L&t Finance Ltd · NSE:LTF
L&t Finance — Q1 FY23 Earnings Presentation
56 slides from L&t Finance's earnings presentation, Jul 19, 2022
Slide 1: L&T Financial Services
@ l&T Financial Services July 19, 2022 National Stock Exchange of India Limited BSE Limited Exchange Plaza, Corporate Relations Department, Plot No. C/1 , G Block, 1st Floor, New Trading Ring, Sandra - Kurla Complex, Sandra (East), P. J. Towers, Dalal Street, Mumbai - 400 051. Mumbai - 400 001. Symb
Slide 2: Strategy & Results Update – Q1FY23
Strategy & Results Update – Q1FY23 1
Slide 3: Disclaimer
Disclaimer The information in this presentation is provided by L&T Finance Holdings Limited (the “Company”) for information purposes only. This presentation or any information herein may not be used, reproduced, copied, photocopied, duplicated or otherwise reproduced in any form or by any means, or
Slide 4: Agenda
Agenda A Journey towards Lakshya 2026 B Q1FY23 in Perspective C Financial Update 3
Slide 5: LTFS - Lakshya 2026
LTFS - Lakshya 2026 AIM. INNOVATE. CREATE. To be a top class ‘digitally enabled’ retail finance company moving from ‘product-focused’ to ‘customer-focused’ approach 4
Slide 6: Lakshya 2026 Goals
Lakshya 2026 Goals Retailisation Retail growth Asset Quality RoA GS3 <3% >80% >25% CAGR 2.8% - 3% NS3 <1% 5
Slide 7: Organisation structure realigned to “customer focus”
Organisation structure realigned to “customer focus” RETAIL Rural Urban CUSTOMER PROFILE RURAL BUSINESS FINANCE FARMER FINANCE URBAN FINANCE SME (Small Rural Entrepreneur) (Farmer) (Urban Individual) (Urban Business) • Rural Business Loans • Two-wheeler • Micro Finance • Tractor Loans • Consumer Loa
Slide 8: Path to becoming a top class digitally enabled retail finance company
Path to becoming a top class digitally enabled retail finance company 1 Sustained profit and growth engine 2 Demonstrable strength in risk management 3 Creating Fintech @ Scale 4 Sustainable future growth through ESG 7
Slide 9: Creating a Fintech@Scale
Creating a Fintech@Scale FY16 – FY21 FY26 Business Strategy ‘Geo – agnostic / ‘Geo / Product Customer Focused’ Focused’ Efficiency improvement Reimagining customer engagement Digital Strategy Portfolio quality management Best in class risk mitigation 8
Slide 10: Creating a Fintech@Scale
Creating a Fintech@Scale Digital backbone in place to drive speed & scale – consistently re-engineered DATA ANALYTICS DIGITAL CUSTOMER JOURNEY ACROSS LIFE-CYCLE Source Underwrite Collect Source Underwrite Disburse Collect App used by ~50% customers borrow only from LTFS Employee Micro LTFS sanction
Slide 11: Creating a Fintech@Scale
Creating a Fintech@Scale Data mining to unleash untapped potential for customer retention Customer Retention% EXISTING CUSTOMER RETENTION STRATEGY UNTAPPED CUSTOMER POTENTIAL Database on disbursal (This is not an exhaustive list) Vishwas Individual 1.4 Cr+ ~50% First Loan Pragati Loan Micro LAP Loan
Slide 12: Creating a Fintech@Scale
Creating a Fintech@Scale Reimagining Customer Engagement through superior customer experience SERVICING FRANCHISE SOURCING FRANCHISE Autonomous channels Assisted channels SHO Employees / Branches Call centre Employees Chatbot Whatsapp App Branches Call centre Partners Portal Agencies 15,000+ Employe
Slide 13: Tech enablement
