Satin Creditcare Network Ltd · NSE:SATIN
Satin Creditcare Network — Q2 FY2019 Earnings Presentation
67 slides from Satin Creditcare Network's earnings presentation, November 2018
Slide 1: Satin Creditcare Network Limited Q2FY19 Corporate Presentation
SATIN CREDITCARE NETWORK LIMITED Q2FY19 CORPORATE PRESENTATION NOVEMBER 2018 BSE: 539404 | NSE: SATIN Corporate Identity No. L65991DL1990PLC041796
Slide 2: Disclaimer
Disclaimer By accessing this presentation, you agree to be bound by the following terms and conditions. This presentation (which may reflect some price sensitive information in terms of SEBI regulations and Companies Act, 2013, as amended from time to time) has been prepared by Satin Creditcare Netw
Slide 3: Contents
Contents Details Satin Overview 3 Key Investment Thesis 7 Future Business Strategy 38 Annexure Industry Overview – BC Operations, MSME Finance and Small Ticket Housing Finance 41 Financial & Operational Details – Consolidated 45 Financial & Operational Details – Standalone 51 Financial & Operational
Slide 4: Satin Overview
Satin Overview
Slide 5: Company Overview
Company Overview Gross Loan Portfolio (“GLP” or “Gross AUM”)(1) of Rs. 61,914 mn; MFI segment Rs. 54,560 mn and Non-MFI 01 segment of Rs. 7,354 mn 02 Improved operational metrics – RoA 2.7%, RoE 18.8% & Cost to Income Ratio 54% in Q2 FY19(1) Better geographical diversification, expanded footprints i
Slide 6: Key Performance Indicators
Key Performance Indicators(1) Continuing the growth story Particulars AUM Revenue NII PAT RoA RoE CRAR(3) Cost/ Inc (Rs Mn) (Rs Mn) (Rs Mn) (Rs Mn) (%) (%) (%) (%) Q2FY19 61,914 3,652 1,967 461 2.7 18.8 25.23 54.0 Q2FY18 44,931 2,471 1,198 733(2) 6.2(2) 58.3(2) 16.70 65.0 Q1FY19 60,257 3,279 1,740 2
Slide 7: Company Overview contd
Company Overview contd Marquee Shareholder Base Key Market Statistics As on Sep 30, 2018 Particulars Value (Rs) Promoter & Promoter Others Group BV Mar’18 188.70 16.27% 26.73%(1) NMI Mutual 6.89% BV Jun’18 196.65 Funds 17.31% SBI-FMO 6.78% FPIs 14.53% ADB MV Kora Cap BV Sep’18 205.79 3.16% Mauritius
Slide 8: Key Investment Thesis
Key Investment Thesis
Slide 9: Key Investment Thesis
Key Investment Thesis Robust Industry Experienced Fundamentals Management with Strong Team Regulatory Support Excellent Backed by Large, Management Marquee Institutional of Demonetization Investors Strong Operational Robust Fundamentals Capabilities Backed and Established Track By Industry’s Best IT
Slide 10: Improving Liability Profile
Improving Liability Profile Diversified mix of funding One of The Largest Lender Base Source of funds raised during the period 75 active lenders % Share as on Top 10 Funders (1) 21.3% 19.1% 30 Sep 2018 28.6% 39.7% 3.8% NABARD 19% 5.4% 5.3% 10.9% 6.4% Bandhan Bank Limited 6% 1.4% 12.2% Capital First
Slide 11: Dynamic Liability Profile Insulated from Capital Market Turbulence
Dynamic Liability Profile Insulated from Capital Market Turbulence Product-wise Sep’18 Product-wise Mar’18 Commercial ECB, 1% Commercial paper, 1% ECB, 1% paper, 2% Buyout, 14% Buyout, 15% Term Loan, Term Loan, 60% NCD, 18% NCD, 21% 65% • No dependence on funding from commercial papers • NCDs are pr
Slide 12: Dynamic Liability Profile Insulated from Capital Market Turbulence
Dynamic Liability Profile Insulated from Capital Market Turbulence Category of Lender Sep’18 Category of Lender Mar’18 Domestic Fund, Domestic Overseas Fund, 1% Overseas Fund, 1% 11% Fund, 12% Domestic Domestic Financial Financial Banks, 44% Institution, Banks, 47% Institution, 20% 13% NBFC, 27% NBF
Slide 13: Strong Liquidity and ALM
Strong Liquidity and ALM Strong Liquidity Position to Sustain Growth Benefit of positive ALM continues Liquidity (Rs. mn) (1) ALM as on Sep’18 Average maturity of Assets: 9.4 months Average Maturity of Liabilities: 23.1 months 11,079 10,977 11,064 7,869 7,098 22.3 23.1 21.5 21.9 18.4 11.7 8.5 9.4 8.
