Edelweiss Financial Services Limited · NSE:EDELWEISS
Edelweiss Financial Services — Q2 FY2022 Earnings Presentation
55 slides from Edelweiss Financial Services's earnings presentation, Oct 28, 2021
Slide 1: Cover letter to stock exchanges: Investor Presentation
EW/Sec/2021/185 October 28, 2021 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 atta
Slide 2: Earnings update – Quarter ended Sep 21
Edelweiss Financial Services Limited Earnings update – Quarter ended Sep 21
Slide 3: Contents
Contents 1 Overview & Highlights 3 2 Update on Key Priorities 19 3 Business Performance 26 4 Governance and Corporate Responsibility 48 2
Slide 4: Overview & Highlights
Overview & Highlights Quarter ended Sep 21
Slide 5: Edelweiss at a glance – Quarter ended Sep 21
Edelweiss at a glance – Quarter ended Sep 21 Net Worth Ex-Insurance PAT INR 8,664 Cr INR 113 Cr Liquidity Customer Assets BVPS INR 5,100 Cr INR 3,24,100 Cr INR 74 (FV ₹1) 4
Slide 6: We are a diversified company with nine businesses
We are a diversified company with nine businesses Edelweiss Financial Services Ltd (EFSL) Housing Mutual Alternative Life General Insurance Wealth NBFC ARC Finance Fund Asset Mgt Insurance Insurance Broking Management ECL Finance Edelweiss Edelweiss Edelweiss Edelweiss Edelweiss Edelweiss Edelweiss
Slide 7: Performance overview – Quarter ended Sep 21
Performance overview – Quarter ended Sep 21 1 Steady performance across businesses – upward trend across key metrics Slide 7 - 9 2 Strong growth continues in customer franchise Slide 10 - 12 3 Robust balance sheet with well-capitalised businesses Slide 13 - 18 4 On track on our 3 priorities for the
Slide 8: Steady performance across businesses (1)
1 Steady performance across businesses (1) • Returned to profitability this quarter and poised for a steady trend hereon NBFC • Retail Collection efficiency stood at 94% • Gradual scale-up in disbursements; Continued focus on asset light model Housing Finance • Retail Collection efficiency back to n
Slide 9: Steady performance across businesses (2)
1 Steady performance across businesses (2) Asset • Robust recoveries at ~INR 900 Cr; ~INR 160 Cr from retail portfolio Reconstruction • Acquired assets of ~INR 1,300 Cr • Gross premium grew by 59% QoQ Life Insurance • Active client base increased by ~9% YoY General • Gross premium grew by 52% QoQ In
Slide 10: Healthy profitability across businesses
1 Healthy profitability across businesses INR Cr Quarter ended Quarter ended Sep 21 Sep 20 NBFC 16 29 Housing Finance 16 13 Asset Reconstruction 70 46 Mutual Fund 11 1 Alternative Asset Mgt 12 2 Insurance Broking 1 1 Life Insurance (59) (58) General Insurance (26) (26) BMU & Corporate (12) (148) Tot
Slide 11: Strong growth continues in customer assets
2 Strong growth continues in customer assets Customer Assets (INR Cr) 324,100 249,100 190,700 Sep 19 Sep 20 Sep 21 Customer assets grew ~2x in last two years, 7% growth in this quarter 10
Slide 12: Customer franchise grew ~3x in last two years
2 Customer franchise grew ~3x in last two years Total Customer Reach (in Lakhs) 47 29 16 Sep 19 Sep 20 Sep 21 Addition of ~3 lakh customers within this quarter 11 Customer reach includes individuals covered under Group Insurance policies
Slide 13: Contributed by Mutual Fund and Insurance businesses
2 Contributed by Mutual Fund and Insurance businesses No of Customers (in lakhs) Mutual Fund Life Insurance General Insurance 19 10 9 9 6 6 3 2 1 Sep 19 Sep 20 Sep 21 Sep 19 Sep 20 Sep 21 Sep 19 Sep 20 Sep 21 12 Customer reach includes individuals covered under Group Insurance policies
Slide 14: Robust balance sheet with well-capitalised businesses
3 Robust balance sheet with well-capitalised businesses Borrowings declined by 36% since Sep 19 to INR 24,755 Cr; D/E stands at 2.1x Strong capitalization across businesses Adequate liquidity of INR 5,100 Cr at 21% of borrowings Credit assets remain conservatively provided, well above IRAC norms 13
Slide 15: Borrowings declined ~36% over last 2 years
