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: NSE filing cover letter
EW/Sec/2020/273 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 in US Dollar on Earnings Updates for the quarter
Slide 2: Edelweiss Financial Services Limited Q2FY21 Earnings Update
US $ version 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 oO Edelweiss Ideas create, values protect
Slide 5: Edelweiss at a Glance – Q2FY21
Edelweiss at a Glance – Q2FY21 Net Worth Liquidity $1,097 Mn $894 Mn Customer Assets Book Value $33,754 Mn $0.89 Face Value $0.01 4
Slide 6: Diversified Businesses Across 9 Key Entities
Diversified Businesses Across 9 Key Entities Edelweiss Financial Services Ltd (EFSL) Corporate Wealth Asset Life General Retail Credit ARC Credit Management Management Insurance Insurance • ECL Finance • Edelweiss • Edelweiss • Edelweiss • Edelweiss • Edelweiss • Edelweiss Ltd Retail Securities Ltd
Slide 7: Well-Capitalised Businesses And Robust Customer Franchise
Well-Capitalised Businesses And Robust Customer Franchise.. Equity Entity Metric Value ($ Mn) ECL Finance Ltd 435 23.5% Edelweiss Retail Finance Ltd 65 CAPAD 29.5% Edelweiss Housing Finance Ltd 106 28.2% Edelweiss Securities Ltd & Others 183 AUA ~$18,049 Mn EAMC, EAAA & Others 25 AUM ~$9,960 Mn Edel
Slide 8: ..Resulting In Strong Fee Income
..Resulting In Strong Fee Income Management Fee Income ($ Mn) 65 66 63 63 56 52 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 c
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 $900 Mn • This is the third in the Edelweiss Special Opportunities Fund (ESOF) series, focused on providing structured credit to Indian companies • Strong validation of our capabilities and trust placed in our
Slide 12: Asset Management AUM Grew 105% YoY
Asset Management AUM Grew 105% YoY Mutual Fund and Alternatives AUM ($ Mn) 9,960 6,911 6,884 7,155 4,865 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 $1,167 Mn in H1FY21 • Assigned $76 Mn mortgages portfolio as part of asset light business approach Retail Credit • Retail collections improving as economy emerges from lockdown Wealth • Strong tracti
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 $894 Mn which is 21% of borrowings Comfortable • Raised $339 Mn in Q2FY21 and $589 Mn in H1FY21 across PCG & TLTRO schemes, Liquidi
Slide 15: Distribution of Earnings Across Businesses
Distribution of Earnings Across Businesses Businesses ($ Mn) Key Entities Q1FY21 Q2FY21 Corporate Credit ECL Finance (21) 3 Retail Credit ERFL & EHFL 1 3 Wealth Management ESL & Others 8 11 Asset Management EAMC, EAAA 1 0.4 Asset Reconstruction EARC 5 6 BMU & Corporate EFSL & others (19) (20) Total
Slide 16: Q2FY21 Financial Snapshot
Q2FY21 Financial Snapshot Consolidated ($ Mn) Q1FY21 Q2FY21 Gross Revenue 245 277 Interest Cost 136 129 Net Revenue 109 149 Expenses 122 141 PPoP (13) 7 Impairment 20 12 PBT (33) (4) PAT Pre MI (36) (8) PAT Post MI (33) (7) 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 ($ Mn) 2,859 2,447 2,192 1,373 1,167 H1FY19 H2FY19 H1FY20 H2FY20 H1FY21 Corporate credit assets will decline by another $270 – $410 Mn by end FY21 17
Slide 19: Debt Equity Ratio Declined Further
2 Debt Equity Ratio Declined Further Borrowings ($ Mn) D/E (Excl Treasury Assets) 6,819 5,854 5,243 4,574 4,180 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 ($ Mn) • Achieved cost reduction of 23% in Q2FY21 against average FY20 fixed cost 75 • Targeted reduction of ~20-25% in FY21 59 58 • Multiple vectors applied to enhance cost discipline and cost control measures • Key expense head
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 oO 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 ($ Mn) 435 • Raised $257 Mn across PCG and TLTRO schemes in H1FY21 • Additionally, raised ~$54 Mn from banks and other CAPAD 23.5% sources in H1FY21 • Pipe
Slide 24: Business Performance Snapshot : ECL Finance Ltd
ECL Finance Business Performance Snapshot : ECL Finance Ltd ($ Mn) Q1FY21 Q2FY21 EOP Loan Book 1,484 1,432 EOP Equity 456 435 Net Revenue 13 38 Operating Expenses 17 26 Credit Costs 17 9 Profit After Tax (21) 3 Net Interest Margin 2.3% 2.6% NNPA 2.1% 2.3% Total provision cover 202% 223% CAPAD 21.3%
Slide 25: Retail Credit: Edelweiss Retail Finance and Housing Finance
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 ~$68 Mn Equity ($ Mn) 65 106 • Collection efficiency at 91% in Sept’20, sim
Slide 26: Business Performance Snapshot : ERFL
