Edelweiss Financial Services Limited · NSE:EDELWEISS
Edelweiss Financial Services — Q1 FY2023 Earnings Presentation
65 slides from Edelweiss Financial Services's earnings presentation, Aug 4, 2022
Slide 1: Cover letter to stock exchanges: Investor Presentation
EW/Sec/2022/142 August 4, 2022 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 ended Jun 22
US $ version Edelweiss Financial Services Limited Earnings update – Quarter ended Jun 22
Slide 3: Contents
Contents 1 Overview & highlights of quarter ended Jun 22 3 2 Update on key priorities FY23 22 3 Business performance 29 4 Governance & corporate responsibility 57 2
Slide 4: Overview & Highlights
Overview & Highlights Quarter ended Jun 22
Slide 5: Edelweiss at a glance – quarter ended Jun 22
Edelweiss at a glance – quarter ended Jun 22 Net Worth Ex-Insurance PAT BVPS $1,059 Mn $13 Mn $1 (FV $0.01) Liquidity Customer Assets $665 Mn $45,514 Mn 4
Slide 6: We are a diversified company across eight businesses
We are a diversified company across eight businesses Edelweiss Financial Services Ltd (EFSL) Credit Asset Management Insurance Asset Wealth Housing Alternative Reconstruction General Management NBFC Mutual Fund Life Insurance Finance Asset Mgt Insurance ECL Finance Edelweiss Edelweiss Edelweiss Edel
Slide 7: Performance overview – quarter ended Jun 22
Performance overview – quarter ended Jun 22 1 Steady performance across businesses facilitated by robust, independent platforms Slide 7 - 10 2 Credit businesses: profitable with significant improvement in asset quality Slide 11 3 Launch of industry-first innovative products and synergistic partnersh
Slide 8: EFSL ex-Insurance PAT increased 68% YoY
1 EFSL ex-Insurance PAT increased 68% YoY Profit After Tax for the Year in $ Mn EFSL Asset Asset ex-Insurance Credit Management Reconstruction 13 8 8 6 4 3 2 Jun 21 Jun 21 Jun 22 Jun 22 Jun 21 Jun 22 Jun 21 Jun 22 -3 7
Slide 9: Earnings distribution across businesses
1 Earnings distribution across businesses $ Mn Business Jun 22 Jun 21 NBFC 4 (1) Housing Finance 0 (2) Mutual Fund 0 1 Alternatives Asset Management 3 1 Asset Reconstruction 8 6 Life Insurance (7) (4) General Insurance (5) (3) EFSL share in Wealth Management 3 3 BMU & Corporate (2) 3 (Less) Minority
Slide 10: Steady performance across businesses (1)
1 Steady performance across businesses (1) • GNPA at 2.76%; improved YoY from 3.96% NBFC • Collection efficiency at 93% for Jun 22 vs 91% for Jun 21 • Strong wholesale inflows of ~$152 Mn in the quarter, momentum expected to continue • GNPA at 2.12%; improved YoY from 3.53% • Collection efficiency a
Slide 11: Steady performance across businesses (2)
1 Steady performance across businesses (2) Asset • Robust recoveries of $222 Mn of which 18% was from retail portfolio Reconstruction • Share of retail assets in capital employed grew ~2x YoY to ~13% as on Jun 22 • Gross premium grew at 12% YoY to $30 Mn; advisors also grew 12% YoY to ~65,100 Life I
Slide 12: Credit businesses: profitable with improvement in asset quality
2 Credit businesses: profitable with improvement in asset quality Profit after Tax ($ Mn) Asset Quality for credit businesses (%) GNPA NNPA NBFC HFC 3.8 3.3 2.5 1.8 4 0 Jun 21 Jun 21 Jun 22 Jun 22 Jun 21 Jun 22 -1 -2 11
Slide 13: Industry-first innovative products
3 Industry-first innovative products General Insurance • Switch 2.0; Industry first, telematics driven ‘usage-based’ product o End-to-end app-based journey o Usage based subscription model for premium payment o Monthly reward structure linked to driving score o Auto switch-on with movement detection
