Edelweiss Financial Services Limited · NSE:EDELWEISS
Edelweiss Financial Services — Investor Presentation (May 2016)
68 slides from Edelweiss Financial Services's investor presentation, May 2016
Slide 1: Edelweiss Financial Services Annual Investor Presentation – May 2016
Edelweiss Financial Services Annual Investor Presentation – May 2016
Slide 2: Contents
Contents 1 OVERVIEW & BUSINESS APPROACH 2 PERFORMANCE HIGHLIGHTS 3 BUSINESS HIGHLIGHTS 4 ENTERPRISE UPDATE 5 DETAILED FINANCIALS 2
Slide 3: Overview & Business Approach
OVERVIEW & BUSINESS APPROACH 3
Slide 4: Our Vision
Our Vision “To be a Respected Financial Services firm with a Portfolio of High Quality Growth Businesses” 4
Slide 5: Our Business Approach
Our Business Approach Leadership Culture Risk & Governance Culture that promotes Zero tolerance policy entrepreneurship and towards Compliance & Risk innovation without compromising on institutionalization Diversification De risked model enhances sustainability Good mix of Strong Enterprise Wholesal
Slide 6: Diversification Strategy Led to a Unique Business Model
Diversification Strategy Led to a Unique Business Model… EDELWEISS Credit Non Credit Insurance WELL DIVERSIFIED Unique Model that is “Scalable, Stable and Profitable” 6
Slide 7: One of the Leading Diversified Financial Services Firms
One of the Leading Diversified Financial Services Firms CREDIT BUSINESSES Present across the spectrum of One of the top 5 Diversified Financial Wholesale Retail Services Firms • Structured Collateralized Credit • Mortgages • Real Estate • SME & Agri-Financing On Balance Sheet Assets ~ 32,100 Cr • Di
Slide 8: Over the Next Four Years…
Over the Next Four Years… Our aim is to grow our diversified business model to... • Grow PAT consistently at 20-25% • Maintain NPA below 2% • Improve RoE • Maintain a healthy Capital Adequacy Ratio Consolidated from 12.9% to 16-18% • Enhance long term credit rating from AA+ to AAA Ex Insurance f
Slide 9: FY16 Performance Highlights
FY16 PERFORMANCE HIGHLIGHTS 9
Slide 10: Key Financial Highlights
Key Financial Highlights 1 Consolidated PAT growth of 26% & Ex Insurance PAT growth of 36% 2 Consistent growth in profits over last 5 years 3 Consolidated RoE improved to 12.9%; Ex Insurance RoE: 18.6% 4 Credit has been a key driver 10
Slide 11: Consolidated PAT Growth of 26% and Ex Insurance of 36%
1 Consolidated PAT Growth of 26% and Ex Insurance of 36% (INR Cr) FY15 FY16 % Growth PAT 329 414 26% Consolidated PAT 381 519 36% Ex Insurance Balance 27,072 32,145 19% Sheet 11
Slide 12: Key Performance Parameters
Key Performance Parameters Edelweiss For FY16 (Ex Insurance) Private Banks NBFC/ DFS PAT growth (YoY) 36% 16% 9% 4 year PAT CAGR 38% 21% 13% Credit Book Growth 33% 24% 21% Net Revenue 7.8% 6.1% 7.9% RoA 1.8% 1.7% 1.9% RoE 18.6% 17% 12% C/I 60% 46% 39% GNPA 1.4% 1.3% 3.2% NNPA 0.47% 0.5% 0.7% Collate
Slide 13: Consistent track record of growth since FY12
2 Consistent track record of growth since FY12 Profit after Tax INR Cr 154 133 120 111 98 103 89 90 122 70 72 106 69 62 68 96 57 88 91 48 51 78 79 83 46 56 58 61 46 51 46 39 40 42 Q4'FY12 Q1'FY13 Q2'FY13 Q3'FY13 Q4'FY13 Q1'FY14 Q2'FY14 Q3'FY14 Q4'FY14 Q1'FY15 Q2'FY15 Q3'FY15 Q4'FY15 Q1'FY16 Q2'FY16