3 Borrowings declined ~36% over last 2 years Borrowings (INR Cr) D/E (Excl Treasury Assets) 38,695 3.4 3.1 30,845 24,755 2.1 Sep 19 Sep 20 Sep 21 Sep 19 Sep 20 Sep 21 14
Slide 16: Strong capitalization across businesses
3 Strong capitalization across businesses Businesses Metric Value NBFC Capital Adequacy 26.1% Housing Finance Capital Adequacy 22.0% Asset Reconstruction Capital Adequacy 36.0% Life Insurance Solvency Ratio 206% General Insurance Solvency Ratio 179% 15
Slide 17: Cash flow plan
3 Cash flow plan INR Cr Oct 21 to Mar 22 Apr 22 to Sep 22 Opening Available Liquidity (A) 5,100 4,500 Inflows Expected Inflows 6,400 4,000 Fresh Borrowings 3,500 2,400 Total Inflows (B) 9,900 6,400 Outflows Repayments 8,000 4,300 Disbursements 2,500 2,500 Total Outflows (C) 10,500 6,800 Closing Avai
Slide 18: Assets in each tenor range adequately cover liabilities
3 Assets in each tenor range adequately cover liabilities INR Cr Assets Liabilities Gap Upto 1 year 17,600 15,250 2,350 1-3 years 13,300 10,550 2,750 3 years+ 13,200 10,500 2,700 17
Slide 19: Credit assets remain conservatively provided
3 Credit assets remain conservatively provided Balance Sheet Provisions IRAC Provisions IndAS Provisions (INR Cr) 758 768 518 417 154 136 Sep 19 Sep 20 Sep 21 We have consistently provided higher than IRAC norms 18
Slide 20: Update on Key Priorities
Update on Key Priorities oO Edelweiss Ideas create, values protect
Slide 21: Key priorities for the next 15 months
Key priorities for the next 15 months 1 Demerger and listing of Edelweiss Wealth Management 2 Reduce wholesale credit assets 3 Scale up our Asset Management and Insurance businesses 20
Slide 22: Demerger and listing of Edelweiss Wealth Management
1 Demerger and listing of Edelweiss Wealth Management Phase I • PAG’s strategic investment in Edelweiss Wealth Management • Segregation of Edelweiss Wealth Management business after regulatory Oct-Dec 21 Phase II approvals (on track) • Filing of regulatory applications for demerger and listing Phase
Slide 23: Reduction in wholesale credit assets by 33% over 2 years
2 Reduction in wholesale credit assets by 33% over 2 years ECLF wholesale loan assets (INR Cr) 15,923 10,695 4,900 Sep 19 Sep 21 Sep 23 Improvement in reduction of wholesale credit assets expected over next 2 years as Covid impact subsides 22
Slide 24: Successful workouts > INR 3,000 Cr in the past 18 months
2 Successful workouts > INR 3,000 Cr in the past 18 months Change of Developer Strengthening the developer group through addition or replacement of developers Projects Ensuring project progress by way of last mile financing and sales support for renewed Streamlining buyer interest Cash flow Improved
Slide 25: Significant growth in Asset Management business
3 Significant growth in Asset Management business Mutual Fund AUM (INR Cr) Alternative Asset Mgt AUM (INR Cr) 71,000 30,200 29,800 43,700 19,800 16,100 Sep 19 Sep 20 Sep 21 Sep 19 Sep 20 Sep 21 Asset Management AUM crossed INR 1,00,000 Cr in this quarter 24
Slide 26: Insurance businesses continue to scale up
3 Insurance businesses continue to scale up LI – Gross Premium for the quarter (INR Cr) GI – Gross Premium for the quarter (INR Cr) 340 96 285 229 59 36 Sep 19 Sep 20 Sep 21 Sep 19 Sep 20 Sep 21 Gross Premium growth of 59% in LI and 52% in GI since last quarter 25
Slide 27: Business Performance
Business Performance oO Edelweiss Ideas create, values protect
Slide 28: NBFC: Business performance snapshot
NBFC NBFC: Business performance snapshot Key Metrics for the quarter Business Update • Edelweiss SME - “Best Digital Strategy” award at the Equity (INR Cr) 3,850 Digital Customer Experience Summit & Awards 2021 • Focus continues on asset light business model: Credit Assets (INR Cr) 14,375 o Initiate
Slide 29: NBFC: Financial performance snapshot
NBFC NBFC: Financial performance snapshot INR Cr Quarter ended Quarter ended Sep 21 Sep 20 AUM 9,284 13,023 Loan book 8,278 11,929 Equity 3,850 3,691 Gross Revenue 472 710 Net Revenue 88 298 Opex 91 196 Credit Costs (18) 70 Profit After Tax 16 29 GNPA 2.7% 3.3% NNPA 2.2% 2.7% Total Provision Cover 2
