Edelweiss Financial Services Limited · NSE:EDELWEISS
Edelweiss Financial Services — Q1 FY2021 Earnings Presentation
49 slides from Edelweiss Financial Services's earnings presentation, August 2020
Slide 1: Edelweiss Financial Services Limited Q1FY21 Quarterly Update
Edelweiss Financial Services Limited Q1FY21 Quarterly Update
Slide 2: Contents
Contents 1 Q1FY21 Highlights 3 2 Business Update 14 3 Balance Sheet Highlights 29 4 Organization. Governance. Sustainability. 40 2
Slide 3: Q1FY21 Highlights
Q1FY21 Highlights Gre Edelweiss Ideas create, values protect
Slide 4: Edelweiss at a Glance – Q1FY21
Edelweiss at a Glance – Q1FY21 Net Worth Liquidity INR 8,320 Cr INR 5,700 Cr As on 12th Aug’20 Customer Assets Book Value INR 2,23,000 Cr INR 66 Face Value ₹1 4
Slide 5: Our Six Businesses are Well-Capitalized
Our Six Businesses are Well – Capitalized.. Edelweiss Financial Services Ltd (EFSL) Corporate Wealth Asset General Retail Credit Life Insurance Credit Management Management Insurance • ECL Finance • Edelweiss • Edelweiss • Edelweiss • Edelweiss • Edelweiss Ltd Retail Finance Securities Ltd Asset Tok
Slide 6: ..And Present In High Growth Segments
..And Present In High Growth Segments Edelweiss Wealth Management is the 2nd largest non bank wealth manager with AuA of ~INR 1,27,000 Cr (~$17 bn) Edelweiss Asset Management is the largest and most comprehensive player in Indian private credit strategies with AUM of ~INR 1,00,000 Cr (~$13 bn) Among
Slide 7: Edelweiss Approach
Edelweiss Approach • Our mission is to build successful and dominant businesses that create long-term value for shareholders • EFSL contributes capital, brand, risk management and governance for sustainable growth • Our partners are global entities with impeccable credentials who contribute domain e
Slide 8: Sale of 51% Stake in Edelweiss Wealth Management
Sale of 51% Stake in Edelweiss Wealth Management • We have entered into a stake sale agreement in Wealth Management arm with PAG, largest Asia-focused alternative investment managers • They will acquire 51% stake in Edelweiss Wealth Management (EWM) at a post-money valuation of INR 4,400 Cr • EWM bu
Slide 9: Summary Background of PAG
Summary Background of PAG • One of the world’s largest Asia-focused private investment firms About • AUM of ~$40 bn with 200+ investment professionals PAG • 11 offices in Asia and around the world • Dedicated team of 50+ investment and operational professionals PAG • Focused on large sized buyout/co
Slide 10: Group Near-Term Priorities
Group Near – Term Priorities Progress the unlocking of value from our businesses and become capital surplus Grow each business with the best management teams and right partners Strengthen balance sheet further Accelerate tech-aided cost rationalization across businesses 10
Slide 11: Priorities By Business For FY21
Priorities By Business For FY21 Corporate • Focus on asset quality monitoring and collection efficiency Credit • Expedite sell-down and release equity • Strengthen capital-light business models in partnership with banks Retail Credit • Help clients navigate the post Covid scenario, with active portf
Slide 12: Q1FY21 Financial Snapshot
Q1FY21 Financial Snapshot Consolidated Q1FY21 (INR Cr) Gross Revenue 1,808 Interest Cost 1,002 Net Revenue 806 Expenses 904 Impairment 145 PBT (243) PAT Pre MI (264) PAT Post MI (245) 12
Slide 13: Distribution of Earnings Across Entities
