Aavas Financiers Ltd. · NSE:AAVAS
Aavas Financiers — FY2019 Earnings Presentation
41 slides from Aavas Financiers's earnings presentation, May 3, 2019
Slide 1: Exchange cover letter for investor presentation
ÀGvas FINANCIERS LTD SAPNE AAPKE, SAATH HAM AARA Ref. No. AAVAS/SEC/2019-20/48 Date: May 03, 2019 To, To, The National Stock Exchange of India Limited BSE Limited The Listing Department Dept. of Corporate Services Exchange Plaza, Phiroze Jeejeebhoy Towers, Bandra Kurla Complex, Dalai Street, Fort, M
Slide 2: Investor Presentation - FY19
AAVAS FINANCIERS LIMITED Investor Presentation - FY19 May 2019
Slide 3: Safe Harbor
Safe Harbor This presentation and the accompanying slides (the "Presentation"), which have been prepared by Aavas Financiers Ltd. (the "Company"), have been prepared solely for information purposes and do not constitute any offer, recommendation or invitation to purchase or subscribe for any securit
Slide 4: Our Background
Our Background Commenced operations in 2011 Regulated by National Housing Bank from Jaipur, Rajasthan ("NHB") Initially promoted by Recognized by NHB for refinance Au Small Finance Bank (till 2016) facility Currently being run by professional management team backed by marquee Retail network of 210 b
Slide 5: Our Pillars of Strength
Our Pillars of Strength y Experienced Board of Directors y Professional Management Team y In-house Sourcing Model y Improving Credit Rating y Technology and Data Analytics y Diversified Shareholding Base
Slide 6: Experienced Board of Directors
Experienced Board of Directors Krishan Kant Rathi Sandeep Tandon K. R. Kamath Chairman & Independent Director Independent Director Non-executive Nominee Director Qualifications: Chartered Accountant, Company Qualifications: Bachelor's degree in Secretary Qualifications: Bachelor's in Electrical comm
Slide 7: Professional Management Team
Professional Management Team 17+ years of experience in Retail finance Sushil Kumar Agarwal Former Business Head (SME and Mortgages), Au SFB Whole Time Director & CEO Prior associated with Kotak Mahindra Prime, ICICI Bank, Au Small Finance Bank Ghanshyam Rawat - Co-Founder and CFO Avinash Kumar - Ch
Slide 8: In-house Sourcing Model
In-house Sourcing Model 1. Reduction in average TAT (days) In House execution model - Replicated across 10 States Turn around time is a key metric for employee incentives Lead generation and <U 21.1 Risk management Collections E sourcing o 12.9 13.4 u +-> ■ Focused direct sourcing ■ In-house legal t
Slide 9: Improving Credit Ratings
Improving Credit Ratings Long-Term Credit Rating Short-Term Credit Rating r Reaffirmed CARE ICRA CRISIL CARE A A -/ A+ / A+ / Mar-19 Mar-19 Mar-19 Mar-19 A1+ Stable Positive Stable Mar-18 A1+ A+ / A/ BBB+ / Mar-17 Mar-16 Aug-12 Stable Stable Stable J V J K CARE Ratings Limited upgraded the Long-Term
Slide 10: Technology and Data Analytics
Technology and Data Analytics Lead Generation Underwriting Operations Collections ■ Majority of the leads ■ Platform integration ■ Tie-up with banks to ■ Route optimization are logged in through with credit bureaus enable branch-level for collection the sourcing app ■ Quarterly scrub of registration
