Edelweiss Financial Services Limited · NSE:EDELWEISS
Edelweiss Financial Services — Q2 FY2021 Earnings Presentation
53 slides from Edelweiss Financial Services's earnings presentation, Oct 30, 2020
Slide 1: Cover letter to National Stock Exchange
EW/Sec/2020/271 October 30, 2020 National Stock Exchange of India Limited Exchange Plaza, Bandra Kurla Complex, Bandra (E), Mumbai – 400 051. Dear Sirs, Ref.:- Symbol: EDELWEISS Sub: Investor Presentation Please find enclosed the Investor Presentation on Earnings Updates for the quarter and half yea
Slide 2: Q2FY21 Earnings Update
Edelweiss Financial Services Limited Q2FY21 Earnings Update
Slide 3: Contents
Contents 1 Q2FY21 Highlights 3 2 Business Update 21 3 Balance Sheet Highlights 40 4 Organization. Governance. Sustainability 45 2
Slide 4: Q2FY21 Highlights
Q2FY21 Highlights Gre Edelweiss Ideas create, values protect
Slide 5: Edelweiss at a Glance – Q2FY21
Edelweiss at a Glance – Q2FY21 Net Worth Liquidity INR 8,093 Cr INR 6,600 Cr Customer Assets Book Value INR 2,49,100 Cr INR 66 Face Value ₹1 4
Slide 6: Diversified Businesses Across 9 Key Entities
Diversified Businesses Across 9 Key Entities Edelweiss Financial Services Ltd (EFSL) Corporate Wealth Asset Life General Retail Credit ARC Credit Management Management Insurance Insurance • ECL Finance • Edelweiss • Edelweiss • Edelweiss • Edelweiss • Edelweiss • Edelweiss Ltd Retail Securities Ltd
Slide 7: Well-Capitalised Businesses And Robust Customer Franchise
Well-Capitalised Businesses And Robust Customer Franchise.. Equity Entity Metric Value (INR Cr) ECL Finance Ltd 3,210 23.5% Edelweiss Retail Finance Ltd 481 CAPAD 29.5% Edelweiss Housing Finance Ltd 782 28.2% Edelweiss Securities Ltd & Others 1,348 AUA ~INR 1,33,200 Cr EAMC, EAAA & Others 181 AUM ~I
Slide 8: Resulting In Strong Fee Income
..Resulting In Strong Fee Income Management Fee Income (INR Cr) 480 489 467 464 411 385 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Q2FY21 Robust annuity income from Wealth Management, Asset Management and Asset Reconstruction businesses 7
Slide 9: Edelweiss Approach
Edelweiss Approach • Our mission is to build successful and dominant businesses that create long-term value for shareholders • EFSL contributes capital, brand, risk management and governance for sustainable growth • Our partners are global entities with impeccable credentials who contribute domain e
Slide 10: Scalable Opportunity For Alternatives in India
Scalable Opportunity For Alternatives in India Globally, investors are seeking yield in a low interest rate world, and Private Credit is becoming mainstream Close-ended Asset Management vehicles as preferred option for long term credit investments as they are unlevered patient vehicles Market share
Slide 11: Largest Fund Raise In The Year In Indian Private Credit
Largest Fund Raise In The Year In Indian Private Credit • Successfully closed ESOF III at $900 Mn (INR 6,600 Cr) • This is the third in the Edelweiss Special Opportunities Fund (ESOF) series, focused on providing structured credit to Indian companies • Strong validation of our capabilities and trust
Slide 12: Asset Management AUM Grew 105% YoY
Asset Management AUM Grew 105% YoY Mutual Fund and Alternatives AUM (INR Cr) 73,500 51,000 52,800 50,800 35,900 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Q2FY21 11
Slide 13: Continued Execution Of FY21 Plan in Q2FY21 (1/2)
Continued Execution Of FY21 Plan in Q2FY21 (1/2) Corporate Credit • Reduced corporate credit book to INR 8,613 Cr in H1FY21 • Assigned INR 560 Cr mortgages portfolio as part of asset- light business approach Retail Credit • Retail collections improving as economy emerges from lockdown Wealth • Stron
Slide 14: Continued Execution Of FY21 Plan in Q2FY21 (2/2)
Continued Execution Of FY21 Plan in Q2FY21 (2/2) General • Edelweiss General Insurance is the fastest growing GI player in H1FY21 Insurance • Overall Liquidity stood at ~INR 6,600 Cr which is 21% of borrowings Comfortable • Raised INR 2,500 Cr in Q2FY21 and INR 4,350 Cr in H1FY21 across PCG & TLTRO
