Edelweiss Financial Services Limited · NSE:EDELWEISS
Edelweiss Financial Services — FY2023 Earnings Presentation
60 slides from Edelweiss Financial Services's earnings presentation, May 26, 2023
Slide 1: Covering letter to stock exchanges
EW/Sec/2023-24/53 May 26, 2023 BSE Limited National Stock Exchange of India Limited P J Towers, Exchange Plaza, Dalal Street, Fort, Bandra Kurla Complex, Bandra (E), Mumbai – 400 001. Mumbai – 400 051. Scrip Code: 532922 Symbol: EDELWEISS Dear Sir/Madam, Sub: Investor Presentation Please find attach
Slide 2: Earnings update – Quarter and Year ended Mar 23
US $ version Edelweiss Financial Services Limited Earnings update – Quarter and Year ended Mar 23
Slide 3: Contents
Contents 1 Overview for quarter and year ended Mar 23 3 2 Performance highlights 6 3 Outlook for next 18 months 24 4 Business performance 26 5 Governance & corporate responsibility 56 Please refer to update filed for more details – • Strategic update – Demerger of Nuvama Wealth Management 2
Slide 4: Overview Quarter and Year ended Mar 23
Overview Quarter and Year ended Mar 23
Slide 5: Edelweiss at a glance – year ended Mar 23
Edelweiss at a glance – year ended Mar 23 Net Worth Ex-Insurance PAT BVPS $1,034 Mn $74 Mn $1 (FV $ 0.01) Net Debt Liquidity as a % of Debt $1,990 Mn 15% 4 Liquidity and Net Debt excludes Wealth Management
Slide 6: Diversified with high-quality and well-capitalised businesses
Diversified with high-quality and well-capitalised businesses Edelweiss Financial Services Ltd (EFSL) Asset Management Credit Insurance Asset Wealth Alternative Reconstruction Housing General Management Mutual Fund NBFC Life Insurance Asset Mgt Finance Insurance Edelweiss Edelweiss Edelweiss Asset E
Slide 7: Performance highlights – quarter and year ended Mar 23
Performance highlights – quarter and year ended Mar 23 1 Ex-Insurance PAT grows by 51% YoY for the year; nearly doubles YoY for the quarter Slide 7 - 10 2 Significant progress achieved on our key priorities - Slide 11-18 Nuvama demerger and value unlock: Record date June 2 for determining shareholde
Slide 8: Healthy profitability across businesses
1 Healthy profitability across businesses PAT for the year in $ Mn EFSL Asset Asset Credit ex-Insurance Management Reconstruction 74 39 31 22 49 19 14 8 Mar 22 Mar 23 Mar 22 Mar 23 Mar 22 Mar 23 Mar 22 Mar 23 51% YoY 164% YoY 26% YoY 38% YoY 7
Slide 9: Earnings distribution across businesses
1 Earnings distribution across businesses $ Mn Quarter Ended Year ended Business Mar 23 Mar 22 Mar 23 Mar 22 Business Mar 23 Mar 22 Mar 23 Mar 22 Alternatives Asset Management 5 2 19 6 Mutual Fund 0 (1) 2 2 Asset Reconstruction 11 8 39 31 NBFC 5 7 17 12 Housing Finance 0 1 2 2 General Insurance (3)
Slide 10: Update on operating performance
1 Update on operating performance Alternative • Fee-Paying AUM grew 32% YoY to $2,822 Mn; deployments grew 75% YoY Asset Management • Launched perpetual AUM product - AnZen InvIT • AUM grew 24% YoY to $12,771 Mn; AUM market share improves 45 bps YoY to 2.61% Mutual Fund • Retail folios grew 20% YoY
Slide 11: Update on operating performance
1 Update on operating performance • Gross direct premium income (GDPI) growth of 53% for FY23, highest amongst GI players General Insurance • Total policies issued in the year grew 31% YoY to ~388,000 • Achieved Embedded Value (EV) break even in our Life Insurance business Life Insurance • Individua
