Edelweiss Financial Services Limited · NSE:EDELWEISS
Edelweiss Financial Services — Q1 FY2023 Earnings Presentation
64 slides from Edelweiss Financial Services's earnings presentation, August 2022
Slide 1: Edelweiss Financial Services Limited Earnings update – Quarter ended Jun 22
Edelweiss Financial Services Limited Earnings update – Quarter ended Jun 22
Slide 2: Contents
Contents 1 Overview & highlights of quarter ended Jun 22 3 2 Update on key priorities FY23 22 3 Business performance 29 4 Governance & corporate responsibility 57 2
Slide 3: Overview & Highlights
Overview & Highlights Quarter ended Jun 22
Slide 4: Edelweiss at a glance – quarter ended Jun 22
Edelweiss at a glance – quarter ended Jun 22 Net Worth Ex-Insurance PAT BVPS INR 8,363 Cr INR 103 Cr INR 72 (FV ₹1) Liquidity Customer Assets INR 5,250 Cr INR 3,59,300 Cr 4
Slide 5: We are a diversified company across eight businesses
We are a diversified company across eight businesses 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 Edel
Slide 6: Performance overview – quarter ended Jun 22
Performance overview – quarter ended Jun 22 1 Steady performance across businesses facilitated by robust, independent platforms Slide 7 - 10 2 Credit businesses: profitable with significant improvement in asset quality Slide 11 3 Launch of industry-first innovative products and synergistic partnersh
Slide 7: EFSL ex-Insurance PAT increased 68% YoY
1 EFSL ex-Insurance PAT increased 68% YoY Profit After Tax for the quarter in INR Cr EFSL Asset Asset ex-Insurance Credit Management Reconstruction 103 65 61 50 35 24 14 Jun 21 Jun 21 Jun 22 Jun 22 Jun 21 Jun 22 Jun 21 Jun 22 -22 7
Slide 8: Earnings distribution across businesses
1 Earnings distribution across businesses INR Cr Business Jun 22 Jun 21 NBFC 32 (8) Housing Finance 3 (14) Mutual Fund 3 6 Alternatives Asset Management 21 8 Asset Reconstruction 65 50 Life Insurance (55) (33) General Insurance (40) (26) EFSL share in Wealth Management 21 21 BMU & Corporate (15) 21
Slide 9: Steady performance across businesses (1)
1 Steady performance across businesses (1) • GNPA at 2.76%; improved YoY from 3.96% • Collection efficiency at 93% for Jun 22 vs 91% for Jun 21 NBFC • Strong wholesale inflows of ~INR 1,200 Cr in the quarter, momentum expected to continue • GNPA at 2.12%; improved YoY from 3.53% • Collection efficie
Slide 10: Steady performance across businesses (2)
1 Steady performance across businesses (2) Asset • Robust recoveries of INR 1,750 Cr of which 18% was from retail portfolio Reconstruction • Share of retail assets in capital employed grew ~2x YoY to ~13% as on Jun 22 • Gross premium grew at 12% YoY to INR 240 Cr; advisors also grew 12% YoY to ~65,1
Slide 11: Credit businesses: profitable with improvement in asset quality
2 Credit businesses: profitable with improvement in asset quality Profit after Tax (INR Cr) Asset Quality for credit businesses (%) GNPA NNPA NBFC HFC 3.8 3.3 2.5 32 1.8 3 Jun 21 Jun 21 Jun 22 Jun 22 Jun 21 Jun 22 -8 -14 11
Slide 12: Industry-first innovative products
3 Industry-first innovative products General Insurance • Switch 2.0; Industry first, telematics driven ‘usage-based’ product o End-to-end app-based journey o Usage based subscription model for premium payment o Monthly reward structure linked to driving score o Auto switch-on with movement detection
Slide 13: Synergistic partnerships
3 Synergistic partnerships Credit • Ongoing CLM disbursals with Standard Chartered Bank and Central Bank of India • New partnership forged with IDFC first for co-lending to MSME • Securitization and direct assignment transactions concluded with Godrej Housing Finance and DBS Bank of ~INR 400 Cr Gene
Slide 14: Customer franchise continues to expand
4 Customer franchise continues to expand Total Customer Customer AssetsReach (in Lakhs) (INR Cr) Customer Reach (# in lakhs) 55 3,59,300 3,02,300 43 2,23,200 27 Jun 20 Jun 21 Jun 22 Jun 20 Jun 21 Jun 22 Growth of ~30% YoY Growth of ~20% YoY 14
Slide 15: Strong balance sheet with well-capitalized businesses
5 Strong balance sheet with well-capitalized businesses Debt reduced by ~INR 6,500 Cr over last 2 years; net D/E at 2.1x Credit assets are conservatively provided for Comfortable liquidity of INR 5,250 Cr at ~21% of debt Strong capitalization across businesses 15