Creating a Fintech@Scale Reimagining Customer Engagement - Inverting the servicing pyramid Traditional servicing New-age servicing 100% documents INVERTING THE SERVICING PYRAMID available on digital Tech enablement (% of interactions across channels) Branch & Call center Self-help options platforms
Slide 14: Creating a Fintech@Scale
Creating a Fintech@Scale Reimagining Customer Engagement - PLANET App Enroute to establishing a geo-agnostic sourcing & servicing channel App Status Total Downloads 1,84,836 28,346 Total Registrations 1,49,748 24,098 Credit score card Utility payments Soft launched in April’22 Launched In-progress B
Slide 15: Creating a Fintech@Scale
Creating a Fintech@Scale Reimagining Customer Engagement - WhatsApp platform for Consumer loan launched Journey: Partner portal à Customer’s WhatsApp à LTFS Journey on WhatsApp Lead generation at BRE Loan E-KYC Customer details partner portal eligibility check disbursed TAT – 15 mins Ticket size: 50
Slide 16: Creating a Fintech@Scale
Creating a Fintech@Scale Other Key Initiatives Digilocker, fuzzy logic & Collection engine for penny Application scorecard allocation, workflow & Digital Journey for SME credit to reduce TAT & for decisioning for 2W communication automation Finance prevent frauds for 2W Enabling seamless access Intr
Slide 17: Agenda
Agenda A Journey towards Lakshya 2026 B Q1FY23 in Perspective C Financial Update 16
Slide 18: Q1FY23 Synopsis (1/3)
Q1FY23 Synopsis (1/3) • Achieved highest ever quarterly retail disbursement (Rs 8,938 Cr), up 10% QoQ • Retail: Strong business momentum across all products: o Rural Business Finance witnessed monthly disbursals of Rs 1,300+ Cr in May & June o Maintained market share in Farm and 2W and achieved high
Slide 19: Q1FY23 Synopsis (2/3)
Q1FY23 Synopsis (2/3) • Maintained strong Collection Efficiency across Retail businesses through enhanced call center efforts & data analytics based Normalised resource allocation collections rhythm • Collections in the Wholesale portfolio continue to be on track. Higher Real Estate collections on a
Slide 20: Q1FY23 Synopsis (3/3)
Q1FY23 Synopsis (3/3) Strengthened • Capital adequacy stands at 23.12% (Tier 1: 19.98%) balance sheet • D/E at 4.05x • Publication of 1st LTFH Integrated Report ESG focus • Helped avoid 13.83 Lakh+ tCO2e emissions through renewable financing in Q1 tCO2e refers to tonnes of carbon dioxide equivalent
Slide 21: Agenda
Agenda A Journey towards Lakshya 2026 B Q1FY23 in Perspective C Financial Update 20
Slide 22: Q1FY23 Performance: Key business metrics
Q1FY23 Performance: Key business metrics Strong Moderation in Astute Liability Stable NIMs + Strengthened Retail Finance Wholesale Management Fees Asset Quality Growth 21
Slide 23: Strong Retail Finance Growth (1/5)
Strong Retail Finance Growth (1/5) Sustained traction in disbursements in Rs Cr RETAIL DISBURSEMENTS 8,938 8,105 3,611 Q1FY22 Q4FY22 Q1FY23 RURAL BUSINESS FINANCE FARMER FINANCE URBAN FINANCE 3,462 3,881 3,811 1,532 3,023 1,357 1,154 1,457 797 Q1FY22 Q4FY22 Q1FY23 Q1FY22 Q4FY22 Q1FY23 Q1FY22 Q4FY22
Slide 24: Strong Retail Finance Growth (2/5)
Strong Retail Finance Growth (2/5) Normalized collections across businesses URBAN FINANCE RURAL BUSINESS FINANCE FY22 FY23 98.8% 98.7% 98.0% TWO-WHEELER RURAL BUSINESS LOANS FY22 FY23 98.6% 98.3% 99.0% 98.3% 98.8% 98.0% 98.0% 98.2% 98.2% 99.5% 99.5% 99.6% 97.0% & MICRO FINANCE 94.0% 99.0% 99.0% 99.0