ERFL/EHFL Business Performance Snapshot : ERFL $ Mn Q1FY21 Q2FY21 EOP Loan Book 178 185 EOP Equity 64 65 Net Revenue 3 3 Operating Expenses 1 1 Credit Costs (0.3) 0.4 Profit After Tax 1.5 1.1 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 $ Mn Q1FY21 Q2FY21 EOP Loan Book 608 517 EOP Equity 104 106 Net Revenue 5 8 Operating Expenses 4 4 Credit Costs 1 1 Profit After Tax - 2 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 ($ Mn) 46 36 34 31 14 16 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 ($ Mn) 18,049 • Enhanced client engagement cutting across all segments – affluent to mega institutions Net New Money 207 ($ Mn) • Continue to see
Slide 30: Wealth Assets Grew 24% YoY
EWM Wealth Assets Grew 24% YoY Wealth Management AUA ($ Mn) 18,049 17,250 15,068 15,407 14,607 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Q2FY21 29
Slide 31: Business Performance Snapshot : Edelweiss Wealth Management
Business Performance Snapshot : Edelweiss Wealth EWM Management ESL & Others ($ Mn) Q1FY21 Q2FY21 AUA 17,250 18,049 EOP Equity 171 183 Gross Revenues 36 42 Net Revenues 29 35 Operating costs 19 21 Profit before tax 10 14 Profit after tax 8 11 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 ~$81 Mn against industry outflows of ~$1,220 Mn Equity 3 22 • Launched an equity passive fund in ($ Mn) partnership with MSCI, the world’s
Slide 33: Business Performance Snapshot : EAAA and EAMC
EAM Business Performance Snapshot : EAAA and EAMC EAMC (Mutual Fund) EAAA (Alternatives) ($ Mn) Q1FY21 Q2FY21 Q1FY21 Q2FY21 AUM 3,984 5,962 3,171 3,997 EOP Equity 22 22 3 3 Net Revenues 3.4 3.7 4.9 4.7 Operating costs 3.1 3.4 4.5 4.6 Profit before tax 0.3 0.1 0.4 0.3 Profit after tax 0.3 0.1 0.4 0.3
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 ($ Mn) 288 environment • Recoveries at $131 Mn in Q2FY21 against $112 Mn in Q2FY20 AUM ($ Mn) 5,745 • Minimal impact of non-operational NCLT as
Slide 35: Business Performance Snapshot : Edelweiss Asset Reconstruction
Business Performance Snapshot : Edelweiss Asset EARC Reconstruction EARC ($ Mn) Q1FY21 Q2FY21 AUM 5,840 5,745 EOP Capital Employed 737 713 EOP Equity 272 288 Gross Revenues 29 29 Net Revenues 10 11 Operating costs 2 3 Profit before tax 7 9 Profit after tax 5 6 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 ($ Mn) 85 Individual APE growth every month in H1FY21 • Dominant share of Traditional Par and Non-Par at ~84% Individual APE ($ Mn) 13 • Strong cha
Slide 37: Business Performance Snapshot : Edelweiss Tokio Life Insurance
Business Performance Snapshot : Edelweiss Tokio Life ETLI Insurance Company Ltd ETLI ($ Mn) Q1FY21 Q2FY21 Net Premium Income 21 37 Investment Income & Other Income 26 16 Total Business 47 54 Profit After Tax (9) (8) Minority (4) (4) Edelweiss’ Share in PAT (5) (4) 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 ($ Mn) 15 • Serviced 59% motor claims through the BOLT app in H1FY21 GWP ($ Mn) 8 • First Insurer to open its stack to partners and developers
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 oO Edelweiss Ideas create, values protect
Slide 42: Liquidity Position Has Improved
Liquidity Position Has Improved Available Liquidity ($ Mn) % of Borrowings 1,396 1,192 1,138 1,104 894 637 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Q2FY21 22% 22% 28% 24% 15% 21% 41
Slide 43: Liquidity & Cash Flow Plan
Liquidity & Cash Flow Plan Particulars ($ Mn) Oct’20 -Mar’21 Apr’21-Sep’21 Opening Available Liquidity (A) 894 827 Inflows Contractual Inflows 488 447 Covid-related impact (81) - Fresh Borrowings 339 339 Asset Sell downs 203 136 Total Inflows (B) 949 921 Outflows Repayments 772 718 Disbursements 244
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 $4,180 Mn $4,180 Mn 43
Slide 45: Assets in each Tenor Range Adequately Cover Liabilities
Assets in each Tenor Range Adequately Cover Liabilities ($ Mn) Assets Liabilities Gap Upto 1 year 2,371 2,033 339 1-3 years 2,249 2,033 217 3 years+ 1,816 1,436 379 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 $1.2 Mn* $3.2 Mn* $85,400* $7.42 Mn * 18.41 lakh Children 1,248 acres of irrigated land More than 1.70 l
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
Safe Harbour NOTES: Slide 4,5 & 6 : Net worth is including MI and includes investment in equity convertible instrument by CDPQ of $141 Mn, Kora Management of $24 Mn and Sanaka Capital of $16 Mn Slide 5 & 6 : Business Equity numbers are after inter company eliminations within respective businesses Sl
Edelweiss Financial Services — Q2 FY2021 Earnings Presentation on 6ix