Slide 14: Synergistic partnerships
3 Synergistic partnerships Credit • Ongoing CLM disbursals with Standard Chartered Bank and Central Bank of India • New partnership forged with IDFC first for co-lending to MSME • Securitization and direct assignment transactions concluded with Godrej Housing Finance and DBS Bank of ~$54 Mn General
Slide 15: Customer franchise continues to expand
4 Customer franchise continues to expand Total Customer Customer AssetsReach ($ Mn)(in Lakhs) Customer Reach (# in lakhs) 55 45,514 38,294 43 28,274 27 Jun 20 Jun 21 Jun 22 Jun 20 Jun 21 Jun 22 Growth of ~30% YoY Growth of ~20% YoY 14
Slide 16: Strong balance sheet with well-capitalized businesses
5 Strong balance sheet with well-capitalized businesses Debt reduced by ~$823 Mn over last 2 years; net D/E at 2.1x Credit assets are conservatively provided for Comfortable liquidity of $665 Mn at ~21% of debt Strong capitalization across businesses 15
Slide 17: Debt reduced by ~$823 Mn over last 2 years
5 Debt reduced by ~$823 Mn over last 2 years Debt ($ Mn) Net D/E 3,961 3.3 3,420 3,139 2.3 2.1 Jun 20 Jun 21 Jun 22 Jun 20 Jun 21 Jun 22 16
Slide 18: Debt distribution across businesses
5 Debt distribution across businesses Debt ($ Mn) Business Jun 22 NBFC 1,230 Housing Finance 267 Alternatives 17 Asset Reconstruction 428 Wealth Management 568 BMU & Corporate 630 Gross Debt 3,139 (Less) Available liquidity 665 Net Debt 2,474 17
Slide 19: Credit assets are conservatively provided for
5 Credit assets are conservatively provided for Balance Sheet Provisions IRAC Provisions IndAS Provisions ($ Mn) 86 71 55 19 18 18 Jun 20 Jun 21 Jun 22 We have consistently provided for higher than IRAC norms 18
Slide 20: Cash flow plan
5 Cash flow plan $ Mn Jul 22 to Jun 23 Opening Available Liquidity (A) 665 Inflows Expected Inflows 1,165 Fresh Borrowings 722 Total Inflows (B) 1,887 Outflows Repayments 1,482 Disbursements 393 Total Outflows (C) 1,875 Closing Available Liquidity (A+B-C) 678 19
Slide 21: Assets in each tenor range adequately cover liabilities
5 Assets in each tenor range adequately cover liabilities $ Mn Assets Liabilities Excess / (Gap) Upto 1 year 1,609 1,355 253 1-3 years 1,583 988 595 3 years+ 1,229 1,127 101 20
Slide 22: Strong capitalization across businesses
5 Strong capitalization across businesses Businesses Metric Value NBFC Capital Adequacy 32.0% Housing Finance Capital Adequacy 30.9% Asset Reconstruction Capital Adequacy 42.6% Life Insurance Solvency Ratio 200% General Insurance Solvency Ratio 171% 21
Slide 23: Update on Key Priorities for FY23
Update on Key Priorities for FY23
Slide 24: On track on our key priorities for the year
6 On track on our key priorities for the year Listing EWM and value unlocking for shareholders Create and enhance value through scale-up of the Asset Management and Insurance businesses Steady reduction of wholesale loan assets 23
Slide 25: Listing EWM and value unlock for shareholders
6 Listing EWM and value unlock for shareholders Phase I • PAG’s strategic investment in Edelweiss Wealth Management Phase II • NCLT order received and made effective for Phase 2 demerger scheme • Solicit share entitlement report and fairness opinion Completed Phase III • Demerger completion Expected
Slide 26: Significant growth in Asset Management business