Slide 25: Strong Retail Finance Growth (3/5)
Strong Retail Finance Growth (3/5) Leading to book growth across businesses in Rs Cr RETAIL BOOK 45,084 47,794 40,096 Q1FY22 Q4FY22 Q1FY23 RURAL BUSINESS FINANCE FARMER FINANCE URBAN FINANCE 20,428 21,607 18,111 13,278 14,397 11,303 10,682 11,317 11,597 Q1FY22 Q4FY22 Q1FY23 Q1FY22 Q4FY22 Q1FY23 Q1FY
Slide 26: Strong Retail Finance Growth (4/5)
Strong Retail Finance Growth (4/5) Scaling-up new products: SME Finance Performance Small and Medium Enterprise Finance • Risk Based Customer Pricing Book Growth • Created a Rs 126 Cr book under pilot • Ready for pan-India branch expansion Channel Dynamics • Digital journey for both DSA and DST chan
Slide 27: Strong Retail Finance Growth (5/5)
Strong Retail Finance Growth (5/5) Thus Bolstering Retailisation Q1FY22 Q1FY23 3% 1% 13% 16% A S 12% 34% S Retail 13% Retail E 38% T 20% M I 25% X 11% 14% Retail - 45 % Retail - 54 % Rural Business Finance Farmer Finance Urb an Finance Real Estate Infrastructure Finance Defocused Retail assets at 54
Slide 28: Moderation in Wholesale Finance (1/2)
Moderation in Wholesale Finance (1/2) Infrastructure Finance performance in line with strategy in Rs Cr DISBURSEMENTS BOOK 33,290 30,521 6,098 29,986 1,480 1,402 Q1FY22 Q4FY22 Q1FY23 Q1FY22 Q4FY22 Q1FY23 Continued asset / capital light model in Infrastructure Finance 27
Slide 29: Moderation in Wholesale Finance (2/2)
Moderation in Wholesale Finance (2/2) Exploring Exit from Real Estate Finance business in Rs Cr DISBURSEMENTS BOOK 12,372 11,210 9,809 528 133 121 Q1FY22 Q4FY22 Q1FY23 Q1FY22 Q4FY22 Q1FY23 Collections-led book run down (Rs 963 Cr of pre / repayments in Q1) 28
Slide 30: Consolidated performance
Consolidated performance Strong liability profile enabling reduction in borrowing cost DIVERSIFIED LIABILITY MIX WEIGHTED AVERAGE COST OF BORROWING (WAC) 5% 2% 4% 0.5% Bank Loan 7% 8% 3% NCD Pvt 7% 34% 43% Retail NCD 8.49% 8.32% CP 45% 42% 7.82% ECB 7.65% 7.64% 7.53% 7.47% 7.34% Others 7.27% Q1FY22
Slide 31: Consolidated performance
Consolidated performance NIMs + Fees Trending positively NIMS + FEE & OTHER INCOME 8.23% 8.17% 7.52% Q1FY22 Q4FY22 Q1FY23 • Higher NIMs achieved YoY through higher retailisation (54% in Q1FY23 vs 45% in Q1FY22), strong retail business momentum and reduction in cost of borrowing • Increase in Fee inc
Slide 32: Consolidated performance
Consolidated performance Strengthened Balance Sheet Particulars (Rs. Cr) Total Lending Business Loan book size (excluding GS3 book) - (1) 83,617 Provision on stage 1 and stage 2 assets as per ECL model - (2) 624 Additional provisions & OTR provisions - (3) 1,450 Additional provisions & OTR provision
Slide 33: Consolidated performance
Consolidated performance Stable Asset Quality CONSOLIDATED – ASSET QUALITY 68% 53% 55% 5,796 5,000 6.67% 7 % 4,000 3,543 3,559 3,000 4.08% 4.08% 1,879 4 % 2,000 1,678 1,591 2.26% 1.98% 1,000 1.87% 0 1 % Q1FY22 Q4FY22 Q1FY23 GS3 (Rs Cr) NS3 (Rs Cr) GS3 (%) NS3 (%) PCR (%) Carrying additional provisio
Slide 34: Conclusion
Conclusion PAT increased 47% YoY to Rs 262 Cr Highest ever Retail disbursements at Rs 8,938 Cr Retailisation continues with share of Retail increasing from 45% to 54% YoY Wholesale book rundown continues, book decreased by 13% YoY NIMs + Fees at 8.23% (up 71bps YoY) WAC stable at 7.27% in an increas
