Fusion Finance Ltd · NSE:FUSION

Fusion Finance — Fusion Micro Finance — Q4 FY23 Earnings Presentation

44 slides from Fusion Finance's earnings presentation, May 22, 2023

  1. Slide 1: Letter to stock exchanges: submission of Earnings Presentation

    Letter No. FMFL/SEC/2023-24/SE-24 Date:22.05.2023 The Manager The Manager Listing Department Listing Department National Stock Exchange of India Limited BSE Limited Exchange Plaza, Plot No. C/1, G Block Bandra Phiroze Jeejeebhoy Towers Kurla Complex, Bandra (E), Mumbai - 400 051 Dalal Street, Mumbai

  2. Slide 2: Investor Presentation Q4 & FY23

    Creating Opportunities… Creating Investor Presentation Opportunities… Q4 & FY23 Fusion Micro Finance Limited

  3. Slide 3: Disclaimer

    Disclaimer Creating Opportunities… By attending the meeting where this Presentation (“Presentation”) is made, or by reading the Presentation materials, you agree to be bound by the limitations contained herein and to maintain absolute confidentiality regarding the information disclosed in this Prese

  4. Slide 4: Presentation Path

    Presentation Path Creating Opportunities… Vision, Mission Business Executive Summary Overview & Values Our Presence Key Strengths Performance 1 2 33 44 5 6 May 22, 2023 | © Fusion Micro Finance Limited 3

  5. Slide 5: Executive Summary

    Creating Opportunities… Executive Summary 1 May 22, 2023 | © Fusion Micro Finance Limited 4

  6. Slide 6: Executive Summary FY'23

    Executive Summary FY’23 Creating Opportunities… Milestone year… successful listing, robust AUM growth of 37 %, highest ever PAT and Rating upgrade. Organic addition of ~0.8 Mn new clients, currently 3.5 Mn clients across 20 states. Cost of Borrowing reduced by 13 bps Set for long term sustainable gr

  7. Slide 7: Executive Summary Q4 FY'23

    Executive Summary Q4 FY’23 Creating Opportunities… Consistent quarter with growth across all metrics. AUM grew by 7% QoQ NIM expanded by 26 bps. Marginal Cost of Borrowing reduced by 48 bps NII NIM PAT Cost To Income Net NPA ₹ 273.75 Cr ₹ 114.52 Cr 36.18% 10.57% Reduced by 225 bps 0.87% QoQ growth 1

  8. Slide 8: Performance Highlights – FY'23

    Performance Highlights – FY’23 Creating Opportunities… Net worth Total Income NII PPOP ₹ 2,321.92 Cr ₹ 1,799.97 Cr ₹ 947.21 Cr ₹ 712.35 Cr 74% 50% 69% 81% OPEX Cost to Income Cost of Borrowing ECL 38.44% 10.30% ₹ 312.66 Cr 5.53% Management overlay 583 bps 13 bps of ₹ 51.25 Cr May 22, 2023 | © Fusion

  9. Slide 9: Collection Efficiency

    Collection Efficiency Creating Opportunities… Collection efficiency excluding Pre-payment collection Pre-Mar-21 Portfolio O/s of MFI AUM ₹ 123 Cr, 1.4% Post Mar-21 Portfolio O/s of MFI AUM ₹ 8,872 Cr, 98.6% 98.7% 99.4% 99.1% 99.2% 98.9% 98.6% 98.1% 98.0% 92.3% 88.1% 89.2% 88.4% 87.8% 88.6% 87.4% 83.

