Edelweiss Financial Services Limited · NSE:EDELWEISS
Edelweiss Financial Services — Investor Presentation (February 2019)
41 slides from Edelweiss Financial Services's investor presentation, Feb 26, 2019
Slide 1: Edelweiss cover letter to NSE
‘oS Edelweiss Ideas create, values protect EW/Sec/ 2019/59 February 26, 2019 National Stock Exchange of India Limited Exchange Plaza, Bandra Kurla Complex, Bandra (E), Mumbai - 400 051. Dear Sirs, Ref.:- Symbol: EDELWEISS Sub: Investor Presentation Please find enclosed the Investor Presentation for
Slide 2: Edelweiss Financial Services Limited
Edelweiss Financial Services Limited Feb 14, 2019
Slide 3: We started Edelweiss in 1996..
We started Edelweiss in 1996.. 1996 Big Aspirations, Limited Capital! Only INR 10 million net-worth Worked on fund-raising for companies 2
Slide 4: Edelweiss Group today..
Edelweiss Group today.. Current net worth of ~INR 8,800 cr Asset Base of ~INR 56,000 crore Servicing nearly 12,00,000 clients Over 11,000 employees spread over 450 offices globally 3
Slide 5: Journey So Far: Our First Years
Journey So Far: Our First 8 Years Profit after Tax INR 8 Cr FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 • Foundation of Edelweiss as an Investment bank in 1996 with a capital base of INR 1 Cr and 4 employees • Expanded
Slide 6: The Next Years: Counter-Cyclical Diversification
The Next 8 Years: Counter-Cyclical Diversification Profit after Tax IPO INR 128 Cr INR 8 Cr FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 Continued to build businesses with high quality talent • Seeded and nurtured divers
Slide 7: The Current years: Steady and Stable growth
The Current 8 years: Steady and Stable growth Profit after Tax INR 1,017 Cr IPO INR 128 Cr INR 8 Cr FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 • Focus is on scaling up existing businesses in a stable and calibrated man
Slide 8: In our journey, there are a few key things we have focused on..
In our journey, there are a few key things we have focused on.. Diversified Bank-like business 1 5 Strengthening Balance Sheet model 2 Long-term Consistency 6 Risk Management 3 Capital Lightness 7 ESG 4 Retailisation 8 Organization Building 7
Slide 9: In our journey, there are a few key things we have focused on..
In our journey, there are a few key things we have focused on.. Diversified Bank-like business 1 5 Strengthening Balance Sheet model 2 Long-term Consistency 6 Risk Management 3 Capital Lightness 7 ESG 4 Retailisation 8 Organization Building 8
Slide 10: We have consciously focused on building a Diversified Financial Services Company
1 We have consciously focused on building a Diversified Financial Services Company Credit Bank-like business model • Retail Credit • Corporate Credit • Distressed Credit Multiple vectors of growth Franchise & Advisory Consistent growth and profitability • Wealth Management • Asset Management • Capit
Slide 11: This has helped us build a good mix of Own and Customer Assets
1 This has helped us build a good mix of Own and Customer Assets As on 31st Dec’18 (rounded off to nearest 100) INR Cr YoY Growth Balance Sheet Assets 55,800 14% Customer Assets 1,91,600 19% Distressed Credit (ARC Assets) 38,200 (1%) Assets Under Advice (Wealth Management) 1,00,300 18% Funds under M
Slide 12: As a result, our profit is well-distributed across our businesses
1 As a result, our profit is well-distributed across our businesses Business Segments 9MFY19 Pre MI PAT (INR Cr) % Contribution Credit Business Retail Mortgage 73 7% LAS, SME, Agri and Business Loans 99 10% Structured Collateralised Credit 179 17% Wholesale Mortgage 232 22% Distressed Credit 293 28%
Slide 13: In our journey, there are a few key things we have focused on..