Slide 15: Distribution of Earnings Across Businesses
Distribution of Earnings Across Businesses Businesses (INR Cr) Key Entities Q1FY21 Q2FY21 Corporate Credit ECL Finance (156) 22 Retail Credit ERFL & EHFL 11 20 Wealth Management ESL & Others 59 83 Asset Management EAMC, EAAA 5 3 Asset Reconstruction EARC 40 46 BMU & Corporate EFSL & others (139) (14
Slide 16: Q2FY21 Financial Snapshot
Q2FY21 Financial Snapshot Consolidated (INR Cr) Q1FY21 Q2FY21 Gross Revenue 1,808 2,047 Interest Cost 1,002 949 Net Revenue 806 1,098 Expenses 904 1,043 PPoP (98) 55 Impairment 145 87 PBT (243) (31) PAT Pre MI (264) (56) PAT Post MI (245) (49) 15
Slide 17: Key Focus Areas
Key Focus Areas 1 Reduction in Corporate Credit Exposure 2 D/E comes down further 3 Cost rationalization under way 4 Progress on EWM demerger & listing process 16
Slide 18: Corporate Credit Exposure Continues To Scale Down
1 Corporate Credit Exposure Continues To Scale Down Corporate Credit Assets (INR Cr) 21,100 18,055 16,178 10,130 8,613 H1FY19 H2FY19 H1FY20 H2FY20 H1FY21 Corporate credit assets will decline by another INR 2,000 - 3,000 Cr by end FY21 17
Slide 19: Debt Equity Ratio Declined Further
2 Debt Equity Ratio Declined Further Borrowings (INR Cr) D/E (Excl Treasury Assets) 50,323 43,201 38,695 33,754 30,845 H1FY19 H2FY19 H1FY20 H2FY20 H1FY21 5.2x 4.4x 3.4x 3.5x 3.1x Borrowings reduced by ~40% over H1FY19 levels 18
Slide 20: Cost Rationalisation Measures Under Way
3 Cost Rationalisation Measures Under Way Q2FY21 Fixed Cost comparison (INR Cr) • Achieved cost reduction of 23% in Q2FY21 against average FY20 fixed cost 550 • Targeted reduction of ~20-25% in FY21 439 425 • Multiple vectors applied to enhance cost discipline and cost control measures • Key expense
Slide 21: Progress on EWM Demerger & Listing Process
4 Progress on EWM Demerger & Listing Process Investment by PAG: Expected • Regulators’ and Lenders’ approvals enabling PAG’s strategic investment in Completion by Dec’20-Feb’21 EWM NCLT approval for restructuring: Expected • NCLT approval for restructuring of Wealth Management entities under the Com
Slide 22: Business Update
Business Update Gre Edelweiss Ideas create, values protect
Slide 23: Corporate Credit: ECL Finance Limited
ECL Finance Corporate Credit : ECL Finance Limited Q2FY21 Key Metrics Business Update • Focused on resource raising to generate liquidity Equity (INR Cr) 3,210 • Raised INR 1,900 Cr across PCG and TLTRO schemes in H1FY21 • Additionally, raised ~INR 400 Cr from banks and other CAPAD 23.5% sources in
Slide 24: Business Performance Snapshot: ECL Finance Ltd
ECL Finance Business Performance Snapshot : ECL Finance Ltd INR Cr Q1FY21 Q2FY21 EOP Loan Book 10,953 10,569 EOP Equity 3,363 3,210 Net Revenue 95 278 Operating Expenses 127 190 Credit Costs 124 67 Profit After Tax (156) 22 Net Interest Margin 2.3% 2.6% NNPA 2.1% 2.3% Total provision cover 202% 223%
Slide 25: Retail Credit: ERFL and EHFL
Retail Credit: Edelweiss Retail Finance Ltd and ERFL/EHFL Edelweiss Housing Finance Ltd Q2FY21 Key Metrics Business Update ERFL EHFL • Steady improvement in overall collections • Overall collections during the quarter was at ~INR 500 Cr Equity (INR Cr) 481 782 • Collection efficiency at 91% in Sept’
Slide 26: Business Performance Snapshot: ERFL
ERFL/EHFL Business Performance Snapshot : ERFL INR Cr Q1FY21 Q2FY21 EOP Loan Book 1,312 1,362 EOP Equity 474 481 Net Revenue 20 20 Operating Expenses 8 7 Credit Costs (2) 3 Profit After Tax 11 8 Net Interest Margin 5.6% 5.7% NNPA 2.0% 1.7% Total provision cover 120% 147% CAPAD 29.3% 29.5% 25
Slide 27: Business Performance Snapshot: EHFL
ERFL/EHFL Business Performance Snapshot : EHFL INR Cr Q1FY21 Q2FY21 EOP Loan Book 4,490 3,815 EOP Equity 769 782 Net Revenue 37 59 Operating Expenses 27 33 Credit Costs 11 8 Profit After Tax - 13 Net Interest Margin 3.3% 3.6% NNPA 1.4% 1.4% Total provision cover 69% 88% CAPAD 23.2% 28.2% 26
