L&t Finance Ltd · NSE:LTF
L&t Finance — Q3 FY2023 Earnings Presentation
63 slides from L&t Finance's earnings presentation, Jan 13, 2023
Slide 1: L&T Financial Services exchange submission letter
{fj; L&T Financial Services January 13, 2023 National Stock Exchange of India Limited BSE Limited Exchange Plaza, Corporate Relations Department, Plot No. C/1, G Block, 1st Floor, New Trading Ring, Bandra - Kurla Complex, Bandra (East), P. J. Towers, Dalal Street, Mumbai - 400 051. Mumbai - 400 001.
Slide 2: Strategy & Results Update – Q3FY23
Strategy & Results Update – Q3FY23 L&T Financial Services 1
Slide 3: Disclaimer
Disclaimer L&T Finance Holdings Limited (the “Company”) offers a range of financial products and services through its wholly-owned subsidiaries. L&T Financial Services (LTFS) is the brand name of L&T Finance Holdings Limited and its subsidiaries. The information in this presentation is provided by t
Slide 4: Agenda
Agenda A Journey towards Lakshya 2026 B Q3FY23 in Perspective C Financial Update 3 @ L&T Financial Services
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: Lakshya 2026 – Accelerate Strategic Initiatives
Lakshya 2026 – Accelerate Strategic Initiatives.. Retalllsatlon = Completed Provisions on change in Strong Reduction in Sale of Mutual Fund Retail Growth + Wholesale book business model Retail Mix (%) & Wholesale Mix (%) & Shift to accelerated sell Monetised value Book (Rs Cr) Book (Rs Cr) down of W
Slide 8: ..to become a Retail-focused NBFC
..to become a Retail-focused NBFC 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 Loan •
Slide 9: LTFS – What do we aspire for?
LTFS – What do we aspire for? .. ) • •• • •• ••• • ••• • •• CATERING TO THE TO DELIVERING FOR RETENTION, TOP NOTCH RURAL, URBAN MASS USING DIGITAL & CREATE A TOP CLASS UPSELL & RETAIL NBFC AFFLUENT, ASPIRER & DATA ANALYTICS CREDITWORTHY POOL SUSTAINABLE CROSS-SELL SME SEGMENT OF CUSTOMERS ROA 8 @ L&
Slide 10: Sustainable differentiators established to achieve Aspirations
Sustainable differentiators established to achieve Aspirations Strong & well provided Amongst Top financiers in Granular customer franchise & D2C App: PLANET balance sheet Retail space Distribution network PCR at 60%, built macro Seen multiple cycles, ~2 Cr customer database, Creating an augmented p
Slide 11: 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 10
Slide 12: Creating a Fintech@Scale
Creating a Fintech@Scale .····· ··· ······ ········ ····· FY16 – FY21 FY26 Business Strategy ‘Geo / Product Focused’ >> ‘Geo – agnostic / Customer Focused’ Efficiency improvement Reimagining customer engagement Digital Strategy Portfolio quality management >> Best in class risk mitigation 11 @ L&T F
Slide 13: Creating a Fintech@Scale - PLANET App
Creating a Fintech@Scale Reimagining Customer Engagement - PLANET App OUR ‘PLANET’ APP FEATURES Completed In Progress (Launched in March 2022) View Loan Update Account Details Mandate Details D2C journey for 2W Loan Download SOA & Consumer Loan Update Profile Rewards & Referrals Download Mandi Price
Slide 14: PLANET App: preferred augmented channel
Creating a Fintech@Scale Reimagining Customer Engagement - PLANET App PLANET APP: BECOMING A PREFERRED AUGMENTED CHANNEL FOR CUSTOMERS Rs. 117 Cr+ Rs. 970 Cr+ 23 Lac+ Collections Business Servicing Experience ~I Geo-agnostic Sourcing ] ~I Self Servicing ] - 843 -·• - - 14 -·· - @ 127 7 Business Serv
Slide 15: Agenda
Agenda A Journey towards Lakshya 2026 B Q3FY23 in Perspective C Financial Update 14 @ L&T Financial Services
Slide 16: Q3FY23 Synopsis (1/2)
Q3FY23 Synopsis (1/2) Business & Financial Updates • Retail mix at 64% of overall portfolio (up YoY from 50% in Q3FY22 and QoQ from 58% in Q2FY23) • Highest ever quarterly retail disbursement: Rs. 11,607 Cr, up 53% YoY and 13% QoQ • Retail: Strong business momentum across products aided by digital a
Slide 17: Q3FY23 Synopsis (2/2)