  10. Slide 10: Impact of Credit Cost

    Impact of Credit Cost Creating Opportunities… Understanding the Credit Cost Impact (₹ Million) Q4 FY 23 FY 23 FY 22 Opening ECL [A] 2,894.37 3,603.50 2,853.02 - Provisions as per ECL [B] 690.05 1,995.13 3,684.87 Reversals (on account of write-off) [C] 457.80 2,472.01 2,934.39 Closing ECL [D = A+B-C]

  11. Slide 11: Overview

    Creating Opportunities… Overview 2 May 22, 2023 | © Fusion Micro Finance Limited 10

  12. Slide 12: 13+ years of robust performance

    13+ years of robust performance Creating Opportunities… Diversified Client Growth AUM Growth Organically diversified 23% for last 5 years 37% for last 5 years since inception Technology Cost of Funds Marquee Investor On Cloud since 2013 Reduced by 237 bps in Warburg Pincus - 2018 last 5 years Rating

  13. Slide 13: Vision, Mission & Values

    Creating Opportunities… Vision, Mission & Values May 22, 2023 | © Fusion Micro Finance Limited 12

  14. Slide 14: Vision, Mission and Values

    Vision, Mission and Values Creating Opportunities… Vision: “Fusion Micro Finance with a social vision and business orientation aims to provide underprivileged women with economic opportunities to transform the quality of Mission: their lives.” “A self-sustainable financial institution which leverage

  15. Slide 15: Our Presence

    Creating Opportunities… Our Presence 44 May 22, 2023 | © Fusion Micro Finance Limited 14

  16. Slide 16: Our Presence

    Our Presence Creating Opportunities… J & K (2) ~3.53 Active Clients Mn 20States Punjab (46) Haryana (47) Himachal Pradesh (8) Uttarakhand (21) (including 3 UTs) Uttar Pradesh (221) Assam (20) Delhi (9) Rajasthan (97) Bihar(147) 1086 Branches Gujarat (39) Madhya Pradesh (111) Chhattisgarh (33) Jharkh

  17. Slide 17: Key Strengths

    Creating Opportunities… Key Strengths 5 May 22, 2023 | © Fusion Micro Finance Limited 16

  18. Slide 18: Key Strengths

    Key Strengths Creating Opportunities… Diversification Liability Management Consistency Digital Orientation People Operational Prudence Strong Governance May 22, 2023 | © Fusion Micro Finance Limited 17

  19. Slide 19: Key Strengths: Diversification

    Key Strengths : Diversification Creating Opportunities… YoY Network Distribution Top 5 states concentration Rural vs Urban Presence 20 75.0% 88% 91% 93% 93% 93% 18 18 18 20 72.3% 85% 18 150 0 18 68.0% 69.0% 1086 65.9% 65.3% 130 0 14 16 934 110 0 14 725 900 12 595 504 10 700 500 375 8 6 300 100 4 15%

  20. Slide 20: Key Strengths: Consistency

    Key Strengths : Consistency Creating Opportunities… YoY ₹ in Crore AUM Disbursement CAGR 43% CAGR 39% 9,296 8,596 6,786 6,180 4,638 3,574 3,710 3,607 2,782 2,641 1,556 1,671 '18 '19 '20 '21 '22 '23 '18 '19 '20 '21 '22 '23 QoQ AUM Disbursement Growth 18% Growth 37% 8,654 9,296 2,373 8,047 6,786 7,389

  21. Slide 21: Key Strengths: Consistency (Contd…)

    Key Strengths : Consistency (Contd…) Creating Opportunities… YoY AUM/ RO (₹ in Crore) AUM/Branch (₹ in Crore) Borrower/ Branch 8.8 3,452 1.4 7.4 3,079 3,167 2,987 3,020 1.1 6.1 6.5 2,728 1.0 1.1 0.9 5.2 0.8 4.1 '18 '19 '20 '21 '22 '23 '18 '19 '20 '21 '22 '23 '18 '19 '20 '21 '22 '23 QoQ AUM/ RO (₹ in

  22. Slide 22: Key Strengths: Operational Prudence

    Key Strengths : Operational Prudence Creating Opportunities… YoY Avg. Ticket Size (₹ in K) Borrowers (in Lacs) Avg. OS / Borrower (₹ in K) 35.7 37.9 CAGR 28% 25.6 35.3 24.5 32.1 21.7 29.8 26.5 27.2 19.3 23.6 17.0 21.2 15.2 18.7 15.5 10.2 '18 '19 '20 '21 '22 '23 '18 '19 '20 '21 '22 '23 '18 '19 '20 '2

