Edelweiss Financial Services Limited · NSE:EDELWEISS
Edelweiss Financial Services — FY2022 Earnings Presentation
66 slides from Edelweiss Financial Services's earnings presentation, May 27, 2022
Slide 1: Cover letter to stock exchanges: Investor Presentation
EW/Sec/2022/95 May 27, 2022 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 attached
Slide 2: Earnings update – Quarter and Year ended Mar 22
Edelweiss Financial Services Limited Earnings update – Quarter and Year ended Mar 22
Slide 3: Contents
Contents 1 Overview & highlights of Quarter and Year ended Mar 22 3 2 Key priorities for the next 12 months 30 3 Business performance 31 4 Governance & Corporate responsibility 58 Addendum – Update on Wealth Management 2
Slide 4: Overview & Highlights
Overview & Highlights Quarter and Year ended Mar 22
Slide 5: Edelweiss at a glance – Year ended Mar 22
Edelweiss at a glance – Year ended Mar 22 Net Worth Ex-Insurance PAT BVPS INR 8,457 Cr INR 405 Cr INR 72 (FV ₹1) Liquidity Customer Assets INR 5,500 Cr INR 3,57,700 Cr 4
Slide 6: We are a diversified company across five clusters
We are a diversified company across five clusters Edelweiss Financial Services Ltd (EFSL) Credit Asset Management Insurance Asset Wealth Housing Alternative Reconstruction General Management NBFC Mutual Fund Life Insurance Finance Asset Mgt Insurance ECL Finance Edelweiss Edelweiss Edelweiss Edelwei
Slide 7: Performance overview – quarter and year ended Mar 22
Performance overview – quarter and year ended Mar 22 1 Steady performance across businesses – upward trend across key metrics Slide 7 - 10 2 Growth in customer franchise enabled by digital ecosystems and synergistic partnerships Slide 11 - 14 Significant improvement in asset quality; aided by strong
Slide 8: EFSL Ex-Insurance PAT increased 29% YoY
1 EFSL Ex-Insurance PAT increased 29% YoY Profit After Tax for the Year in INR Cr EFSL Asset Asset ex-Insurance Credit Management Reconstruction 405 315 253 186 112 67 33 19 Mar 21 Mar 22 Mar 21 Mar 22 Mar 21 Mar 22 Mar 21 Mar 22 7 EFSL ex-insurance PAT for year ended Mar 21 has been commensurately
Slide 9: Earnings distribution across businesses
1 Earnings distribution across businesses INR Cr Quarter ended Year ended Business Mar 22 Mar 22 NBFC 56 98 Housing Finance 8 14 Mutual Fund (7) 20 Alternatives Asset Management 15 47 Asset Reconstruction 64 253 Life Insurance (61) (206) General Insurance (24) (105) EFSL share in Wealth Management 1
Slide 10: Business highlights - quarter and year ended Mar 22 (1)
1 Business highlights - quarter and year ended Mar 22 (1) • NNPA improved to 1.96% as on Mar 22 from 2.31% on Dec 21 and 6.83% on Mar 21 • Retail collection efficiency at 96% for the quarter NBFC • Strong wholesale recoveries of ~INR 1,600 Cr in the quarter, momentum expected to continue • NNPA impr
Slide 11: Business highlights - quarter and year ended Mar 22 (2)
1 Business highlights - quarter and year ended Mar 22 (2) • Robust recoveries of ~INR 2,700 Cr during the quarter and ~INR 6,900 Cr during the Asset year; 11% from retail portfolio Reconstruction • Share of retail assets in capital employed grew ~4x YoY to ~14% as on Mar 22 • Gross premium grew at 6
Slide 12: Customer reach nearly doubled in 2 years
2 Customer reach nearly doubled in 2 years Total Customer Customer AssetsReach (in Lakhs) (INR Cr) Customer Reach (# in lakhs) 49 3,57,700 41 2,80,800 2,06,500 26 Mar 20 Mar 21 Mar 22 Mar 20 Mar 21 Mar 22 Growth of ~20% YoY Growth of ~27% YoY 11 Customer reach includes individuals covered under Grou
Slide 13: Enabled by digital platforms and innovative products
