Edelweiss Financial Services Limited · NSE:EDELWEISS
Edelweiss Financial Services — Q3 FY2018 Earnings Presentation
50 slides from Edelweiss Financial Services's earnings presentation, January 2018
Slide 1: Edelweiss Financial Services Limited Q3FY18 Earnings Update
Edelweiss Financial Services Limited Q3FY18 Earnings Update
Slide 2: Safe Harbour
Safe Harbour 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 (“Ed
Slide 3: Contents
Contents 1 Quarterly Performance Highlights 2 Business Approach 3 Business Update 4 ESG at Edelweiss 3
Slide 4: Quarterly Performance Highlights – Q3FY18
Quarterly Performance Highlights – Q3FY18
Slide 5: Q3FY18 Performance Highlights
Q3FY18 Performance Highlights 1 Consolidated PAT growth 52% YoY Balance Sheet growth 31% YoY Sustained non-linear growth 2 Q3 Consolidated PAT at INR 236 Cr; 38% CAGR over 27 quarters 3 Profitability across businesses Credit business grew 42% YoY Franchise & Advisory business grew 55% YoY 4
Slide 6: Consolidated PAT Growth of 52%
1 Consolidated PAT Growth of 52% (INR Cr) Q3FY17 Q2FY18 Q3FY18 Y-o-Y Growth PAT 155 209 236 52% Consolidated PAT Ex-Insurance 187 234 272 46% Balance 37,245 47,819 48,796 31% Sheet 6
Slide 7: Sustained PAT Growth Trajectory
2 Sustained PAT Growth Trajectory Profit after Tax Ex-Insurance PAT Consolidated PAT (INR Cr) 272 234 222 212 236 187 209 166 196 154 155 133 170 120 155 111 140 144 98 103 89 90 122 70 69 62 68 72 106 46 48 51 57 83 88 91 96 78 79 33 27 35 51 56 58 61 39 40 42 46 46 33 26 29 Q2FY12 Q3FY12 Q1FY13 Q2
Slide 8: Profit Growth Across Businesses
3 Profit Growth Across Businesses Y-o-Y 3 Year (INR Cr) Q3FY17 Q2FY18 Q3FY18 FY17 FY16 Growth CAGR PAT 155 209 236 52% 609 414 39% Credit 117 149 167 42% 447 337 40% Franchise & Advisory 51 66 79 55% 193 72 81% Insurance (31) (24) (35) - (110) (104) - BMU, Corp & Others 18 18 25 - 79 110 - 8
Slide 9: Improving Key Performance Parameters
4 Improving Key Performance Parameters Key Ratios Consolidated Q3FY17 Q2FY18 Q3FY18 FY17 FY16 RoE 15.4% 18.3% 17.4% 15.5% 12.9% RoA 1.7% 2.0% 2.0% 1.7% 1.3% Cost to Income Ratio 65% 58% 59% 67% 71% Ex-Insurance Q3FY17 Q2FY18 Q3FY18 FY17 FY16 RoE 20.9% 22.2% 22.5% 20.7% 18.6% RoA 2.5% 2.5% 2.6% 2.4%
Slide 10: Business Approach
/ Z, Business Approach Ge Edelweiss reate, values protect
Slide 11: Edelweiss at a Glance
Edelweiss at a Glance INR cr PAT PAT Ex-Insurance Balance Sheet EOP 38% 9MFY18A 856 cr 39% 9MFY18A 971 cr 25% 9MFY18 48,796 cr CAGR CAGR CAGR FY12 128 cr FY12 141 cr FY12 13,289 cr RoE Ex-Insurance % RoA Ex-Insurance % 1500 9MFY18 22.3 % 9MFY18 2.5 % 130 bps bps FY12 7.3 % FY12 1.2 % 9MFY18A – 9M FY
Slide 12: We are a Diversified Financial Services Company
We are a Diversified Financial Services Company Credit Bank-like business model • Retail Credit • Corporate Credit • Distressed Credit Multiple vectors of growth Consistent growth and profitability Franchise & Advisory • Wealth Management • Asset Management Reduction in volatility • Capital Markets
Slide 13: Our Asset Base is a Mix of Own and Customer Related Assets
Our Asset Base is a Mix of Own and Customer Related Assets As on 31st Dec’17 (rounded off to nearest 100) INR Cr YoY Growth Balance Sheet Assets 48,800 31% Clients ~11.4 lacs Assets under Management and Advice 1,61,200 61% Distressed Credit (ARC Assets) 38,600 38% Offices Assets Under Advice (Wealth
Slide 14: Retail Credit Book is now 39% of Total Credit Book
Retail Credit Book is now 39% of Total Credit Book Retail Credit - Capital Employed (INR Cr) 14,200 8,952 6,031 4,188 2,799 2,115 1,535 FY12 FY13 FY14 FY15 FY16 FY17 9MFY18 Key vectors for our growth will be SME Loans and Retail Mortgages 14