Q3FY23 Synopsis (2/2) Business & Financial Updates • Maintained strong Collection Efficiency across Retail businesses through enhanced on-ground efforts & data analytics Best-in-class based resource allocation collections • Accelerated Wholesale collections aided by swift sell down and pre/repayment
Slide 18: Q3FY23 On-going Lakshya Initiatives (1/2)
Q3FY23 On-going Lakshya Initiatives (1/2) Mutual Fund divestment & “Accelerated reduction” of Wholesale book • LTFH entered into a definitive agreement with HSBC Asset Management (India) Private Limited (“HSBC AMC”) on Dec 23rd, 2021 for divestment of its Mutual Fund business Unlocking value; • Sale
Slide 19: Q3FY23 On-going Lakshya Initiatives (2/2)
Q3FY23 On-going Lakshya Initiatives (2/2) Merger of LTF and LTICL with LTFH • In-line with the ‘Right Structure’ strategy, LTFH, over the last 7 years, has merged 5 entities. This led to reduction in no. of lending entities from 7 to 2. i.e. L&T Finance Limited (LTF) and L&T Infra Credit Limited (LT
Slide 20: Agenda
Agenda A Journey towards Lakshya 2026 B Q3FY23 in Perspective C Financial Update 19 @ L&T Financial Services
Slide 21: Q3FY23 Performance: Key business metrics
Q3FY23 Performance: Key business metrics Strong “Accelerated Astute Liability Stable NIMs + Strengthened Retail Finance reduction” in Management Fees Asset Quality Growth Wholesale 20 @ L&T Financial Services
Slide 22: Built strengths over the years – Farmer Finance
Built strengths over the years Farmer Finance – amongst the Leading Financiers Well diversified Dealer / OEM Customer footprint Relationship Centricity • Vintage of 17+ years • Retention products (Kisan Suvidha) • 2,500+ Dealers • 170 branches across 16 states • Financing adjacencies through • Analy
Slide 23: Built strengths over the years – Rural Business Finance
Built strengths over the years t, Rural Business Finance - amongst the Leading Financiers ... Well diversified Operational Customer footprint excellence Centricity • Automated underwriting; geo-strategy • Vintage of 14+ years based on women credit penetration • LTFS exclusive customers at ~40% • 17
Slide 24: Built strengths over the years – Two wheeler Finance
Built strengths over the years Two wheeler Finance - amongst the Leading Financiers Well diversified Dealer / OEM Customer footprint Relationship Centricity • Strong New To Credit proposition (~50%) • Vintage of 10+ years • 5,000+ Dealers • Best-in-class TAT: 45 secs • 93 locations across India • Al
Slide 25: Translating to strong Retail Finance Growth (1/5)
Translating to strong Retail Finance Growth (1/5) t, Digital led “product innovation” resulting in sustained traction in disbursements ... in Rs Cr RETAIL DISBURSEMENTS 11,607 10,238 7,606 Q3FY22 Q2FY23 Q3FY23 RURAL BUSINESS FINANCE FARMER FINANCE URBAN FINANCE 4,418 4,281 4,166 I4,572 3,157 2,942 2
Slide 26: Translating to strong Retail Finance Growth (2/5)
t, Translating to strong Retail Finance Growth (2/5) t, Leading to book growth across businesses ... ... in Rs Cr RETAIL BOOK 57,000 52,040 42,602 Q3FY22 Q2FY23 Q3FY23 RURAL BUSINESS FINANCE FARMER FINANCE URBAN FINANCE 17,485 I25,947 I 15,840 I23,841 II 11,955 11,865 12,447 19,422 II 11,210 Q3FY22
Slide 27: Translating to strong Retail Finance Growth (3/5)
t, Translating to strong Retail Finance Growth (3/5) t, Normalized collections across businesses ... ... URBAN FINANCE . . FY22 . . FY23 RURAL BUSINESS FINANCE 98.1•1, 1 I 99.o'lo I I 9s.s%1 I 9s.s%1 99.o•,, 98.3%1 I 9s.s%1 TWO-WHEELER ------------------------ -------------------------- ------------
Slide 28: Translating to strong Retail Finance Growth (4/5)
Translating to strong Retail Finance Growth (4/5) Scaling-up new products: SME Finance Small and Medium Enterprise Finance • Geographical footprint extended to 17 locations from 2* Book Growth • Disbursed Rs. 538 Cr in Q3FY23. Book size increased to Rs. 838 Cr (from Rs. 61 Cr in Q4FY22) • Lead gener