In our journey, there are a few key things we have focused on.. Diversified Bank-like business 1 5 Strengthening Balance Sheet model 2 Long-term Consistency 6 Risk Management 3 Capital Lightness 7 ESG 4 Retailisation 8 Organization Building 12
Slide 14: We have focused on long-term growth stability despite any short-term volatility
2 We have focused on long-term growth stability despite any short-term volatility Profit after Tax (INR Cr) 1,017* 890 609 414 329 763 220 178 128 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 *Annualised; Numbers for FY19 are as per IndAS and for prior periods as per IGAAP 13
Slide 15: This has helped us build a strong, capital-efficient franchise
2 This has helped us build a strong, capital-efficient franchise over the last few years INR Cr PAT Consolidated Balance Sheet Assets Customer Assets 5,822 1,91,60 1,017 0 13,289 128 7,500 FY12 FY19Ann FY12 9M-FY19 FY12 9M-FY19 PAT Ex-Insurance RoE Ex-Insurance % RoA Ex-Insurance 1,208 20.3% 2.5% 1.
Slide 16: In our journey, there are a few key things we have focused on..
In our journey, there are a few key things we have focused on.. Diversified Bank-like business 1 5 Strengthening Balance Sheet model 2 Long-term Consistency 6 Risk Management 3 Capital Lightness 7 ESG 4 Retailisation 8 Organization Building 15
Slide 17: We have focused on establishing dominance in capital-light businesses
3 We have focused on establishing dominance in capital-light businesses Early identification of niches of low competitive intensity Special focus on on capital-light businesses which thrive on people and platform Investment in initial years now return asymmetric payoffs 16
Slide 18: We are now market leaders in most of these businesses
3 We are now market leaders in most of these businesses Market Leader in Market Leaders in Distressed Credit Private Debt Third largest wealth Leading domestic manager in the country brokerage 17
Slide 19: In our journey, there are a few key things we have focused on..
In our journey, there are a few key things we have focused on.. Diversified Bank-like business 1 5 Strengthening Balance Sheet model 2 Long-term Consistency 6 Risk Management 3 Capital Lightness 7 ESG 4 Retailisation 8 Organization Building 18
Slide 20: Our Assets are becoming increasingly retail on the Credit side..
4 Our Assets are becoming increasingly retail on the Credit side.. Retail Credit - Capital Employed (INR Cr) 17,756 16,188 Building Platform 8,952 6,031 4,188 2,115 2,799 1,535 FY12 FY13 FY14 FY15 FY16 FY17 FY18 9M-FY19 Retail credit is now 43% of the total credit book Key vectors for our growth wil
Slide 21: .. And on the Wealth Management Side
4 .. And on the Wealth Management Side Wealth Management AUA (INR Cr) 1,00,300 90,100 60,300 29,500 17,700 7,000 8,900 4,800 FY12 FY13 FY14 FY15 FY16 FY17 FY18 9M-FY19 We cater to UHNI as well as the fast-growing Affluent segments 20
Slide 22: We are one of the fastest growing Life Insurance companies
4 We are one of the fastest growing Life Insurance companies Individual APE (INR cr) 370 251 165 138 97 63 35 9 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19E 21
Slide 23: In our journey, there are a few key things we have focused on..
In our journey, there are a few key things we have focused on.. Diversified Bank-like business 1 5 Strengthening Balance Sheet model 2 Long-term Consistency 6 Risk Management 3 Capital Lightness 7 ESG 4 Retailisation 8 Organization Building 22
Slide 24: We have focused on enhancing the share of long-term borrowings..
5 We have focused on enhancing the share of long-term borrowings.. % of total borrowings (excl. CBLO) 61% 61% 62% 58% 59% 51% 36% 34% FY15 FY16 FY17 FY18 Sep'18 Oct'18 Nov'18 Dec'18 23
Slide 25: .. While diversifying the mix across instruments..
5 .. While diversifying the mix across instruments.. Total Borrowings 23,540 27,773 33,379 47,323 47,037 (INR Cr) 6% 2% 6% 5% 8% 27% 33% 42% 42% 51% 22% 20% 25% 32% 29% 22% 32% 25% 14% 17% 17% 7% 5% 7% 5% FY15 FY16 FY17 FY18 Q3FY19 CBLO CPs Term Loans NCD Others CPs are down to 7% of total borrowing
Slide 26: .. As well as Sources
5 .. As well as Sources Total Borrowings 23,540 27,773 33,379 47,323 47,037 (INR Cr) 4% 5% 7% 10% 11% 14% 14% 15% 11% 19% 17% 5% 7% 17% 5% 31% 27% 30% 41% 44% 38% 42% 34% 30% 22% FY15 FY16 FY17 FY18 Q3FY19 Mutual Funds Banks Asset Specific Borrowings Retail Others Mutual Funds are now 22% of total b
Slide 27: We have also continued to maintain a significant Liquidity Cushion..
