Power Finance Corporation Limited · NSE:PFC
Power Finance — Q1 FY2019 Earnings Presentation
33 slides from Power Finance's earnings presentation, Jun 30, 2018
Slide 1: Performance Highlights, Quarter ended 30th June 2018
Power Finance Corporation Limited A Navratna PSU Performance Highlights Quarter ended 30th June 2018 54EC Foreign Borrowings Renewables 54EC Bonds Funding for a Brighter Tomorrow….
Slide 2: Table of Contents
Table of Contents 1. Highlights 2. Ind AS Transition a) Introduction b) Key areas of impact c) Key changes for PFC from IGAAP d) Key changes for PFC from RBI e) ECL Methodolgy - Key Concepts 3. Earning Updates 4. Asset Quality 5. Operational Performance 6. Shareholders Outlook 2
Slide 3: Highlights
1. HIGHLIGHTS 3
Slide 4: Highlights
Highlights SNAPSHOT – As on 30TH June 2018 KEY HIGHLIGHTS (Rs.’crore) As on Based on Ind AS 1 Ind As implemented w.e.f. 01.04.2018 30.06.2018 PAT 1,373 Interest Income 6,617 2 No Stage III assets (NPA) in Govt. Sector Interest Expense 4,624 Net Interest Income 1,993 Net Interest Margin on Earning As
Slide 5: No major impact of RBI circular dated 31st May 2018
Highlights No major impact on PFC of RBI circular dated 31st May 2018 – withdrawing Govt. NBFCs exemption from applying RBI Prudential norms RBI Circular dated 31st May 2018 No major impact on PFC of RBI circular ▷ RBI on 31 May 2018 withdrew the st ▷ PFC has already been applying RBI exemption avai
Slide 6: Ind AS Transition
2. IND AS TRANSITION 6
Slide 7: Ind AS Transition - Introduction
Ind AS Transition - Introduction Ind AS implemented from 01.04.2018 PFC has adopted Indian Accounting Standards (IND AS) with effect from 1st April 2018. ▷ Results for Q1 19 have been reported as per Ind AS ▷ Figures for Q1 18 of previous year have been restated as per Ind As to make them comparable
Slide 8: Ind AS Transition - Key Areas of Impact
Ind AS Transition - Key Areas of Impact 1 Expected ▷ Provisioning of Rs.17,238 cr. on Total Loan Portfolio as on 30 June 2018 th Credit Loss ○ Rs.15,445 cr. as per IND As. ○ Rs.1,793 cr. is additional provisioning considering RBI prudential norms. 2 Net Worth ▷ Ind AS impact on net worth as on 31 Ma
Slide 9: Key Changes for PFC from IGAAP
Ind AS Transition – Key Changes for PFC from IGAAP Key Items IGAAP Ind AS Fee Income & Booked upfront Amortised on Effective 1 Fee Expense Interest Rate (EIR) basis Recorded at Lending Recorded at Effective Interest Rate 2 Interest Income & (EIR). Rate/Borrowing Rate Interest Expense Income on credi
Slide 10: Key Changes for PFC from IGAAP
Ind AS Transition – Key Changes for PFC from IGAAP Key Items IGAAP Ind AS Derivatives Covered by AS 11 - 5 Derivatives Premium amortised All Derivatives - Fair Value changes recognised in P&L Derivatives Covered by Guidance Note - Fair Value changes recognised in P&L. Category wise fair valuation Sc
Slide 11: Key Changes for PFC from RBI
Ind As Transition - Key Changes for PFC from RBI Key Items RBI Ind AS Asset ▷ Standard Asset ▷ Stage I – Performing Asset 1 Classifcation ○ No default in repayment of principal or ○ Loan assets classified in Stage I - where payment of interest is perceived & payment overdue is <=30 days. does not ca
Slide 12: Key Changes for PFC from RBI
Ind As Transition - Key Changes for PFC from RBI Key Items RBI Ind AS ▷ Rule based provisioning ▷ ECL Model for provisioning 1 2 Provisioning ○ Under IND AS no specific provisioning ○ specific provisioning percentage prescribed for Standard, Restructured percentage is prescribed. Standard & NPA Asse
Slide 13: ECL Methodology – Key Concepts (1/2)
ECL Methodolgy – Key Concepts (1/2) What is ECL? An estimate of likelihood that a borrower will be unable to meet its debt obligation ▷ ECL is a forward looking model which requires during a specified time frame. to start provisioning for expected credit losses PD from the time when the loan is orig
Slide 14: ECL Methodology – Key Concepts (2/2)
ECL Methodolgy – Key Concepts (2/2) Stages for ECL Calculation 14
Slide 15: Earning Updates
3. EARNING UPDATES 15
Slide 16: Earning Updates
Earning Updates Revenue & Growth (Rs.’crore) Q1 FY 19 Q1 FY 18 Interest Income 6,617 6,745 Interest Expense 4,624 4,140 Net Interest Income 1,993 2,605 Profit After Tax 1,373 1,122 Other Comprehensive Income (150) (84) Cumulative Provisions 17,238 15,934 Reserve for Bad & Doubtful debts 3,447 3,127
Slide 17: Earning Updates – Key Ratios
Earning Updates Key Ratios Q1 FY 19 Q1 FY 18 Yield on Earning Assets 10.57% 11.21% Cost of Funds 8.08% 8.32% Interest Spread on Earning Assets 2.49% 2.89% Net Interest Margin on Earning Assets 3.26% 4.17% Net worth (Share Capital + All Reserves) Rs.37,571 cr. Rs.36,440 cr. Return on Average Net wort
Slide 18: Asset Quality
4. ASSET QUALITY 18
Slide 19: Asset Quality Snapshot – Total Portfolio
Asset Quality Snapshot – Total Portfolio Loan Book of Rs.2,84,848 cr. as on 30.06.2018 No Stress – Regular in Government Sector Servicing 82% Rs. 2,33,166 cr. Rs.20,865 cr. No Stress – Private Sector Revival Regular in 18% Envisaged Servicing Rs.51,683 cr. Rs.5,314 cr. Stressed Rs.25,504 cr. 89% of
Slide 20: Provisioning Snapshot – Total Portfolio
Provisioning Snapshot – Total Portfolio (Rs.’crore) Status as on 30.06.2018 Stage III (NPA) Stage I Stage II Stage III as % of Total Total Loan Assets Outstanding Loan Assets Government Sector 2,12,253 20,913 - Nil 2,33,166 Private Sector 20,865 3,434 27,384 9.61% 51,683 Total Outstanding Amount 2,3
Slide 21: Asset Quality Snapshot – Private Sector (1/2)
Asset Quality Snapshot – Private Sector (1/2) In 5 projects worth Rs. 5,314 cr. revival envisaged with minimum haircut In projects: GVK, Shiga, Dans, South East Up, India Power Haldia Resolution 15% provision imminent available *Projects worth Rs.3,434 crore are in Stage II and balance Rs. 1,880 cr.