2 Enabled by digital platforms and innovative products Mutual Fund Edelweissmf.com Einvest Mobile App Zoho Customer Experience One of the quickest investor Android & iOS based Integrated CRM for transaction journeys mobile app Services, Sales & Marketing Platform Oriented BRICS Cloud Migration Cyber
Slide 14: Enabled by digital platforms and innovative products
2 Enabled by digital platforms and innovative products Wealth Management Trading Tech Edelweiss API Connect New Trading Platform Low latency Algo trading Enables user to build, integrate and Transition to new age, performance Reengineered the platform to lower trade with our suite of APIs and SDKs r
Slide 15: And by synergistic ecosystem partnerships
2 And by synergistic ecosystem partnerships Insurance Credit Diverse partnerships across trusted legacy institutions and new age internet economy players 14 List of partners is indicative not exhaustive
Slide 16: Significant improvement in asset quality
3 Significant improvement in asset quality Asset Quality (%) GNPA NNPA 6.7 5.8 2.5 1.8 Mar 21 Mar 22 Total provision cover improved to 189% as on Mar 22 from 70% as on Mar 21 15
Slide 17: Credit assets are conservatively provided for
3 Credit assets are conservatively provided for Balance Sheet Provisions IRAC Provisions IndAS Provisions (INR Cr) 904 640 470 155 172 155 Mar 20 Mar 21 Mar 22 We have consistently provided for higher than IRAC norms 16
Slide 18: Robust balance sheet with well-capitalised businesses
4 Robust balance sheet with well-capitalised businesses Reduction in borrowings by ~30% over last 2 years; net D/E improved to 2x Strong capitalization across businesses Comfortable liquidity of INR 5,500 Cr at ~23% of borrowings 17
Slide 19: Borrowings reduced by ~30% over last 2 years
4 Borrowings reduced by ~30% over last 2 years Borrowings (INR Cr) Net D/E 3.5 33,800 26,700 24,050 2.2 2.0 Mar 20 Mar 21 Mar 22 Mar 20 Mar 21 Mar 22 18
Slide 20: Debt distribution across businesses
4 Debt distribution across businesses Borrowings (INR Cr) Business Mar 22 NBFC 10,200 Housing Finance 2,300 Asset Reconstruction 3,050 Wealth Management 3,430 BMU & Corporate 5,070 Gross Debt 24,050 (Less) liquid / treasury assets 5,500 Net Debt 18,550 19
Slide 21: Strong capitalization across businesses
4 Strong capitalization across businesses Businesses Metric Value NBFC Capital Adequacy 31.7% Housing Finance Capital Adequacy 28.3% Asset Reconstruction Capital Adequacy 42% Life Insurance Solvency Ratio 211% General Insurance Solvency Ratio 167% 20
Slide 22: Cash flow plan
4 Cash flow plan INR Cr Apr 22 to Mar 23 Opening Available Liquidity (A) 5,500 Inflows Expected Inflows 9,000 Fresh Borrowings 4,500 Total Inflows (B) 13,500 Outflows Repayments 9,900 Disbursements 3,700 Total Outflows (C) 13,600 Closing Available Liquidity (A+B-C) 5,400 21
Slide 23: Assets in each tenor range adequately cover liabilities
4 Assets in each tenor range adequately cover liabilities INR Cr Assets Liabilities Gap Upto 1 year 19,300 15,500 3,800 1-3 years 15,200 12,100 3,100 3 years+ 10,700 10,000 700 22
Slide 24: Update on Key Priorities
Update on Key Priorities (e. Edelweiss Ideas create, values protect
Slide 25: Update on key priorities for FY22
Update on key priorities for FY22 1 Demerger and listing of Edelweiss Wealth Management 2 Reduce wholesale credit assets 3 Scale-up our Asset Management and Insurance businesses 24
Slide 26: 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 Phase II • NCLT order received and made effective for Phase 2 demerger scheme • Solicit share entitlement report and fairness opinion Completed Phase III • Demerger completion Ex
Slide 27: Wholesale book reduced ~30% in the past 2 years