Slide 14: Ex Insurance RoE Improved to 18.6%
3 Ex Insurance RoE Improved to 18.6% Consolidated RoE % Ex-Insurance RoE% 18.6% 15.6% 12.9% 12.2% 11.3% 11.3% 7.6% 8.2% FY13 FY14 FY15 FY16 FY13 FY14 FY15 FY16 Consolidated RoE Q4FY16: 14.5% 14 Equity represents Tangible Networth
Slide 15: RoA Attribution (Ex Insurance)
RoA Attribution (Ex Insurance) FY16 FY15 FY14 NII 5.1% 5.5% 5.3% Interest 12.8% 12.0% 11.6% Treasury 1.2% 2.2% 1.9% Interest Cost -8.8% -8.6% -8.1% Non-interest income 2.7% 2.9% 2.6% Fee & commission 2.4% 2.7% 2.4% Other income 0.3% 0.2% 0.2% Expenses -5.2% -5.7% -5.1% Employee cost -2.5% -2.9% -2.5
Slide 16: Credit has been a key driver
4 Credit has been a key driver PAT INR Cr Credit Non Credit Insurance 414 329 337 220 107 230 170 152 30 182 101 -51 -53 -104 FY14 FY15 FY16 16
Slide 17: Business Highlights
BUSINESS HIGHLIGHTS € Edelweiss S 2016 INDIAN OLYMPIC TEAM BGs 17
Slide 18: Diversified Mix of Businesses
Diversified Mix of Businesses CREDIT NON CREDIT INSURANCE Present across : Strong product franchise One of the fastest serving diverse client growing life insurance Wholesale needs: companies • Structured Collateralized Credit • Capital Markets • Real Estate • Wealth Management • Distressed Assets C
Slide 19: Financial Snapshot
Financial Snapshot EoP Profit (INR Cr) Networth After Tax RoE%* Credit Business 2,321 337 17.0% Non Credit 1,112 182 22.3% Total Ex-Insurance 3,433 519 18.6% Insurance 939 -104 - Total 4,372 414 12.9% Numbers are Management Estimates 19 * On Average Equity; adjusted for intangibles and minority inte
Slide 20: Business Highlights – Credit
BUSINESS HIGHLIGHTS – CREDIT 20
Slide 21: Credit Business at a glance
Credit Business at a glance Credit Business INR (Cr) Capital Employed 20,014 NIM 6.8% NII 1,200 Cost to Income 44% Provisions 160 PAT 337 GNPA 1.4% NNPA 0.47% RoE 17.0% RoA 2.0% Credit Non Credit Insurance Balance Sheet Numbers are Management Estimates . Capital Employed is End of Period
Slide 22: Credit Portfolio is a Mix of Differentiated and Scalable Assets
Credit Portfolio is a Mix of Differentiated and Scalable Assets SME & Agri Structured • Customized credit solutions, with high Financing Mortgages LAS and Collateralized Credit collateral cover 1,440 2,641 Others Distressed 13% 1,940 7% Real Estate • Caters to wide a range of residential Assets Cred
Slide 23: Present across Retail, SME and Wholesale segments
Present across Retail, SME and Wholesale segments Wholesale Credit Retail Credit • Comprises of • Comprises of • Collateralized Lending to Corporate • Housing Finance • Real Estate • SME & Agri Financing • Distressed Asset Credit (ARC) • LAS & Rural Finance • Began credit operations in 2007 • Commen
Slide 24: Business Strengths
Business Strengths Client Centric Solutions • Ability to understand client needs and structure products to suit their needs • Strong client relations Proactive Risk Management • Three tier risk management approach – Business risk team supplemented by Global risk team & Global Risk Committee • Robust
Slide 25: Credit – Improving Parameters