Slide 28: Sharp Pick-Up in Retail Collections
ERFL/EHFL Sharp Pick-Up in Retail Collections Retail Credit Collections (INR Cr) 341 267 250 231 107 115 Apr'20 May'20 Jun'20 July'20 Aug'20 Sept'20 Increased customer engagement has helped greatly with collections 27
Slide 29: Edelweiss Wealth Management: Edelweiss Securities Ltd and Others
Edelweiss Wealth Management : Edelweiss Securities EWM Ltd and Others Q2FY21 Key Metrics Business Update • Business momentum back to pre-covid levels AUA (INR Cr) 1,33,200 • Enhanced client engagement cutting across all segments – affluent to mega institutions Net New Money 1,530 (INR Cr) • Continue
Slide 30: Wealth Assets Grew 24% YoY
EWM Wealth Assets Grew 24% YoY Wealth Management AUA (INR Cr) 1,33,200 1,27,300 1,13,700 1,11,200 1,07,800 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Q2FY21 29
Slide 31: Business Performance Snapshot: Edelweiss Wealth Management
Business Performance Snapshot : Edelweiss Wealth EWM Management ESL & Others (INR Cr) Q1FY21 Q2FY21 AUA 1,27,300 1,33,200 EOP Equity 1,260 1,348 Gross Revenues 264 310 Net Revenues 215 256 Operating costs 141 155 Profit before tax 72 101 Profit after tax 59 83 30
Slide 32: Edelweiss Asset Management: EAAA and EAMC
EAM Edelweiss Asset Management : EAAA and EAMC Q2FY21 Key Metrics Business Update EAAA EAMC • Mutual Fund : (Alternatives) (Mutual Fund) • Equity YTD Inflows of ~INR 600 Cr against industry outflows of ~INR 9,000 Cr Equity 21 160 • Launched an equity passive fund in (INR Cr) partnership with MSCI, t
Slide 33: Business Performance Snapshot: EAAA and EAMC
EAM Business Performance Snapshot : EAAA and EAMC EAMC (Mutual Fund) EAAA (Alternatives) (INR Cr) Q1FY21 Q2FY21 Q1FY21 Q2FY21 AUM 29,400 44,000 23,400 29,500 EOP Equity 159 160 20 21 Net Revenues 25 27 36 35 Operating costs 23 25 33 34 Profit before tax 2 1 3 2 Profit after tax 2 1 3 2 32
Slide 34: Asset Reconstruction: Edelweiss Asset Reconstruction Company Ltd
Asset Reconstruction : Edelweiss Asset Reconstruction EARC Company Ltd Q2FY21 Key Metrics Business Update • Strong recoveries despite current market Equity (INR Cr) 2,123 environment • Recoveries at INR 965 Cr in Q2FY21 against INR 827 Cr in Q2FY20 AUM (INR Cr) 42,400 • Minimal impact of non-operati
Slide 35: Business Performance Snapshot: Edelweiss Asset Reconstruction
Business Performance Snapshot : Edelweiss Asset EARC Reconstruction EARC (INR Cr) Q1FY21 Q2FY21 AUM 43,100 42,400 EOP Capital Employed 5,439 5,262 EOP Equity 2,007 2,123 Gross Revenues 213 215 Net Revenues 77 84 Operating costs 17 22 Profit before tax 54 63 Profit after tax 40 46 34
Slide 36: Life Insurance: Edelweiss Tokio Life Insurance Company Ltd
Life Insurance : Edelweiss Tokio Life Insurance ETLI Company Ltd Q2FY21 Key Metrics Business Update • Amongst only 2 companies to have registered Equity (INR Cr) 625 Individual APE growth every month in H1FY21 • Dominant share of Traditional Par and Non-Par at ~84% Individual APE (INR Cr) 93 • Stron
Slide 37: Business Performance Snapshot: Edelweiss Tokio Life Insurance
Business Performance Snapshot : Edelweiss Tokio Life ETLI Insurance Company Ltd ETLI (INR Cr) Q1FY21 Q2FY21 Net Premium Income 154 276 Investment Income & Other Income 195 121 Total Business 349 397 Profit After Tax (68) (58) Minority (33) (29) Edelweiss’ Share in PAT (35) (30) 36
Slide 38: Among The Fastest Growing In The Industry
ETLI Among The Fastest Growing In The Industry Individual APE CAGR Since FY16 vs Industry Outpaced Industry growth YoY during the quarter 29% 10% 0% 13% 9% -19% Edelweiss Tokio Peer Set Industry Edelweiss Tokio Peer Set Industry Life Insurance Life Insurance 37
Slide 39: General Insurance: Edelweiss General Insurance Company Ltd