6 Significant growth in Asset Management business Mutual Fund AUM ($ Mn) Alternative Asset Mgt AUM ($ Mn) 11,147 4,592 3,800 7,854 2,964 3,724 Jun 20 Jun 21 Jun 22 Jun 20 Jun 21 Jun 22 Asset Management AUM has grown by 35% YoY 25
Slide 27: Insurance businesses continues to scale up
6 Insurance businesses continues to scale up LI – Gross Premium for the quarter ($ Mn) GI – Gross Premium for the quarter ($ Mn) 30 15 27 21 8 5 Jun 20 Jun 21 Jun 22 Jun 20 Jun 21 Jun 22 YoY growth in Gross Premium at 12% for LI and 86% for GI 26
Slide 28: Wholesale loan assets reduced 21% YoY
6 Wholesale loan assets reduced 21% YoY ECLF wholesale loan assets ($ Mn) 1,507 1,381 1,087 772 380 Jun 20 Jun 21 Jun 22 Jun 23E Jun 24E Reduction of ~65% in next 2 years aided by strong demand and improved fundamentals 27
Slide 29: Workouts & strong housing demand aiding in faster recovery
6 Workouts & strong housing demand aiding in faster recovery Successful workouts: • Inflows of ~$152 Mn in the quarter, strong visibility for the year • Sell down capabilities aided in faster recoveries; will continue to be the dominant contributor in FY23 • Sentiment in real estate sector remains o
Slide 30: Business Performance: Credit
Business Performance Credit
Slide 31: Credit businesses at a glance
Credit Credit businesses at a glance Quarter ended Jun 22 Equity Credit Assets Profit After Tax $601 Mn $1,963 Mn $4 Mn 30
Slide 32: NBFC: Business performance snapshot
NBFC NBFC: Business performance snapshot Key Metrics for the quarter Business Update • Portfolio continues to strengthen Equity ($ Mn) 503 o GNPA at 2.76%; improved YoY from 3.96% o Collection efficiency at 93% for Jun 22 vs 91% for Jun 21 Credit Assets ($ Mn) 1,438 • Focus continues on asset light
Slide 33: NBFC: Financial performance snapshot
NBFC NBFC: Financial performance snapshot $ Mn Jun 22 Jun 21 AUM 820 1,255 Loan book 757 1,177 Equity 502 485 Gross Revenue 45 55 Net Revenue 10 3 Opex 8 11 Credit Cost (3) (2) Profit After Tax 4 (1) GNPA 2.76% 3.96% NNPA 1.93% 3.28% Total Provision Cover 237% 135% 32
Slide 34: 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) 99 o GNPA at 2.12%; improves YoY from 3.53% o Collection efficiency at 98% for Jun 22 vs 93% for Jun 21 Credit Assets ($ Mn) 550 o YoY reductio
Slide 35: Housing Finance: Financial performance snapshot
Housing Finance Housing Finance: Financial performance snapshot $ Mn Jun 22 Jun 21 AUM 522 528 Loan book 402 447 Equity 99 95 Gross Revenue 14 15 Net Revenue 4 4 Opex 3 3 Credit Cost 0 3 Profit After Tax 0 (2) GNPA 2.12% 3.53% NNPA 1.68% 3.18% Total Provision Cover 68% 49% 34
Slide 36: Business Performance: Asset Management
Business Performance Asset Management
Slide 37: Asset Management businesses at a glance
Asset Management Asset Management businesses at a glance Quarter ended Jun 22 Equity AUM Profit After Tax $54 Mn $15,739 Mn $3 Mn Fee Income $13 Mn 36
Slide 38: Mutual Fund: Business performance snapshot
Mutual Fund Mutual Fund: Business performance snapshot Key Metrics for the quarter Business Update • Fastest growing amongst the top 15 AMCs in the industry with AUM at $11,147 Mn as on Jun 22 Equity ($ Mn) 24 • Total net inflows of $751 Mn for the quarter against industry outflows of $570 Mn AUM ($
Slide 39: Mutual Fund: Financial performance snapshot
Mutual Fund Mutual Fund: Financial performance snapshot $ Mn Jun 22 Jun 21 AUM 11,147 7,854 Net New Money 751 692 Equity 24 21 Revenue 4 5 Opex 4 4 Profit After Tax 0 1 38
Slide 40: Consistent expansion of investor and partner reach