  23. Slide 23: Key Strengths: People

    Key Strengths : People Creating Opportunities… Stable and Experienced core management team and a strong second line with diversified experience Balanced infusion of strong talent for key leadership positions with progressing home-grown talent Team Size Building a performance driven culture which rew

  24. Slide 24: Key Strengths: Liability Management

    Key Strengths : Liability Management Creating Opportunities… Average Cost of Borrowing Marginal & Average Cost of Borrowing 11.2% 13.5% 12.7% 12.3% 11.2% 10.7% 10.7% 10.4% 10.3% 10.4% 10.4% 10.3% 10.2% 10.1% 10.1% 9.9% YoY QoQ '18 '19 '20 '21 '22 '23 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Marginal Cost of Bo

  25. Slide 25: Key Strengths: Liability Management (Contd…)

    Key Strengths : Liability Management (Contd…) Creating Opportunities… Positive ALM (in Months) 25.8 Tenure Ratings 23.7 24.2 23.0 22.2 20.4 16.5 17.5 18.8 17.6 FY 2023 A FY 2022 A- FY 2018 BBB+ '19 '20 '21 '22 '23 Avg Maturity of Assets Avg Maturity of Liabilties Loan Maturity (Tenure) Rating > 5 YE

  26. Slide 26: Key Strengths: Digital Orientation

    Key Strengths : Digital Orientation Creating Opportunities… Technology – Infrastructure Customer Experience Early Cloud adoption Digital onboarding improved from Scalable 30% in 2018 to 100% in 2023 Open API Cashless disbursement improved Architecture from 20% in 2018 to 97% in 2023 Efficiency Busin

  27. Slide 27: Key Strengths: Digital Orientation (Building for future)

    Key Strengths : Digital Orientation (Building for future) Creating Opportunities… Real-time insights with Data Lake and Analytics Driving operational efficiency with automated Credit Decisioning Continuous investment in core technology Best-in-class cyber resilience framework May 22, 2023 | © Fusion

  28. Slide 28: Key Strengths: Strong Governance

    Key Strengths : Strong Governance Creating Opportunities… Independent Risk Independent Audit Function reporting Management Function to Board Audit Committee Extensive use of Strong reporting mechanism & Data Analytics Comprehensive risk-based audits Automation driving optimization Continuous process

  29. Slide 29: ESG - seeking to be a responsible Financial Institution

    ESG - seeking to be a responsible Financial Institution Creating Opportunities… Responsible approach towards environment , community and employees as well as towards internal governance standards Continuous Engagement with Community and Employees Governance Standards 2,898 initiatives covering 344 d

  30. Slide 30: Corporate Social Responsibility

    Corporate Social Responsibility Creating Opportunities… Fusion creates a positive impact on economic, social, and environmental growth of disadvantaged communities through integrated and sustainable development initiatives May 22, 2023 | © Fusion Micro Finance Limited 29

  31. Slide 31: Corporate Social Responsibility

    Corporate Social Responsibility Creating Opportunities… May 22, 2023 | © Fusion Micro Finance Limited 30

  32. Slide 32: Business Performance

    Creating Opportunities… Business Performance 6 May 22, 2023 | © Fusion Micro Finance Limited 31

  33. Slide 33: Profit and Loss Statement

    Profit and Loss Statement Creating Opportunities… Profit & Loss Statement (₹ Million) Q4 FY 23 Q4 FY 22 YoY % FY 23 FY 22 YoY % Revenue from operations - Interest income 4,507.39 3,071.87 46.73% 16,001.03 10,643.19 50.34% - Other than interest income 501.55 432.86 15.87% 1,418.20 869.46 63.11% Total

  34. Slide 34: Balance Sheet

    Balance Sheet Creating Opportunities… Financial Position (₹ Million) FY 23 FY 22 YoY % Financial and Non-financial assets - Cash & Other Bank Balances 9,503.61 10,113.72 (6.03)% - Bank balances other than cash and cash equivalents 1,146.66 1,422.26 (19.38)% - Loans - (Net of Impairment Loss Allowanc