Slide 11: Initial Public Offering
Initial Public Offering October 2018 ■ Listing of Aavas Financiers Limited on BSE and NSE ■ Listing Date : 8th October 2018 ■ Total IPO size ^ 16,403 Mn of which Primary is ^ 3,600 Mn ■ Raised ^ 5,202 Mn from 34 high profile anchor investors 10
Slide 12: Diversified Shareholding Base
Diversified Shareholding Base Shareholding Pattern as on Top Public Shareholders : 31st March 2019 31st March 2019 Investor Details % Holding Others, 2% AU Small Finance Bank 7.23 KEDAÀRA SBI Equity Mutual FundA 6.87 FII 13% Nomura Asset Management 2.32 DSP Mutual FundA 2.09 DII, 11% Buena Vista Fun
Slide 13: Award and Certifications
Award and Certifications ASSOCHAM Award ISO Certifications Certified with ISO 10002:2014 compliance standard in respect of customer satisfaction and complaint handling process pursuant to a certificate of registration (CCH 04 00002) dated June 13, 2018 and valid untilJune 12, 2021 Certified with ISO
Slide 14: Housing Sector - Under-penetrated
Housing Sector - Under-penetrated y Size of Opportunity y Measures from Government and Regulator y Long-term Government Support
Slide 15: Size of Opportunity
Size of Opportunity Indian Housing Finance Housing Market (^ Trn) Market Size ^ 18.2 Trn 34 (as on Dec-18) YoY Growth +16% (as on Dec-18) Banks - 17%, HFCs & NBFCs - 13% Market Share Banks - 63% HFCs & NBFCs -37% (as on Dec-18) (P) (P) (P) (P) Mortgage Penetration (%) Affordable segment Growth Outlo
Slide 16: Measures from Government and Regulator
Measures from Government and Regulator ÀGVQS NHB proposes changes to applicable norms for HFCs NHB has proposed to increase minimum CAR from 12% at present to 15% & reduce maximum leverage from 16 at present to 12 in a phased manner by March 2022 Centre extends subsidy scheme on home loans Centre ha
Slide 17: Long-term Government Support
Long-term Government Support Demand Side Supply Side Interest Subsidy Scheme (CLSS - Credit Linked Subsidy Scheme) Income Tax Expenses ■ Promotion of affordable housing for weaker section ■ 100% tax deduction on affordable housing projects for developers to ■ Interest rate subsidy scheme under Pradh
Slide 18: Financial Performance
Financial Performance y Key Business Parameters y AUM and Disbursements y Spreads and Margins y Asset Quality y Liability Franchise y ALM - Surplus y Key Ratios
Slide 19: Key Business Parameters
Key Business Parameters 93,484 units ^ 78,706 Mn 122 districts ~ 51.38% Cumulative Housing Units Loan to Value Cumulative Disbursements Presence with TTM business Financed on portfolio generated from 167 districts 5,190 units ^ 4,845 Mn 876 tehsils 45 branches Cumulative Housing Units Cumulative Dis
Slide 20: Performance Highlights
Performance Highlights AUM (^ Mn) Disbursement (^ Mn) GNPA (%) Average Loan Outstanding per unit ^ 0.86 Mn Mar-18 Mar-19 PAT* (^ Mn) NIM (%) ROA (%) Average Loan per unit Disbursed ^ 0.90 Mn FY18 FY19 FY18 FY19 Data as per Ind-AS * PATincludes Other Comprehensive Income 19
Slide 21: Healthy Business Growth
Healthy Business Growth AUM (^ Mn) Disbursements (^ Mn) PAT (^ Mn) Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19 Data as per IGAAP 20