General Insurance : Edelweiss General Insurance EGIC Company Ltd Q2FY21 Key Metrics Business Update • Fastest growing player in the industry in H1FY21 Equity (INR Cr) 109 • Serviced 59% motor claims through the BOLT app in H1FY21 GWP (INR Cr) 59 • First Insurer to open its stack to partners and deve
Slide 40: Fastest Growing Player In The Industry Enabled By Digital Model
Fastest Growing Player In The Industry Enabled By EGIC Digital Model Robust growth in GDPI in H1FY21 Strong performance in Retail Lines compared to the Industry in H1FY21 83% 398% 187% 28% 2% -13% Edelweiss General Industry Motor Retail Health Insurance Edelweiss General Insurance Industry 39
Slide 41: Balance Sheet Highlights
Balance Sheet Highlights Gre Edelweiss Ideas create, values protect
Slide 42: Liquidity Position Has Improved
Liquidity Position Has Improved Available Liquidity (INR Cr) % of Borrowings 10,300 8,800 8,400 8,150 6,600 4,700 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Q2FY21 22% 22% 28% 24% 15% 21% 41
Slide 43: Liquidity & Cash Flow Plan
Liquidity & Cash Flow Plan Particulars (INR Cr) Oct’20-Mar’21 Apr’21-Sep’21 Opening Available Liquidity (A) 6,600 6,100 Inflows Contractual Inflows 3,600 3,300 Covid-related impact (600) - Fresh Borrowings 2,500 2,500 Asset Sell downs 1,500 1,000 Total Inflows (B) 7,000 6,800 Outflows Repayments 5,7
Slide 44: Borrowing Profile Is Well Diversified
Borrowing Profile Is Well Diversified Borrowing Profile by Instruments Borrowing Profile by Source 2% 22% 43% 35% 8% 63% 27% Loans & OD NCDs CPs Banks Retail MF PF, Insurance & FIs INR 30,845 Cr INR 30,845 Cr 43
Slide 45: Assets in each Tenor Range Adequately Cover Liabilities
Assets in each Tenor Range Adequately Cover Liabilities (INR Cr) Assets Liabilities Gap Upto 1 year 17,500 15,000 2,500 1-3 years 16,600 15,000 1,600 3 years+ 13,400 10,600 2,800 Total gap represents our equity base 44
Slide 46: Organisation. Governance. Sustainability
Organisation. Governance. Sustainability
Slide 47: Prudent Risk Management and Responsible Growth
Prudent Risk Management and Responsible Growth Market Risk Regulatory Reputational Business Risk Credit Risk Liquidity Risk Risk Risk Physical Technology Operational & Infrastructure People Risk Fraud Risk Risk Process Risk Risk Enterprise risk management approach: 11 Risk Framework 46
Slide 48: 12 Member Board Comprises Majority of Independent Directors
12 Member Board Comprises Majority of Independent Directors Mr. P N Venkatachalam Dr. Ashima Goyal Independent Director Independent Director • Banking sector expert and former member of the • Professor at Indira Gandhi Institute of Development Research Interim Pension Fund Regulatory Authority of In
Slide 49: Significant Institutional Ownership
Significant Institutional Ownership Shareholding Pattern as on 30th Sept, 2020 Key Shareholders above 1% Percent 1 Pabrai Investment Funds 6.0% Employee 2 BIH SA 5.2% Trust 3 TIAA CREF funds 3.4% DIIs, Non 4.8% Promoter Group Institutions 4 Wellington Management 3.1% & Others 5 LIC 2.2% 21.3% 32.9%
Slide 50: Our Sustainability Efforts
Our Sustainability Efforts EdelGive Foundation’s commitment to Achieving the SDGs (Cumulative till date) 111 Districts Sustainable Women across 14 States Quality Education Livelihoods Empowerment INR 8.6 Cr* INR 23.69 Cr* INR 63 lakhs* INR 54.74 Cr * 18.41 lakh Children 1,248 acres of irrigated land
Slide 51: EdelGive Funding Partners & Networks
EdelGive Funding Partners & Networks We have partnered with some of the largest Foundations, Corporates and HNIs through our innovative models focused on collaboration 50
Slide 52: 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 53: Safe Harbour – Notes
Safe Harbour NOTES: Slide 4,5 & 6 : Net worth is including MI and includes investment in equity convertible instrument by CDPQ of INR 1,040 Cr, Kora Management of INR 177 Cr and Sanaka Capital of INR 117 Cr Slide 4,6,11, 28,29,30 : Customer Assets, AUM and AUA are rounded off to nearest 100 Slide 5
Edelweiss Financial Services — Q2 FY2021 Earnings Presentation on 6ix