  35. Slide 35: Key Ratios

    Key Ratios Creating Opportunities… YoY Margin Analysis Cost to Income Opex 73.4% 8.1% 21.7% 22.4% 21.2% 7.3% 20.5% 20.5% 63.4% 18.8% 6.4% 50.9% 5.3% 5.5% 5.5% 13.5% 44.3% 44.3% 12.7% 12.3% 38.4% 11.2% 10.4% 10.3% 9.7% 9.2% 10.2% 8.2% 8.8% 8.4% '18 '19 '20 '21 '22 '23 '18 '19 '20 '21 '22 '23 '18 '19

  36. Slide 36: Key Ratios

    Key Ratios Creating Opportunities… ROA (On Avg. AUM) ROA (On Avg. Assets) ROE 4.6% 21.2% 4.8% 11.5% 2.4% 2.2% 1.8% 1.8% 7.6% 1.1% 0.9% 3.6% 0.4% 0.3% 1.7% '18 '19 '20 '21 '22 '23 '18 '19 '20 '21 '22 '23 '18 '19 '20 '21 '22 '23 -3.3% -2.5% -16.4% GNPA NNPA 2.2% 5.5% 5.7% 1.6% 4.0% 3.5% 0.9% 1.5% 0.6%

  37. Slide 37: MSME Business

    MSME Business Creating Opportunities… MSME vertical launched in Dec 2019 to tap the potential of the ‘missing middle’ Building credit assessment capability …nucleus of our MSME strategy Clear focus on mapping adjacencies and potential thereof Business Update ( As of FY23) : Total Clients : 10,747 GL

  38. Slide 38: Recent Awards & Accolades

    Recent Awards & Accolades Creating Opportunities… “Best Data Analytics Initiative of the Year” (Micro Finance Company) 2nd Annual NBFC & Fintech Excellence Awards 2023 By Quantic May 22, 2023 | © Fusion Micro Finance Limited 37

  39. Slide 39: Highly Experienced Board with Strong Governance

    Highly Experienced Board with Strong Governance Creating Opportunities… ◼ Chairperson of the governing board of ◼ Managing Director at Warburg Pincus India Microfinance Institutions Network Limited ◼ Served on the board of Creditaccess Grameen and Muthoot Microfinance, among ◼ Over 26 years of exper

  40. Slide 40: Stable & Experienced Management Team

    Stable & Experienced Management Team Creating Opportunities… May 22, 2023 | © Fusion Micro Finance Limited 39

  41. Slide 41: Share Holder Profile

    Share Holder Profile Creating Opportunities… # Category Top 10 Share Holders Public / Others 1 Mutual Fund Nippon Life India Trustee ltd Top 10 Public 14.00% Shareholders 2 Insurance Co Kotak Mahindra Life Insurance Company ltd. 17.80% 3 Mutual Fund Aditya Birla Sun Life Trustee Private limited 4 Fo

  42. Slide 42: Abbreviations

    Abbreviations Creating Opportunities… AUM Asset Under Management PAT Profit After Tax NIM Net Interest Margin ROE Return on Equity ROA Return on Assets ECL Expected Credit Loss CRAR Capital Risk Adequacy Ratio GNPA Gross Non-Performing Assets NNPA Net Non-Performing Assets NII Net Interest Income PP

  43. Slide 43: Definitions

    Definitions Creating Opportunities… • AUM represents the aggregate of principal outstanding for all loans including the assigned portfolio as of the last day of the relevant period/year • Net Interest Income represents interest income on loan portfolio for the relevant period/year reduced by finance

  44. Slide 44: Thank You

    Creating Opportunities… Creating Thank You Opportunities… For Investor queries contact: Mr. Deepak Madaan| Email: investor.relations@fusionmicrofinance.com | +91-9289224563 May 22, 2023 | © Fusion Micro Finance Limited 43

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