Slide 14: Strong Liquidity Position contd
Strong Liquidity Position contd Static ALM as on Sep 30, 2018 (Rs mn) Oct’18 Nov’18 Dec’18 Jan’19 Feb’19 Mar’19 Total Inflows Liquidity at the beginning of month* 11,064 12,970 15,063 15,885 14,977 15,966 11,064 Principal - Loan portfolio 2,955 2,975 2,890 3,147 2,762 2,881 17,611 Interest - Loan po
Slide 15: Key Milestones
Key Milestones 20 years to reach AUM of Rs 100 Cr; next 8 years to reach AUM of Rs. 5,000 Cr Business Timeline Registers as JLG business shows Receives MIX Social Reaches 0.49 mn active clients & gross Listing on NSE, Reaches 2.71 mn active Date of inception NBFC strong asset quality Performance AUM
Slide 16: Select Accolades & Key Highlights
Select Accolades & Key Highlights • First Direct Equity Investment in Microfinance by Asian Development Bank Client Protection Certificate • Received ISO 27001:2013 certification in October 2018 for Information Smart Campaign - 2016 security • “Rural Champions of The Year” Award by ET Edge in Septem
Slide 17: ISO 27001:2013 – Amongst the First MFIs to be Certified
ISO 27001:2013 – Amongst the First MFIs to be Certified Satin’s Aspirational Journey Towards Building a Sensitive Culture Around Information Security • Information security is a key mandate for every organisation • International Organization for Standardization (ISO) is the world’s largest developer
Slide 18: Robust Industry Fundamentals with Strong Regulatory Support - Growth to Continue
Robust Industry Fundamentals with Strong Regulatory Support - Growth to Continue Industry Snapshot High growth in loan portfolio and client reach NBFC-MFIs have 26.5 mn borrowers and outstanding 26.5 25.3 GLP of Rs. 519 bn as at Q1FY19 23.3 20.3 21.3 19.2 19.4 19.8 17.1 Average loan disbursed pe
Slide 19: Low Penetration of MFI in India – Structural Growth Driver
Low Penetration of MFI in India – Structural Growth Driver Northern and Western states are relatively under penetrated Top 10 states having 85% market share in Jun’2018 State-wise MFI penetration data(1) Market Share (%) 0% Karnataka Others 15% 12% 0% 15% Rajasthan 18% 3% Odisha 16% 11% Kerala 6% 9%
Slide 20: Satin Surges Ahead Faster Than Industry
Satin Surges Ahead Faster Than Industry Industry is growing in last 5 years at a CAGR of Despite the setback of demonetization, Satin ~26% maintained its growth momentum 782,300 616,230 57,568 505,350 40,666 383,860 32,708 244,990 21,406 10,560 MAR'14 MAR'15 MAR'16 MAR'17 MAR'18 MAR'14 MAR'15 MAR'16
Slide 21: Collection Efficiency Heading Towards Normalcy
Collection Efficiency Heading Towards Normalcy Emerged from the woes of demonetization Demand till 30 Collection till 30 % of AUM as on Cumulative Period of disbursement Sep’18 Sep’18 Sep’18 CE% (Rs mn) (Rs mn) Jan’17 to Dec'17 34,112 33,328 33% 97.7% Jan'18 to Sep'18 11,773 11,712 67% 99.5% Back to
Slide 22: PAR and Expected Credit Loss (ECL)
PAR and Expected Credit Loss (ECL) The worst is over ECL methodology prescribed in IND AS is based on the principle of providing for expected future losses, rather than incurred losses. Expected Credit Loss (ECL): Probability of credit losses over the expected life of the financial asset. ECL Calcul
Slide 23: Provisioning