Slide 29: Translating to strong Retail Finance Growth (5/5)
Translating to strong Retail Finance Growth (5/5) Thus Bolstering Retailisation ASSET MIX Q3FY22 Q2FY23 Q3FY23 3% 1% 1% 14% 18% 20% 27% 32% 13% 34% 13% 14% 9% 22% 14% 27% 10% 29% Retail - 50 % Retail - 58 % Retail - 64 % Rural Business Finance Farmer Finance Urb an Finance Real Estate Infrastructure
Slide 30: Accelerated reduction in Wholesale Finance (1/2)
Accelerated reduction in Wholesale Finance (1/2) Wholesale Finance DISBURSEMENTS BOOK in Rs Cr in Rs Cr 29,185 28,461 INFRASTRUCTURE FINANCE 23,648 1,758 1,444 718 Q3FY22 Q2FY23 Q3FY23 Q3FY22 Q2FY23 Q3FY23 in Rs Cr in Rs Cr REAL ESTATE FINANCE 11,603 9,136 545 7,362 93 104 Q3FY22 Q2FY23 Q3FY23 Q3FY2
Slide 31: Intent to reduce Wholesale existed even pre-Lakshya (2/2)
However, intent to reduce Wholesale existed even pre-Lakshya (2/2) Wholesale mix: Sharply down from 55% in Q3FY20 to 36% in Q3FY23 INFRASTRUCTURE FINANCE BOOK REAL ESTATE BOOK in Rs Cr in Rs Cr 39% 41% 34% 35% 34% 32% 27% 16% 15% 14% 13% 11% 10% 9% 39,674 41,456 15,215 14,841 (43%) (50%) 11,603 11,2
Slide 32: Consolidated performance – Strong liability profile
Consolidated performance Strong liability profile DIVERSIFIED LIABILITY MIX WEIGHTED AVERAGE COST OF BORROWING (WAC) 5% 1% 2% 1% Bank 2% 7% Loan 7% NCD Pvt 7% 36% Retail 48% NCD CP 7.82% 40% 7.65% 7.64% ECB 7.53% 7.47% 7.54% 44% 7.34% 7.27% 7.33% Others Q3FY22 Q3FY23 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 FY21
Slide 33: Consolidated performance – NIMs + Fees
Consolidated performance NIMs + Fees Trending positively NIMS + FEE & OTHER INCOME 8.80% 8.43% 8.10% Q3FY22 Q2FY23 Q3FY23 • NIMs+Fee increased sharply through higher retailisation mix (64% in Q3FY23 vs 50% in Q3FY22), strong retail business momentum and prudent ALM management • This is despite incre
Slide 34: Consolidated performance – Asset Quality
Consolidated performance Strengthened and Stable Asset Quality CONSOLIDATED – ASSET QUALITY 0 54% 055% 0 60% 5,623 5,000 6.69% 7 % 4,000 3,591 3,723 3,000 2,565 4.02% 4.21% 4 % 3.17% 1,615 2,000 1,487 1,000 1.85% 1.72% 0 1 % Q3FY22 Q2FY23 Q3FY23 - - GS3 (Rs Cr) NS3 (Rs Cr) GS3 (%) NS3 (%) 0 PCR (%)
Slide 35: Retail Finance – Asset Quality
Retail Finance Strengthened and Stable Asset Quality RETAIL – ASSET QUALITY 0 70% 0 76% 0 79% 1 5 % 1,976 1,850 1 3 % 1,642 1 1 % 9 % 7 % 488 5 % 3.85% 446 3.55% 3.47% 407 3 % 1.18% 0.88% 0.73% 1 % -1 % Q3FY22 Q2FY23 Q3FY23 - - GS3 (Rs Cr) NS3 (Rs Cr) GS3 (%) NS3 (%) 0 PCR (%) Carrying macro / enhan
Slide 36: Conclusion
Conclusion Consol PAT up 39% YoY to Rs. 454 Cr Pivoting towards Retail RoA tree Retailisation 64% (up from 50% YoY) Disbursements Rs. 11,607 Cr (highest ever) Book Rs. 57,000 Cr (up 34% YoY) NIMs + Fees 11.38% (up 25bps YoY) GS3 / NS3 & PCR 3.47% / 0.73% & 79% PAT at Rs. 394 Cr (up 76% YoY) PAT, RoA
Slide 37: Appendix
Appendix 36 @ L&T Financial Services
Slide 38: Appendix
Appendix A Fintech @ Scale B Financials C Other key annexures 37 @ L&T Financial Services
Slide 39: Creating a Fintech@Scale – Architecture: Built Digital & Data Analytics
Creating a Fintech@Scale Architecture: Phase 1 – Built Digital & Data Analytics Capabilities •------------------- DEEPEN ---------------------------------------------------------------- ... Product Suite Customer focused Journey Customer Retention o-o ■ Farm Loan 2W Loan ■ UNDERWRITING DISBURSEMENT
Slide 40: Creating a Fintech@Scale – Omni-channel Customer Ecosystem
Creating a Fintech@Scale Architecture: Phase 2 – Building Omni-channel Customer Ecosystem •------------------------------------------------------------------- DEVELOPING ---------------------------------------------------------------+- Customer Need Marketplace Customer Engagement Platform App '' Ru
Slide 41: Digital backbone to drive speed & scale
Digital backbone 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 TAT: 60 secs Finance & Rural Bus.