Mutual Fund Consistent expansion of investor and partner reach MF Equity AUM ($ Mn) Unique active mutual fund distributors (EoP) (#) 2,381 3,805 3,430 1,710 1,700 633 Jun 20 Jun 21 Jun 22 Jun 20 Jun 21 Jun 22 SIP Book ($ Mn) Active Folios (# in Lakhs) 20 10.2 17 7.0 8 3.6 Jun 20 Jun 21 Jun 22 Jun 20
Slide 41: Alternative Asset Mgt: Business performance snapshot
Alternative Asset Mgt Alternative Asset Mgt: Business performance snapshot Key Metrics for the quarter Business Update • AUM grew 21% YoY and FPAUM grew 76% YoY Equity ($ Mn) 30 • Raised AUM of $633 Mn in the quarter • IYP II onshore fund has received CRISIL Fund Management AUM ($ Mn) 4,592 Grading
Slide 42: Alternative Asset Mgt: Financial performance snapshot
Alternative Asset Mgt Alternative Asset Mgt: Financial performance snapshot $ Mn Jun 22 Jun 21 AUM 4,592 3,800 Fee Paying AUM 2,534 1,751 Equity 30 20 Net Revenue 8 7 Opex 5 6 Profit After Tax 3 1 41
Slide 43: Alternative assets overview
Alternative Asset Mgt Alternative assets overview AUM – Strategy wise Fee Paying AUM – Strategy wise AUM – Tenure wise 16% 20% 18% 39% 40% 17% $4,592 Mn $2,534 Mn $4,592 Mn 25% 28% 82% 15% Sepacial Situations Sepacial Situations Asset Over 3 year duration Structured Credit Structured Credit Asset le
Slide 44: Business Performance: Asset Reconstruction
Business Performance Asset Reconstruction
Slide 45: Asset Reconstruction: Business performance snapshot
ARC Asset Reconstruction: Business performance snapshot Key Metrics for the quarter Business Update Equity ($ Mn) 322 • Robust recoveries of $222 Mn of which 18% was from retail portfolio AUM ($ Mn) 4,928 • Deployed $60 Mn in the quarter Capital employed 654 • Retail assets nearly doubled YoY their
Slide 46: Asset Reconstruction: Financial performance snapshot
ARC Asset Reconstruction: Financial performance snapshot $ Mn Jun 22 Jun 21 AUM 4,928 5,358 Capital Employed 654 675 Wholesale assets 570 631 Retail assets 84 44 Equity 322 288 Gross Revenue 29 26 Opex 3 2 Profit After Tax 8 6 Edelweiss’ share in PAT 5 4 45
Slide 47: Business Performance: Insurance
Business Performance Insurance
Slide 48: Insurance businesses at a glance
Insurance Insurance businesses at a glance Quarter ended Jun 22 Gross Premium Policies Issued Customer Reach $45 Mn # 90,110 ~38 lakhs 47
Slide 49: Life Insurance: Business performance snapshot
Life Insurance Life Insurance: Business performance snapshot Key Metrics for the quarter Business Update Equity ($ Mn) 56 • Individual APE grew at a 5-year CAGR of 23% against industry growth at 10% Individual APE ($ Mn) 9 • Gross premium growth of 12% YoY to $30 Mn • Launched a new product “Guarant
Slide 50: Life Insurance: Financial performance snapshot
Life Insurance Life Insurance: Financial performance snapshot $ Mn Jun 22 Jun 21 Net Premium Income 29 26 Investment Income & Other (13) 19 Income Total Income 16 45 Policy benefits & insurance policy 5 34 liability Other expenses 18 15 Profit After Tax (7) (4) Edelweiss’ share in PAT * (5) (2) 49 *
Slide 51: Life insurance business continues to scale up
Life Insurance Life insurance business continues to scale up Customer Count (#) Individual APE for the quarter ($ Mn) 3,49,900 3,33,900 9 3,04,200 7 7 Jun 20 Jun 21 Jun 22 Jun 20 Jun 21 Jun 22 Gross Premium for the quarter ($ Mn) AUM ($ Mn) 689 30 27 561 21 424 Jun 20 Jun 21 Jun 22 Jun 20 Jun 21 Jun
Slide 52: General Insurance: Business performance snapshot