Provisioning OD vs ECL as of Sep’18 1,807 • Collection against PAR 360 during H1 FY19 is Rs 61.1 mn • Management overlay used to 1,050 1,007 conservatively provide ECL • The Overdue (OD) for more than 90 days is Rs. 1,007 mn • ECL is Rs. 1,807 mn OD - PAR 60 OD - PAR 90 ECL Rs mn On standalone basis
Slide 24: Growth Changes Customer Mix
Growth Changes Customer Mix Trend in Loan Cycle Focus is now on acquisition of new customers due to geographical expansion, leading to increase in first cycle customers By GLP (Rs. mn) 32,708 35,846 50,102 54,560 10.4% 14.4% 15.7% 18.6% 25.0% 37.0% 32.8% 38.2% 52.3% 48.8% 39.5% 27.4% FY16 FY17 FY1
Slide 25: Rural Focus of Operations
Rural Focus of Operations Financing the rural growth story Purpose-wise details 13.6% 21.6% 16.3% 3.4% 78.4% 66.7% Rural Urban Agriculture & allied Production Trading Others 24
Slide 26: Strong Client Demand resulting in Rebound in Disbursements
Strong Client Demand resulting in Rebound in Disbursements, along with Rapid scaling up of Cashless Disbursements Growth While Focusing on Quality1 o Disbursement in H1 usually remains low Average monthly disbursement in Rs mn 6,577 o Q3FY17 was impacted due to demonetisation 4,443 4,598 3,973 4,223
Slide 27: Strong Capitalization
Strong Capitalization Healthy CRAR(1) to help Capitalize on Growth Opportunities Net Worth (Rs. Mn) CRAR 9,642 10,096 24.38% 25.23% 5,412 16.70% Q2FY18 Q1FY19 Q2 FY19 Q2 FY18 Q1FY19 Q2 FY19 • Tie-up with IndusInd Bank for business correspondence activities will reduce the capital requirement for gro
Slide 28: Track Record of Delivering Growth
Track Record of Delivering Growth Gross Income (Rs. mn) Cost to Income Ratio (%) 59.7% 52.8% 3,469 51.1% 3,096 2,351 Q2FY18 Q1FY19 Q2FY19 Q2FY18 Q1FY19 Q2FY19 NII1 and PAT (Rs. mn) Opex to GLP (%) NII PAT 6.7% 6.7% 1,788 1,563 6.3% 1,081 744 251 444 Q2FY18 Q1FY19 Q2FY19 Q2 FY18 Q1 FY19 Q2 FY19 Note:
Slide 29: Operational Highlights (1/2)
Operational Highlights (1/2) Districts, States and Branches Employees & Loan Officers 1,0661 995 431 767 6,5542 20 6,382 10,9724 18 16 16 4,481 9,004 1,352 6,910 1,344 318 2,684 1,109 302 215 235 9,579 7,653 5,801 3,918 FY16 FY17 FY18 H1FY19 FY16 FY17 FY18 H1FY19 Districts States Branches Satin Empl
Slide 30: Operational Highlights (2/2)
Operational Highlights (2/2) Disbursement1 (Rs. mn) & No. of Loans1 (‘000) Satin JLG loans - Average Ticket Size2 (Rs) 1,816 1,689 1,566 30,000 28,000 55,717 937 24,000 23,000 36,061 35,940 25,998 FY16 FY17 FY18 H1FY19 FY16 FY17 FY18 H1FY19 No. of Loans (‘000) Note: (1) Standalone basis; (2) TSL’s a
Slide 31: Transparent Operations
Transparent Operations Transparent Operations Smart Campaign – Client Protection Certification Loan Card with transparent terms and conditions Strong Internal Audit Processes and Systems ensure portfolio quality Full fledged in-house Internal Audit department for Group Lending and MSME • 88 member t
Slide 32: Credit Bureau Data For Screening Loan Applications
Credit Bureau Data For Screening Loan Applications Hit Rate for all Products-Q2FY19 CB Rejection Reason-Q2FY19 Over Indebtedness Defaulters No Hit, 5% 16% 23.57% Ticket Size 2% Hit, 76.43% >1 MFI 77% SCNL Guidelines Rejection Rate for all products is ~ 16% for Q2FY19 MFIN Note: Limit RBI Guidelines
Slide 33: Diversification – By Product
