Bajaj Finserv Limited · NSE:BAJAJFINSV
Bajaj Finserv — Q4 FY20 Earnings Presentation
55 slides from Bajaj Finserv's earnings presentation, May 21, 2020
Slide 1: Cover letter to stock exchanges
~BAJAJ \Iii FINSERV 21 May 2020 To . To Corporate Relations Department. Corporate Listing Department. BSE Limited National Stock Exchange of India Ltd 1st Floor, New Trading Ring, Exchange Plaza, 5th Floor Rotunda Building, P J Tower, Plot No.C-1, G Block, Dalal Street, Mumbai 400 001 Bandra-Kurla C
Slide 2: Investor Presentation – Q4 FY20
BAJAJ FINSERV LIMITED Investor Presentation – Q4 FY20* * Financial year 2019-20
Slide 3: Bajaj Group Structure
Bajaj Group Structure Bajaj Holdings & Investment Limited (BHIL) 33.43% 39.16%@ Bajaj Auto Limited Bajaj Finserv Limited 52.82%@ 74% 74% Bajaj Finance Limited Bajaj Allianz General Insurance Bajaj Allianz Life Insurance • Set up in 1987: BFL is a 33 year old Company Limited# Company Limited # compan
Slide 4: Bajaj Finserv's Vision – A diversified financial services group
Bajaj Finserv’s Vision – A diversified financial services group with a pan- India presence Life cycle needs Investment/ Asset Asset Family Income of Individual & Wealth acquisition protection Protection protection SME customers management Lending General Insurance Health Insurance Life Insurance Lif
Slide 5: Bajaj Finserv's response to Covid-19
Bajaj Finserv’s response to Covid-19 Activated Business Continuity Plan ❑ WFH drill done even before lockdown 1 ❑ Emergency response teams monitoring the situation; Implementing actions on real time ❑ Board and Committee meetings held through video conferencing ❑ Swiftly moved the IT infrastructure
Slide 6: Bajaj Finserv's response to Covid-19
Bajaj Finserv’s response to Covid-19 Partners / Distribution ❑ Continuous engagement with partners; virtual product training 4 ❑ Mapping of partner capabilities and integration of new processes at priority, ensuring smooth transition ❑ Digital on-boarding of insurance agents Regulator / Authorities
Slide 7: Bajaj Finserv – A resilient diversified financial services business
Bajaj Finserv – A resilient diversified financial services business BFL’s robust liquidity management framework has ensured that it Bajaj Finance Limited has liquidity to meet its debt service obligations, despite it having to offer repayment moratoriums to its customers. BFL’s excellent risk manage
Slide 8: Bajaj Finserv performance highlights – Q4 FY20
Bajaj Finserv performance highlights – Q4 FY20 All Figures in Rs Million Performance Highlights of Q4 FY20 over Q4 FY19 (Ind AS) 132,943 1,944 313,013 35,354 CY 2% -77% 32% 12% PY 129,945 8,387 237,401 31,351 Total Revenue PAT* Net Worth Net Worth (Consolidated) (Consolidated) (Consolidated) (Standa
Slide 9: Consolidated profit components – Q4 FY20
Consolidated profit components – Q4 FY20 All Figures in Rs Million Consolidated profit components for Q4 FY20 (Ind AS) Impact of Covid Intercompany ❑ MTM* losses on BAGIC & BALIC adjustments investments - Rs 7,680 Mn (pre-tax) Bajaj Finserv- ❑ BFL Contingency provision - Rs 9000 Mn Standalone (3,301
Slide 10: FY20 Highlights
FY20 Highlights All Figures in Rs Million Highlights of Group Companies BAJAJ FINSERV# FY20 FY19 Growth BAJAJ FINANCE# FY20 FY19 Growth Total Revenue 543,515 426,056 28% AUM 1,471,534 1,158,884 27% Net worth 313,013 237,401 32% Total Income 263,856 185,002 43% PAT 33,691 32,190 5% PAT 52,637 39,950
Slide 11: Bajaj Finance Limited
BAJA FINSERV Bajaj Finance Limited 10