Slide 16: Debt reduced by ~INR 6,500 Cr over last 2 years
5 Debt reduced by ~INR 6,500 Cr over last 2 years Debt (INR Cr) Net D/E 31,270 3.3 27,000 24,780 2.3 2.1 Jun 20 Jun 21 Jun 22 Jun 20 Jun 21 Jun 22 16
Slide 17: Debt distribution across businesses
5 Debt distribution across businesses Debt (INR Cr) Business Jun 22 NBFC 9,710 Housing Finance 2,105 Alternatives 135 Asset Reconstruction 3,375 Wealth Management 4,480 BMU & Corporate 4,975 Gross Debt 24,780 (Less) Available liquidity 5,250 Net Debt 19,530 17
Slide 18: Credit assets are conservatively provided for
5 Credit assets are conservatively provided for Balance Sheet Provisions IRAC Provisions IndAS Provisions (INR Cr) 675 558 437 149 145 144 Jun 20 Jun 21 Jun 22 We have consistently provided for higher than IRAC norms 18
Slide 19: Cash flow plan
5 Cash flow plan INR Cr Jul 22 to Jun 23 Opening Available Liquidity (A) 5,250 Inflows Expected Inflows 9,200 Fresh Borrowings 5,700 Total Inflows (B) 14,900 Outflows Repayments 11,700 Disbursements 3,100 Total Outflows (C) 14,800 Closing Available Liquidity (A+B-C) 5,350 19
Slide 20: Assets in each tenor range adequately cover liabilities
5 Assets in each tenor range adequately cover liabilities INR Cr Assets Liabilities Excess / (Gap) Upto 1 year 12,700 10,700 2,000 1-3 years 12,500 7,800 4,700 3 years+ 9,700 8,900 800 20
Slide 21: Strong capitalization across businesses
5 Strong capitalization across businesses Businesses Metric Value NBFC Capital Adequacy 32.0% Housing Finance Capital Adequacy 30.9% Asset Reconstruction Capital Adequacy 42.6% Life Insurance Solvency Ratio 200% General Insurance Solvency Ratio 171% 21
Slide 22: Update on Key Priorities for FY23
Update on Key Priorities for FY23
Slide 23: On track on our key priorities for the year
6 On track on our key priorities for the year Listing EWM and value unlocking for shareholders Create and enhance value through scale-up of the Asset Management and Insurance businesses Steady reduction of wholesale loan assets 23
Slide 24: Listing EWM and value unlock for shareholders
6 Listing EWM and value unlock for shareholders 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 Expected
Slide 25: Significant growth in Asset Management business
6 Significant growth in Asset Management business Mutual Fund AUM (INR Cr) Alternative Asset Mgt AUM (INR Cr) 88,000 36,250 30,000 62,000 23,400 29,400 Jun 20 Jun 21 Jun 22 Jun 20 Jun 21 Jun 22 Asset Management AUM has grown by 35% YoY 25
Slide 26: Insurance businesses continues to scale up
6 Insurance businesses continues to scale up LI – Gross Premium for the quarter (INR Cr) GI – Gross Premium for the quarter (INR Cr) 240 117 214 63 164 40 Jun 20 Jun 21 Jun 22 Jun 20 Jun 21 Jun 22 YoY growth in Gross Premium at 12% for LI and 86% for GI 26
Slide 27: Wholesale loan assets reduced 21% YoY
6 Wholesale loan assets reduced 21% YoY ECLF wholesale loan assets (INR Cr) 11,900 10,900 8,580 5,700 3,000 Jun 20 Jun 21 Jun 22 Jun 23E Jun 24E Reduction of ~65% in next 2 years aided by strong demand and improved fundamentals 27
Slide 28: Workouts & strong housing demand aiding in faster recovery
6 Workouts & strong housing demand aiding in faster recovery Successful workouts: • Inflows of INR ~1,200 Cr in the quarter, strong visibility for the year • Sell down capabilities aided in faster recoveries; will continue to be the dominant contributor in FY23 • Sentiment in real estate sector rema
Slide 29: Business Performance: Credit
Business Performance Credit
Slide 30: Credit businesses at a glance
Credit Credit businesses at a glance Quarter ended Jun 22 Equity Credit Assets Profit After Tax INR 4,748 Cr ~INR 15,500 Cr INR 35 Cr 30
Slide 31: NBFC: Business performance snapshot
NBFC NBFC: Business performance snapshot Key Metrics for the quarter Business Update • Portfolio continues to strengthen Equity (INR Cr) 3,967 o GNPA at 2.76%; improved YoY from 3.96% o Collection efficiency at 93% for Jun 22 vs 91% for Jun 21 Credit Assets (INR Cr) 11,354 • Focus continues on asset
Slide 32: NBFC: Financial performance snapshot
