Bajaj Finance Limited · NSE:BAJFINANCE
Bajaj Finance — Q1 FY17 Earnings Presentation
49 slides from Bajaj Finance's earnings presentation, Jul 26, 2016
Slide 1: Bajaj Finance Limited Q1 FY17 Presentation
BAJAJ FINANCE LIMITED Q1 FY17 Presentation 26th July 2016
Slide 2: Glossary
GLOSSARY 2W Two Wheeler IIP Index of Industrial Production 3W Three Wheeler IRR Internal Rate of Return ACMF Auto Components Manufacturer Financing LAP Loan Against Property AR Assets Receivable LAS Loan Against Securities ARU Activation, Retention & Usage MF Mutual Fund ASC Authorized Service Cente
Slide 3: Presentation Path
PRESENTATION PATH • Bajaj group structure 4 • Bajaj Finserv group - Executive summary 5 • What do we stand for 6 • Key strategic differentiators 7 • Bajaj Finance Shareholder profile 8 • Financial snapshot 9 • Bajaj Finance Limited product suite 10 • Business/Product launch journey 11 • Executive su
Slide 4: Bajaj Group Structure
BAJAJ GROUP STRUCTURE Bajaj Holdings and Investment Limited (Listed) 1 31.49% 2 39.16% Bajaj Auto Limited Bajaj Finserv Limited (Listed) (Listed) Auto Business Arm Financial Services Arm 3 57.28% 74% 74% Bajaj Finance Limited Bajaj Allianz life Insurance Bajaj Allianz General (Listed) Company Limite
Slide 5: Bajaj Finserv Group - Executive Summary
BAJAJ FINSERV GROUP - EXECUTIVE SUMMARY Bajaj Finserv is the financial services arm of the Bajaj group Bajaj Allianz General Bajaj Allianz Life Bajaj Finance Limited Insurance Company* Insurance Company* A 29 year old non bank finance 2nd largest private General insurer in Amongst top 4 private play
Slide 6: What Do We Stand For
WHAT DO WE STAND FOR envisages an optimal mix of risk and profit to a sustainable ROA of 3% and ROE of 18-20% in the medium term 6
Slide 7: Key Strategic Differentiators
KEY STRATEGIC DIFFERENTIATORS Part of the Bajaj Group one of the oldest & Strong brand equity has helped build a 2600 Crs most respected business houses retail deposit book in less than 2 years Focus on mass affluent and above clients Cross sell client base of 9.24 MM Strong focus on cross selling a
Slide 8: Bajaj Finance Shareholder Profile
BAJAJ FINANCE SHAREHOLDER PROFILE Top 20 investors & their holdings OTHERS As on As on S.No Name of Shareholder 1.43% Mar'16 June'16 1 BAJAJ FINSERV LTD 57.28% 57.28% 2 MAHARASHTRA SCOOTERS LIMITED 3.52% 3.52% CORPORATES 3 GOVERNMENT OF SINGAPORE 2.37% 2.65% 6.03% 4 SMALLCAP WORLD FUND, INC 1.13% 1.
Slide 9: Financial Snapshot
FINANCIAL SNAPSHOT ` in Crore YoY CAGR Financials snapshot FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 (8 years) Assets under management 2,539 4,032 7,573 13,107 17,517 24,061 32,410 44,229 36% 50% Income from operations 599 916 1,406 2,172 3,110 4,073 5,418 7,384 36% 43% Interest expenses 164 201 371 7
Slide 10: Bajaj Finance Limited Product Suite
BAJAJ FINANCE LIMITED PRODUCT SUITE Bajaj Finance Limited Small Consumer Commercial Rural Distribution Business Relationships Lending Lending Lending Services Lending Consumer Durable Business Loans Infrastructure Consumer Durable Loan Cross Sell CRISIL Rating Financing Financing * Financing Digital
Slide 11: Business/Product Launch Journey
BUSINESS/PRODUCT LAUNCH JOURNEY Retail SME +34 Commercial Rural Fee Commercial Products Fee Products +6 +6 EMI Card Urban Gold +5 +5 Loans Extended Consumer *Co-branded Corporate Warranty Financial Credit Card Finance Fitness +4 Cross Sell Report Business Life Vendor *Infrastructure Light CRISIL SME
Slide 12: Executive Summary
EXECUTIVE SUMMARY Bajaj • 29 year old non bank with a demonstrated track record of profitability Finance • Focused on Consumer, Rural, SME & Commercial lines of businesses • Portfolio mix for Consumer : SME : Commercial : Rural stands at 44% : 40% : 12% : 3.4% • Strategic business unit organization
Slide 13: Executive Summary (Contd.)