Slide 12: BFL – Key Strategic Differentiators
BFL – KEY STRATEGIC DIFFERENTIATORS STRATEGY • Diversified financial services strategy seeking to optimise risk and profit, to deliver a sustainable business model and deliver a superior ROE and ROA • Focused on continuous innovation to transform customer experience to create growth opportunities. D
Slide 13: BFL: Business Segments
BFL : Business Segments BAJAJ FINANCE Consumer SME Commercial Rural • Largest consumer • Focused on affluent • Wholesale Lending • Unique hub-and-spoke electronics, digital products SMEs with an average products covering short, model in 1,357 locations & furniture lender in India annual sales of aro
Slide 14: Pre Covid & BFL's Response to Covid-19
Pre Covid & BFL’s Response to Covid-19 Prior to Covid-19 ❑ Due to various fiscal stimulus measures implemented by government and good monsoon, economy was clearly on mend in Q4 ❑ Overall systemic liquidity was quite strong at nearly Rs. 300,000 Crore ❑ BFL is well placed with liquidity surplus of ap
Slide 15: Pre Covid & BFL's Response to Covid-19
Pre Covid & BFL’s Response to Covid-19 ❑ BFL has offered repayment moratorium to its impacted customers on a suo-moto basis as well as on customer requests to assist them in protecting their cash flows in these tough times. ❑ As a matter of prudence, Company decided that a set of customers with 60 d
Slide 16: BFL – Key Highlights
BFL – Key Highlights Q4 2019-20 ❑ Strong AUM growth - 27% YoY for the company as well as across all lines of businesses in the company except for securities lending which contracted by 24% ❑ New loans booked increased by 3% to 6.03 MM in Q4 FY20 from 5.83 MM in Q4 FY19. Adjusted for lower acquisitio
Slide 17: BFL – Key Highlights
BFL – Key Highlights Q4 2019-20 ❑ Cost of funds at consolidated level has sequentially increased by 8 bps to 8.37% in Q4 FY20. ❑ BFL liquidity position remains very strong with overall liquidity surplus of approximately ₹ 15,725 crore as of 31 March 2020. The Company’s liquidity surplus as of 15 May
Slide 18: BFL – Key Highlights
BFL – Key Highlights Q4 2019-20 ❑ The Company is well capitalised with CRAR of 25.01% as at 31 March 2020. The Tier-I capital stood at 21.27%. Subsidiaries (included in BFL Consolidated Performance) ❑ Bajaj Housing Finance Ltd (BHFL) delivered profit after tax growth of 47% to Rs. 91 crore in Q4 FY2
Slide 19: BFL – Q4 FY20 highlights
BFL – Q4 FY20 highlights All Figures in Rs Million Performance Highlights of Q4 FY20 over Q4 FY19 (Ind AS) CY 1,471,534 72,308 9,481 27% 36% -19% PY 1,158,884 52,980 11,761 Book Size Total Income Profit After Tax • Borrowing mix is not excessively dependent on banks. CY 0.7% 2.9% (Mix of 38 : 42 : 1
Slide 20: BFL: Growth Continues
BFL : Growth Continues All Figures in Rs Million FY20 Book Size FY20 Total Income Increase of 26% 1,413,760 Increase of 43% 2,63,856 1,125,128 185,002 Q4 FY20 Increase of 36% 72,308 52,980 FY19 FY20 FY19 FY20 Q4 FY19 Q4 FY20 Net Interest Income FY20 Increase of 42% Q4 FY20 Increase of 38% 169,124 11
Slide 21: BFL: Growth aided by low NPA and control on Opex
BFL : Growth aided by low NPA and control on Opex All Figures in Rs Million Loss Provision and Net NPA% • Loan losses and provisions (expected credit loss) for Q4 39,295 40,000 2.00% FY20 were Rs. 1,954 Cr as against Rs. 409 Cr in Q4 FY19. 35,000 • During the quarter, the Company has taken a 30,000
Slide 22: Bajaj Allianz General Insurance
Bajaj Allianz General Insurance 21