Slide 15: AUAs Continue to Scale Up - ~INR 85,000 Crores
AUAs Continue to Scale Up - ~INR 85,000 Crores Wealth Management AUA 84,700 (INR Cr) 60,300 29,500 17,700 7,000 8,900 4,800 FY12 FY13 FY14 FY15 FY16 FY17 9MFY18 We cater to UHNI as well as the fast-growing Affluent segments 15
Slide 16: Scale Benefits Leading to Operating Efficiencies…
Scale Benefits Leading to Operating Efficiencies… Cost to income ratio (Ex- Insurance) 70% 65% 59% 59% 60% 54% 47% FY12 FY13 FY14 FY15 FY16 FY17 9MFY18 16
Slide 17: …Aided by Technology Initiatives across Businesses
…Aided by Technology Initiatives across Businesses Retail Credit Wealth Management Life Insurance • Scorecard based objective • Digital client on-boarding • Leveraging analytics and underwriting machine learning for • Client centricity customer acquisition and • Cognitive Tools to further management
Slide 18: We have Significantly Improved Balance Sheet Efficiency…
We have Significantly Improved Balance Sheet Efficiency… RoE RoA 22.3% 20.7% 2.5% 2.4% 18.6% 15.6% 1.9% 1.9% 17.9% 1.8% 1.7% 15.5% 2.0% 12.2% 11.3% 1.7% 12.9% 1.2% 1.5% 11.3% 1.4% 7.3% 1.3% 1.2% 1.2% 7.6% 8.2% 6.0% FY12 FY13 FY14 FY15 FY16 FY17 9MFY18 FY12 FY13 FY14 FY15 FY16 FY17 9MFY18 Ex-Insuranc
Slide 19: …Ensuring Our Diversified Model Delivers Consistent Growth
…Ensuring Our Diversified Model Delivers Consistent Growth PAT (INR Cr) Balance Sheet (INR Cr) Annualised 856 48,796 609 38,667 32,145 414 27,072 329 642 220 16,204 178 13,289 14,529 128 FY12 FY13 FY14 FY15 FY16 FY17 9MFY18 FY12 FY13 FY14 FY15 FY16 FY17 9MFY18 25% growth in balance sheet assets supp
Slide 20: Business Update: Credit
Business Update CREDIT Retail Credit – Corporate Credit – Distressed Credit
Slide 21: Credit Business is a Mix of Diversified and Scalable Assets
Credit Business is a Mix of Diversified and Scalable Assets Capital Employed % As on 31st Dec’17 (INR Cr) Share Retail Credit 14,200 39% Retail Mortgage 5,532 15% Blend of loans to home owners and home buyers SME & Business Loans 3,189 9% Underserved and highly scalable, focus area for future Loan a
Slide 22: Credit Business at a Glance
Credit Business at a Glance Credit Business (INR Cr) 9MFY18 FY17 Capital Employed 36,115 27,608 Average Interest Yield 16.1% 16.2% Average Cost of Borrowing 9.9% 10.3% Net Interest Margin 7.5% 7.2% Net Revenue 1,786 1,695 Cost to Income 35% 36% Provisions & Write Offs 351 319 PAT (post MI) 453 447 R
Slide 23: Asset Quality at a Glance
Asset Quality at a Glance At the end of 9MFY18 FY17 Gross NPA (INR Cr) 533 362 Gross NPA % 1.74% 1.59% Net NPA % 0.68% 0.60% Outstanding Provision Held 439 314 Total Provision Cover 82% 87% Average Collateral cover on Corporate book 2.2X 2.3X Average Loan-To-Value on Retail book ~45% ~45% Credit Fra
Slide 24: Retail Credit Expanding Footprint
Retail Credit Expanding Footprint Capital Employed Business Highlights (INR Cr) SME • Originations up 156% on Y-o-Y basis in Q3FY18 14,200 • Expanding SME credit distribution capabilities; now present in 69 locations from 44 locations in Q2FY18 11,783 • Launched new product “Salary Advance” for sala
Slide 25: Calibrated Growth in Corporate Credit
Calibrated Growth in Corporate Credit Capital Employed Business Highlights (INR Cr) • Risk-management centered approach to collateralized lending • In house team of experts for carrying out detailed 16,372 evaluations 15,398 13,222 • Counterparty, Collateral and Cash flows • Ring fenced structures a
Slide 26: Agri Credit Expected to Scale Up