Slide 12: Update on key priorities for FY23
2 Update on key priorities for FY23 A Demerger and Listing of Nuvama Wealth Management B Scaling Asset Management and Insurance businesses C Reducing Wholesale loan assets Please refer to updates filed for more details – • Strategic update – Demerger of Nuvama Wealth Management 11
Slide 13: Win-win-win for all stakeholders
A Win-win-win for all stakeholders For Nuvama • Deal led to primary infusion of capital into the business • Nuvama is now an independent business with a focused strategy and the flexibility to attract business-specific partners and investors • Paved the way for listing of Nuvama For Shareholders of
Slide 14: Update and next steps
A Update and next steps Step 1 – Capital Raise Step 2 - Demerger Step 3 - Allotment Step 4 - Listing Phase I Phase II & III Allotment Listing Capital raise in NCLT order received and Allot 30% EFSL holdings Listing of Nuvama Nuvama made effective for Phase II to Shareholders of Wealth Management dem
Slide 15: Alternatives – 52% growth in AUM YoY; FPAUM up 32%
B Alternatives – 52% growth in AUM YoY; FPAUM up 32% Assets under Management ($ Mn) Fee Paying AUM ($ Mn) 5,656 2,822 3,649 3,710 2,141 1,721 Mar 21 Mar 22 Mar 23 Mar 21 Mar 22 Mar 23 Raised $1,703 Mn in the year Deployed $851 Mn in the year 14
Slide 16: MF – AUM growth of 24% YoY
B MF – AUM growth of 24% YoY Assets under Management ($ Mn) Total Folios (# in lakhs) 12,771 11.7 9.7 10,339 6,690 5.5 Mar 21 Mar 22 Mar 23 Mar 21 Mar 22 Mar 23 Inflows of $2,688 Mn in the year YoY growth of 21% in Total Folios 15
Slide 17: GI – Gross Premium growth of 53% YoY for the year
B GI – Gross Premium growth of 53% YoY for the year GI – Gross Premium for the year ($ Mn) GI – Number of policies issued (#) 67 3,87,800 2,96,800 44 1,88,200 27 Mar 21 Mar 22 Mar 23 Mar 21 Mar 22 Mar 23 2nd highest growth in the industry Growth of 31% YoY 16
Slide 18: LI – Achieved Embedded Value breakeven in the year
B LI – Achieved Embedded Value breakeven in the year LI – Gross Premium for the year ($ Mn) LI – Assets under Management ($ Mn) 204 807 178 668 148 513 Mar 21 Mar 22 Mar 23 Mar 21 Mar 22 Mar 23 Premium up of 15% YoY AUM grew 21% YoY 17
Slide 19: Wholesale reduction on track; reduction of ~40% in the year
C Wholesale reduction on track; reduction of ~40% in the year ECLF wholesale loan assets ($ Mn) 1,137 Planned reduction on track 730 693 365 Mar 22 Mar 23 Mar 23 Mar 24 planned actuals planned Expect momentum to continue with planned reduction of ~50% in FY24 18
Slide 20: Customer franchise continues to grow
3 Customer franchise continues to grow Customer Reach (# in lakhs) Customer Assets ($ Mn) 67 50,330 43,507 49 34,154 41 Mar 21 Mar 22 Mar 23 Mar 21 Mar 22 Mar 23 Growth of 36% YoY Growth of 16% YoY 19
Slide 21: Well capitalised businesses
4 Well capitalised businesses Businesses Metric Value NBFC Capital Adequacy 34.3% Housing Finance Capital Adequacy 32.0% Asset Reconstruction Capital Adequacy 47.1% Life Insurance Solvency Ratio 220% General Insurance Solvency Ratio 180% 20
Slide 22: Debt distribution across businesses
4 Debt distribution across businesses $ Mn Business Mar 23 NBFC 962 Housing Finance 225 Alternatives 30 Asset Reconstruction 355 BMU & Corporate 771 Gross Debt 2,343 (Less) Liquidity 353 Net Debt 1,990 21
Slide 23: Cash flow plan
4 Cash flow plan $ Mn Apr 23 to Mar 24 Opening Available Liquidity 353 Expected inflows (less) expected outflows (109) Fresh borrowings 572 Disbursements (438) Closing Available Liquidity 377 22
