCR
Slide 2: Bajaj Finance Limited Q2 FY19 Investor Presentation
Bajaj Finance Limited Q2 FY19 Investor Presentation 23 October 2018
Slide 3: Presentation Path
Presentation Path • Section 01 Bajaj Finance Limited overview 3 • Section 02 Ind AS financial performance Q2 FY19 16 • Section 03 Non financial commentary 20 • Section 04 Asset liability management 22 • Section 05 Resilience to manage higher interest rate cycles 28 • Section 06 Customer Franchise an
Slide 4: Section 01 Bajaj Finance Limited overview
Section 01 Bajaj Finance Limited overview 3
Slide 5: Bajaj group structure
Bajaj group structure Bajaj Holdings & Investment Limited (Listed) 1 31.54% 2 39.16% Bajaj Auto Limited Bajaj Finserv Limited (Listed) (Listed) Auto Business Arm Financial Services Arm 3 54.99% 74% 74% Bajaj Finance Limited Bajaj Allianz life Insurance Bajaj Allianz General Insurance (Listed) Compan
Slide 6: Bajaj Finserv group - Executive summary
Bajaj Finserv group - Executive summary through its various subsidiaries Bajaj Finance Limited Bajaj Allianz General Insurance Limited Bajaj Allianz Life Insurance Limited A 31 year old non bank finance company 2nd largest private General insurer in Amongst top 5 private players as of India as of FY
Slide 7: What do we stand for
What do we stand for a sustainable ROA of 3% and ROE of 18-20% in the medium term 6
Slide 8: Key strategic differentiators
Key strategic differentiators Part of the Bajaj Group one of the oldest & most A trusted brand with strong brand equity respected business houses Focus on mass affluent and above clients Overall franchise of 30.05 MM and Cross sell client base of 17.82 MM Strong focus on cross selling assets, insura
Slide 9: Bajaj Finance Shareholder profile
Bajaj Finance Shareholder profile Top 20 investors & their holdings As on 30 As on 30 As on 30 OTHERS S.No Name of Shareholder CORPORATES 1.72% 1 BAJAJ FINSERV LTD 54.99% 54.99% 55.13% 6.15% 2 GOVERNMENT OF SINGAPORE 3.62% 3.54% 3.99% MF 3 MAHARASHTRA SCOOTERS 3.28% 3.28% 3.29% 7.32% 4 STEADVIEW CAP
Slide 10: Financial snapshot
Financial snapshot ₹ in Crs FY18@ YoY CAGR Financials snapshot @ FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 (Consol.) FY17 FY18 (11 years) Assets under management 2,478 2,539 4,032 7,573 13,107 17,517 24,061 32,410 44,229 60,196 84,033 40% 42% Income from operations 503 599 916 1,406 2,172 3,
Slide 11: Product suite
Product suite BAJAJ FINANCE LIMITED Consumer SME Commercial Rural Deposits Partnerships & Services • Consumer Durable Loans • Unsecured Working • Securities Lending • Consumer Durable • Retail Term • Life Insurance • Digital Product Loans (1) Capital Loans (1) • Large Value Lease Loans Deposits Dist
Slide 12: Executive summary Bajaj Finance Limited Consolidated
Executive summary Bajaj Finance Limited Consolidated Overview • 31 year old non bank with a demonstrated track record of profitable growth • Diversified financial services company focused on Consumer, Rural, SME, Commercial and Mortgages lending • Strong focus on deposits acceptance and fee product
Slide 13: Executive summary Bajaj Finance Limited Standalone
Executive summary Bajaj Finance Limited Standalone Overview • Focused on Consumer, Rural, SME and Commercial lines of businesses • Strategic business unit organization design supported by horizontal common utility functions to drive domain expertise, scalability and operating leverage • Strategy is