Distribution of Earnings Across Entities INR Cr Q1FY21 ECL Finance (156) ERFL & EHFL 11 Edelweiss Wealth Management 59 Edelweiss Asset Management 45 Edelweiss Tokio Life Insurance (68) Edelweiss General Insurance (16) BMU & Corporate (139) Total Consolidated Pre MI PAT (264) 13
Slide 14: Business Update
Business Update Gre Edelweiss Ideas create, values protect
Slide 15: Corporate Credit: ECL Finance Limited
ECL Finance Corporate Credit : ECL Finance Limited Q1FY21 Key Metrics Business Update & Near Term Priorities • Focused on resource raising to generate liquidity Equity (INR Cr) 3,363 • Raised INR 1,800 Cr across PCG and TLTRO schemes in H1FY21 till date and another INR 400 Cr is in pipeline CAPAD 21
Slide 16: Business Performance Snapshot: ECL Finance Ltd
ECL Finance Business Performance Snapshot : ECL Finance Ltd INR Cr Q1FY21 EOP Loan Book 10,953 EOP Equity 3,363 Net Revenue 95 Operating Expenses 127 Credit Costs 124 Profit After Tax (156) Net Interest Margin 2.3% NNPA 2.1% Total provision cover 202% CAPAD 21.3% 16
Slide 17: Retail Credit: ERFL and EHFL
Retail Credit: Edelweiss Retail Finance Ltd and Edelweiss ERFL/EHFL Housing Finance Ltd Q1FY21 Key Metrics Business Update & Near Term Priorities ERFL EHFL • Improving collections - July collections were at ~INR 300 Cr Equity (INR Cr) 474 769 • Raised INR 265 Cr across PCG and TLTRO schemes, banks &
Slide 18: Business Performance Snapshot: ERFL and EHFL
ERFL/EHFL Business Performance Snapshot : ERFL and EHFL Q1FY21 (INR Cr) ERFL EHFL EOP Loan Book 1,312 4,490 EOP Equity 474 769 Net Revenue 20 37 Operating Expenses 8 27 Credit Costs (2) 11 Profit After Tax 11 - Net Interest Margin 5.6% 3.3% NNPA 2.0% 1.4% Total provision cover 120% 69% CAPAD 29.0% 2
Slide 19: Edelweiss Wealth Management: Edelweiss Securities Ltd and Others
Edelweiss Wealth Management : Edelweiss Securities EWM Ltd and Others Q1FY21 Key Metrics Business Update & Near Term Priorities • Business continues to be steady despite market AUA (INR Cr) 1,27,300 volatility Net New Money • Enhanced client engagement driven by tech-first 1,250 approach (INR Cr) •
Slide 20: Business Performance Snapshot: Edelweiss Wealth Management
Business Performance Snapshot : Edelweiss Wealth EWM Management Q1FY21 (INR Cr) ESL & Others AuA 1,27,300 EOP Equity 1,260 Gross Revenues 264 Net Revenues 215 Operating costs 141 Profit before tax 72 Profit after tax 59 20
Slide 21: Edelweiss Asset Management: EAML, EAAA, EARC & Others
Edelweiss Asset Management : EAML, EAAA, EARC & EAM Others Q1FY21 Key Metrics Business Update & Near Term Priorities EAML EAAA,EARC • Mutual Fund : and others • Bharat Bond ETF Series II oversubscribed 3.7 times and mobilised ~INR 11,000 Cr with ~40,000 applications Equity (INR Cr) 159 2,090 • Aim t
Slide 22: Business Performance Snapshot: Edelweiss Asset Management
Business Performance Snapshot : Edelweiss Asset EAM Management EAAA, EARC & Q1FY21 (INR Cr) EAML others AUM 29,400 66,300 EOP Equity 159 2,090 Gross Revenues 25 257 Net Revenues 25 102 Operating costs 23 50 Profit before tax 2 57 Profit after tax 2 43 22
Slide 23: Life Insurance: Edelweiss Tokio Life Insurance Company Ltd
Life Insurance : Edelweiss Tokio Life Insurance ETLI Company Ltd Q1FY21 Key Metrics Business Update & Near Term Priorities Equity (INR Cr) 721 • 2nd highest growth in industry: 21% YoY growth in individual APE Individual APE (INR Cr) 58 • Strong channel mix: 75% of channel is controlled channels lik
Slide 24: Business Performance Snapshot: Edelweiss Tokio Life Insurance