NBFC NBFC: Financial performance snapshot INR Cr Jun 22 Jun 21 AUM 6,474 9,906 Loan book 5,978 9,293 Equity 3,966 3,829 Gross Revenue 357 436 Net Revenue 82 26 Opex 63 88 Credit Cost (22) (18) Profit After Tax 32 (8) GNPA 2.76% 3.96% NNPA 1.93% 3.28% Total Provision Cover 237% 135% 32
Slide 33: Housing Finance: Business performance snapshot
Housing Finance Housing Finance: Business performance snapshot Key Metrics for the quarter Business Update • Portfolio continues to strengthen Equity (INR Cr) 781 o GNPA at 2.12%; improves YoY from 3.53% o Collection efficiency at 98% for Jun 22 vs 93% for Jun 21 Credit Assets (INR Cr) 4,343 o YoY r
Slide 34: Housing Finance: Financial performance snapshot
Housing Finance Housing Finance: Financial performance snapshot INR Cr Jun 22 Jun 21 AUM 4,121 4,165 Loan book 3,176 3,527 Equity 781 749 Gross Revenue 108 120 Net Revenue 33 31 Opex 26 27 Credit Cost 2 20 Profit After Tax 3 (14) GNPA 2.12% 3.53% NNPA 1.68% 3.18% Total Provision Cover 68% 49% 34
Slide 35: Business Performance: Asset Management
Business Performance Asset Management
Slide 36: Asset Management businesses at a glance
Asset Management Asset Management businesses at a glance Quarter ended Jun 22 Equity AUM Profit After Tax INR 426 Cr INR 124,250 Cr INR 24 Cr Fee Income INR 104 Cr 36
Slide 37: Mutual Fund: Business performance snapshot
Mutual Fund Mutual Fund: Business performance snapshot Key Metrics for the quarter Business Update • Fastest growing amongst the top 15 AMCs in the industry with AUM at INR 88,000 Cr as on Jun 22 Equity (INR Cr) 186 • Total net inflows of INR 5,930 Cr for the quarter against industry outflows of INR
Slide 38: Mutual Fund: Financial performance snapshot
Mutual Fund Mutual Fund: Financial performance snapshot INR Cr Jun 22 Jun 21 AUM 88,000 62,000 Net New Money 5,930 5,460 Equity 186 167 Revenue 34 37 Opex 31 31 Profit After Tax 3 6 38
Slide 39: 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 (EoP) (#) 18,800 3,805 3,430 13,500 1,700 5,000 Jun 20 Jun 21 Jun 22 Jun 20 Jun 21 Jun 22 SIP Book (INR Cr) Active Folios (# in Lakhs) 157 10.2 132 7.0 62 3.6 Jun 20 Jun 21 Ju
Slide 40: Alternative Asset Mgt: Business performance snapshot
Alternative Asset Mgt Alternative Asset Mgt: Business performance snapshot Key Metrics for the quarter Business Update • AUM grew 21% YoY and FPAUM grew 76% YoY Equity (INR Cr) 240 • Raised AUM of INR 5,000 Cr in the quarter • IYP II onshore fund has received CRISIL Fund Management AUM (INR Cr) 36,2
Slide 41: Alternative Asset Mgt: Financial performance snapshot
Alternative Asset Mgt Alternative Asset Mgt: Financial performance snapshot INR Cr Jun 22 Jun 21 AUM 36,250 30,000 Fee Paying AUM 20,000 13,825 Equity 240 161 Net Revenue 67 52 Opex 42 44 Profit After Tax 21 8 41
Slide 42: Alternative assets overview
Alternative Asset Mgt Alternative assets overview AUM – Strategy wise Fee Paying AUM – Strategy wise AUM – Tenure wise 16% 20% 18% 39% 40% 17% INR 36,250 Cr INR 20,000 Cr INR 36,250 Cr 25% 28% 82% 15% Sepacial Situations Sepacial Situations Asset Over 3 year duration Structured Credit Structured Cre
Slide 43: Business Performance: Asset Reconstruction
Business Performance Asset Reconstruction
Slide 44: Asset Reconstruction: Business performance snapshot
ARC Asset Reconstruction: Business performance snapshot Key Metrics for the quarter Business Update Equity (INR Cr) 2,541 • Robust recoveries of INR 1,750 Cr of which 18% was from retail portfolio AUM (INR Cr) 38,900 • Deployed INR 475 Cr in the quarter Capital employed 5,160 • Retail assets nearly
Slide 45: Asset Reconstruction: Financial performance snapshot
ARC Asset Reconstruction: Financial performance snapshot INR Cr Jun 22 Jun 21 AUM 38,900 42,300 Capital Employed 5,160 5,329 Wholesale assets 4,500 4,980 Retail assets 660 349 Equity 2,541 2,272 Gross Revenue 230 203 Opex 26 18 Profit After Tax 65 50 Edelweiss’ share in PAT 39 30 45
Slide 46: Business Performance: Insurance
Business Performance Insurance
Slide 47: Insurance businesses at a glance
Insurance Insurance businesses at a glance Quarter ended Jun 22 Gross Premium Policies Issued Customer Reach INR 357 Cr # 90,110 ~38 lakhs 47
Slide 48: Life Insurance: Business performance snapshot