Slide 35: Appendix
Appendix Seas @ L&T Financial Services
Slide 36: Appendix
Appendix A Financials B Other key annexures 35
Slide 37: LTFH Consolidated – Summary financial performance
LTFH Consolidated – Summary financial performance Performance Summary Q1FY22 Summary P&L (Rs Cr ) Q4FY22 Q1FY23 Y-o-Y (%) 2,925 Interest Income 2,822 2,846 (3%) 1,508 Interest Expense 1,397 1,413 (6%) 1,416 NIM 1,425 1,433 1% 270 Fee & Other Income 345 370 37% 1,686 Total Income 1,769 1,803 7% 548 O
Slide 38: LTFH Consolidated – Key ratios
LTFH Consolidated – Key ratios Key Ratios Q1FY22 Key Ratios Q4FY22 Q1FY23 13.03% Yield 13.03% 12.99% 6.31% Net Interest Margin 6.58% 6.54% 1.20% Fee & Other Income 1.59% 1.69% 7.52% NIM + Fee & Other Income 8.17% 8.23% 2.44% Operating Expenses 2.93% 2.97% 5.07% Earnings before credit cost 5.24% 5.26
Slide 39: Lending Business – Business wise disbursement split
Lending Business – Business wise disbursement split Disbursement Q1FY22 Segments (Rs Cr ) Q4FY22 Q1FY23 Y-o-Y (%) 1,357 Farm Equipment 1,154 1,532 13% 824 2W Finance 1,380 1,517 84% 797 Rural Business Loans 3,881 3,168 - - Micro Finance Loans - 643 - 327 Consumer Loans 798 1,010 209% 288 Home Loans
Slide 40: Lending Business – Business wise book split
Lending Business – Business wise book split Book Q1FY22 Segments (Rs Cr) Q4FY22 Q1FY23 Y-o-Y (%) 10,682 Farm Equipment 11,317 11,597 9% 6,894 2W Finance 7,462 7,488 9% Rural Business Loans & Micro 11,303 13,278 14,397 27% Finance Loans 780 Consumer Loans 2,301 3,027 288% 7,202 Home Loans 7,837 8,369
Slide 41: Retail Finance – Summary financial performance
Retail Finance – Summary financial performance Performance Summary Q1FY22 Summary P&L (Rs Cr ) Q4FY22 Q1FY23 Y-o-Y (%) 1,634 Interest Income 1,729 1,807 11% 615 Interest Expense 624 664 8% 1,019 NIM 1,104 1,143 12% 88 Fee & Other Income 157 200 127% 1,107 Total Income 1,262 1,343 21% 411 Operating E
Slide 42: Retail Finance – Key ratios
Retail Finance – Key ratios Key Ratios Q1FY22 Key Ratios Q4FY22 Q1FY23 16.11% Yield 16.06% 15.57% 10.05% Net Interest Margin 10.26% 9.85% 0.87% Fee & Other Income 1.46% 1.72% 10.92% NIM + Fee & Other Income 11.72% 11.57% 4.06% Operating Expenses 4.50% 4.30% 6.86% Earnings before credit cost 7.22% 7.
Slide 43: Wholesale Finance – Summary financial performance
Wholesale Finance – Summary financial performance Performance Summary Q1FY22 Summary P&L (Rs Cr ) Q4FY22 Q1FY23 Y-o-Y (%) 1,234 Interest Income 1,038 1,000 (19%) 835 Interest Expense 747 731 (12%) 399 NIM 291 269 (33%) 82 Fee & Other Income 89 89 8% 481 Total Income 380 358 (26%) 98 Operating Expens
Slide 44: Wholesale Finance – Key ratios
Wholesale Finance – Key ratios Key Ratios Q1FY22 Key Ratios Q4FY22 Q1FY23 10.61% Yield 10.00% 9.93% 3.43% Net Interest Margin 2.81% 2.67% 0.71% Fee & Other Income 0.86% 0.88% 4.14% NIM + Fee & Other Income 3.66% 3.55% 0.84% Operating Expenses 0.99% 1.08% 3.30% Earnings before credit cost 2.68% 2.47%
Slide 45: Infrastructure Finance – Portfolio wise split
Infrastructure Finance – Portfolio wise split D Sectors (Rs. Cr) Q1FY22 Q4FY22 Q1FY23 Y-o-Y (%) I S B Renewable Power 1,264 5,564 1,215 (4%) U R Roads 160 351 187 17% S E Power Transmission 32 155 - (100%) M E Others 24 28 - (100%) N T Total 1,480 6,098 1,402 (5%) Q1FY22 Q4FY22 Q1FY23 Sectors (Rs. C
Slide 46: Appendix
Appendix A Financials B Other key annexures 45