EXECUTIVE SUMMARY (CONTD.) SME • Focused on high net worth SMEs with an average annual sales of ` 25 Crores with established Business financials & demonstrated borrowing track records • Offer a range of working capital & growth capital products and mortgage (Loan against property, Lease Rental Disco
Slide 14: Customer Franchise
CUSTOMER FRANCHISE Jun 2015 Jun 2016 Total Franchise 12.17 million 17.18 million Credit segment filter 8.52 million 11.88 million 8.31 million Overall Cross sell franchise 11.24 million Non delinquent 7.85 million customers 10.15 million Cross sell franchise 6.86 million 9.24 million New to Bajaj cu
Slide 15: Key Portfolio Metrics
KEY PORTFOLIO METRICS Deploym AUM (₹ Crores) IRR (%) ents Ticket Quarter Business Segment (Lacs) gone by Q2 FY16 Q3 FY 16 Q4 FY 16 Q1 FY17 YoY Q1 FY17 Range 1. 2W & 3W finance 3,387 3,647 3,773 4,080 23% 1,059 22.0-28.0 0.56 2. Consumer durable finance 4,916 5,935 5,556 6,783 32% 5,020 24.0-26.0 0.2
Slide 16: Strong Distribution Reach
STRONG DISTRIBUTION REACH Geographic Presence (No. of branches) Active Distribution (Points of sale) Business Line FY13 FY14 FY15 FY16 FY17* Business Line FY13 FY14 FY15 FY16 FY17* CD retailer 3,500+ 4,900+ 7,000+ 9,400+ 10,800+ Digital retailer 850+ 1,600+ 2,650+ 5,200+ 7,000+ Consumer presence 91
Slide 17: Key Performance Highlights for Q1 FY17
KEY PERFORMANCE HIGHLIGHTS FOR Q1 FY17 • Customers acquired during Q1 FY17 48% to 25,40,540 from 17,19,125 in Q1 FY16 • Assets under Management (AUM) as of 30 June 2016 was 40% to ₹ 49,608 crore from ₹ 35,557 crore as of 30 June 2015 • Total income for Q1 FY17 39% to ₹2,301 Crores from ₹1,656
Slide 18: Summary Financial Statement
SUMMARY FINANCIAL STATEMENT ₹ in Crores Financials snapshot Q1'16 YoY FY'16 FY'15 YoY FY'14 Assets under finance (AUF) 47,923 34,095 40% 42,756 31,199 36% 22,971 Assets under management (AUM) 49,608 35,557 40% 44,229 32,410 36% 24,061 Total Interest & fee Income 2,301 1,656 39% 7,384 5,418 36% 4,073
Slide 19: Management Discussion
MANAGEMENT DISCUSSION Market Assessment : • Economic indicators Parameters IIP -1.3% 1.2% - CPI 5.39% 5.76% 5.77% WPI 0.34% 0.79% 1.62% • Consumer durables and Consumer non-durables have a recorded growth of 6% and 2.2% percent respectively, with the overall growth in Consumer goods being 1.1 % in M
Slide 20: Management Discussion (Contd.)
MANAGEMENT DISCUSSION (CONTD.) 2 Wheeler & 3 • 2 Wheeler financing business disbursed 175K accounts in the quarter (30% YoY) Wheeler Financing • 3 Wheeler financing business disbursed 12K accounts in the quarter (106% YoY) • improved to Disbursed: 1,059 Crs 32.3% from 28.1% in Q1 FY16 (51% YoY) • im
Slide 21: Management Discussion (Contd.)
MANAGEMENT DISCUSSION (CONTD.) • Life care finance segment delivered about 3.9 K cases in Q1 FY17. Dental care was the Lifestyle Finance largest contributor with 33% volumes followed by Stem cell & Hair restoration • Business continues to expand into life care financing space. It added more than 450
Slide 22: Management Discussion (Contd.)
MANAGEMENT DISCUSSION (CONTD.) Urban Gold Loans • Business crossed 100 Crs AUM • Currently present in 60 urban branches Disbursed: 82 Crs • New streams of revenue in terms of fee income & insurance cross sell initialized • New capabilities are being built to reduce customer TAT and provide flexibili
Slide 23: Management Discussion (Contd.)