Slide 42: Reimagining customer engagement through superior customer experience
Reimagining customer engagement through superior customer experience SERVICING FRANCHISE SOURCING FRANCHISE Autonomous channels Assisted channels SHO Employees / Branches Call centre Employees Partners Portal Chatbot Whatsapp App Branches Call centre Agencies 15,000+ Employees, ~1,700 Meeting Centre
Slide 43: Data mining to unleash untapped potential for customer retention
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 Business 1.4 Cr+ ~50% First Loan Pragati Loan Rural LAP Rural Business Micro Fi
Slide 44: Appendix
Appendix A Fintech @ Scale B Financials C Other key annexures 43 @ L&T Financial Services
Slide 45: Business wise disbursement split
Business wise disbursement split Disbursement Q3FY22 Segments (Rs Cr ) Q2FY23 Q3FY23 Y-o-Y (%) 1,492 Farm Equipment 1,304 2,057 38% 1,637 2W Finance 1,721 2,146 31% 3,157 Rural Business Loans 3,887 3,624 15% - Micro Finance Loans 531 657 - 650 Consumer Loans 1,328 1,228 89% 638 Home Loans 1,013 1,07
Slide 46: Business wise book split
Business wise book split Book Q3FY22 Segments (Rs Cr) Q2FY23 Q3FY23 Y-o-Y (%) 11,210 Farm Equipment 11,865 12,447 11% 7,306 2W Finance 8,093 8,716 19% Rural Business Loans & Micro 11,955 15,840 17,485 46% Finance Loans 1,696 Consumer Loans 3,979 4,719 178% 7,463 Home Loans 9,105 9,868 32% 2,957 LAP
Slide 47: LTFH Consolidated – Summary financial performance
LTFH Consolidated – Summary financial performance Q3FY22 Summary P&L (Rs Cr) Q2FY23 Q3FY23 Y-o-Y (%) 2,787 Interest Income 3,002 3,1 94 15% 1-- ------ ------ ---------------------- 1,418 Interest Expense 1,438 1,501 6% 1--------------------------------------------------- 1,369 NIM 1,563 1,693 24% 1-
Slide 48: LTFH Consolidated – Key ratios
LTFH Consolidated – Key ratios Key Ratios Q3FY22 Key Ratios Q2FY23 Q3FY23 12.84% Yield 13.25% 13.98% 6.31% Net Interest Margin 6.90% 7.41% 1.79% Fee & Other Income 1.53% 1.39% 8.10% NIM + Fee & Other Income 8.43% 8.80% 2.78% Operating Expenses 3.19% 3.37% 5.32% Earnings before credit cost 5.24% 5.44
Slide 49: Retail Finance – Summary financial performance
Retail Finance – Summary financial performance Performance Summary Q3FY22 Summary P&L (Rs Cr ) Q2FY23 Q3FY23 Y-o-Y (%) 1,630 Interest Income 1,972 2,260 39% 607 Interest Expense 718 845 39% 1,023 NIM 1,254 1,415 38% 160 Fee & Other Income 174 163 2% 1,183 Total Income 1,428 1,578 33% 439 Operating E
Slide 50: Retail Finance – Key ratios
Retail Finance – Key ratios Key Ratios Q3FY22 Key Ratios Q2FY23 Q3FY23 15.33% Yield 15.65% 16.30% 9.62% Net Interest Margin 9.95% 10.20% 1.51% Fee & Other Income 1.38% 1.18% 11.13% NIM + Fee & Other Income 11.33% 11.38% 4.13% Operating Expenses 4.40% 4.45% 7.00% Earnings before credit cost 6.93% 6.9
Slide 51: Wholesale Finance – Summary financial performance
Wholesale Finance – Summary financial performance Performance Summary Q3FY22 Summary P&L (Rs Cr ) Q2FY23 Q3FY23 Y-o-Y (%) 1,106 Interest Income 1,014 919 (17%) 762 Interest Expense 707 681 (11%) 345 NIM 308 238 (31%) 113 Fee & Other Income 62 94 (17%) 457 Total Income 370 332 (27%) 105 Operating Exp
Slide 52: Wholesale Finance – Key ratios