Life Insurance Life Insurance: Business performance snapshot Key Metrics for the quarter Business Update Equity (INR Cr) 446 • Individual APE grew at a 5-year CAGR of 23% against industry growth at 10% Individual APE (INR Cr) 68 • Gross premium growth of 12% YoY to INR 240 Cr • Launched a new produc
Slide 49: Life Insurance: Financial performance snapshot
Life Insurance Life Insurance: Financial performance snapshot INR Cr Jun 22 Jun 21 Net Premium Income 231 206 Investment Income & Other (106) 148 Income Total Income 125 354 Policy benefits & insurance policy 37 271 liability Other expenses 143 116 Profit After Tax (55) (33) Edelweiss’ share in PAT
Slide 50: Life insurance business continues to scale up
Life Insurance Life insurance business continues to scale up Customer Count (#) Individual APE for the quarter (INR Cr) 3,49,900 68 3,33,900 58 58 3,04,200 Jun 20 Jun 21 Jun 22 Jun 20 Jun 21 Jun 22 Gross Premium for the quarter (INR Cr) AUM (INR Cr) 240 5,440 215 4,430 165 3,350 Jun 20 Jun 21 Jun 22
Slide 51: General Insurance: Business performance snapshot
General Insurance General Insurance: Business performance snapshot Key Metrics for the quarter Business Update • Strong GDPI growth of 82% YoY against industry growth of 23% Equity (INR Cr) 135 • Consistent growth in our choice of business segments; Health (retail) and Motor grew by 126% and 95% YoY
Slide 52: General Insurance: Financial performance snapshot
General Insurance General Insurance: Financial performance snapshot INR Cr Jun 22 Jun 21 Net Premium Income 68 50 Investment Income & Other 8 13 Income Total Income 76 63 Policy benefits & insurance policy 53 64 liability Other expenses 52 36 Profit After Tax (40) (26) 52
Slide 53: Business Performance: Wealth
Business Performance Wealth
Slide 54: Wealth Management: Business performance snapshot
Wealth Mgt Wealth Management: Business performance snapshot Key Metrics for the quarter Business Update • AuA grew 17% YoY with net new money of ~INR 4,600 Cr AUA (INR Cr) 1,96,200 for the quarter • Strong 106% YoY growth in distribution income; revenue LAS loan book growth of 21% YoY 2,900 (INR Cr)
Slide 55: Wealth Management: Financial performance snapshot
Wealth Mgt Wealth Management: Financial performance snapshot INR Cr Jun 22 Jun 21 AUA 196,200 1,68,000 Equity 1,973 1,618 Gross Revenue 428 341 Net Revenue 346 293 Opex 278 212 Profit After Tax 47 55 Edelweiss’ share in PAT * 21 21 55 * Edelweiss stake in Edelweiss Wealth Management at ~44% in Jun 2
Slide 56: Wealth assets continue to maintain robust growth
Wealth Mgt Wealth assets continue to maintain robust growth Wealth Management AUA (INR Cr) Customer Count (#) 9,27,600 1,96,200 1,68,000 7,30,900 1,27,300 6,12,400 Jun-20 Jun-21 Jun-22 Jun-20 Jun-21 Jun-22 56
Slide 57: Governance & Corporate Responsibility
Governance & Corporate Responsibility
Slide 58: 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 59: Significant institutional ownership
Significant institutional ownership Shareholding Pattern as on Jun 30, 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 4.3% & Others 32.6% 4 TIAA CREF funds 4.3% 25.1% 5 LIC 2.6% 6
Slide 60: 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 61: Our investment in communities
Our investment in communities EdelGive Foundation’s commitment to investing in communities 92 Districts Sustainable Women across 12 States Quality Education Livelihoods Empowerment 20 lakh children impacted 50,000 Individuals trained 2 lakh women supported INR 40 Cr 30,000 schools reached 1,000 wate
Slide 62: Trusted partner: EdelGive funding partners & networks
Trusted partner: EdelGive funding partners & networks Foundations, Corporates and HNIs partner with Edelgive Platform for their philanthropic allocation 62
Slide 63: 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 64: Safe Harbour
Safe Harbour Slide 4: Net worth includes MI, investment in CCD by CDPQ of INR 866 Cr and excludes EWM, Ex-Insurance PAT is post MI Slide 4: BVPS considers potential stake dilution from convertible instruments in NBFC Slide 4,15,17,19: Available Liquidity is calculated as on balance sheet date and in
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