Slide 23: BAGIC – Key Strategic Differentiators
BAGIC – KEY STRATEGIC DIFFERENTIATORS STRATEGY Strive for market share growth in chosen segments through a well-diversified product portfolio and multi-channel distribution supported by prudent underwriting DIFFERENTIATORS ▪ Industry leading combined ratios consistently over Strong selection of Risk
Slide 24: BAGIC – Key Highlights
BAGIC – Key Highlights Q4 2019-20 ❑ BAGIC GWP de-grew by 22 % in Q4 FY20 vs Industry de - growth of 1%; ❑ FY20 growth for BAGIC was 15.6% vs Industry growth of 9.5% (Industry excl. specialized insurers grew by 10.7%) ❑ Combined ratio (COR) improved and stood at 93.8% in Q4 FY20 v/s 103.9% in Q4 FY19
Slide 25: BAGIC – Key Highlights
BAGIC – Key Highlights Q4 2019-20 ❑ During the year, the Company introduced several initiatives to further enhance its service . Some of the capabilities developed are: ❑ A new CRM was launched to provide an integrated omni-channel experience for new business, renewals and service ❑ Fully digital on
Slide 26: BAGIC: Q4 FY20 highlights
BAGIC : Q4 FY20 highlights All Figures in Rs Million Performance Highlights of Q4 FY20 over Q4 FY19 CY 26,555 18,598 19,723 3,041 -22% -14% 3% 266% PY 34,023 21,669 19,174 831 Gross Written Net Written Premium Net Earned Premium Profit After Tax Premium ▪ Ex Crop GWP was Rs. 24,143 Mn in Q4 FY20 (Rs
Slide 27: BAGIC: Combined Ratio
BAGIC : Combined Ratio Combined Ratios (Including Motor TP Pool Losses) 100.8% 103.9% 99.3% 96.8% 96.7% 92.3% 93.8% FY16 FY17 FY18 FY19 FY20 Q4 FY19 Q4 FY20 1. Combined Ratios are in accordance with the Master Circular on ‘Preparation of Financial statements of General Insurance Business’ issued by
Slide 28: BAGIC: Profit after tax and capital efficiency
BAGIC : Profit after tax and capital efficiency All Figures in Rs Million PAT PAT CAGR of 15.3% between FY16 – FY20 Q4 FY20 PAT growth of 266% 9,988 9,212 7,278 7,799 Rs. Million 5,642 3,041 831 FY16 FY17 FY18 FY19 FY20 Q4 FY19 Q4 FY20 Total Capital infused is Rs.2,768 Mn BAGIC - Capital Invested -
Slide 29: BAGIC: Consistently amongst top private insurers in terms of Gross Premium
BAGIC : Consistently amongst top 2 private insurers in terms of Gross Premium Industry GDPI Trend (Rs. Bn.) 1,786 1,617 1,415 1,199 916 930 1,056 737 597 439 448 451 602 678 687 730 258 265 477 190 187 FY16 FY17 FY18 FY19 FY20 Q4 FY19 Q4 FY20 PSU Private Insurers* Industry BAGIC Premium Trend 128,33
Slide 30: BAGIC: Balanced product mix
BAGIC : Balanced product mix Business Mix 8% 8% 10% 10% 12% 20% 13% 9% 19% 25% 15% 16% 14% 13% 11% 8% 14% 9% 11% 8% 8% 5% 6% 6% 6% 44% 44% 47% 41% 40% FY18 FY19 FY20 Q4 FY19 Q4 FY20 Motor (Retail) Health (Retail) Group Health Prop, Liability, Engg Agri (Crop Insurance) Others ▪ Ex Crop GWP de-grew b
Slide 31: BAGIC: Diversified Channel Mix
BAGIC: Diversified Channel Mix Channel Mix 11% 9% 23% 20% 27% 32% 47% 37% 44% 37% 9% 5% 7% 4% 4% 8% 15% 12% 12% 12% 20% 21% 24% 20% 20% FY18 FY19 FY20 Q4 FY19 Q4 FY20 Individual Agents Corporate Agents - Banks Corporate Agents - Others Brokers Direct Business ▪ Bancassurance channel delivered 18% gr
Slide 32: BAGIC – Virtual Points of Presence
BAGIC - VIRTUAL POINTS OF PRESENCE VSO 10,000 9.2% 10.0% 8.4% 8,000 8.0% 6.2% 6,000 6.0% 3.9% 4,000 4.0% 2,000 1.5% 2.0% - 0.0% FY16 FY17 FY18 FY19 FY20 Rs Million VSO GWP VSO contribution GWP-Ex Crop • Initiated in August 2014 and has grown exponentially to approx. 2,000 locations as of Q4 FY20 • F
Slide 33: BAGIC: Assets Under Management
