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/2022/96 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
US $ version 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 $1,166 Mn $53 Mn $1 (FV $0.01) Liquidity Customer Assets $726 Mn $47,186 Mn 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 $ Mn EFSL Asset Asset ex-Insurance Credit Management Reconstruction 53 33 42 25 15 9 4 3 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 adjusted t
Slide 9: Earnings distribution across businesses
1 Earnings distribution across businesses $ Mn Quarter ended Year ended Business Mar 22 Mar 22 NBFC 7 13 Housing Finance 1 2 Mutual Fund (1) 3 Alternatives Asset Management 2 6 Asset Reconstruction 8 33 Life Insurance (8) (27) General Insurance (3) (14) EFSL share in Wealth Management 2 13 BMU & Cor
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 ~$211 Mn in the quarter, momentum expected to continue • NNPA improved
Slide 11: Business highlights - quarter and year ended Mar 22 (2)
1 Business highlights - quarter and year ended Mar 22 (2) • Robust recoveries of ~$356 Mn during the quarter and ~$910 Mn during the year; 11% Asset from retail portfolio Reconstruction • Share of retail assets in capital employed grew ~4x YoY to ~14% as on Mar 22 • Gross premium grew at 66% QoQ & 2
Slide 12: Customer reach nearly doubled in 2 years
2 Customer reach nearly doubled in 2 years Total Customer Customer AssetsReach ($ Mn)(in Lakhs) Customer Reach (# in lakhs) 47,186 49 41 37,041 27,240 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 Group Insuran
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 ($ Mn) 119 84 62 20 23 20 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 ~$726 Mn at ~23% of borrowings 17
Slide 19: Borrowings reduced by ~30% over last 2 years
4 Borrowings reduced by ~30% over last 2 years Borrowings ($ Mn) Net D/E 4,459 3.5 3,522 3,173 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 ($ Mn) Business Mar 22 NBFC 1,346 Housing Finance 303 Asset Reconstruction 402 Wealth Management 452 BMU & Corporate 669 Gross Debt 3,173 (Less) liquid / treasury assets 726 Net Debt 2,477 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 $ Mn Apr 22 to Mar 23 Opening Available Liquidity (A) 726 Inflows Expected Inflows 1,187 Fresh Borrowings 594 Total Inflows (B) 1,781 Outflows Repayments 1,306 Disbursements 488 Total Outflows (C) 1,794 Closing Available Liquidity (A+B-C) 712 21
Slide 23: Assets in each tenor range adequately cover liabilities
4 Assets in each tenor range adequately cover liabilities $ Mn Assets Liabilities Gap Upto 1 year 2,546 2,045 501 1-3 years 2,005 1,596 409 3 years+ 1,411 1,319 92 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 ($ Mn) 1,715 1,477 1,236 791 462 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 ~$211 Mn in quarter ended Mar 22 • Momentum
Slide 29: Significant growth in Asset Management business
3 Significant growth in Asset Management business Mutual Fund AUM ($ Mn) Alternative Asset Mgt AUM ($ Mn) 11,213 3,957 4,023 2,863 7,255 3,694 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 ($ Mn) GI – Gross Premium for the year ($ Mn) 47 193 161 30 135 21 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 $621 Mn $2,185 Mn $15 Mn 32
Slide 34: NBFC: Business performance snapshot
NBFC NBFC: Business performance snapshot Key Metrics for the year Business Update • NNPA improved to 1.96% as on Mar 22 from 2.31% Equity ($ Mn) 519 on Dec 21 and 6.83% on Mar 21 • Strategic shift in product mix of mSME; pivoting to secured lending model Credit Assets ($ Mn) 1,661 • Focus continues
Slide 35: NBFC: Financial performance snapshot
NBFC NBFC: Financial performance snapshot $ Mn Quarter ended Quarter ended Year ended Year ended Mar 22 Mar 21 Mar 22 Mar 21 AUM 970 1,368 970 1,368 Loan book 892 1,304 892 1,304 Equity 519 506 519 506 Gross Revenue 53 59 243 298 Net Revenue 10 1 47 58 Opex 8 14 44 76 Credit Cost (7) (16) (8) (1) Pr
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 ($ Mn) 103 • Portfolio continues to strengthen o Collection efficiency at 101% for Q4 vs 99% for Q3 Credit Assets ($ Mn) 552 o NNPA improved to 1.