Slide 22: AUM - Category wise Break-up
AUM - Category wise Break-up ÀGVQS Product Category (^ Mn) Customer Category (^ Mn) Segmentai Breakup (^ Mn) Home Loan ATS + 4 5 9 % > -^ 59,416 59,416 59,416 Mar 19 : 0.90 Mn Salaried ATS Retail ATS 20,875 40,730 40,730 40,730 44,878 Mar 18 : 0.88 Mn Mar 19 : 0.86 Mn Mar 19 : 0.85 Mn 14,739 59,113
Slide 23: Disbursement - Category wise Break-up
Disbursement - Category wise Break-up ÀGVQS Product Category (^ Mn) Product Category (^ Mn) Home Loan ATS <+303% >- Mar 19 : 0.99 Mn ~~l 26,724 Mar 18 : 0.93 Mn 20,512 19,331 72.1% 72.3% Mortgage Loan ATS 14,795 Mar 19 : 0.72 Mn Mar 18 : 0.87 Mn 7,393 27.9% 27.7% 5,717 FY18 FY19 FY18 FY19 Home Loan
Slide 24: Yields, Cost of Borrowing and Spreads
Yields (%) • COB (%) Spreads (%) Yields (%) • COB (%) Spreads (%) 18.10% 14.63% 14.39% 14.23% 13.99% 13.90% 13.88% 13.94% 13.75% 9.23% . 8'f 6% 8.75% 8.63% 8.57% 8.63% 8.82% 8.74% ^ Consistent Spreads ^ nnnnnni 5.80% 5.40% 5-43% 5.48% 5.36% 5.33% 5.25% 5.12% 5.01% 5.10% 5.22% 5.36% 5.01% 4.64% FY14
Slide 25: Margin and Cost Efficiency
Margin and Cost Efficiency OpEx (%) NIM (%) ROA (%) 8.84% 8.86% 9.00% 3.25% 3.22% 4.86% 2.82% 4.05% 4.11% 2.14% 3.89% 3MFY18 6MFY18 9MFY18 FY18 3MFY18 6MFY18 9MFY18 FY18 8.56% 8.82% 9.39% 9.32% 3.58% 3.64% 4.19% 4.02% 3.92% 3.81% 2.93% 3.06% 3MFY19 6MFY19 9MFY19 FY19 3MFY19 6MFY19 9MFY19 FY19 3MFY19
Slide 26: Asset Quality
Asset Quality Gross NPAs (%) Net NPAs (%) 0.81% 0.82% 0.57% 0.58% 0.49% 0.47% 0.37% Sep-18 Dec-18 Mar-19 Dec-18 Mar-19 1+DPD (%) Segment-wise GNPAs Mar-18 Mar-19 4.9% Jun-16 Home Loan Mortgage Loan Data as per Ind-AS 25
Slide 27: Robust Liability Franchise - no exposure to Commercial Paper
Robust Liability Franchise - no exposure to Commercial Paper àgvqs Diversified Funding Mix Diversified Mix Loan Assets & Borrowings (^ Mn) As on Mar-19 As on Mar-19 37 Lenders Floating Fixed Equity ■ Terms Loans ■ Assignment ~12 years 59,416 59,416 Average Borrowing Tenor ■ NHB Refinancing NCDs ~15
Slide 28: ALM - Comfortable Surplus
ALM - Comfortable Surplus Surplus Management (^ Mn) Average tenor of outstanding borrowing (months) As on Mar-19 i Incremental Q4 borrowings ^ 8,992 Mn for 162 months at 8.21% <3months 2,213 <6months 3,612 <1year 9,101 <3years 14,594 <5years 16,151 <7years 18,617 <10years 18,834 52,660 Overall 17,27
Slide 29: Comfortable Liquidity Position
Comfortable Liquidity Position Comfortable Liquidity for Growth (^ Mn) Liquidity Position Sanctioned Debt ~ 21,870 Cash & Cash Equivalents ~ 14,650 Sanctioned Debt Q1FY19 ~ ^ 3,550 Mn Q2FY19 ~ ^ 1,850 Mn Mar 19 Liquidity Principal Profit Debt Repayment Mar 20 Liquidity Position Repayments Position Q
Slide 30: Quarterly Trend of Net Securitization Volume
Quarterly Trend of Net Securitization Volume ^ 5,385 Mn ^ 6,802 Mn 2,816 995 0 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY19 29
Slide 31: Key Financial Ratios
Key Financial Ratios ROE (%) Book Value Per Share (^) 14.84% 11.64% Mar-17 Mar-18 Mar-19 Mar-17 Mar-18 Mar-19 Capital Adequacy Ratio (%) Earning Per Share* (^) Tier I Tier II 65.4% 23.1 15.2 Mar-17 Mar-18 Mar-19 Mar-17 Mar-18 Mar-19 Data of Capital Adequacy Ratio is as per IGAAP for Mar'17 & Mar'18