BAGIC : Assets Under Management AUM (cash and investments) FY20 Increase of 9% 187,458 BAGIC continues to 172,367 grow its AUM 148,229 strongly Investments 108,291 Rs. Million are largely in 92,112 fixed income securities Investment Leverage of 3.3x as on 31 March 2020 FY16 FY17 FY18 FY19 FY20 Inves
Slide 34: BAGIC's digital Infrastructure to rescue during lockdown
* BAGIC’s digital Infrastructure to rescue during lockdown Digital Platforms Insta Pay Services Campaigns In addition to agent’s app ❑ New express bitly and platform, mediums used Apart from Google Pay and links with all Phone – Pe, 48 other prepopulated details Purchase & Renewals services provider
Slide 35: Bajaj Allianz Life Insurance
Bajaj Allianz Life Insurance 34
Slide 36: BALIC – Key Strategic Differentiators
BALIC - KEY STRATEGIC DIFFERENTIATORS STRATEGY • Continued focus on sustainable and profitable growth by maintaining balanced product mix and investment in retail growth engines • Business construct is to maximize customer benefits while gaining market share in retail space, maintaining shareholder
Slide 37: BALIC – Key Highlights
BALIC – Key Highlights Q4 2019-20 ❑ BALIC Individual Rated premium de-grew by 12 % in Q4 FY20 vs Industry de growth of 13% (Private sector de-grew by 16%) ❑ FY20 BALIC growth of 10.6% vs Industry growth of 6.2% (Private sector grew by 4.8%) ❑ During FY20, BALIC is one of the three companies to witne
Slide 38: BALIC – Key Highlights
BALIC – Key Highlights Q4 2019-20 ❑ FY20 PAT decreased by 10% to Rs. 4,496 Mn largely on account of increased new business strain, and higher group claims. ❑ Strong growth in Net New Business Value (NBV) by 47% from Rs. 1,541 Mn to Rs. 2,266 Mn ❑ Net New Business margins moved to double digit (10%)
Slide 39: BALIC – Q4 FY20 highlights
BALIC – Q4 FY20 highlights All Figures in Rs. Million Performance Highlights of Q4 FY20 over Q4 FY19 CY 6,059 8,883 16,091 31,283 -12% -20% 9% -5% PY 6,891 11,082 14,718 32,899 Individual Rated NB Group NB Renewal Premium Gross Written Premium CY 2,266 745% Solvency Ratio 47% as on 31 Mar 2020 PY 1,
Slide 40: BALIC: Ticket Size
BALIC : Ticket Size All Figures in Rs. Regular Premium Ticket Size Regular Premium Ticket Size (Agency) FY20 Q4 FY20 FY20 Increase of Q4 FY20 Decrease of increase of 10% increase of 1% 14% 12% 95,213 61,716 60,865 60,509 56,128 85,211 83,571 74,714 45,449 62,858 FY18 FY19 FY20 Q4 FY19 Q4 FY20 FY18 F
Slide 41: BALIC: Persistency
BALIC : Persistency Persistency 13th Month Persistency 25th Month 79% 79% 77% 68% 68% 71% 74% 58% 51% 68% Persistency - 13th Month Persistency - 25th Month FY17 FY18 FY19 FY20 FY20* FY17 FY18 FY19 FY20 FY20* Persistency 37th Month Persistency 61st Month 55% 58% 40% 53% 37% 38% 49% 33% 44% 32% Persis
Slide 42: BALIC: Individual Rated New Business
BALIC : Individual Rated New Business All Figures in Rs Million Individual Rated NB Individual Rated NB Agency FY20 Increase of 11% FY20 decrease of 10% 12,039 19,271 Q4 FY20 decrease 11,065 10,826 17,420 Q4 FY20 decrease of 12% 13,972 of 32% 4,528 6,891 6,059 3,060 FY18 FY19 FY20 Q4 FY19 Q4 FY20 FY
Slide 43: BALIC: Balanced product mix
BALIC : Balanced product mix Individual Rated Mix Share of Non-ULIP business in individual business increasing 51% 45% 60% 60% Individual - Unit Linked 72% Individual - Non Par 21% 30% Individual - Par 10% 16% 4% 24% 30% 28% 24% 25% FY18 FY19 FY20 Q4 FY19 Q4 FY20 Group NB Mix Share of protection bus
Slide 44: BALIC: Assets Under Management