Slide 47: Prudent ALM
Prudent ALM As on 30th June, 2022 Structural Liquidity statement 57,095 Cumulative Inflows (Rs. Cr) Cumulative Outflows (Rs. Cr) 36,663 33,602 20,370 18,648 15,870 11,632 9,496 6,861 8,003 6,090 2,803 355 662 1-7 days 8-14 days 15 days-1 1-2 months 2-3 months 3-6 months 6-12 months month Cumulative
Slide 48: AAA Credit Rating for LTFH and all its subsidiaries
AAA Credit Rating for LTFH and all its subsidiaries Credit Ratings – LTFH and its subsidiaries • Long-term ratings of LTFH and all its lending subsidiaries have been reaffirmed ‘AAA’ (Stable Outlook) by all 4 rating agencies: Ratings Ø CRISIL: Mar’22 Update Ø CARE: Sept’21 Ø India Ratings: Apr’22 Ø
Slide 49: AUM disclosure
AUM disclosure Mutual Fund ASSETS UNDER MANAGEMENT (RS CR) Quarter ended June, 2021 Quarter ended March, 2022 Quarter ended June, 2022 Fund Type AUM1 Avg. AUM2 AUM1 Avg. AUM2 AUM1 Avg. AUM2 Pure Equity 32,344 30,986 33,801 33,709 30,313 31,978 Hybrid 12,332 11,505 10,707 11,588 9,413 10,174 Fixed In
Slide 50: ESG@LTFH: Building a Collective Sustainable Future
ESG@LTFH: Building a Collective Sustainable Future LTFH Integrated Report Publication of 1st LTFH Integrated Report Compliance with reporting of all ‘essential indicators’ under BRSR, 1 year in advance of applicability Integrated Report assured by independent assurance provider ‘Water neutrality’ st
Slide 51: ESG@LTFH: Building a Collective Sustainable Future
ESG@LTFH: Building a Collective Sustainable Future Environment Social Governance Committed to environmental Investing in stakeholder relationships Ensuring robust governance mechanism stewardship by responsible business through transparent, ethical and through accountability, compliance and conduct
Slide 52: Corporate Social Responsibility
Corporate Social Responsibility Directly linked to creating value Digital Financial Inclusion Other Initiatives Reached out to 2,17,000+ community members, Focused on long term impact, continued to maintain creating awareness on financial literacy and COVID-19 and upkeep 68,000+ trees in drought pro
Slide 53: LTFS branch footprint
LTFS branch footprint 8 2 10 As of 30th June, 2022 1 No. of States & Union 21 & 1 9 15 Territories 9 4 No. of branches 200 3 13 No. of Rural Business Loans / 16 27 1 1,542 Micro Finance branches* 6 7 No. of employees 25,281 25 10 1 11 13 6 3 52 *All these are in villages/far outskirts of the cities
Slide 54: Well experienced and diversified Board
Well experienced and diversified Board BOARD OF DIRECTORS S.N. Subrahmanyan, Non-Executive Director, Chairperson Dinanath Dubhashi, Managing Director & CEO o Current Managing Director and Chief Executive Officer of Larsen & Toubro Limited. o Over 30 years of experience across multiple domains in BFS
Slide 55: Management Team
Management Team Dinanath Dubhashi Managing Director & CEO 32 yrs exp, BNP Paribas, SBI Cap, CARE Ratings Sachinn Joshi Kailash Kulkarni Raju Dodti Group CFO CE - Investment Management Rupa Rege Nitsure CE – Wholesale Finance 32 yrs exp, Aditya Birla Group Head - Marketing Group Chief Economist 24 yr
Slide 56: Registered Office: L&T Finance Holdings Limited
Registered Office: L&T Finance Holdings Limited Brindavan, Plot No 177 CST Road, Kalina Santacruz (E), Mumbai 400 098 www.ltfs.com T +91 22 6212 5000/5555 CIN: L67120MH2008PLC181833 55