Slide 24: Assets in each tenor range adequately cover liabilities
4 Assets in each tenor range adequately cover liabilities $ Mn Assets Liabilities Excess / (Gap) Up to 1 year 1,545 1,423 122 1-3 years 1,654 1,119 535 3 years+ 1,326 1,034 292 23
Slide 25: Outlook for next 18 months
Outlook for next 18 months Ge Edelweiss Ideas create, values protect
Slide 26: Outlook for next 18 months
Outlook for next 18 months • Creating value by building and scaling asset light and retail businesses o Alternatives – Focusing on deployment of dry powder with emphasis on new fund raise o Mutual Fund – Expanding Equity AUM while maintaining leadership in Debt o Insurance – Leveraging technology an
Slide 27: Business Performance – Asset Management
Business Performance Asset Management
Slide 28: Asset Management businesses at a glance
Asset Management Asset Management businesses at a glance Year ended Mar 23 Equity AUM Profit After Tax $99 Mn $18,427 Mn $22 Mn Fee Income $55 Mn 27
Slide 29: Alternative Asset Mgt: Business performance snapshot
Alternative Asset Mgt Alternative Asset Mgt: Business performance snapshot Key Metrics for the quarter Business Update • Raised AUM of ~$1,703 Mn in the year; $268 Mn in the Equity ($ Mn) 75 quarter • Deployments grew 75% YoY leading to FPAUM growth of 32% AUM ($ Mn) 5,656 YoY • Steady annuity fees
Slide 30: Alternative Asset Mgt: Financial performance snapshot
Alternative Asset Mgt Alternative Asset Mgt: Financial performance snapshot $ Mn Quarter ended Quarter ended Year ended Year ended Mar 23 Mar 22 Mar 23 Mar 22 AUM 5,656 3,710 5,656 3,710 Fee Paying AUM 2,822 2,141 2,822 2,141 Equity 75 26 75 26 Net Revenue 14 11 48 34 Opex 9 9 27 28 Profit After Tax
Slide 31: Alternative assets overview
Alternative Asset Mgt Alternative assets overview AUM – Strategy wise Fee Paying AUM – Strategy wise AUM – Tenure wise 15% 24% 37% $5,656 Mn $2,822 Mn $5,656 Mn 63% 76% 85% Credit Real Assets Credit Real Assets Asset Over 3 year duration Asset less than 3 year duration 30
Slide 32: Mutual Fund: Business performance snapshot
Mutual Fund Mutual Fund: Business performance snapshot Key Metrics for the quarter Business Update • AUM grew by 24% YoY to $12,771 Mn; AUM market share improved by 45 bps YoY to 2.61% Equity ($ Mn) 24 • Net inflows of $797 Mn for the quarter with total net inflows of $2,688 Mn for the year AUM ($ M
Slide 33: Mutual Fund: Financial performance snapshot
Mutual Fund Mutual Fund: Financial performance snapshot $ Mn Quarter ended Quarter ended Year ended Year ended Mar 23 Mar 22 Mar 23 Mar 22 AUM 12,771 10,339 12,771 10,339 Net New Money 797 499 2,688 3,515 Equity 24 22 24 22 Revenue 5 5 20 20 Opex 5 6 18 18 Profit After Tax 0 (1) 2 2 32
Slide 34: Consistent growth in AUM and customer base
Mutual Fund Consistent growth in AUM and customer base MF Equity AUM ($ Mn) MF Debt AUM ($ Mn) 2,761 9,755 2,384 7,505 1,289 4,810 Mar 21 Mar 22 Mar 23 Mar 21 Mar 22 Mar 23 SIP Book ($ Mn) Active Folios (# in Lakhs) 21 21 11.7 15 9.7 5.5 Mar 21 Mar 22 Mar 23 Mar 21 Mar 22 Mar 23 Growing SIP book add
Slide 35: Business Performance – Asset Reconstruction
Business Performance Asset Reconstruction
Slide 36: Asset Reconstruction: Business performance snapshot