Diversification – By Product Existing Product New Products with Large Target Markets BC Services Affordable Strategic MFI MSME Housing Tie-Up Started in FY09 Started in FY17 Acquired in FY17 Started in Feb’18 Tie-up with IndusInd • Total AUM Rs. • Launched in Apr’16 • Acquired majority • Satin Housi
Slide 34: Company's Product Mix - MSME started in FY17, has gained traction
Company’s Product Mix - MSME started in FY17, has gained traction Business Correspondent MFI Segment(1) Non-MFI Segment Housing Finance services Product features as on Satin Housing Finance MFI Lending Loans to MSME(2) TSL(3) Sep’18 Ltd(4) Start Date May’08 (JLG) Apr’16 May’12(3) Feb’18 Rs. 100,000
Slide 35: Business Correspondent (BC) Partnership with IndusInd Bank
Business Correspondent (BC) Partnership with IndusInd Bank No of loans disbursed Growing the Asset Under Management 32,231 • Satin entered into BC partnership with IndusInd Bank 23,680 in H2 FY18 • 8 Regional offices and 159 branches are actively disbursing under this arrangement 10,628 10,899 6,348
Slide 36: Diversification – By Geography
Diversification – By Geography Focus on Geographic Diversification1 and limiting Reducing Geographic concentration concentration per state <20% by 2020 GLP - Q2 Q2 FY19 FY15 States Change CAGR % FY19 % mix % mix GLP UTTAR PRADESH 14,125.1 22.8% 43.3% 13% 21,407 32,708 40,665 57,568 61,914 (Rs.mn) BI
Slide 37: Impact of Digital Transformation
Impact of Digital Transformation 01 Mobile Technology Platform – Last Mile Connectivity 02 Process re-engineered to enable customer acquisition within 3 minutes 03 Live Dashboard Every Two Minutes 04 Increased digitization of processes 05 Geo Location Tracking 06 Real-time Credit Checks 07 Instant B
Slide 38: Backed by Large, Marquee Institutional Investors
Backed by Large, Marquee Institutional Investors 7 rounds of equity capital raise with marquee investors with complete profitable exits to 3 investors Investor confidence Raised Rs. 2,500 mn from marquee institutions via QIP in Oct 2016. Further raised Rs. 1,500 mn in Oct 2017 via QIP from large
Slide 39: Future Business Strategy
Future Business Strategy
Slide 40: Future Business Strategy
Future Business Strategy Core operations (MFI Lending) Focus on improving collections Client retention by expanding product offerings Geographic diversification – Started operations in Assam and Orissa in FY18, Meghalaya, Tripura and Tamil Nadu in FY19. Aim to achieve per state exposure to <20
Slide 41: Guidance for FY19
Guidance for FY19(1) PAT ~Rs 1,650 mn Note: (1) On Consolidated basis; 40
Slide 42: Annexure: Industry Overview
Annexure Industry Overview -BC Operations, MSME Finance and Small Ticket Housing Finance
Slide 43: BC Operations
BC Operations Number of BC transactions to soar given lower cost of operations BC portfolio of NBFC-MFIs on the rise BC Transactions – Value (Rs. Bn) and Volume (Mn) BC Portfolio of NBFC – MFI (Rs. Bn) 23,858 33% 31% 32% 25% 27% 23% 22% 24% 14,911 12% 9,037 5,316 5,720 3,038 27.0 29.3 27.3 29.8 524
Slide 44: Micro, small and medium enterprise (MSME) finance
Micro, small and medium enterprise (MSME) finance Share of NBFCs and private banks to increase in MSMSE credit NBFCs’ MSME credit to sustain impressive growth Share of MSME Finance By Institutions GLP (Rs. Bn) 1,821 5.3% 6.4% 7.2% 8.1% 8.9% 9.5% 2.5% 3.0% 2.9% 2.9% 1,505 3.0% 3.0% 24.8% 26.0% 27.0%
Slide 45: Small Ticket Housing Finance