Credit – Improving Parameters At the end of FY16 FY15 FY14 Average Interest Yield 16.2% 15.8% 15.1% Average Cost of Borrowing 10.7% 10.9% 10.3% Interest Spread 5.5% 4.9% 4.7% Net Interest Margin 6.8% 6.7% 6.7% 45 cities & 36 cities & 22 cities & Retail Credit Presence* 3400 villages 750 villages 400
Slide 26: Credit: Robust Asset Quality
Credit: Robust Asset Quality At the end of (INR Cr) FY16 FY15 FY14 Total Credit Book 20,014 15,036 8,953 Pvt. Banks NBFCs Gross NPLs 281 196 82 Gross NPL % 1.40% 1.31% 0.92% 1.3% 3.2% Net NPLs % 0.47% 0.38% 0.25% Total Provision Held* 247 184 82 0.5% 0.7% Total Provision Cover* 88% 94% 100% Collater
Slide 27: Business Highlights – Non Credit
BUSINESS HIGHLIGHTS – NON CREDIT 27
Slide 28: Non Credit Business at a glance
Non Credit Business at a glance Non Credit INR (Cr) Capital Employed 11,192 Net Revenue 1,107 Cost to Income 76% PBT 265 PAT 182 RoE 22.3% RoA 1.5% Credit Non Credit Insurance Balance Sheet 28 Numbers are Management Estimates
Slide 29: Non Credit Business Mix
Non Credit Business Mix • Entire spectrum of corporate advisory services - Fixed Income Advisory, M&A, ECM, Private Equity Syndication Capital Markets • Leader in Debt Capital Markets • One of the largest domestic institutional broking house with strong focus on research Wealth Management • Multi as
Slide 30: Capital Markets: Leadership position in the market
Capital Markets: Leadership position in the market Broking ADV (INR Cr) • One of the largest domestic institutional 5,200 broking company 5,000 • Robust fundamental research covering ~225 stocks among 27 sectors representing ~77% 2,900 3,100 2,600 of total market cap • Rated Best Brokerage in India
Slide 31: Wealth and Asset Management – Rapidly gaining market share
Wealth and Asset Management – Rapidly gaining market share Wealth Management AUA (INR Cr) 29,500 • Servicing over 250 families 17,750 • Clients include many marquee family offices, 8,900 Institutions & HNIs 4,800 7,000 • Best Private Banking Solution at Asia-Pacific Structured Products & Derivatives
Slide 32: Non Credit Businesses have Scaled-up Rapidly
Non Credit Businesses have Scaled-up Rapidly Balance Sheet Management Unit (INR Cr) 4,866 KEY OBJECTIVES • Liquidity management • Asset Liability Management 1,267 1,213 347 • Manage Treasury assets • Corporate Fixed Assets and Investments Gsecs Liquidity Fixed & Others cushion Tax Assets Agri Servic
Slide 33: Growing Business Presence
Growing Business Presence MUMBAI INDIA GLOBAL PRESENCE 1 Strong clients/accounts base of over 887,000 3 6,227 employees across 237 offices across businesses in 122 cities including nine international offices 2 Over 303,000 Depository Participant Accounts 4 Touch points include over 4,500 Authorised
Slide 34: Business Highlights – Insurance
BUSINESS HIGHLIGHTS – INSURANCE 34
Slide 35: Key Milestones
Key Milestones 2016 71 Branches 15,490 Agents 1,943 Employees 26 Products 310 Cr Gross Premium Started Operations July 2011 Highest startup capital INR 550 Crs 2013 45 Branches 3,401 Agents 1,275 Employees 18 Products 55 Cr Premium Credit Non Credit Insurance Balance Sheet 35