Slide 14: Executive summary Bajaj Finance Limited Standalone
Executive summary Bajaj Finance Limited Standalone SME Business • Focused on affluent SMEs with an average annual sales of ₹ 10-12 Crores with established financials & demonstrated borrowing track records • Offer a range of working capital products to SME & self employed professionals • Offer full r
Slide 15: Executive summary Bajaj Housing Finance Limited
Executive summary Bajaj Housing Finance Limited Bajaj Housing • Bajaj Housing Finance Limited is a 100% subsidiary of Bajaj Finance Limited, registered with National Housing Banks as a Housing Finance Limited Finance Company • It offers a full range of mortgage products such as home loans, loan agai
Slide 16: Executive summary Bajaj Housing Finance Limited
Executive summary Bajaj Housing Finance Limited Developer • Offers construction finance and inventory finance mainly to Category A and A+ developers in India Finance • Currently present in 8 locations (Mumbai, Bangalore, Pune, Ahmedabad, Chennai, Kolkata, Hyderabad, Surat) • Average ticket size rang
Slide 17: Section 02 Ind AS financial performance Q2 FY19
Section 02 Ind AS financial performance Q2 FY19 16
Slide 18: Consolidated key performance highlights for Q2 FY19
Consolidated key performance highlights for Q2 FY19 • Customer franchise as of 30 September 2018 31% to 30.05 MM from 22.99 MM as of 30 September 2017. During the quarter, the company acquired 1.77 MM new customers • New loans booked during Q2 FY19 63% to 5.26 MM from 3.23 MM in Q2 FY18 • AUM as
Slide 19: Financial Statement Summary Consolidated (Ind AS)
Financial Statement Summary Consolidated (Ind AS) ₹ in crore Financials snapshot Q2 FY19 Q2 FY18 YoY H1 FY19 H1 FY18 YoY FY18 Assets under management 1,00,217 72,669 38% 1,00,217 72,669 38% 84,135 Total Interest & fee income 4,296 3,066 40% 8,238 5,900 40% 12,772 Interest expenses 1,567 1,141 37% 2,
Slide 20: Reconciliation of consolidated profit with previous GAAP
Reconciliation of consolidated profit with previous GAAP ₹ in crore Particulars Q2 FY19 Q2 FY18 YoY H1 FY19 H1 FY18 YoY FY18 Profit before tax as per previous GAAP @ 1,572 858 83% 3,134 1,784 76% 4,096 Ind AS adjustments increasing / (decreasing) profit : Adoption of Effective Interest Rate (EIR) fo
Slide 21: Section 03 Non financial commentary
Section 03 Non financial commentary 20
Slide 22: Non financial commentary
Non financial commentary • On 10 August 2018, the Company has acquired 100% shares of Bajaj Financial Securities Limited (BFinsec) from its wholly owned subsidiary Bajaj where the Company currently avails the services of external depository participants (DP) and stock brokers • Bajaj Housing Finance
Slide 23: Section 04 Asset liability management
Section 04 Asset liability management 22
Slide 24: Behaviouralized ALM snapshot as on 30th September 2018
Behaviouralized ALM snapshot as on 30 th September 2018 Particulars 1m >1 to 2 m >2 to3 m >3 to 6m >6m to 1 yr >1 to 3 yr >3 to 5 yr >5 yr Total Cash & Investments 3,967 1 1 196 238 264 61 2,773 7,503 Advances 7,586 5,169 5,126 11,793 16,850 27,939 7,731 5,136 87,328 Trade Receivable & Others 2,035
Slide 25: Disciplined ALM Management over the last 8 years
