Fusion Finance Ltd · NSE:FUSION
Fusion Finance — Fusion Micro Finance — Q3 FY23 Earnings Presentation
42 slides from Fusion Finance's earnings presentation, Feb 11, 2023
Slide 1: Exchange submission letter of earnings presentation
Date: 11.02.2023 Letter No. FMFL/SEC/2022-23/SE-121 The Manager The Manager Listing Department Listing Department National Stock Exchange of India Limited BSE Limited Exchange Plaza, Plot No. C/1, G Block Phiroze Jeejeebhoy Towers Bandra Kurla Complex, Bandra (E), Mumbai - 400 051 Dalal Street, Mumb
Slide 2: Investor Presentation Q3 FY23
Creating Opportunities… Creating Investor Presentation Opportunities… Q3 FY23 Fusion Micro Finance Limited
Slide 3: Disclaimer
Disclaimer Creating Opportunities… By attending the meeting where this Presentation (“Presentation”) is made, or by reading the Presentation materials, you agree to be bound by the limitations contained herein and to maintain absolute confidentiality regarding the information disclosed in this Prese
Slide 4: Presentation Path
Presentation Path Creating Opportunities… Vision, Mission Business Executive Summary Overview & Values Our Presence Key Strengths Performance 1 2 33 44 5 6 February 11, 2023 | © Fusion Micro Finance Limited 3
Slide 5: Executive Summary
Creating Opportunities… Executive Summary 1 February 11, 2023 | © Fusion Micro Finance Limited 4
Slide 6: Executive Summary
Executive Summary Creating Opportunities… Company continues to demonstrate robust growth in portfolio , stable asset quality and has achieved highest PAT since inception. Consistent focus on adding new clients – added ~0.7 Mn clients in 9 months while continuing to retain existing clients. Uptick in
Slide 7: Performance Highlights – 9M FY'23
Performance Highlights – 9M FY’23 Creating Opportunities… ECL Cost to Income Net worth CRAR NNPA ₹ 2,894 Mn 39.41% 28.15% Including Management ₹ 22,052 Mn 0.98% overlay of ₹ 252.5 Mn Total Income NII OPEX Cost of Borrowing PPOP ₹ 12,793 Mn ₹ 6,735 Mn 10.26% ₹ 4,912 Mn 5.52% YoY growth 102% February
Slide 8: Collection Efficiency
Collection Efficiency Creating Opportunities… Pre-Mar-21 Portfolio ₹ 2,529 mn 3% of MFI-AUM Post Mar-21 Portfolio ₹ 81,806 mn 97% of MFI-AUM Total Collection efficiency including Pre-payment collection 109.5% 107.1% 107.5% 106.5% 104.5% 103.7% 94.4% 96.5% 96.8% 95.4% 94.1% 93.4% 92.8% 88.4% Collecti
Slide 9: Impact of Credit Cost
Impact of Credit Cost Creating Opportunities… ₹ in Million Understanding the Credit Cost Impact Q3 FY 23 Q2 FY23 9M FY 23 FY 22 - Opening ECL- [A] 2,850.8 2,442.7 3,603.5 2,853.0 - Provisions as per ECL [B] 494.0 610.9 1,305.1 3,684.9 - Reversals (on account of write-off) [C] 450.4 202.8 2,014.2 2,9
Slide 10: Overview
Creating Opportunities… Overview 2 February 11, 2023 | © Fusion Micro Finance Limited 9
Slide 11: 12+ years of robust performance
12+ years of robust performance Creating Opportunities… Diversified Client Growth AUM Growth Organically diversified 31% for last 5 years 51% for last 5 years since beginning Technology Cost of Funds Ranking On Cloud since 2013 Reduced by 335 bps in 2nd largest NBFC – MFI last 5 years Marquee Invest
Slide 12: Vision, Mission & Values
Creating Opportunities… Vision, Mission & Values February 11, 2023 | © Fusion Micro Finance Limited 11
Slide 13: Vision, Mission and Values
Vision, Mission and Values Creating Opportunities… Vision: “Fusion Micro Finance with a social vision and business orientation aims to provide underprivileged women with economic opportunities to transform the quality of Mission: their lives.” “A self sustainable financial institution which leverage
Slide 14: Our Presence
Creating Opportunities… Our Presence 44 February 11, 2023 | © Fusion Micro Finance Limited 13
Slide 15: Our Presence
Our Presence Creating Opportunities… ~3.4 20 J & K (2) Himachal Pradesh (8) Punjab (46) Mn Uttarakhand (20) Active Clients States Haryana (47) Delhi (9) Uttar Pradesh (212) (including 2 UTs) Assam (20) Rajasthan (97) 1057 Bihar(145) Madhya Pradesh (106) Jharkhand (47) Chhattisgarh (32) Gujarat (37)
Slide 16: Key Strengths
Creating Opportunities… Key Strengths 5 February 11, 2023 | © Fusion Micro Finance Limited 15