2 Wholesale book reduced ~30% in the past 2 years ECLF wholesale loan assets (INR Cr) 13,000 11,200 9,370 6,000 3,500 Mar 20 Mar 21 Mar 22 Mar 23 Mar 24 Further reduction by ~60% in the next 2 years aided by strong demand in real estate 26
Slide 28: Workouts & strong housing demand aiding in faster recovery
2 Workouts & strong housing demand aiding in faster recovery Successful workouts over the last 18 months: • While overall book reduction over the last 24 months has been slower than planned, momentum has picked up over the last quarter • Robust inflows of INR ~1,600 Cr in quarter ended Mar 22 • Mome
Slide 29: Significant growth in Asset Management business
3 Significant growth in Asset Management business Mutual Fund AUM (INR Cr) Alternative Asset Mgt AUM (INR Cr) 85,000 30,000 30,500 55,000 21,700 28,000 Mar 20 Mar 21 Mar 22 Mar 20 Mar 21 Mar 22 Asset Management AUM has doubled in two years and tripled in three years 28
Slide 30: Insurance cluster continues to scale up
3 Insurance cluster continues to scale up LI – Gross Premium for the year (INR Cr) GI – Gross Premium for the year (INR Cr) 1,460 360 1,220 1,020 225 160 Mar 20 Mar 21 Mar 22 Mar 20 Mar 21 Mar 22 YoY growth in Gross Premium at 20% for LI and 60% for GI 29
Slide 31: Key priorities for next 12 months
Key priorities for next 12 months 1 Listing EWM and value unlock for shareholders 2 Create and enhance value through scale-up of the Asset Management and Insurance businesses 3 Continue on the path to make businesses independent in order to create and unlock value 4 Steady reduction of Wholesale boo
Slide 32: Business Performance: Credit
Business Performance Credit
Slide 33: Credit cluster at a glance
Credit Credit cluster at a glance Year ended Mar 22 Equity Credit Assets Profit After Tax INR 4,711 Cr INR 16,565 Cr INR 112 Cr 32
Slide 34: NBFC: Business performance snapshot
NBFC NBFC: Business performance snapshot Key Metrics for the year Business Update • NNPA improved to 1.96% as on Mar 22 from 2.31% Equity (INR Cr) 3,933 on Dec 21 and 6.83% on Mar 21 • Strategic shift in product mix of mSME; pivoting to secured lending model Credit Assets (INR Cr) 12,592 • Focus con
Slide 35: NBFC: Financial performance snapshot
NBFC NBFC: Financial performance snapshot INR Cr Quarter ended Quarter ended Year ended Year ended Mar 22 Mar 21 Mar 22 Mar 21 AUM 7,357 10,373 7,357 10,373 Loan book 6,763 9,889 6,763 9,889 Equity 3,934 3,838 3,934 3,838 Gross Revenue 403 449 1,841 2,262 Net Revenue 79 6 355 441 Opex 63 108 336 578
Slide 36: Housing Finance: Business performance snapshot
Housing Finance Housing Finance: Business performance snapshot Key Metrics for the year Business Update • Significant growth in PAT; grew 2.5x YoY Equity (INR Cr) 778 • Portfolio continues to strengthen o Collection efficiency at 101% for Q4 vs 99% for Q3 Credit Assets (INR Cr) 4,186 o NNPA improved
Slide 37: Housing Finance: Financial performance snapshot
Housing Finance Housing Finance: Financial performance snapshot INR Cr Quarter ended Quarter ended Year ended Year ended Mar 22 Mar 21 Mar 22 Mar 21 AUM 3,924 4,385 3,924 4,385 Loan book 3,145 3,645 3,145 3,645 Equity 778 763 778 763 Gross Revenue 121 123 514 551 Net Revenue 49 35 186 162 Opex 40 33
Slide 38: Business Performance: Asset Management
Business Performance Asset Management
Slide 39: Asset Management cluster at a glance
Asset Management Asset Management cluster at a glance Year ended Mar 22 Equity AUM Profit After Tax INR 398 Cr INR 115,500 Cr INR 67 Cr Fee Income INR 437 Cr 38
Slide 40: Mutual Fund: Business performance snapshot