Slide 37: Housing Finance: Financial performance snapshot
Housing Finance Housing Finance: Financial performance snapshot $ Mn Quarter ended Quarter ended Year ended Year ended Mar 22 Mar 21 Mar 22 Mar 21 AUM 518 578 518 578 Loan book 415 481 415 481 Equity 103 101 103 101 Gross Revenue 16 16 68 73 Net Revenue 6 5 25 21 Opex 5 4 16 16 Credit Cost (1) 2 6 7
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 $53 Mn $15,236 Mn $9 Mn Fee Income $58 Mn 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 ~$3,825 Mn in the year; ~$541 Mn in the quarter Equity ($ Mn) 24 • Total net equity inflows more than doubled YoY to ~$1,055 Mn in the year; ~$185 Mn in the quarte
Slide 41: Mutual Fund: Financial performance snapshot
Mutual Fund Mutual Fund: Financial performance snapshot $ Mn Quarter ended Quarter ended Year ended Year ended Mar 22 Mar 21 Mar 22 Mar 21 AUM 11,213 7,255 11,213 7,255 Net New Money 541 844 3,812 3,074 Equity 24 21 24 21 Revenue 6 5 22 16 Opex 7 5 19 15 Profit After Tax (1) 0 3 1 40
Slide 42: Consistent expansion of investor and partner reach
Mutual Fund Consistent expansion of investor and partner reach MF Equity AUM ($ Mn) Unique active mutual fund distributors (#) 2,586 4,200 3,200 1,398 2,000 541 Mar 20 Mar 21 Mar 22 Mar 20 Mar 21 Mar 22 SIP Book ($ Mn) Active Folios (# in Lakhs) 22 9.7 16 5.5 7 3.4 Mar 20 Mar 21 Mar 22 Mar 20 Mar 21
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 ~$218 Mn & Realized ~$178 Mn during the Equity ($ Mn) 28 quarter • Performing Credit investments engine on roll – Deployed AUM ($ Mn) ~4,023 ~$171 Mn during the year • PAT f
Slide 44: Alternative Asset Mgt: Financial performance snapshot
Alternative Asset Mgt Alternative Asset Mgt: Financial performance snapshot $ Mn Quarter ended Quarter ended Year ended Year ended Mar 22 Mar 21 Mar 22 Mar 21 AUM 4,023 3,957 4,023 3,957 Fee Paying AUM 2,322 1,867 2,322 1,867 Equity 28 20 28 20 Net Revenue 12 6 37 22 Opex 10 6 31 20 Profit After Tax
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% $4,023 Mn $2,322 Mn $4,023 Mn 30% 32% 86% 15% Distressed Credit Fund Distressed Credit Fund Asset Over 3 year duration Structured Debt Fund Structured Debt F
Slide 46: Business Performance: Asset Reconstruction
Business Performance Asset Reconstruction
Slide 47: Asset Reconstruction: Business performance snapshot
ARC Asset Reconstruction: Business performance snapshot Key Metrics for the year Business Update Equity ($ Mn) 327 • Robust recoveries of ~$910 Mn of which 11% was from retail portfolio in the year AUM ($ Mn) ~5,303 • Recoveries of ~$356 Mn in the quarter • Acquired assets worth ~$686 Mn in the year
Slide 48: Asset Reconstruction: Financial performance snapshot
ARC Asset Reconstruction: Financial performance snapshot $ Mn Quarter ended Quarter ended Year ended Year ended Mar 22 Mar 21 Mar 22 Mar 21 AUM 5,303 5,382 5,303 5,382 Capital Employed 662 694 662 694 Wholesale assets 572 665 572 665 Retail assets 90 29 90 29 Equity 327 293 327 293 Gross Revenue 29
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 $240 Mn # 3,62,550 ~30 lakhs 49 Customer reach includes individuals covered under Group Insurance policies
Slide 51: Life Insurance: Business performance snapshot
Life Insurance Life Insurance: Business performance snapshot Key Metrics for the year Business Update Equity ($ Mn) 82 • Individual APE for the year grew at a 5-year CAGR of 21% against industry growth at 10% Individual APE ($ Mn) 55 • Gross premium growth of 66% QoQ & 20% YoY • Launched a new produ
Slide 52: Life Insurance: Financial performance snapshot
Life Insurance Life Insurance: Financial performance snapshot $ Mn Quarter ended Quarter ended Year ended Year ended Mar 22 Mar 21 Mar 22 Mar 21 Net Premium Income 73 62 188 157 Investment Income & Other 6 13 63 89 Income Total Income 80 75 251 246 Policy benefits & insurance policy 193 186 60 55 li
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 ($ Mn) 3,48,800 53 55 3,30,200 2,90,500 43 Mar 20 Mar 21 Mar 22 Mar 20 Mar 21 Mar 22 Gross Premium for the year ($ Mn) AUM ($ Mn) 724 193 557 161 136 406 Mar 20 Mar 21 Mar 22 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 ($ Mn) 18 • Consistent growth in our choice of business segments; Health and M
Slide 55: General Insurance: Financial performance snapshot
General Insurance General Insurance: Financial performance snapshot $ Mn Quarter ended Quarter ended Year ended Year ended Mar 22 Mar 21 Mar 22 Mar 21 Net Premium Income 8 6 31 21 Investment Income & Other 2 1 8 6 Income Total Income 11 7 39 27 Policy benefits & insurance policy 5 29 22 7 liability
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 ($ Mn) ~26,647 of ~$277 Mn for the quarter • Strong 63% YoY growth in distribution income, revenue LAS loan book growth of 24% YoY ~396 ($ Mn) •
Slide 58: Wealth Management: Financial performance snapshot
Wealth Mgt Wealth Management: Financial performance snapshot $ Mn Quarter ended Quarter ended Year ended Year ended Mar 22 Mar 21 Mar 22 Mar 21 AUA 26,647 20,447 26,647 20,447 Equity 242 206 242 206 Gross Revenue 54 54 211 170 Net Revenue 44 42 175 138 Opex 37 32 133 97 Profit After Tax 5 9 32 32 Ed
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 ~$66 Mn 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 averag
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 ~$25.9 Mn * ~30,000 schools reached ~1,0
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 $117 Mn 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 4,15,19
Edelweiss Financial Services — FY2022 Earnings Presentation on 6ix