Wholesale Finance – Key ratios Key Ratios Q3FY22 Key Ratios Q2FY23 Q3FY23 10.57% Yield 10.21% 10.36% 3.29% Net Interest Margin 3.10% 2.68% 1.08% Fee & Other Income 0.62% 1.06% 4.37% NIM + Fee & Other Income 3.72% 3.74% 1.00% Operating Expenses 1.10% 1.09% 3.37% Earnings before credit cost 2.62% 2.65
Slide 53: Wholesale Finance – Asset Quality
Wholesale Finance – Asset Quality Wholesale Finance - Asset Quality 0 45% 033% 0 36% 3,610 3,510 3,360 2 1 % 3,410 3,310 3,210 3,110 3,010 2,910 2,810 1 6 % 2,710 2,610 2,510 2,410 2,310 2,210 2,110 1,857 1 1 % 2,010 1,910 1,735 1,810 8.44% 1,608 1,710 1,610 1,510 1,410 1,167 5.19% 6 % 1,310 1,210 4
Slide 54: Appendix
Appendix A Fintech @ Scale B Financials C Other key annexures 53 @ L&T Financial Services
Slide 55: Prudent ALM
Prudent ALM As on 31st December, 2022 Structural Liquidity statement ■ Cumulative Inflows (Rs. Cr) 70,091 ■ Cumulative Outflows (Rs. Cr) 43,215 39,125 30,285 23,232 24,136 18,226 11,859 12,849 13,477 4,062 7,197 403 1,026 1-7 days 8-14 days 15 days-1 1-2 months 2-3 months 3-6 months 6-12 months mont
Slide 56: 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: Ø CRISIL: Sep’22 Ratings Update Ø CARE: Sep’22 Ø India Ratings: Apr’22 Ø I
Slide 57: ESG@LTFH: Driving Sustainable Growth
ESG@LTFH: Driving Sustainable Growth People | Business | Community • Significant Improvement in score from ‘D’ (Disclosure) to ‘B’ (Management) level ~CDP DISCLOSURE INSIGHT ACTION • Higher than Asia regional average of ‘C’ and Financial services sector average of ‘B-’ ESG MSCI ESG RATIN GS 0 Retain
Slide 58: ESG@LTFH: Driving Sustainable Growth
ESG@LTFH: Driving Sustainable Growth People | Business | Community Environment Social Governance .......................................................................................................... ................................................................................................
Slide 59: Corporate Social Responsibility
Corporate Social Responsibility Directly linked to creating value Digital Financial Inclusion Other Initiatives Reached out to 8,56,000+ community members, Horticulture plantation under Project Prakruti creating awareness on financial literacy initiated in Tumkur, Karnataka with an aim to plant 50,0
Slide 60: LTFS branch footprint
LTFS branch footprint BRANCHES MEETING CENTRE BRANCHES 8 37 2 10 38 1 10 16 4 53 68 43 9 336 4 13 27 13 65 119 16 1 51 1 6 32 7 117 24 32 11 As of 31st December, 2022 No. of States & Union 21 & 1 1 12 Territories 13 190 No. of branches 203 (Rural & Urban) No. of Rural Business Loans / 6 1,654 368 3
Slide 61: 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 and Toubro Limited. o Over 30 years of experience across multiple domains in B
Slide 62: Management Team
Management Team Dinanath Dubhashi Managing Director & CEO 32 yrs exp, BNP Paribas, SBI Cap, CARE Ratings Sachinn Joshi Raju Dodti Tushar Patankar Group CFO Rupa Rege Nitsure CE – Wholesale Finance Group Chief Risk Officer 32 yrs exp, Aditya Birla Group Chief Economist 24 yrs exp, IDFC, Rabo, ABN 28
Slide 63: Registered Office
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 62 S l&T Financial Services
L&T Finance Holdings — Q3 FY2023 Earnings Presentation on 6ix