Mutual Fund Mutual Fund: Business performance snapshot Key Metrics for the year Business Update • Total net inflows increased 24% YoY to ~INR 29,000 Cr in the year; ~INR 4,100 Cr in the quarter Equity (INR Cr) 182 • Total net equity inflows more than doubled YoY to ~INR 8,000 Cr in the year; ~INR 1,
Slide 41: Mutual Fund: Financial performance snapshot
Mutual Fund Mutual Fund: Financial performance snapshot INR Cr Quarter ended Quarter ended Year ended Year ended Mar 22 Mar 21 Mar 22 Mar 21 AUM 85,000 55,000 85,000 55,000 Net New Money 4,100 6,400 28,900 23,300 Equity 182 161 182 161 Revenue 43 39 167 120 Opex 50 38 147 115 Profit After Tax (7) 1
Slide 42: Consistent expansion of investor and partner reach
Mutual Fund Consistent expansion of investor and partner reach MF Equity AUM (INR Cr) Unique active mutual fund distributors (#) 19,600 4,200 3,200 10,600 2,000 4,100 Mar 20 Mar 21 Mar 22 Mar 20 Mar 21 Mar 22 SIP Book (INR Cr) Active Folios (# in Lakhs) 170 9.7 125 5.5 50 3.4 Mar 20 Mar 21 Mar 22 Ma
Slide 43: Alternative Asset Mgt: Business performance snapshot
Alternative Asset Mgt Alternative Asset Mgt: Business performance snapshot Key Metrics for the year Business Update • Deployed ~INR 1,650 Cr & Realized ~INR 1,350 Cr during Equity (INR Cr) 216 the quarter • Performing Credit investments engine on roll – Deployed AUM (INR Cr) ~30,500 INR ~1,300 Cr du
Slide 44: Alternative Asset Mgt: Financial performance snapshot
Alternative Asset Mgt Alternative Asset Mgt: Financial performance snapshot INR Cr Quarter ended Quarter ended Year ended Year ended Mar 22 Mar 21 Mar 22 Mar 21 AUM 30,500 30,000 30,500 30,000 Fee Paying AUM 17,600 14,150 17,600 14,150 Equity 216 152 216 152 Net Revenue 92 44 282 164 Opex 76 43 232
Slide 45: Alternative assets overview
Alternative Asset Mgt Alternative assets overview AUM – Strategy wise Fee Paying AUM – Strategy wise AUM – Tenure wise 11% 11% 14% 37% 20% 44% INR 30,500 Cr INR 17,600 Cr INR 30,500 Cr 30% 32% 86% 15% Distressed Credit Fund Distressed Credit Fund Asset Over 3 year duration Structured Debt Fund Struc
Slide 46: Business Performance: Asset Reconstruction
Business Performance Asset Reconstruction
Slide 47: Asset Reconstruction: Business performance snapshot
ARC Asset Reconstruction: Business performance snapshot Key Metrics for the year Business Update Equity (INR Cr) 2,476 • Robust recoveries of ~INR 6,900 Cr of which 11% was from retail portfolio in the year AUM (INR Cr) ~40,200 • Recoveries of ~INR 2,700 Cr in the quarter • Acquired assets worth ~IN
Slide 48: Asset Reconstruction: Financial performance snapshot
ARC Asset Reconstruction: Financial performance snapshot INR Cr Quarter ended Quarter ended Year ended Year ended Mar 22 Mar 21 Mar 22 Mar 21 AUM 40,200 40,800 40,200 40,800 Capital Employed 5,016 5,263 5,016 5,263 Wholesale assets 4,336 5,041 4,336 5,041 Retail assets 680 222 680 222 Equity 2,476 2
Slide 49: Business Performance: Insurance
Business Performance Insurance
Slide 50: Insurance cluster at a glance
Insurance Insurance cluster at a glance Year ended Mar 22 Gross Premium Policies Issued Customer Reach INR 1,820 Cr # 3,62,550 ~30 lakhs 49 Customer reach includes individuals covered under Group Insurance policies
Slide 51: Life Insurance: Business performance snapshot
Life Insurance Life Insurance: Business performance snapshot Key Metrics for the year Business Update Equity (INR Cr) 619 • Individual APE for the year grew at a 5-year CAGR of 21% against industry growth at 10% Individual APE (INR Cr) 420 • Gross premium growth of 66% QoQ & 20% YoY • Launched a new
Slide 52: Life Insurance: Financial performance snapshot
Life Insurance Life Insurance: Financial performance snapshot INR Cr Quarter ended Quarter ended Year ended Year ended Mar 22 Mar 21 Mar 22 Mar 21 Net Premium Income 556 472 1,424 1,188 Investment Income & Other 47 98 479 678 Income Total Income 603 570 1,903 1,866 Policy benefits & insurance policy