Business Performance Snapshot : Edelweiss Tokio Life ETLI Insurance Company Ltd INR Cr Q1FY21 Net Premium Income 154 Investment Income & Other Income 195 Total Business 349 Profit After Tax (68) Minority (33) Edelweiss’ Share in PAT (35) 24
Slide 25: Among The Fastest Growing In The Industry
ETLI Among The Fastest Growing In The Industry Individual APE CAGR Since FY16 vs Industry Individual APE Growth : Outlier During Lockdown in Q1FY21 30% 21% 10% 8% -15% -18% Edelweiss Tokio Peer Set Industry Edelweiss Tokio Peer Set Industry Life Insurance Life Insurance 25
Slide 26: General Insurance: Edelweiss General Insurance Company Ltd
General Insurance : Edelweiss General Insurance EGIC Company Ltd Q1FY21 Key Metrics Business Update & Near Term Priorities • Fastest growing insurer among private players Equity (INR Cr) 110 • Health continues to be a large focus area for us - Contribution of health higher than the Industry and our
Slide 27: Digital Model Enabled Seamless Execution During Lockdown
Digital Model Enabled Seamless Execution During EGIC Lockdown Robust growth in GWP continued while Industry Strong performance in Retail Lines compared to faced headwinds in Q1FY21 the Industry in Q1FY21 101% 496% 441% 17% -4% -24% Edelweiss General Industry Motor Retail Health Insurance Edelweiss G
Slide 28: Well Positioned for Strong Growth in the Future
EGIC Well Positioned for Strong Growth in the Future Robust Network and Consistent and Robust Service Footprint Growth Our business Innovative Products parameters and With Many Firsts in decisions Focus on Profitable Retail India demonstrate Segments compelling prospects Diversified Distribution Wit
Slide 29: Balance Sheet Highlights
Balance Sheet Highlights Liquidity. Capital Adequacy. Portfolio Mix
Slide 30: Update on Resources Raising
1. Update on Resources Raising • Raised ~INR 2,000 Cr under TLTRO and PCG in H1FY21 till date 1 • INR 750 Cr is in pipeline • Additionally, raised ~INR 1,700 Cr mainly from bank borrowings in H1FY21 till date 2 • INR 200 Cr is in pipeline • Corporate asset sell-down transaction generated liquidity t
Slide 31: Liquidity & Cash Flow Plan
1. Liquidity & Cash Flow Plan Particulars (INR Cr) Jul-Dec’20 Jan-Jun’21 Opening Available Liquidity (A) 4,700 5,200 Inflows Contractual Inflows 4,000 4,200 Covid-related impact (1,900) (300) Fresh Borrowings 4,500 2,000 Asset Sell downs 1,300 1,100 Total Inflows (B) 7,900 7,000 Outflows Repayments
Slide 32: Capital Adequacy Strong Both At Group & Key Operating Entities Level
2. Capital Adequacy Strong Both At Group & Key Operating Entities Level Q1FY21 CAPAD Net D/E ECL Finance Ltd 21.3% 4.1x Edelweiss Retail Finance Ltd 29.0% 2.5x Edelweiss Housing Finance Ltd 23.2% 4.5x Edelweiss Asset Reconstruction Company Ltd 32.6% 1.8x EFSL (Consolidated) has capital adequacy rati
Slide 33: Debt Equity Ratio Continues To Decline
2. Debt Equity Ratio Continues To Decline D/E (Excluding Treasury Assets) 5.2 4.6 4.4 3.7 3.4 3.5 3.2 3.0 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Debt Equity Ratio set to decline further through FY21 33
Slide 34: Significantly De-Levered Our Balance Sheet
2. Significantly De-Levered Our Balance Sheet Borrowings (INR Cr) 50,323 44,760 43,201 40,859 38,695 36,848 33,754 30,394 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Borrowings has reduced by 40% over Q2FY19 levels 34
Slide 35: Borrowing Profile Is Well Diversified
2. Borrowing Profile Is Well Diversified Borrowing Profile by Instruments Borrowing Profile by Source 1% 18% 39% 42% 11% 60% 29% Loans & OD NCDs CPs Banks Retail MF PF, Insurance & FIs INR 30,394 Cr INR 30,394 Cr 35