MANAGEMENT DISCUSSION (CONTD.) Ecommerce • Ecommerce Consumer Finance was launched with Flipkart in the quarter gone by • Currently financing on Flipkart is available on brands like Apple, Mircromax, LG, LeEco etc. EMI Cards • 6.1 MM Cards In Force • NTB (New To Bajaj) program for non-financed custo
Slide 24: Management Discussion (Contd.)
MANAGEMENT DISCUSSION (CONTD.) MSME Rural • Realigning business strategy towards higher proportion of secured lending Disbursed 38.5 Crs • Tightened unsecured loan policy due to stress in agri business Business Loans • Business continues to grow well with strong portfolio quality • Disbursed: 1,344
Slide 25: Management Discussion (Contd.)
MANAGEMENT DISCUSSION (CONTD.) Loan Against Property • Homogeneity of SME customers across secured & unsecured businesses have enabled to reengineer existing processes and provide a better proposition for customers Disbursed: 1,132 Crs (De-growth of 3% • 100% D2C transition has lowered business volu
Slide 26: Management Discussion (Contd.)
MANAGEMENT DISCUSSION (CONTD.) ACMF • ACMF book grew 16% YoY in Q1 FY17 • Elevated competitive intensity seen from major private/foreign banks due to improving credit profile of several auto ancillaries Net AR addition: 25 Crs • Credit performance of portfolio continues to hold well Corporate Financ
Slide 27: Management Discussion (Contd.)
MANAGEMENT DISCUSSION (CONTD.) Relationship Management • Customer Lifecycle model being created to map customer lifecycle journey across life insurance, general insurance, loan products and investments. Disbursed: 504 Crs • (Growth: 83% YoY) management products added to product suites Fixed Deposits
Slide 28: Management Discussion (Contd.)
MANAGEMENT DISCUSSION (CONTD.) • Interest cost for the company continues to remain significantly lower amongst its NBFC Interest Cost peers • Borrowing mix - 45:48:07 between banks, money markets and deposits • Credit rating of AAA/Stable by India Ratings (Fitch), AA+/Positive by CRISIL & AA+/Stable
Slide 29: Financial Performance Trends Q1 FY17
FINANCIAL PERFORMANCE TRENDS Q1 FY17 48% YoY AUM (` Crore) 40% YoY Revenue (` Crore) 39% YoY Net Interest Income (NII) (` Crore) 45% YoY 29
Slide 30: Financial Performance Trends Q1 FY17
FINANCIAL PERFORMANCE TRENDS Q1 FY17 Operating expenses % of NII Loan loss provision (₹ Crore) 74% YoY Net NPA & Provisioning coverage* Profit Before Tax (` Crore) 55% YoY *The net NPA & provisioning coverage numbers for Q1 FY17 are at 120 days over-dues while the same for previous quarters are
Slide 31: Financial Performance Trends Q1 FY17
FINANCIAL PERFORMANCE TRENDS Q1 FY17 Capital adequacy ratio Earnings per share Basic (₹) 46% YoY Return on avg. assets under finance & Equity 31
Slide 32: Credit Quality Portfolio Composition
CREDIT QUALITY PORTFOLIO COMPOSITION Consumer durable loan portfolio Two & Three wheeler loan portfolio Lifestyle finance loan portfolio Digital product finance loan portfolio Legends indicate customers who are current/ no dues as of the month. 32
Slide 33: Credit Quality Portfolio Composition
CREDIT QUALITY PORTFOLIO COMPOSITION Personal loan cross sell portfolio Salaried personal loan portfolio Small business loan portfolio Loan against property portfolio Legends indicate customers who are current/ no dues as of the month. 33
Slide 34: Credit Quality Portfolio Composition
CREDIT QUALITY PORTFOLIO COMPOSITION Home loans portfolio Rural Lending portfolio Legends indicate customers who are current/ no dues as of the month. 34
Slide 35: Credit Quality Provisioning Coverage (120 DPD)
CREDIT QUALITY PROVISIONING COVERAGE (120 DPD) Business Segment AUM PCR GNPA NNPA GNPA NNPA Remarks (Values in ₹ Crs) Q1 FY17 (%) (%) (%) 1. 2W & 3W finance 4,080 191 59 69% 4.69% 1.50% Repossessable asset 2. Consumer durable finance 6,783 115 9 93% 1.80% 0.14% 3. Digital product finance 816 13 2 85
Slide 36: Credit Quality Provisioning Coverage (150 DPD)
CREDIT QUALITY PROVISIONING COVERAGE (150 DPD) Business Segment AUM PCR GNPA NNPA GNPA NNPA Remarks (Values in ₹ Crs) Q1 FY17 (%) (%) (%) 1. 2W & 3W finance 4,080 163 40 76% 4.00% 1.00% Repossessable asset 2. Consumer durable finance 6,783 93 4 95% 1.45% 0.07% 3. Digital product finance 816 9 1 90%
Slide 37: PR Coverage Highlights in Q1 FY17
PR COVERAGE HIGHLIGHTS IN Q1 FY17 Publication date: April 21, 2016, The Financial Express Article access: http://www.financialexpress.com/industry/banking-finance/bajaj-to-launch-online-consumer-finance-emi/240474/ 37
Slide 38: PR Coverage Highlights in Q1 FY17 (Contd.)