Disciplined ALM Management over the last 8 years 150% 141% 125% 119% 120% 113% 100% 96% 75% 71% 48% 61% 65% 50% 38% 36% 50% 36% 44% 25% 4% 16% 0% -15% -15% -15% -15% -15% -15% -15% -15% -25% Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Sep-18 -50% Cumulative gap upto 1m Cumulative gap upto 12m P
Slide 26: Liability mix over the last 8 years
Liability mix over the last 8 years.. 8% 5% 5% 8% 9% 10% 11% 13% 4% 3% 3% 4% 6% 3% 7% 5% 31% 33% 38% 35% 25% 43% 35% 40% 58% 58% 54% 48% 34% 53% 31% 35% 12% 15% 6% 8% 1% 4% Mar'12 Mar'13 Mar'14 Mar'15 Mar'16 Mar'17 Mar'18 Sep'18 Deposits Bank Loans (incl. CC/OD/WCDL) NCD Subordinate Debt Short term
Slide 27: Conservative leverage standards
Conservative leverage standards 7.0 7.0 7.0 7.0 7.0 7.0 7.0 7.0 6.8 24.7% 6.6 7 6.4 6.3 22.0% 6.2 22.1% 5.9 * 20.3% 6 5.3 19.5% 19.7% 19.1% 17.5% 18.0% 5 16.2% 16.1% 5.1 17.2% 15.0% 18.7% 14.6% 14.2% 4 3 5.7% 2 5.0% 4.9% 3.8% 3.4% 3.3% 3.0% 2.5% 1 0 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 H1 FY19
Slide 28: Key takeaways on liquidity
Key takeaways on liquidity • Company is very well covered on ALM across all maturities. • Company has a natural hedge of ALM due to its diversified product portfolio where the tenors range from 1 month (Purchase Order and Retailer finance) to 3 months (EMI spends financing) to 8 months (B2B) to 12 m
Slide 29: Section 05 Resilience to manage higher interest rate cycles
Section 05 Resilience to manage higher interest rate cycles 28
Slide 30: Resilient business model
Resilient business model 18.00% 47.0% 46.0% 50.0 44.6% 45.0% 43.1% 41.4% 41.8% 16.00% 38.7% 36.0% 40.0 32.9% 33.3% 38.4% 14.00% 36.4% 29.9% 28.4% 30.0 26.4% 12.00% 9.7% 9.9% 9.9% 10.00% 9.5% 20.0 9.1% 9.0% 8.2% 8.2% 8.00% 10.0 6.00% 4.2% 0.00 4.1% 3.9% 4.0% 3.6% 3.5% 3.7% 4.00% 3.3% 3.0% 3.0% 3.0% 3
Slide 31: Key takeaways on Resilience of business model
Key takeaways on Resilience of business model • Operating leverage has improved every year over the last 8 years despite continued investment in new product launches, distribution, geo expansion and technology. Opex to NII has gone down from 44.6% in FY13 to 36.5% in H1 FY19 • Focus on fee revenue d
Slide 32: Section 06 Customer franchise and distribution reach
Section 06 Customer franchise and distribution reach 31
Slide 33: Customer franchise
Customer franchise Q2 FY18 Q2 FY19 Q1 FY19 22.99 MM Total Franchise 30.05 MM 28.28 MM 16.97 MM Credit segment filter 23.13 MM 21.61 MM 16.14 MM Overall Cross sell franchise 22.17 MM 20.68 MM Non delinquent 14.71 MM customers 20.08 MM 18.77 MM Cross sell franchise 13.21 MM 17.82 MM Addition of 1.3 MM
Slide 34: Strong distribution reach
Strong distribution reach Geographic Presence 31 Mar 2015 31 Mar 2016 31 Mar 2017 31 Mar 2018 30 Sep 2018 Urban 161 262 377 730 862 Rural 232 397 538 602 751 Of which Rural Lending branches 50 105 177 219 308 Of which Rural Lending franchisees 182 292 361 383 443 Total Bajaj Finance presence 393 659
Slide 35: Section 07 Business segment wise AUM
Section 07 Business segment wise AUM 34
Slide 36: Business segment wise AUM as of 30 September 2018
Business segment wise AUM as of 30 September 2018 ₹ crore Consolidated Standalone as BHFL as of 30 Consolidated Assets Under Management Growth Composition as of 30 Sept 2017 of 30 Sep 2018 Sep 2018 as of 30 Sept 2018 Consumer B2B -Auto Finance Business 5,398 7,676 - 7,676 42% 8% Consumer B2B - Sales