Slide 30: Housing Finance: Business performance snapshot
Housing Finance Housing Finance: Business performance snapshot Key Metrics for the quarter Business Update • Gradual scale up in disbursements Equity (INR Cr) 766 o ~INR 300 Cr disbursed during the quarter Credit Assets (INR Cr) 4,597 • Collection efficiency back to normalcy at 99% for the current q
Slide 31: Housing Finance: Financial performance snapshot
Housing Finance Housing Finance: Financial performance snapshot INR Cr Quarter ended Quarter ended Sep 21 Sep 20 AUM 4,388 4,950 Loan book 3,362 3,815 Equity 766 782 Gross Revenue 135 161 Net Revenue 50 59 Opex 27 33 Credit Costs 4 8 Profit After Tax 16 13 GNPA 3.6% 2.4% NNPA 3.2% 2.1% Total Provisi
Slide 32: Mutual Fund: Business performance snapshot
Mutual Fund Mutual Fund: Business performance snapshot Key Metrics for the quarter Business Update • Total net inflows of ~INR 7,300 Cr during the quarter Equity (INR Cr) 179 • Strong net equity inflows of ~INR 2,500 Cr during the quarter driven by Balanced Advantage fund AUM (INR Cr) ~71,000 • Equi
Slide 33: Mutual Fund: Financial performance snapshot
Mutual Fund Mutual Fund: Financial performance snapshot INR Cr Quarter ended Quarter ended Sep 21 Sep 20 AUM 71,000 44,000 Equity 179 160 Revenue 45 27 Opex 33 25 Profit After Tax 11 1 32
Slide 34: Consistent expansion of investor and partner reach
Mutual Fund Consistent expansion of investor and partner reach MF Equity AUM (INR Cr) Quarterly Equity Gross Sales (INR Cr) 16,600 3,500 5,900 4,700 900 400 Sep 19 Sep 20 Sep 21 Sep 19 Sep 20 Sep 21 SIP AUM (INR Cr) Active Folios (in Lakhs) 139 8.2 60 4.3 48 2.6 Sep 19 Sep 20 Sep 21 Sep 19 Sep 20 Se
Slide 35: Alternative Asset Mgt: Business performance snapshot
Alternative Asset Mgt Alternative Asset Mgt: Business performance snapshot Key Metrics for the quarter Business Update • Robust investment pipeline Equity (INR Cr) 174 o Deployed ~INR 750 Cr during the quarter & ~INR 1,850 Cr in half year ended Sep 21 AUM (INR Cr) ~30,200 • Ranked no. 3 in Asia in t
Slide 36: Alternative Asset Mgt: Financial performance snapshot
Alternative Asset Mgt Alternative Asset Mgt: Financial performance snapshot INR Cr Quarter ended Quarter ended Sep 21 Sep 20 AUM 30,200 29,500 Deployed AUM 14,600 11,600 Equity 174 21 Revenue 61 35 Opex 49 34 Profit After Tax 12 2 35
Slide 37: Alternative assets overview
Alternative Asset Mgt Alternative assets overview Alternative Asset Mgt AUM – Strategy wise Deployed AUM – Strategy wise 11% 12% 38% 19% 44% INR 30,200 Cr 30% INR 14,600 Cr 32% 14% Distressed Credit Fund Structured Debt Fund Distressed Credit Fund Structured Debt Fund Real Estate Credit Fund Infrast
Slide 38: Asset Reconstruction: Business performance snapshot
ARC Asset Reconstruction: Business performance snapshot Key Metrics for the quarter Business Update Equity (INR Cr) 2,343 • Robust recoveries of ~INR 740 Cr from wholesale portfolio and ~INR 160 Cr from retail portfolio AUM (INR Cr) ~42,800 • Acquired assets worth ~INR 1,300 Cr Capital employed 5,50
Slide 39: Asset Reconstruction: Financial performance snapshot
ARC Asset Reconstruction: Financial performance snapshot INR Cr Quarter ended Quarter ended Sep 21 Sep 20 AUM 42,800 42,400 Capital Employed 5,500 5,300 Wholesale assets 5,000 5,200 Retail assets 500 100 Equity 2,343 2,123 Gross Revenue 231 215 Opex 20 22 Profit After Tax 70 46 Edelweiss’ share in P
Slide 40: Life Insurance: Business performance snapshot
Life Insurance Life Insurance: Business performance snapshot Key Metrics for the quarter Business Update Equity (INR Cr) 610 • Individual APE CAGR of 26% since FY17 against industry growth at 13% Individual APE (INR Cr) 98 • Launched 2 new products this quarter: ‘Total Protect Plus’ and ‘Premier Gua
Slide 41: Life Insurance: Financial performance snapshot