Slide 36: Fastest Growing Individual APE
Fastest Growing Individual APE Individual APE CAGR Growth since FY13 59% • Industry CAGR over 3 years -2% • Our Peer set (Non Bank backed New Insurance 11% companies) grew at a CAGR of 11% • Edelweiss Tokio grew at a CAGR of 59% -2% ETLI Peer Set Industry Investment • Edelweiss Tokio funds have been
Slide 37: Insurance – Rapidly growing & stable platform
Insurance – Rapidly growing & stable platform 4% 7% Agency 13% Balanced channel Brokers mix with focus on Banca agency 57% Corporate Agents 19% Direct Business • “The Rising Star Insurer” award in the Indian Insurance Awards 2013 • Winner of “Top 100 Infosec Maestros Awards” A Responsible in 2015 –
Slide 38: Pan India Presence
Pan India Presence At the end of FY16 FY15 FY14 Delhi (NCR) 6 branches No. of Personal 15,490 10,421 7,255 Financial Advisors Punjab / Himachal Pradesh 71 in 59 in 58 in No. of Branches / Uttarakhand Uttar 61 cities 49 cities 48 cities 6 branches Pradesh 6 branches Rajasthan / Haryana 6 branches Wes
Slide 39: Insurance
Insurance Edelweiss Tokio Life Insurance Company Limited Standalone (ETLI) (INR Cr) FY16 FY15 FY14 Gross Premium Income 310 193 111 Investment Income & Other Income 87 97 58 Total Income 397 290 169 Total Expenses 552 361 238 Profit Before Tax (155) (71) (69) Profit After Tax (155) (71) (69) Net Wor
Slide 40: Balance Sheet
BALANCE SHEET ~~ 2016 INDIAN OLYMPIC TEAM coo 40
Slide 41: Key Highlights – Balance Sheet
Key Highlights – Balance Sheet 1 On-Balance Sheet Assets: INR~32,100 Cr Total assets managed INR ~93,700 Cr 2 ALM maintained Balance Sheet 3 Comfortable capital adequacy ratio at 18% 4 Diversified Liability mix 5 Stable business model reflected in credit ratings 41
Slide 42: $14.5 billion of Assets
1 $14.5 billion of Assets As on 31 Mar 2016 INR Cr USD bn Assets on Balance Sheet 32,100 5.0 Assets Under Management 32,100 5.0 Assets Under Advice 29,500 4.5 Total Assets 93,700 14.5 Credit Non Credit Insurance Balance Sheet 42
Slide 43: Comfortable ALM Profile
2 Comfortable ALM Profile Mar’16: INR 32,145 Cr Assets Liabilities 100% % of Assets and Liabilities 77% 100% 56% 73% 34% 40% 55% 15% 38% 34% 15% Asset Specific 0-3 Mnth 3-6 Mnth 6-12 Mnth 1-3 years 3+ years Borrowing • Positive ALM across durations • ALCO manages and monitors ALM, Interest Rate Risk
Slide 44: Strong capital position
3 Strong capital position Networth (INR Cr) Liability Structure, Mar’16 (INR Cr) Tier I 4,192 4,192 3,204 3,434 Tier II 961 Total Capital 5,153 Risk Weighted Assets 28,773 FY14 FY15 FY16 Consolidated Capital Adequacy 18% • Steady growth in Net worth over the last several years • Sub Debt issued to i
Slide 45: Diversified Sources of Borrowings
4 Diversified Sources of Borrowings FY11 FY16 Others 5% 5% Retail 5% 14% Asset Specific 14% 17% Bank 26% 30% Money Markets 50% 34% Total Borrowings INR 7,858 Cr INR 27,773 Cr • Steady diversification in sources of borrowings • Lower dependence on debt market borrowings • Exploring Alternative source
Slide 46: Share of Long Term funds increasing