Slide 36: Assets in each Tenor Range Adequately Cover Liabilities
2. Assets in each Tenor Range Adequately Cover Liabilities (INR Cr) Assets Liabilities Gap Upto 1 year 13,200 11,400 1,800 1-3 years 14,300 14,000 300 3 years+ 16,000 11,100 4,900 Total gap represents our equity base 36
Slide 37: Corporate Credit Exposure Continues To Decline
3. Corporate Credit Exposure Continues To Decline Total Corporate Credit Assets (INR Cr) 21,100 17,798 18,055 16,987 16,178 13,928 10,130 8,549 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Corporate credit book will decline by another INR 2,000 - 3,000 Cr by end FY21 37
Slide 38: Retail Credit Assets Are 55% Of Total
3. Retail Credit Assets Are 55% Of Total Q1FY21 (INR Cr) Total book % Retail Credit 10,457 55% Retail Mortgage 6,514 34% SME & Business Loans 2,409 13% ESOP and Margin Financing 1,409 7% Agri and Rural Finance 124 1% Corporate Credit 8,549 45% Structured Collateralised Credit 2,930 15% Wholesale Mor
Slide 39: Asset Quality at a Glance
3. Asset Quality at a Glance INR Cr Q1FY21 Credit Book 18,896 Of which Stage 3 887 ECL Provision 909 Of which Stage 3 206 NNPA 3.6% Specific Provision Cover 23% Total Provision Cover 103% 39
Slide 40: Organisation. Governance. Sustainability
Organisation. Governance. Sustainability
Slide 41: Prudent Risk Management and Responsible Growth
Prudent Risk Management and Responsible Growth Market Risk Regulatory Reputational Business Risk Credit Risk Liquidity Risk Risk Risk Physical Technology Operational & Infrastructure People Risk Fraud Risk Risk Process Risk Risk Enterprise risk management approach: 11 Risk Framework 41
Slide 42: 12 Member Board Comprises Majority of Independent Directors
12 Member Board Comprises Majority of 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 In
Slide 43: Significant Institutional Ownership
Significant Institutional Ownership Shareholding Pattern as on 30th June, 2020 Key Shareholders above 1% Percent 1 BIH SA 5.2% Employee 2 Pabrai Investment Funds 4.3% Trust 3 Wellington Management 3.7% DIIs, Non 4.8% Promoter Group Institutions 4 TIAA CREF funds 3.2% & Others 5 LIC 2.2% 23.0% 32.9%
Slide 44: Our Sustainability Efforts
Our Sustainability Efforts EdelGive Foundation’s commitment to Achieving the SDGs (Cumulative till date) 111 Districts across 14 States Quality Education No Poverty Gender Equality INR 13 lakhs* INR 240 lakhs* INR 48 lakhs* INR 14.18 Cr * 18.41 lakh Children 1,240 acres of irrigated land More than 1
Slide 45: EdelGive Funding Partners & Networks
EdelGive Funding Partners & Networks We have partnered with some of the largest Foundations, Corporates and HNIs through our innovative models focused on collaboration 45
Slide 46: Annexure
Annexure Gre Edelweiss Ideas create, values protect
Slide 47: Wealth Management Pro Forma Financials
Wealth Management Pro Forma Financials INR Cr Edelweiss Wealth Management (EWM) PBT 72 Profit on sale of shares (38) Preference Share Dividends 14 Costs carved in from other entities (11) Pro-Forma Edelweiss Wealth Management PBT 37 47
Slide 48: 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 49: Safe Harbour
Safe Harbour NOTES: Slide 4 : Net worth is including MI and includes investment in equity convertible instrument by CDPQ of INR 1,040 Cr, Kora Management of INR 177 Cr and Sanaka Capital of INR 117 Cr Slide 4 : Customer Assets are rounded off to nearest 100 Slide 5 : Only key entities are mentioned
Edelweiss Financial Services — Q1 FY2021 Earnings Presentation on 6ix