Life Insurance Life Insurance: Financial performance snapshot INR Cr Quarter ended Quarter ended Sep 21 Sep 20 Net Premium Income 332 276 Investment Income & Other Income 216 121 Total Income 548 397 Policy benefits & insurance policy liability 455 304 Other expenses 152 151 Profit After Tax (59) (5
Slide 42: Customer base and gross premium continue to grow
Life Insurance Customer base and gross premium continue to grow No of Active Unique Clients (#) Gross Premium for the quarter (INR Cr) 340 339,400 312,500 285 268,200 229 Sep 19 Sep 20 Sep 21 Sep 19 Sep 20 Sep 21 41
Slide 43: General Insurance: Business performance snapshot
General Insurance General Insurance: Business performance snapshot Key Metrics for the quarter Business Update • Robust GDPI growth of 62% YoY while industry grew at Equity (INR Cr) 128 12% in Sep 21 quarter • Multiple partner integrations via open API gateway went live with Mahindra Insurance Broke
Slide 44: General Insurance: Financial performance snapshot
General Insurance General Insurance: Financial performance snapshot INR Cr Quarter ended Quarter ended Sep 21 Sep 20 Net Premium Income 60 40 Investment Income & Other Income 12 7 Total Income 72 47 Policy benefits & insurance policy liability 59 38 Other expenses 38 35 Profit After Tax (26) (26) 43
Slide 45: Strong growth enabled by digital platform
General Insurance Strong growth enabled by digital platform No of Unique Clients (#) Gross Premium for the quarter (INR Cr) 214,300 96 150,700 59 36 56,200 Sep 19 Sep 20 Sep 21 Sep 19 Sep 20 Sep 21 44
Slide 46: Wealth Management: Business performance snapshot
Wealth Mgt Wealth Management: Business performance snapshot Key Metrics for the quarter Business Update • AuA grew ~7% QoQ with net new money for the quarter AUA (INR Cr) ~1,80,100 over INR 2,700 Cr LAS loan book ~2,000 • Strong quarterly financial performance with YoY revenue (INR Cr) growth of ~30
Slide 47: Wealth Management: Financial performance snapshot
Wealth Mgt Wealth Management: Financial performance snapshot INR Cr Quarter ended Quarter ended Sep 21 Sep 20 AUA 1,80,100 1,33,200 Equity 1,716 1,348 Gross Revenue 403 310 Net Revenue 343 256 Opex 233 155 Profit After Tax 93 83 Edelweiss’ share in PAT 36 83 46
Slide 48: Wealth assets continue to maintain robust growth
Wealth Mgt Wealth assets continue to maintain robust growth Wealth Management AUA (INR Cr) No of Clients (#) 180,100 752,600 133,200 647,400 107,800 527,700 Sep 19 Sep 20 Sep 21 Sep 19 Sep 20 Sep 21 47
Slide 49: Governance and Corporate Responsibility
Governance and Corporate Responsibility
Slide 50: 12 Member Board with 7 Independent Directors
12 Member Board with 7 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 51: Significant institutional ownership
Significant institutional ownership Shareholding Pattern as on 30th Sep 21 Key Shareholders above 1% Percent 1 Pabrai Investment Funds 7.7% Employee Trust 2 BIH SA 5.1% DIIs, Non 4.8% Promoter Group 3 TIAA CREF funds 5.0% Institutions & Others 4 Baron Asset Management 4.4% 23.5% 32.8% 5 LIC 2.6% 6 V
Slide 52: Our investment in communities
Our investment in communities EdelGive Foundation’s commitment to investing in communities 97 Districts across 13 States Sustainable Women Quality Education Livelihoods Empowerment 19.49 lakh Children 2,200 hectares of irrigated 1.78 lakh women supported INR 73 Cr * supported land Committed 6,900 Gr
Slide 53: Trusted partner: EdelGive funding partners & networks
Trusted partner: EdelGive funding partners & networks Foundations, Corporates and HNIs partner with Edelgive Platform for their philanthropic allocation 52
Slide 54: 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 55: Safe Harbour
Safe Harbour Slide 4: Net worth is including MI, investment in CCD by CDPQ of INR 866 Cr and excluding Edelweiss Wealth Mgt equity Slide 4: Ex-Insurance PAT is excluding MI Slide 4: BVPS has been computed by taking into account potential stake dilution from convertible instruments in NBFC Slide 4,16
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