General Insurance General Insurance: Business performance snapshot Key Metrics for the quarter Business Update • Strong GDPI growth of 82% YoY against industry growth of 23% Equity ($ Mn) 17 • Consistent growth in our choice of business segments; Health (retail) and Motor grew by 126% and 95% YoY ag
Slide 53: General Insurance: Financial performance snapshot
General Insurance General Insurance: Financial performance snapshot $ Mn Jun 22 Jun 21 Net Premium Income 9 6 Investment Income & Other 1 2 Income Total Income 10 8 Policy benefits & insurance policy 7 8 liability Other expenses 7 5 Profit After Tax (5) (3) 52
Slide 54: Business Performance: Wealth
Business Performance Wealth
Slide 55: Wealth Management: Business performance snapshot
Wealth Mgt Wealth Management: Business performance snapshot Key Metrics for the quarter Business Update • AuA grew 17% YoY with net new money of ~$583 Mn for AUA ($ Mn) 24,854 the quarter • Strong 106% YoY growth in distribution income; revenue LAS loan book growth of 21% YoY 367 ($ Mn) • LAS book g
Slide 56: Wealth Management: Financial performance snapshot
Wealth Mgt Wealth Management: Financial performance snapshot $ Mn Jun 22 Jun 21 AUA 24,854 19,635 Equity 250 198 Gross Revenue 54 43 Net Revenue 44 37 Opex 35 27 Profit After Tax 6 7 Edelweiss’ share in PAT * 3 3 55 * Edelweiss stake in Edelweiss Wealth Management at ~44% in Jun 22 against ~38.5% in
Slide 57: Wealth assets continue to maintain robust growth
Wealth Mgt Wealth assets continue to maintain robust growth Wealth Management AUA ($ Mn) Customer Count (#) 9,27,600 24,854 21,281 7,30,900 16,126 6,12,400 Jun-20 Jun-21 Jun-22 Jun-20 Jun-21 Jun-22 56
Slide 58: Governance & Corporate Responsibility
Governance & Corporate Responsibility
Slide 59: 11 Member Board with 6 Independent Directors
11 Member Board with 6 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 India • Specialis
Slide 60: Significant institutional ownership
Significant institutional ownership Shareholding Pattern as on Jun 30, 2022 Key Shareholders above 1% Percent 1 Pabrai Investment Funds 7.9% Employee Trust 2 BIH SA 5.1% DIIs, Non 4.8% Promoter Group Institutions 3 Baron Asset Management 4.3% & Others 32.6% 4 TIAA CREF funds 4.3% 25.1% 5 LIC 2.6% 6
Slide 61: 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 ~$63 Mn mobilized Partnered with over 150 Assisted over 60% of EdelGive’s Ensured long term through commitments high caliber NGOs NGO partners to grow at a CAGR association with averag
Slide 62: Our investment in communities
Our investment in communities EdelGive Foundation’s commitment to investing in communities 92 Districts Sustainable Women across 12 States Quality Education Livelihoods Empowerment 20 lakh children impacted 50,000 Individuals trained 2 lakh women supported $5.1 Mn 30,000 schools reached 1,000 waters
Slide 63: Trusted partner: EdelGive funding partners & networks
Trusted partner: EdelGive funding partners & networks Foundations, Corporates and HNIs partner with Edelgive Platform for their philanthropic allocation 62
Slide 64: 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 65: Safe Harbour
Safe Harbour Slide 4: Net worth includes MI, investment in CCD by CDPQ of $110 Mn and excludes EWM, Ex-Insurance PAT is post MI Slide 4: BVPS considers potential stake dilution from convertible instruments in NBFC Slide 4,15,17,19: Available Liquidity is calculated as on balance sheet date and inclu
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