Slide 53: Customer base and gross premium continue to grow
Life Insurance Customer base and gross premium continue to grow Customer Count (#) Individual APE for the year (INR Cr) 3,48,800 404 420 3,30,200 2,90,500 323 Mar 20 Mar 21 Mar 22 Mar 20 Mar 21 Mar 22 Gross Premium for the year (INR Cr) AUM (INR Cr) 5,490 1,460 1,220 4,220 1,030 3,080 Mar 20 Mar 21
Slide 54: General Insurance: Business performance snapshot
General Insurance General Insurance: Business performance snapshot Key Metrics for the year Business Update • Achieved GDPI growth of ~27% YoY in the quarter and ~60% YoY in the year against industry growth of ~11% Equity (INR Cr) 135 • Consistent growth in our choice of business segments; Health an
Slide 55: General Insurance: Financial performance snapshot
General Insurance General Insurance: Financial performance snapshot INR Cr Quarter ended Quarter ended Year ended Year ended Mar 22 Mar 21 Mar 22 Mar 21 Net Premium Income 63 42 233 162 Investment Income & Other 17 8 59 43 Income Total Income 80 50 292 205 Policy benefits & insurance policy 41 221 1
Slide 56: Business Performance: Wealth
Business Performance Wealth
Slide 57: Wealth Management: Business performance snapshot
Wealth Mgt Wealth Management: Business performance snapshot Key Metrics for the year Business Update • AuA grew ~30% YoY and ~4% QoQ with net new money AUA (INR Cr) ~2,02,000 of ~INR 2,100 Cr for the quarter • Strong 63% YoY growth in distribution income, revenue LAS loan book growth of 24% YoY ~3,0
Slide 58: Wealth Management: Financial performance snapshot
Wealth Mgt Wealth Management: Financial performance snapshot INR Cr Quarter ended Quarter ended Year ended Year ended Mar 22 Mar 21 Mar 22 Mar 21 AUA 2,02,000 1,55,000 2,02,000 1,55,000 Equity 1,833 1,563 1,833 1,563 Gross Revenue 413 408 1,600 1,288 Net Revenue 336 320 1,327 1,043 Opex 282 244 1,00
Slide 59: Governance & Corporate Responsibility
Governance & Corporate Responsibility
Slide 60: 11 Member Board with 6 Independent Directors
11 Member Board with 6 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 61: Significant institutional ownership
Significant institutional ownership Shareholding Pattern as on Mar 31, 2022 Key Shareholders above 1% Percent 1 Pabrai Investment Funds 7.9% Employee Trust 2 BIH SA 5.1% DIIs, Non 4.8% Promoter Group Institutions 3 Baron Asset Management 4.4% & Others 32.6% 4 TIAA CREF funds 4.3% 24.2% 5 LIC 2.6% 6
Slide 62: Our contribution to building a more sustainable tomorrow
Our contribution to building a more sustainable tomorrow Under the leadership of EdelGive Foundation, we have… Over ~INR 500 Cr mobilized Partnered with over 150 Assisted over 60% of EdelGive’s Ensured long term through commitments high caliber NGOs NGO partners to grow at a CAGR association with av
Slide 63: Our investment in communities
Our investment in communities EdelGive Foundation’s commitment to investing in communities 94 Districts Sustainable Women across 13 States Quality Education Livelihoods Empowerment ~ 20 lakh children impacted ~50,000 Individuals trained ~2 lakh women supported INR 196 Cr * ~30,000 schools reached ~1
Slide 64: Trusted partner: EdelGive funding partners & networks
Trusted partner: EdelGive funding partners & networks Foundations, Corporates and HNIs partner with Edelgive Platform for their philanthropic allocation 63
Slide 65: 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 66: 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 4,15
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