Slide 17: Key Strengths
Key Strengths Creating Opportunities… Diversification Liability Management Consistency Digital Orientation People Operational Prudence Strong Governance February 11, 2023 | © Fusion Micro Finance Limited 16
Slide 18: Key Strengths: Diversification
Key Strengths : Diversification Creating Opportunities… YoY Network Distribution Top 5 states concentration Rural vs Urban Presence 18 18 18 18 20 1200 20 74.0% 75.0% 72.3% 90% 91% 92% 93% 93% 93% 1057 18 86% 1000 14 934 16 68.0% 67.7% 65.9% 65.3% 800 12 725 14 595 12 600 504 10 375 8 400 264 6 10 %
Slide 19: Key Strengths: Consistency
Key Strengths : Consistency Creating Opportunities… YoY ₹ in Million AUM Disbursement CAGR 50% CAGR 47% 86,536 61,798 62,232 67,860 35,740 37,103 46,378 36,065 27,822 26,414 16,705 15,556 8,308 8,272 '17 '18 '19 '20 '21 '22 9MFY 23 '17 '18 '19 '20 '21 '22 9MFY 23 QoQ AUM Disbursement Growth 22% Grow
Slide 20: Key Strengths: Consistency (Contd…)
Key Strengths : Consistency (Contd…) Creating Opportunities… YoY AUM/ RO (₹ in Mn) AUM/Branch (₹ in Mn) Borrower/ Branch 3,079 3,167 3,020 3,381 12.9 11.4 840 2,779 11.0 739 2,728 2,987 10.2 649 9.3 610 7.6 524 6.1 415 313 '17 '18 '19 '20 '21 '22 9MFY 23 '17 '18 '19 '20 '21 '22 9MFY 23 '17 '18 '19 '
Slide 21: Key Strengths: Operational Prudence
Key Strengths : Operational Prudence Creating Opportunities… YoY Avg. Ticket Size (₹ in K) Borrowers (in Lacs) Avg. OS / Borrower (₹ in K) 35.7 36.8 CAGR 31% 32.1 34.0 24.5 24.8 29.8 27.2 21.7 26.5 19.3 23.6 17.0 21.3 21.2 15.2 18.7 15.5 11.3 10.2 7.3 '17 '18 '19 '20 '21 '22 9MFY 23 '17 '18 '19 '20
Slide 22: Key Strengths: People
Key Strengths : People Creating Opportunities… Stable and Experienced core management team with avg. tenure of ~7 years in Fusion Strong second line with diversified experience and progressive orientation Team Size Focus on home grown talent >10k Across 1057 locations Awarded ‘Great Place to Work’ i
Slide 23: Key Strengths: Liability Management
Key Strengths : Liability Management Creating Opportunities… Marginal Cost of Borrowings & Avg Cost of Borrowing % Marginal Cost of Borrowings & Avg Cost of Borrowing % 14.1% 13.5% 11.2% 12.7% 12.3% 11.2% 10.8% 10.7% 10.4% 10.3% 10.3% 10.3% 10.2% 10.4% 10.1% 10.1% 9.9% 9.7% YoY QoQ FY'17 FY'18 FY'19
Slide 24: Key Strengths: Liability Management (Contd…)
Key Strengths : Liability Management (Contd…) Creating Opportunities… Positive ALM (in Months) 25.8 Tenure Ratings 23 23.7 22.2 20.4 21.5 18.8 16.5 17.5 17.7 FY 2023 A FY 2022 A- FY 2017 BBB+ '19 '20 '21 '22 9MFY 23 Average maturity of Assets Average maturity of Liabilities Loan Maturity (Tenure) Ra
Slide 25: Key Strengths: Digital Orientation
Key Strengths : Digital Orientation Creating Opportunities… Technology – Infrastructure Customer Experience Early Cloud adopters Digital onboarding improved from Scalable 30% in 2018 to 100% in 2022. Open API Cashless disbursement improved Architecture from 20% in 2018 to 97% in 2022. Efficiency Bus
Slide 26: Key Strengths: Digital Orientation (Building for future)
Key Strengths : Digital Orientation (Building for future) Creating Opportunities… Real-time insights with Data Lake and Analytics Driving operational efficiency with automated Credit Decisioning Continuous investment in core technology Best-in-class cyber resilience framework February 11, 2023 | © F
Slide 27: Key Strengths: Strong Governance
Key Strengths : Strong Governance Creating Opportunities… Risk Management: Dedicated & Independent risk management function with strong focus on Credit, Operational, Market and other risk factors Strong governance mechanism consisting of Board Risk Mgmt. Committee (BRMC) & Mgmt. Risk committee (MRC)
Slide 28: ESG - seeking to be a responsible Financial Institution
ESG - seeking to be a responsible Financial Institution Creating Opportunities… Responsible approach towards environment , community and employees as well as towards internal governance standards Continuous Engagement with Community and Employees Governance Standards Established approximately 2,831
Slide 29: Corporate Social Responsibility