Small Ticket Housing Finance Healthy growth expected in low ticket housing finance segment Key Growth Drivers Loan book – less than Rs. 2.5 Miilion Thrust on low ticket housing with Govt. initiatives like ‘Housing for All’ to boost growth and help increase share Pradhan Mantri Awas Yojana – Cred
Slide 46: Financial & Operational Details – Consolidated
Annexure Financial & Operational Details – Consolidated
Slide 47: Business Details – Consolidated
Business Details – Consolidated PARTICULARS Q2 FY19 Q2 FY18 Q1FY19 YoY % QoQ % AUM (Rs. mn) 61,914 44,931 60,257 37.8% 2.7% On-Book AUM* 51,285 39,586 53,444 29.6% -4.0% Securitization 5,640 2,228 7,916 153.2% -28.7% Assignment 2,177 289 84 653.2% 2491.2% Business Correspondence – IndusInd Bank 2,15
Slide 48: Business Details – Consolidated (Contd)
Business Details – Consolidated (Contd) PARTICULARS Q2 FY19 Q2 FY18 Q1FY19 YoY % QoQ % No. of Loan Accounts 3,231,801 2,831,213 3,050,265 14.1% 6.0% SCNL 2,815,468 2,472,192 2,629,930 13.9% 7.1% TSL 416,125 359,021 420,244 15.9% -1.0% SHFL 208 - 91 - 128.6% Average Ticket Size* MFI Lending (SCNL) 27
Slide 49: P&L Statement – Consolidated (Quarterly)
P&L Statement – Consolidated (Quarterly) Particulars (Rs mn) Q2 FY19 Q2 FY18 YoY% Q1FY19 QoQ% Revenue Interest and Fee Income 3,035 2,205 37.6% 2,914 4.2% Net Gain On Derecognition of Financial Instruments 179 0 0 Treasury Income 227 149 52.4% 169 33.9% Service Charges 183 111 64.1% 176 3.8% Other O
Slide 50: P&L Statement – Consolidated (Half Yearly)
P&L Statement – Consolidated (Half Yearly) Particulars (Rs mn) H1 FY19 H1 FY18 YoY% Revenue Interest and Fee Income 5,948 4,184 42.2% Net Gain On Derecognition of Financial Instruments 179 0 Treasury Income 396 348 13.9% Service Charges 359 214 67.7% Other Operating Income 48 21 127.6% Total Revenue
Slide 51: Net worth reconciliation – Consolidated
Net worth reconciliation – Consolidated Particulars As at As at Explanation Mar 31, 2018 Apr 1, 2017 (Rs in mn) (Rs in mn) Net worth as per IGAAP *10,908.5 *6,648.7 Measurement of financial assets and financial (316.9) (3.2) Impact of amortization of following using the EIR method: liabilities at am
Slide 52: Financial & Operational Details – Standalone
Annexure Financial & Operational Details – Standalone
Slide 53: Operational Details – Standalone (Quarterly)
Operational Details – Standalone (Quarterly) PARTICULARS Q2 FY19 Q2 FY18 Q1FY19 YoY % QoQ % Gross AUM (Rs. mn) 55,611 39,875 54,002 39.5% 3.0% No. of districts 318 267 307 19.1% 3.6% No. of branches 885 680 838 30.1% 5.6% No. of States of operation 20 18 18 11.1% 11.1% No. of Employees 9,579 5,978 7
Slide 54: Operational Details - Standalone (Quarterly contd)
Operational Details - Standalone (Quarterly contd) PARTICULARS Q2 FY19 Q2 FY18 Q1FY19 YoY % QoQ % Product Financing Gross AUM (Rs. mn) 21 0 13 - 61.4% No. of Loan Accounts 5,747 48 3,174 - 81.1% Disbursement during the period (Rs. mn) 18.4 - 13.2 - 39.9% No. of loans disbursed during the period 3,07
Slide 55: Operational Details – Standalone (Half yearly)
Operational Details – Standalone (Half yearly) PARTICULARS H1 FY19 H1 FY18 YoY % Gross AUM (Rs. mn) 55,611 39,875 39.5% No. of districts 318 267 19.1% No. of branches 885 680 30.1% No. of States of operation 20 18 11.1% No. of Employees 9,579 5,978 60.2% No. of Loan Officers 5,619 3,960 41.9% No. of