Slide 22: Asset Quality Snapshot – Private Sector (2/2)
Asset Quality Snapshot – Private Sector (2/2) Stressed projects at Rs.25,504 cr. Provisioning Available (Rs.’crore) As on 23 projects 30.06.2018 Provision on Stressed 13,745 Stage III Assets Additional provision buffer Provision on Stage I Assets 2,177 All in Stage III Reserve for Bad & Doubtful 3,4
Slide 23: Status Update – Stressed Assets (1/2)
Status Update as on date – Stressed Assets (1/2) 1 Seven Projects where resolution ▷ Three Projects worth Rs.4,992 cr. (GMR, underway KSK, Jhabua) where : (GMR Chhattisgarh, KSK Mahandi, ○ Bidding completed for these projects. Jhabua Power, Indiabulls Amravati, Essar Mahan, Rattan India –Nasik & ○ H
Slide 24: Status Update – Stressed Assets (2/2)
Status Update as on date – Stressed Assets (2/2) 2 Project which may not be immediately ▷ Three projects worth Rs.689 cr. may not be immediately impacted by RBI circular as impacted by 12th Feb RBI circular exposure is less than Rs. 2,000 cr: ○ 37% provisioning available against these projects. Stat
Slide 25: Operational Performance
5. OPERATIONAL PERFORMANCE 25
Slide 26: Loan Assets - Composition
Loan Assets - Composition (Rs.’crore) As on 30.06.2018 As on 30.06.2017 Amt. % Amt. % Gross Loan Assets 2,84,848 100% 252,746 100% Scheme Wise Generation 2,04,551 72% 1,89,376 75% Transmission 19,781 7% 17,577 7% Distribution 36,284 13% 20,672 8% Others 24,233 9% 25,121 10% Sector Wise State Sector
Slide 27: Disbursements - Composition
Disbursements - Composition (Rs.’crore) Q1 FY 19 Q1 FY 18 Amt. % Amt. % Disbursements (excluding R-APDRP/IPDS) 12,981 100% 12,849 100% Scheme Wise Generation 3,793 29% 5,850 46% Transmission 377 3% 947 7% Distribution 6,218 48% 803 6% Others 2,593 20% 5,249 41% Sector Wise State Sector 10,305 79% 9,
Slide 28: Borrowing Profile
Borrowing Profile (Rs.’crore) Borrowings 30.06.2018 30.06.2017 Amt. % Amt. % Bonds 1,94,135 83% 1,88,799 92% Term Loans 31,692 14% 7,240 4% Short Term Loans 7,591 3% 8,726 4% Total 2,33,418 100% 2,04,765 100% of which: Rupee Denominated 2,12,312 91% 1,96,363 96% Foreign Currency Loans 21,106 9% 8,40
Slide 29: PFC's access to low cost funds
PFC’s access to low cost funds PFC mandated by Ministry of Finance to raise 54 EC Capital Gain Bonds 54EC Salient Features Eligibile Investors Individuals,HUF,NRI,FIs,LLP, Benefit to Investor Partnership,Banks,Mutual Funds, Insurance Co., PF funds 5 years from deemeed Tenor allotment date Long Term
Slide 30: Shareholders Outlook
6. SHAREHOLDERS OUTLOOK 30
Slide 31: Shareholders Outlook
Shareholders Outlook Dividend Performance 66% GoI Shareholding Consistent Dividend Pay out Track 1 Record Particulars 30.06.2018 30.06.2017 Dividend Payout as a % of Equity President of India 65.61%* 66.35% Share Capital FIIs & FPIs 11.55% 15.65% 78% 69% Indian FIs & Banks 7.16% 8.39% Bodies Corpora
Slide 32: Thanks! Any questions?
Thanks! Any questions? You can reach PFC’s Investor Relations Team at investorrelations@pfcindia.com. Investor Relations Team : ▷ Mr. B.S.Bisht,General Manager (+91-11- 23456846) ▷ Ms. Jasneet Guram, DGM (+91-11- 23456823) Join us: @pfclindia www.pfcindia.com 32
Slide 33: Disclaimer
Disclaimer ▷ The presentation is prepared based on stand-alone unaudited financial statements of PFC for quarter ended 30.06.2018 ▷ This presentation may contain statements which reflect Management’s current views and estimates and could be construed as forward looking statements. The future involve