Share of Long Term funds increasing Long Term Liabilities INR (Cr) Long Term Liabilities Breakup Sub-debt 14,475 9% Structured 11,473 Product 12% NCD 46% 6,641 4,811 Term Loan 33% FY13 FY14 FY15 FY16 LT as % of Total 29% 41% 43% 45% Average Tenure (years) 3.2 Liabilities • Long Term Liabilities grow
Slide 47: Liquidity Cushion at ~INR 2,900 Cr is 9% of Balance Sheet
Liquidity Cushion at ~INR 2,900 Cr is 9% of Balance Sheet Including off Balance sheet lines • A well diversified liquidity cushion INR (Cr) comprising of: 2,900 • Banking Lines • Fixed Deposits 1,700 • G Secs, Mutual Funds etc • Steady growth in liquidity cushion to provide for any liquidity event 4
Slide 48: Stable Business Model Reflected in Credit Ratings
5 Stable Business Model Reflected in Credit Ratings Rating agency Purpose (debt programme) Rating Short term CRISIL A1+ Short term CARE A1+ Short term [ICRA] A1+ Long term BWR AA+ Long term CARE AA Long term [ICRA] AA Credit Non Credit Insurance Balance Sheet 48
Slide 49: Enterprise Update
ENTERPRISE UPDATE Edelweiss — 2016 INDIAN OLYMPIC TEAM [R@{@,9)
Slide 50: Awards
Awards Jury Special Award for excellence in the BFSI 2015 by My FM Stars of the Industry Bull of the Year Award by Zee Business Market Analyst Awards India’s Promising Brands 2015 by The Economic Times Consumer Survey Best Private Banking Solution (Edelweiss Structured Products) by Asia-Pacific SRP’
Slide 51: Marketing – Key Highlights
Marketing – Key Highlights With Edelweiss’s retail businesses expanding and launching new products, greater marketing effort is planned this fiscal to build awareness and preference for the brand Strategy 1. Saina Nehwal appointed as Edelweiss Group brand ambassador 2. Edelweiss appointed principal
Slide 52: Marketing – Key Highlights
Marketing – Key Highlights All India Press Ad TV Ad Social Media https://www.youtube.com/watch?v=NL2nUnO4my8 52 52
Slide 53: Key HR Metrics
Key HR Metrics At the end of FY16 FY15 FY14 Head Count 6,227 5,555 4,001 Senior Hiring 81 113 32 Senior Attrition 10% 17% 11% During FY16 FY15 FY14 Learning & Training man days 21,530 19,582 13,392 Development Employees covered 5,374 4,838 3,900 Building leadership capability through a Four-Tier Lea
Slide 54: EdelGive Foundation - Key Highlights
EdelGive Foundation - Key Highlights Impacted over 300,000 lives in 13 states. Supported 85 NGOs. Brought Rs. 60 crores into philanthropy Education Livelihood Women Empowerment Empowering children through holistic Water and soil conservation, skill Promoting safety, gender justice, and learning appr
Slide 55: Shareholding Pattern
Shareholding Pattern EMPLOYEE TRUST TOP INSTITUTIONAL SHAREHOLDERS ABOVE 1%* 5.5% AS ON MAR 31, 2016 NON INSTITUTIONS Name Percent 18.1% 1 Carlyle 8.4% 45.4% PROMOTERS & EMPLOYEES 2 Fidelity 5.5% 3 BIH SA 5.4% 31.0% 4 SAIF Advisors 3.1% 5 Amansa Investments 1.5% FOREIGN 6 Ashoka PTE 1.1% INSTITUTION
Slide 56: Detailed Financials
DETAILED FINANCIALS 56
Slide 57: Consolidated Financials – P&L
Consolidated Financials – P&L (INR Cr) FY16 FY15 FY14 Fee and Commission Income 697 573 356 Fund based Income 4,218 3,100 2,063 Premium from Life Insurance Business 300 187 106 Other Operating Income 87 38 22 Other Income 14 14 9 Total Revenue 5,316 3,912 2,556 Employee Benefits Expense 882 709 458