Corporate Social Responsibility Creating Opportunities… Fusion creates a positive impact on economic, social, and environmental growth of disadvantaged communities through integrated and sustainable development initiatives 333 February 11, 2023 | © Fusion Micro Finance Limited 28
Slide 30: Corporate Social Responsibility
Corporate Social Responsibility Creating Opportunities… COVID19 Welfare Program Flood relief work Menstrual Hygiene Eye-care Program Beneficiaries: 5,07,263 Beneficiaries: 58,543 Beneficiaries: 6,653 Beneficiaries: 7,245 Programs: 1,953 Programs: 109 Programs: 8 Programs: 7 Wheelchair Distribution F
Slide 31: Business Performance
Creating Opportunities… Business Performance 6 February 11, 2023 | © Fusion Micro Finance Limited 30
Slide 32: Profit and Loss Statement
Profit and Loss Statement Creating Opportunities… ₹ in Million Profit & Loss Statement Q3 FY 23 Q3 FY 22 YoY % Q2 FY 23 QoQ % 9M FY 23 9M FY 22 YoY % FY22 Revenue from operations - Interest income 4,202.4 2,769.3 51.7% 3,997.6 5.1% 11,493.6 7,571.3 51.8% 10,643.2 - Other than interest income 383.8 4
Slide 33: Balance Sheet
Balance Sheet Creating Opportunities… ₹ in Million Financial Position Q3 FY 23 Q3 FY 22 YoY % Q2 FY 23 QoQ% FY22 Financial and Non financial assets - Cash & Other Bank Balances 11,031.8 9,767.9 12.9% 9,167.0 20.3% 10,113.7 - Bank balances other than cash and cash equivalents 1,156.2 1,360.9 (15.0)%
Slide 34: Key Ratios
Key Ratios Creating Opportunities… YoY Margin Analysis % 73.4% Cost to Income Opex 9.2% 24.1% 65.6% 63.4% 8.1% 21.7% 22.4% 21.2% 20.5% 7.3% 18.8% 20.2% 50.9% 44.3% 6.4% 44.3% 5.3% 5.5% 5.5% 14.1% 13.5% 12.7% 39.4% 12.3% 11.2% 10.4% 10.3% 10.0% 9.7% 8.8% 9.2% 9.9% 8.2% 8.4% FY'17 FY'18 FY'19 FY'20 FY
Slide 35: Key Ratios
Key Ratios Creating Opportunities… GNPA NNPA 5.5% 5.7% 2.2% 4.0% 1.6% 3.7% 0.9% 1.5% 1.1% 0.6% 0.4% 0.4% 0.1% 0.2% FY'17 FY'18 FY'19 FY'20 FY'21 FY'22 9MFY'23 FY'17 FY'18 FY'19 FY'20 FY'21 FY'22 9MFY'23 ROA (On Avg. AUM) ROA (On Avg. Assets) ROE 4.5% 4.7% 20.5% 2.4% 1.8% 1.8% 11.5% 2.2% 7.6% 1.1% 0.
Slide 36: MSME Business
MSME Business Creating Opportunities… MSME vertical launched in Dec 2019 to tap the potential of the ‘missing middle’ Building credit assessment capability …nucleus of our MSME strategy Clear focus on mapping adjacencies and potential thereof Business Update ( As of 9M FY23) : Total Clients : 8560 G
Slide 37: Recent Awards & Accolades
Recent Awards & Accolades Creating Opportunities… We are honoured and proud to have received the “ MICROFINANCE ORGANIZATION OF THE YEAR (LARGE)” award by Inclusive India Awards 2022, a joint initiative of Access Development Services and Niti Aayog. The award was handed over by Dr. V. Anantha Nagesw
Slide 38: Highly Experienced Board with Strong Governance
Highly Experienced Board with Strong Governance Creating Opportunities… Experienced Board of Directors Chairperson of the governing board of Managing Director at Warburg Pincus India Microfinance Institutions Network Limited Served on the board of Creditaccess Grameen and Muthoot Microfinance,
Slide 39: Stable & Experienced Management Team
Stable & Experienced Management Team Creating Opportunities… February 11, 2023 | © Fusion Micro Finance Limited 38
Slide 40: Abbreviations
Abbreviations Creating Opportunities… AUM Asset Under Management PAT Profit After Tax NIM Net Interest Margin ROE Return of Equity ROA Return on Assets ECL Expected Credit Loss CRAR Capital Risk Adequacy Ratio GNPA Gross Non-Performing Assets NNPA Net Non-Performing Assets NII Net Interest Income PP
Slide 41: Definitions
Definitions Creating Opportunities… • AUM represents the aggregate of principal outstanding for all loans to customers and assets pertaining to securitization, assignment and business correspondent portfolio, as of the last day of the relevant period/year • Net Interest Margin represents net interes
Slide 42: Thank You
Creating Opportunities… Creating Thank You Opportunities… For Investor queries contact: Mr. Deepak Madaan| Email: investor.relations@fusionmicrofinance.com | +91-9289224563 February 11, 2023 | © Fusion Micro Finance Limited 41