ARC Asset Reconstruction: Business performance snapshot Key Metrics for the quarter Business Update Equity ($ Mn) 340 • Recoveries of $202 Mn for the quarter; $916 Mn in the year of which 13% was from retail portfolio AUM ($ Mn) 4,512 • Deployed $46 Mn in the quarter; $178 Mn for the year Capital em
Slide 37: Asset Reconstruction: Financial performance snapshot
ARC Asset Reconstruction: Financial performance snapshot $ Mn Quarter ended Quarter ended Year ended Year ended Mar 23 Mar 22 Mar 23 Mar 22 AUM 4,512 4,890 4,512 4,890 Capital Employed 572 610 572 610 Wholesale assets 478 527 478 527 Retail assets 94 83 94 83 Equity 340 301 340 301 Gross Revenue 31
Slide 38: Business Performance – Credit
Business Performance Credit
Slide 39: Credit businesses at a glance
Credit Credit businesses at a glance Year ended Mar 23 Equity AUM Profit After Tax $567 Mn ~$1,460 Mn $19 Mn 38
Slide 40: NBFC: Business performance snapshot
NBFC NBFC: Business performance snapshot Key Metrics for the quarter Business Update • Maintained credit quality with stable asset quality ratios Equity ($ Mn) 470 o GNPA at 2.07%; improved 69 bps YoY o Total provision cover of 409% AUM ($ Mn) 954 • Wholesale book reduction of ~40% in the year; expe
Slide 41: NBFC: Financial performance snapshot
NBFC NBFC: Financial performance snapshot $ Mn Quarter ended Quarter ended Year ended Year ended Mar 23 Mar 22 Mar 23 Mar 22 AUM 954 1,532 954 1,532 Credit Assets 890 1,459 890 1,459 Gross Loan Book 539 823 539 823 Gross Revenue 49 49 204 224 Net Revenue 16 10 73 43 Opex 8 8 38 41 Credit Cost 4 (6)
Slide 42: Housing Finance: Business performance snapshot
Housing Finance Housing Finance: Business performance snapshot Key Metrics for the quarter Business Update • Portfolio continues to strengthen Equity ($ Mn) 97 o GNPA at 1.91%; improved from 1.99% YoY o Quarterly collection efficiency at 97.79% AUM ($ Mn) 501 • Total disbursals of ~$122 Mn for the y
Slide 43: Housing Finance: Financial performance snapshot
Housing Finance Housing Finance: Financial performance snapshot $ Mn Quarter ended Quarter ended Year ended Year ended Mar 23 Mar 22 Mar 23 Mar 22 AUM 501 535 501 535 Credit Assets 400 414 400 414 Gross Loan Book 373 383 373 383 Gross Revenue 14 15 54 63 Net Revenue 5 6 18 23 Opex 4 5 15 15 Credit C
Slide 44: Business Performance – Insurance
Business Performance Insurance
Slide 45: Insurance businesses at a glance
Insurance Insurance businesses at a glance Year ended Mar 23 Gross Premium Policies Issued Customer Reach $271 Mn # 444,380 ~47 lakhs 44
Slide 46: General Insurance: Business performance snapshot
General Insurance General Insurance: Business performance snapshot Key Metrics for the quarter Business Update • Gross direct premium income (GDPI) growth of 53% for Equity ($ Mn) 21 FY23, highest amongst GI players • Consistent growth in focus segments - Motor & Health grew by 52% & 56% in FY23; ag
Slide 47: General Insurance: Financial performance snapshot
General Insurance General Insurance: Financial performance snapshot $ Mn Quarter ended Quarter ended Year ended Year ended Mar 23 Mar 22 Mar 23 Mar 22 Net Premium Income 10 8 37 28 Investment Income & Other 3 2 10 7 Income Total Income 14 10 47 36 Policy benefits & insurance policy 7 31 27 7 liabili
Slide 48: Life Insurance: Business performance snapshot
Life Insurance Life Insurance: Business performance snapshot Key Metrics for the quarter Business Update Equity ($ Mn) 82 • Achieved Embedded Value break-even with focus on margin and capital management • Embedded Value of $224 Mn as on Mar 23 Individual APE ($ Mn) 28 • Individual APE crosses $61 Mn