Agri Credit Expected to Scale Up Collateral Value (INR Cr) Agri Credit Book Size (INR Cr) Collateral Manager Stock Storage Stock 3,310 2,838 2,340 570 890 912 690 482 438 2,740 1,650 1,926 Q3 FY17 Q2 FY18 Q3 FY18 Q3 FY17 Q2 FY18 Q3 FY18 Business Highlights • One of the few organized players providin
Slide 27: Distressed Credit Performance on Track
Distressed Credit Performance on Track Capital Employed Business Highlights (INR Cr) • Focus on large operating and EBITDA earning assets that 5,359 5,543 need financial restructuring 3,543 • Strong focus on resolutions aided by changes in Insolvency and Bankruptcy Code norms • Actively targeting op
Slide 28: Business Update: Franchise & Advisory
Business Update FRANCHISE & ADVISORY Wealth Management – Asset Management – Capital Markets
Slide 29: Franchise & Advisory Business at a Glance
Franchise & Advisory Business at a Glance Franchise & Advisory 9MFY18 FY17 (INR Cr) Net Revenue 932 1,060 Cost to Income 66% 73% PAT 209 193 Credit Franchise & Advisory Life Insurance 29
Slide 30: Wealth Management AUA Continues to Scale Up
Wealth Management AUA Continues to Scale Up Assets Under Advice Business Highlights (INR Cr) • Proposed acquisition of Religare’s Securities broking 84,700 business to add significant distribution reach 76,300 53,700 • Will increase client base by 3X • Increase our distribution reach, adding ~1,250
Slide 31: Asset Management has Healthy Growth in AUM
Asset Management has Healthy Growth in AUM Asset Management AUM Business Highlights (INR Cr) Alternative Assets 26,000 • Leading player in the Private Debt space across special opportunities, real estate credit and distressed assets credit 22,100 • Raised INR 1,750 Cr in a new CAT II Fund – Edelweis
Slide 32: Capital Markets Strong Performance Continues
Capital Markets Strong Performance Continues Key Equity Capital Market Transactions Business Highlights Equity Capital Markets • Closed eight capital market transactions and one advisory transaction during the quarter IPO INR 8,695 Cr QIP INR 2,000 Cr IPO of INR 1,542 Cr • Continue to build market s
Slide 33: Business Update: Life Insurance
Business Update Life Insurance
Slide 34: Life Insurance – Long Term Value Creation
Life Insurance – Long Term Value Creation Products Mix Distribution New Business Premium 9MFY18 • Agency-led multi-channel distribution approach with 16% 26% emphasis on productivity • 121 branches and 27,485 PFAs across 94 cities in India 30% 28% Investments Capability Traditional Par Traditional N
Slide 35: One of the Fastest Growing in Individual Annual Premium Equivalent
One of the Fastest Growing in Individual Annual Premium Equivalent Individual Annual Premium Equivalent Number of Policies Issued CAGR growth since 9MFY15 (Individual Business ) 32% 23% 14,560 12,105 12% 8,470 Edelweiss Tokio Peer Set Industry Q3FY17 Q2FY18 Q3FY18 Life Insurance Business Highlights
Slide 36: Life Insurance – Key Financials
Life Insurance – Key Financials Edelweiss Tokio Life Insurance Company Limited (ETLI) (INR Cr) 9MFY18 FY17 Net Premium Income 314 426 Investment Income & Other Income 142 151 Total Income 456 577 Profit After Tax (136) (216) Minority (67) (106) Edelweiss’ Share in PAT (69) (110) Net Worth 1,258 732
Slide 37: Balance Sheet
Balance Sheet Ge Edelweiss Ideas create, values protect
Slide 38: Key Highlights – Balance Sheet
Key Highlights – Balance Sheet 1 Matched Asset-Liability profile 2 Improved capital adequacy ratio at 19.2% 3 Diversified borrowings mix 4 Liquidity cushion at 10% of Balance Sheet 5 Stable business model reflected in credit ratings 38