Slide 56: Operational Details - Standalone (Half yearly contd)
Operational Details - Standalone (Half yearly contd) PARTICULARS H1 FY19 H1 FY18 YoY % Product Financing Gross AUM (Rs. mn) 21 0 - No. of Loan Accounts 5,747 48 - Disbursement during the period (Rs. mn) 31.6 - - No. of loans disbursed during the period 5,903 - - Average Ticket Size* (Rs.) 5,300 - -
Slide 57: Financial Performance – Standalone
Financial Performance – Standalone RoE Tree H1 FY19 H1 FY18 Q2 FY19 Q2 FY18 Q1FY19 Gross Yield (1) 24.67% 23.85% 25.32% 24.24% 23.62% Financial Cost Ratio(2) 12.08% 13.43% 12.27% 13.10% 11.70% Net Interest Margin(3) 12.59% 10.42% 13.05% 11.14% 11.92% Operating Expense ratio(4) 6.53% 6.73% 6.67% 6.65
Slide 58: P&L Statement – Standalone (Quarterly)
P&L Statement – Standalone (Quarterly) Particulars (Rs mn) Q2 FY19 Q2 FY18 YoY% Q1FY19 QoQ% Revenue Interest and Fee Income 3,029 2,205 37.4% 2,912 4.0% Net Gain On Derecognition of Financial Instruments 179 0 0 Treasury Income 219 142 53.9% 163 33.9% Service Charges 29 0 4 560.1% Other Operating In
Slide 59: P&L Statement – Standalone (Half yearly)
P&L Statement – Standalone(Half yearly) Particulars (Rs mn) H1 FY19 H1 FY18 YoY% Revenue Interest and Fee Income 5,941 4,184 42.0% Net Gain On Derecognition of Financial Instruments 179 0 Treasury Income 382 337 13.1% Service Charges 34 0 Other Operating Income 29 14 113.0% Total Revenue 6,565 4,535
Slide 60: Net worth reconciliation – Standalone
Net worth reconciliation – Standalone Particulars As at As at Explanation Mar 31, 2018 Apr 1, 2017 (Rs in mn) (Rs in mn) Net worth as per IGAAP * 10,950.6 *6,622.2 Measurement of financial assets and financial (316.7) (3.6) Impact of amortization of following using the EIR method: liabilities at amo
Slide 61: Financial & Operational Details - TSL
Annexure Financial & Operational Details - TSL
Slide 62: Operational Details – TSL
Operational Details – TSL PARTICULARS Q2 FY19 Q2 FY18 Q1FY19 YoY % QoQ % Gross AUM (Rs. mn) 6,038 5,056 6,136 19.4% -1.6% No. of districts 91 96 102 -5.2% -10.8% No. of branches 179 165 177 8.5% 1.1% No. of Regional Offices (RO) 8 7 7 14.3% 14.3% No. of States of operation 8 8 8 0.0% 0.0% No. of Emp
Slide 63: P&L Statement – TSL
P&L Statement – TSL Particulars (Rs mn) Q2 FY19 Q2 FY18 YoY% Q1FY19 QoQ% Revenue Service Charges 153.4 111.3 37.7% 171.6 -10.6% Treasury Income 5.7 4.2 34.2% 4.4 27.9% Other Income 12.7 2.3 447.7% 2.3 453.0% Total Revenue 171.7 117.9 45.7% 178.3 -3.7% Expenses Finance Cost 4.5 1.9 130.8% 5.5 -17.8%
Slide 64: Financial & Operational Details – Satin Housing Finance Limited (SHFL)
Annexure Financial & Operational Details – Satin Housing Finance Limited (SHFL)
Slide 65: Financial & Operational Details – SHFL
Financial & Operational Details – SHFL* Particulars (Rs mn) Q2 FY19 Q2 FY18 Q1 FY19 QoQ% Revenue Interest and Fee Income 7.1 - 2.5 189.1% Treasury Income 2.6 1.7 1.8 44.6% Other income 3.0 - 0.0 - Total Revenue 12.7 1.7 4.2 199.0% Expenses Finance cost 0.1 0.0 0.0 460.4% Employee benefit expenses 10
Slide 66: Contact Information
Contact Information For any queries, please contact: Aditi Singh Head – Capital Markets Satin Creditcare Network Limited E: Aditi.singh@satincreditcare.com T: +91 124 4715 400 (Ext – 222) 65
Slide 67: Thank You
Thank You
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