BALIC : Assets Under Management AUM (Mix) • AUM as on 31 March 2020 de- grew by 1%; Primarily due to 566 561 Covid-19 impact on stock market 493 520 leading to de-growth in UL AUM; 441 365 336 Traditional AUM grew by 9% 279 306 249 230 192 214 214 196 • Of the UL Funds of Rs.196 Bn., 59% is equity a
Slide 45: MCEV Update
MCEV Update * All Figures in Rs Million Particulars FY 19 FY 20 Annualized Premium** (ANP) 22,255 22,945 Gross New Business Value* (NBV) 3,477 4,351 Net New Business Value* (NBV) 1,541 2,266 Net Margins on ANP+ (Post overruns) 6.9% 9.9% Embedded Value++ (EV) 129,889 134,384 • One-year forward rates
Slide 46: MCEV Movement
MCEV Movement All Figures in Rs Mn Net NBV2 4,351 2,085 938 251 5,149 9,838 1,272 134,384 129,889 EV as at Unwind Gross New Expenses Assumption Operating Investment Capital EV as at Mar 31, 2019 Business Overrun Change Variance Variance Distributed Mar 31, 2020 Value Increase / Decrease 1. Par Busin
Slide 47: BALIC's digital Infrastructure – The key enabler during COVID-19 lockdown
BALIC’s digital Infrastructure – The key enabler during COVID-19 lockdown* • 10% increase in per 45% increase in number of day Avg. Users transactions post lockdown during lockdown • 160% increase in Fund switch requests due to WhatsApp market volatility 24*7 Video based policy servicing during lock
Slide 48: Annexure
Annexure
Slide 49: BAGIC: LOB wise Net Claim ratio (Major LOBs)
BAGIC : LOB wise Net Claim ratio (Major LOBs) Net Claim Ratio Line of Business Q4 FY20 Q4 FY19 FY20 FY19 Fire 48.0% 59.0% 68.0% 74.4% Marine Cargo 59.2% 105.0% 67.3% 94.0% Motor OD 66.4% 64.9% 67.7% 60.0% Motor TP 59.4% 54.2% 64.5% 64.5% Motor Total 62.2% 58.9% 65.8% 62.4% Engineering 71.6% 10.1% 52
Slide 50: BAGIC: Loss Triangle: Whole Account Excluding IMTPIP
BAGIC : Loss Triangle : Whole Account Excluding IMTPIP on Net Basis as at 31 March 2020 Accident Year Cohort Particulars (Rs. Mn) 31-Mar-09 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- and Prior 10 11 12 13 14 15 16 17 18 19 20 A] Ultimate Net loss Cost - O
Slide 51: BAGIC: Loss Triangle: Whole Account Excluding IMTPIP
BAGIC : Loss Triangle : Whole Account Excluding IMTPIP on Net Basis as at 31 March 2020 Accident Year Cohort Particulars (Rs. Mn) 31-Mar-09 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- 31-Mar- and Prior 10 11 12 13 14 15 16 17 18 19 20 A] Ultimate Net loss Cost - O
Slide 52: BAGIC: Loss Triangles - IMTPIP reserving
BAGIC : Loss Triangles - IMTPIP reserving • The IMTPIP came to operation on 1st April 2007 exclusively for third party claims in respect of commercial vehicles. All insurers registered to carry on non-life insurance business including motor business were automatically required to participate in the
Slide 53: Exposure to Downgraded Investments (Debt): BALIC & BAGIC
Exposure to Downgraded Investments (Debt) : BALIC & BAGIC BALIC Type of Fund (BALIC) Total exposure as of Of which Impairment Sr. No. Of which performing (Amt in Rs. Mn) 31 Mar 2020 (non performing) Provided for 1 PAR 3,003 1,012 1,991 2,096 2 N-PAR 408 250 158 206 3 ULIP 994 0 994 871 4 SH 2,865 35
Slide 54: Disclaimer
Disclaimer This presentation has been prepared by Bajaj Finserv Limited (the “Company”) solely for your information and for your use. This presentation is for information purposes only and should not be deemed to constitute or form part of any offer or invitation or inducement to sell or issue any s
Slide 55: Thank You
BAJA FINSERV Thank You