Slide 49: Life Insurance: Financial performance snapshot
Life Insurance Life Insurance: Financial performance snapshot $ Mn Quarter ended Quarter ended Year ended Year ended Mar 23 Mar 22 Mar 23 Mar 22 Net Premium Income 81 68 199 173 Investment Income & Other 7 6 44 58 Income Total Income 88 73 243 231 Policy benefits & insurance policy 180 178 63 55 lia
Slide 50: Business Performance – Wealth
Business Performance Wealth
Slide 51: Wealth Management: Business performance snapshot
Wealth Mgt Wealth Management: Business performance snapshot Key Metrics for the quarter Business Update • AUA grew 12% YoY AUA ($ Mn) 27,391 • Robust net new money of ~$1,816 Mn in the year; growth of 16% YoY LAS loan book ~459 • Distribution income increased by 62% YoY ($ Mn) • Loan against Shares
Slide 52: Wealth Management: Financial performance snapshot
Wealth Mgt Wealth Management: Financial performance snapshot $ Mn Quarter ended Quarter ended Year ended Year ended Mar 23 Mar 22 Mar 23 Mar 22 AUA 27,391 24,569 27,391 24,569 Equity 274 223 274 223 Gross Revenue 74 50 269 195 Net Revenue 62 41 222 161 Opex 60 34 173 123 Profit After Tax 10 5 37 29
Slide 53: Governance & Corporate Responsibility
Governance & Corporate Responsibility
Slide 54: 8 Member Board with 4 Independent Directors
8 Member Board with 4 Independent Directors Mr. Ashok Kini Independent Director • Former Managing Director (National Banking Group) State Bank of India • Served as an advisor to the Thorat Committee on Financial Inclusion at RBI • 35 years of banking experience Dr. Ashima Goyal Independent Director
Slide 55: Significant institutional ownership
Significant institutional ownership Above 1% Shareholding Pattern as on Mar 31, 2023 Key Shareholders Percent 1 Pabrai Investment Funds 8.5% Employee Trust 2 BIH SA 4.8% DIIs, Non 4.8% Promoter Group Institutions 3 TIAA CREF funds 4.3% & Others 32.6% 4 Baron Asset Management 4.2% 28.4% 5 LIC 2.6% 6
Slide 56: Our contribution to building a more sustainable tomorrow
Our contribution to building a more sustainable tomorrow Under the leadership of EdelGive Foundation, we have… Over ~$104 Mn mobilized Partnered with over 168 Assisted over 60% of EdelGive’s Ensured long term through commitments high caliber NGOs NGO partners to grow at a CAGR association with avera
Slide 57: Our investment in communities
Our investment in communities EdelGive Foundation’s commitment to investing in communities 92 Districts Sustainable Women across 13 States Quality Education Livelihoods Empowerment 20 lakh children impacted 1.1 lakh Individuals trained 2.3 lakh women supported 31,000 schools reached 1,750 watershed
Slide 58: Trusted partner: EdelGive funding partners & networks
Trusted partner: EdelGive funding partners & networks Foundations, Corporates and HNIs partner with Edelgive Platform for their philanthropic allocation 57
Slide 59: Safe Harbour
Safe Harbour DISCLAIMER : 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 60: Safe Harbour
Safe Harbour Slide 4: Net worth includes MI, investment in CCD by CDPQ of $80 Mn and excludes Nuvama, Ex-Insurance PAT is post MI Slide 4,21,22: Available Liquidity is calculated as on balance sheet date and includes high quality liquid assets and LAS book; Excludes Nuvama Slide 4,21: Debt includes
Edelweiss Financial Services — FY2023 Earnings Presentation on 6ix