PR COVERAGE HIGHLIGHTS IN Q1 FY17 (CONTD.) Publication date: June 21, 2016, The Hindu Business Line Article access: http://www.thehindubusinessline.com/companies/store-credit-card-future-group-teams-up-with-bajaj- finance/article8756704.ecees.com/industry/services/retail/bajaj-finance-future-group-t
Slide 39: Awards & Accolades
AWARDS & ACCOLADES • the second year in a row by the Great Places to Work Institute 39
Slide 40: Disclaimer
DISCLAIMER This presentation has been prepared by and is the sole responsibility of Bajaj Finance Limited (together with its subsidiaries, referred to as the Company or . By accessing this presentation, you are agreeing to be bound by the trailing restrictions. This presentation does not constitute
Slide 41: Thank You
BAJAJ FINANCE LIMITED Q1 FY17 Presentation THANK YOU
Slide 42: Annexure
ANNEXURE 42
Slide 43: Lending Industry Opportunity
LENDING INDUSTRY OPPORTUNITY India vs. Advanced Economies Bank Credit (US $ Bn) India vs. Advanced Economies - Household Debt/GDP (%) Denmark 129% US 11,290 Netherlands 115% Japan 3,700 Australia 113% 3,057 Canada 92% UK UK 86% Canada 2,706 Ireland 85% Italy 2,128 South Korea 81% India 1,057 US 77%
Slide 44: Low ticket high velocity collection capability (~250K accounts per month) Work flow based underwriting
Low ticket high velocity collection Work flow based underwriting for SME 1 capability (~250K accounts per month) 2 businesses on cloud. Centre of Excellence for Analytics Direct cash collection model 3 across Sales, Pricing, Risk, Marketing, 4 for unbanked rural customers Collection & Service 5 Flex
Slide 45: Product Per Customer (PPC)
PRODUCT PER CUSTOMER (PPC) Product per Customer (PPC) is a measure of cumulative products bought by a customer over his/her lifetime. Consumer SME Products PPC PPC PPC PPC Products PPC PPC PPC PPC offered Benchmark (12 MOB) (18 MOB) (24 MOB) offered Benchmark (12 MOB) (18 MOB) (24 MOB) 16 3 2.55* 2.
Slide 46: Product Per Customer (PPC)
PRODUCT PER CUSTOMER (PPC) Consumer Disbursed Value (` Crore) Fresh v/s Repeat Mix Product Per Customer (PPC) Fresh Repeat Loan Product Fee Product 100% 2.55 2.72 2.88 80% 57% 1.13 1.14 1.16 61% 59% 64% 60% 40% 1.42 1.58 1.73 20% 39% 41% 36% 43% 0% Q2'16 Q3'16 Q4'16 Q1'17 Upto 12 MOB Upto 18 MOB Upt
Slide 47: EMI Card Franchise
EMI CARD FRANCHISE What is EMI Card Progress till date • EMI Card refers to Existing Member Identification Card. 50 35.00 • The EMI card can be used to purchase consumer durables & lifestyle 45 30.00 products, by availing a loan from BFL without any documents. 40 35 25.00 • Customers simply have to
Slide 48: ALM Strategy
ALM STRATEGY Borrowings ₹ 40,155 Crs) Borrowings ` 37,025 Crs) Loan Book (` Crs) Behaviourilised ALM (` Crs) 48
Slide 49: NPA Provisioning Standards
NPA PROVISIONING STANDARDS 0.25% (from FY16 0.30%) Consumer Finance SME Finance Commercial Lending provision coverage provision coverage provision coverage Consumer Durables : Home Loan / Loan against Construction Equipment 3-5 Bucket - 75% Property : Finance : Above 5 - 100% 4-5 Bucket - 15% 4 -5 B