Slide 32: Ind-AS Transition
Ind-AS Transition Sr. No. Key Changes Impacted Line Item IGAAP Ind-AS 1 Net Fees Income Fees Income Booked upfront Amortized based on Effective Interest Rate 2 Credit Costs Credit Costs As specified by regulator Expected Credit Loss (ECL) Model Option value under Black Scholes pricing model 3 ESOP V
Slide 33: ECL Model - Key Differences
ECL Model - Key Differences Sr. No. Components NHB Regulations ECL Model • Standard Assets: Performing • Stage 1: Performing - 1 to 30 DPD • Sub-Standard Assets: NPA < 15 months 1 Asset Classification Norms • Stage 2: Under-Performing - 31 to 90 DPD • Doubtful Assets: NPA > 15 months • Stage 3: Non-
Slide 34: Annexures
Annexures Y Quarterly and Yearly Profit & Loss Statement y BalanceSheet y PAT Reconciliation y ECL Provisioning y Networth Reconciliation 33
Slide 35: Quarterly Profit & Loss Statement
Quarterly Profit & Loss Statement Particulars (^ Mn ) Q4 FY19 Q4 FY18 Y-o-Y Q3 FY19 Q-o-Q Interest Income (incl. Processing Fee) 1,964.8 1,373.2 1,864.7 Interest Expenses 723.1 509.8 627.3 Net Interest Income 1,241.7 863.3 43.8% 1,237.4 0.3% Non-Interest Income 86.9 104.0 82.8 Non-Interest Expenses
Slide 36: Yearly Profit & Loss Statement
Yearly Profit & Loss Statement ÀGVQS Particulars (^ Mn ) FY19 FY18 Interest Income (incl. Processing Fee) 6,839.4 4,743.2 Interest Expenses 2.553.7 1,930.9 Net Interest Income 4.285.8 2,812.4 52.4% Non-Interest Income 270.3 201.2 Non-Interest Expenses 1,890.2 1,644.7 Provisions, Contingencies and Wr
Slide 37: Balance Sheet
Balance Sheet 31-Mar-19 31-Mar-18 Particulars (^ Mn ) (Ind-AS) (Ind-AS) Sources of Funds Share Capital 781.1 691.7 Reserves & Surplus 17,588.5 11,207.3 Borrowings 36,532.5 27,375.6 Deferred Tax Liability (Net) 427.5 113.5 Other Liabilities & Provisions 938.7 1,012.9 Total 56,268.3 40,401.0 Applicati
Slide 38: PAT Reconciliation
PAT Reconciliation Particulars (^ Mn ) Net Profit as per IGAAP FY19 1,473.1 FY18 929.3 _Ly-o-y_ L 58.5% Q4 FY19 441.4 Q4 FY18 | Y-o-Y 284.5 55.1% Add / (Less) : Adjustments as per IndAS on account of: Adoption of effective interest rate (EIR) for amortisation of Income and expenses - financial asset
Slide 39: ECL Provisions
ECL Provisions ÀGVQS Classification of the Assets based on the ECL computation under IndAS: Particulars (^ Mn ) FY19 FY18 (Ind-AS) (I-GAAP) (Ind-AS) (I-GAAP) Gross Stage 3 GNPA 222.7 158.3 154.9 106.9 % portfolio in Stage 3 (GNPA%) 0.47% 0.35% 0.46% 0.34% ECL Provision Stage 3 48.6 46.6 24.8 24.4 Ne
Slide 40: Networth Reconciliation
Networth Reconciliation Particulars (^ Mn ) FY19 Net worth as per previous GAAP 17,086.4 Adjustments increasing/(decreasing) net worth as reported under previous GAAP: Adoption of EIR for amortisation of Income and expenses - financial assets at amortised cost / net interest on credit impaired loans
Slide 41: Contact Us
Contact Us Aavas Financiers Limited (Formerly known as Au HOUSING FINANCE LIMITED) CIN:L65922RJ2011PLC034297 Mr. Himanshu Agrawal investorrelations@ aavas.in www.aavas.in Strategic Growth Advisors Private Limited CIN: U74140M H2010PTC204285 Ms. Payal Dave / Ms. Neha Shroff payal.dave@ sgapl.net / ne