Slide 39: Matched Asset - Liability Profile
1 Matched Asset - Liability Profile As on 31st Dec’17: INR 48,796 Cr Assets Liabilities 100% % of Assets and Liabilities 100% 70% 47% 66% 38% 30% 37% 7% 24% 26% 7% Asset Specific 0-3 Mnth 3-6 Mnth 6-12 Mnth 1-3 years 3+ years Borrowing • Positive asset-liability matching across durations • BMU manag
Slide 40: Comfortable Capital Adequacy Ratio
2 Comfortable Capital Adequacy Ratio Capital Structure as on 31st Dec’17 (INR Cr) Tier I 7,840 Capital Adequacy Ratio Tier II 1,559 19.2% Total Capital 9,399 Debt/Equity : 4.3 (excluding Treasury assets ) Risk Weighted 49,038 Assets 87% of gross assets 40
Slide 41: Diversified Sources of Borrowing
3 Diversified Sources of Borrowing As on 31st Dec’17 Others 10% Mutual Funds Retail 29% 14% Total Borrowings INR 41,116 Cr 8% Asset Specific Borrowing 39% Banks 41
Slide 42: Liquidity Cushion at 10% of Balance Sheet
4 Liquidity Cushion at 10% of Balance Sheet Liquidity Cushion (rounded off to nearest 50) INR Cr • A well diversified liquidity cushion 4,900 comprising: 4,050 • Banking Lines • Fixed Deposits 2,900 2,600 • Government Securities, Mutual Funds 1,350 etc 1,700 1,630 920 2,700 • Steady growth in liquid
Slide 43: Stable Business Model Reflected in Credit Ratings
5 Stable Business Model Reflected in Credit Ratings Purpose (Debt Programme) Rating agency Rating Short term CRISIL A1+ Short term CARE A1+ Short term ICRA A1+ Long term BWR AA+ Long term CARE AA Long term CRISIL AA Long term ICRA AA Long term SMERA AA+ 43
Slide 44: Significant Institutional Ownership
Significant Institutional Ownership Shareholding Pattern Key Shareholders above 1% (As on 31st Dec’17) Name Percent 1 BIH SA 4.22% Employee 2 HDFC Mutual Fund 2.30% Trust DIIs, Non 3 Goldman Sachs Funds 1.85% Institutions Promoters 4.9% 4 Caisse de dépôt et placement du Québec (CDPQ) 1.54% & Others
Slide 45: ESG at Edelweiss
ESG at Edelweiss Ge Edelweiss Ideas create, values protect
Slide 46: Creating Continuous Talent and Leadership Pipeline
Creating Continuous Talent and Leadership Pipeline • Our leadership programmes are focused towards identifying and grooming leaders at every level • Leadership development is an integral part of our business and growth strategy • Development endeavors at Edelweiss are structured, framework driven an
Slide 47: Board Comprises Majority of Independent Directors
Board Comprises Majority of Independent Directors 6 out of 11 directors are independent Mr. K Chinniah Mr. P N Venkatachalam • Served as Managing Director & Global Head • Banking sector expert and former member of Infrastructure, Portfolio, Strategy & Risk the Interim Pension Fund Regulatory Group w
Slide 48: EdelGive Foundation - Unique Philanthropic Platform
EdelGive Foundation - Unique Philanthropic Platform Focuses on Education, Livelihood and Women’s Empowerment 48
Slide 49: EdelGive Foundation - Key Metrics
EdelGive Foundation - Key Metrics Employee Engagement Employee Engagement % More than 70% engaged in financial and non financial giving Man Hours spent till date 25,000 hrs Field Visits till date 78 Capacity Building – Non financial support Employees provided skills and time pro bono in over 60 proj
Slide 50: Awards and Recognition
Awards and Recognition Best Research Analyst (organization) Award ASSOCHAM Capital Markets Intermediaries Excellence Awards 2017 Best Performing Institutional Member NSE Market Achievers Award 2017 Ranked as one of the leading custodians in India Global Custodian Indian Domestic Survey 2017 Best Pro
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