Slide 58: Consolidated Financials - P&L (ex-Insurance)
Consolidated Financials - P&L (ex-Insurance) (INR Cr) FY16 FY15 FY14 Fee and Commission Income 697 573 355 Fund based Income 4,132 3,006 2,008 Other Operating Income 86 39 22 Other Income 13 10 6 Total Revenue 4,928 3,628 2,391 Employee Benefits Expense 754 610 376 Financial Costs 2,619 1,831 1,210
Slide 59: Consolidated Financials - Balance Sheet
Consolidated Financials - Balance Sheet (INR Cr) Mar 16 Mar 15 Mar 14 Equity and Liabilities Shareholders’ Funds 3,675 3,161 2,890 Minority Interest 697 371 366 Borrowings 27,773 23,540 12,948 Total 32,145 27,072 16,204 Assets Credit Book Assets 20,014 15,036 8,952 FDs and Cash & Bank Balances 3,116
Slide 60: Addendum
Addendum Edelweiss F=3 PROUD SPONSOR "ee 2016 INDIAN OLYMPIC TEAM [R@{@,9)
Slide 61: ECL Finance Ltd. - Financial Snapshot
ECL Finance Ltd. - Financial Snapshot (INR Cr) FY16 FY15 Interest Income 2,021 1,343 Treasury Income & Other Income (134) (101) Total Income 1,887 1,241 Total Expenses 1,508 964 Profit Before Tax 379 277 Profit After Tax 250 183 Net Worth 1,891 1,673 61
Slide 62: Edelweiss Finance & Investments Ltd. – Financial Snapshot
Edelweiss Finance & Investments Ltd. – Financial Snapshot (INR Cr) FY16 FY15 Interest Income 336 330 Treasury Income & Other Income (11) 65 Total Income 325 395 Total Expenses 248 319 Profit Before Tax 77 76 Profit After Tax 52 51 Net Worth 348 376 62
Slide 63: Edelweiss Retail Finance Ltd. – Financial Snapshot
Edelweiss Retail Finance Ltd. – Financial Snapshot (INR Cr) FY16 FY15 Interest Income 153 43 Fee Income & Other Income 8 2 Total Income 161 45 Total Expenses 124 33 Profit Before Tax 38 12 Profit After Tax 25 8 Net Worth 260 124
Slide 64: Edelweiss Housing Finance Ltd. – Financial Snapshot
Edelweiss Housing Finance Ltd. – Financial Snapshot (INR Cr) FY16 FY15 Interest earned 251 168 Investment Income & Other Income 22 12 Total Income 273 180 Total Expenses 212 146 Profit Before Tax 61 34 Profit After Tax 38 21 Net Worth 336 311 64
Slide 65: Edelweiss Asset Reconstruction Co. Ltd. – Financial Snapshot
Edelweiss Asset Reconstruction Co. Ltd. – Financial Snapshot (INR Cr) FY16 FY15 Fee and Incentive Income 322 190 Other Operating Income 48 14 Total Income 370 204 Total Expenses 301 158 Profit Before Tax 69 46 Profit After Tax 45 34 Net Worth 206 153 65
Slide 66: Edelweiss Commodities Services Ltd. – Financial Snapshot
Edelweiss Commodities Services Ltd. – Financial Snapshot (INR Cr) FY16 FY15 Revenue from Operations 903 750 Other operating income 44 44 Total Income 947 794 Total Expenses 853 715 Profit Before Tax 94 79 Profit After Tax 65 56 Net Worth 577 533 66
Slide 67: Additional Information
Additional Information Consolidated Debt Equity Ratio FY16 FY15 Gross 6.35 6.67 Excluding Treasury Assets 4.95 5.22 Consolidated RWA (as a % of Gross Assets) 77% 69% Insurance FY16 FY15 Insurance APE (INR Crs) 146 99 Insurance Persistency 70% 61%
Slide 68: Safe Harbor
Safe Harbor 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 (“Ede
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