Slide 37: Mortgages and Commercial business AUM breakup
Mortgages and Commercial business AUM breakup ₹ crore Mortgages Composition 30 Sep 2017 30 Sep 2018 Growth Assets Under Management break up (% of Consolidated AUM) Home Loan 10,043 14,685 46% 15% Loan Against Property 8,936 9,469 6% 10% Lease Rental Discounting 1,957 3,355 71% 3% Developer Finance 8
Slide 38: Section 08 Update on credit quality
Section 08 Update on credit quality 37
Slide 39: Credit quality Portfolio composition
Credit quality Portfolio composition CD loan portfolio Two & Three wheeler loan portfolio 1st Bucket 2nd Bucket 3rd Bucket 4th Bucket 5th Bucket 1st Bucket 2nd Bucket 3rd Bucket 4th Bucket 5th Bucket 5+ Bucket Bkt 0 97.72% 98.07% 97.83% 98.38% 98.58% 98.83% 98.91% 99.04% 98.91% Bkt 0 89.15% 83.93% 8
Slide 40: Portfolio Credit quality Including BHFL
Portfolio Credit quality Including BHFL Personal Loans Cross Sell portfolio Salaried Personal Loans portfolio 1st Bucket 2nd Bucket 3rd Bucket 4th Bucket 5th Bucket 1st Bucket 2nd Bucket 3rd Bucket 4th Bucket 5th Bucket Bkt 0 97.21% 97.81% 97.29% 97.18% 97.26% 97.46% 97.62% 97.64% 97.69% Bkt 0 99.43
Slide 41: Portfolio Credit quality Including BHFL
Portfolio Credit quality Including BHFL Home Loans portfolio Rural Lending portfolio 1st Bucket 2nd Bucket 3rd Bucket 4th Bucket 5th Bucket 5+ Bucket 1st Bucket 2nd Bucket 3rd Bucket 4th Bucket 5th Bucket Bkt 0 99.03% 99.38% 99.02% 98.91% 98.82% 98.96% 99.48% 99.49% 99.40% Bkt 0 98.53% 98.82% 99.15%
Slide 42: Credit Quality Provisioning Coverage
Credit Quality Provisioning Coverage 30 Sep 17 30 Sep 18 30 Sep 17 30 Sep 18 Consolidated AUM PCR Assets Under Management GNPA NNPA GNPA* GNPA NNPA* NNPA 30 Sep 18 (%) (%) (%) (%) (%) Consumer B2B -Auto Finance 7,676 457 172 63% 6.50% 5.76% 2.73% 2.24% Business Consumer B2B - Sales Finance 12,437 14
Slide 43: NPA movement - Consolidated
NPA movement - Consolidated (Values in ₹ Cr) Particulars 72,139 77,970 84,033 93,314 1,00,217 Opening GNPA (A) 1,136 1,187 1,254 1,164 1,280 Roll Forward into NPA (i) 300 348 298 378 480 Restructuring (ii) 17 3 4 1 3 Total Slippages (B = i + ii) 317 351 302 379 483 Roll back to standard (iii) 96 96
Slide 44: Disclaimer
Disclaimer This presentation has been prepared by and is the sole responsibility of Bajaj Finance Limited (together with its subsidiaries, referred to as the Company or . By accessing this presentation, you are agreeing to be bound by the trailing restrictions. This presentation does not constitute
Slide 45: Thank You
BAJAJ FINANCE LIMITED Q2 FY19 Investor Presentation Thank You
Slide 46: Annexures
BAJAJ FINSERV Annexures 45
Slide 47: Glossary
Glossary 2W Two Wheeler IRR Internal Rate of Return 3W Three Wheeler LAP Loan Against Property ACMF Auto Components Manufacturer Financing LAS Loan Against Securities ALM Asset & Liability Management MF Mutual Fund AR Assets Receivable MM Million ARU Activation, Retention & Usage MSME Micro, Small &
Slide 48: ALM Strategy (Standalone)
ALM Strategy (Standalone) Borrowings ₹ 73,822 Crs) Borrowings ₹ 67,425 Crs) 1,425, 1,544 2% 2% 6,497, Banks 7,810 Banks 9% 12% NCDs 20,092 NCDs 24,912, 30% 11,014, 34% 9,427 15% Subordinate Debt Subordinate Debt 14% 3,921, Deposits Deposits 5% 3,938 CPs CPs 6% 26,053, 24,614 CBLO CBLO 35% 36% Behavi