5 We have also continued to maintain a significant Liquidity Cushion.. Liquidity Cushion INR Cr 7,100 • Increase in on-book liquidity 1,600 5,200 • Government Securities, Mutual Funds etc.: INR 4,800 Cr 4,050 2,450 2,900 1,350 • Fixed Deposits and bank 5,500 balance: INR 700 Cr 1,700 1,630 2,700 2,7
Slide 28: .. In addition to Other Liquid Assets
5 .. In addition to Other Liquid Assets, which helped us manage the recent market dislocation • Total balance sheet liquidity of INR 14,000 Cr, including INR 7,100 cr of Liquidity Cushion which can be converted into cash within 24-48 hours • Other Liquid Assets (OLA) of INR 6,900 Cr, which includes
Slide 29: Our Balance Sheet agility also helped us quickly bring down the DE
5 Our Balance Sheet agility also helped us quickly bring down the DE in the current quarter D/E ( Ex BMU assets and episodic) 5.2 4.9 4.8 4.9 4.2 FY15 FY16 FY17 FY18 Q3FY19 28
Slide 30: In our journey, there are a few key things we have focused on..
In our journey, there are a few key things we have focused on.. Diversified Bank-like business 1 5 Strengthening Balance Sheet model 2 Long-term Consistency 6 Risk Management 3 Capital Lightness 7 ESG 4 Retailisation 8 Organization Building 29
Slide 31: Our Risk Principle
6 Our Risk Principle… Can we afford it? AND Is it worth it? Oversight by Board Risk Committee Global Risk Committee Business Risk Group Risk Enterprise Risk Management Council Corporate Controller & audit • Implementation of • Define Organisation • Review “High Impact & Business risk framework risk
Slide 32: This ensures prudent risk management and responsible growth
6 This ensures prudent risk management and responsible growth Market Risk Regulatory Reputational Business Risk Credit Risk Liquidity Risk Risk Risk Physical Operational Technology & Process Fraud Risk Infrastructure People Risk Risk Risk Risk Enterprise risk management approach : 11 Risk Framework
Slide 33: In our journey, there are a few key things we have focused on..
In our journey, there are a few key things we have focused on.. Diversified Bank-like business 1 5 Strengthening Balance Sheet model 2 Long-term Consistency 6 Risk Management 3 Capital Lightness 7 ESG 4 Retailisation 8 Organization Building 32
Slide 34: Our Framework is based on the United Nations Sustainable Development Goals
7 Our Framework is based on the United Nations Sustainable Development Goals People Focused Goals No Poverty, Zero Hunger & Economic Growth Quality Education Gender Equality Planet Focused Goals Affordable & Clean Energy Responsible Consumption Climate Support 33
Slide 35: EdelGive Foundation - Unique Philanthropic Platform
7 EdelGive Foundation - Unique Philanthropic Platform PARTNERSHIPS CAPACITY BUILDING IMPACT Non-Financial Support Foundations Build Stronger Organizations Organizational Capacity Towards a high impact social sector EdelGive platforms EdelGive Non-Profit Corporates Foundation Organization Enhanced So
Slide 36: EdelGive Partners
EdelGive Partners atDta r TATA TRUSTS (— {— (— BO ROSI LE @- CREDIT suisse GREAT GASTERN SDMC Trust ( (- G genpact 35
Slide 37: EdelGive Foundation - Key Metrics
7 EdelGive Foundation - Key Metrics Employee Engagement Employee Engagement % More than 60% engaged in financial and non financial giving Man Hours spent till date 30,500 hrs Field Visits till date 107 Capacity Building – Non financial support Employees provided skills and time pro bono in over 90 p
Slide 38: Strong and Diverse Board of Directors with Rich Experience
7 Strong and Diverse Board of Directors with Rich Experience Mr. P N Venkatachalam Mr. K Chinniah • Banking sector expert and former • Served as Managing Director & Global member of the Interim Pension Fund Head Infrastructure, Portfolio, Strategy Regulatory Authority of India & Risk Group with GIC
Slide 39: In our journey, there are a few key things we have focused on..
In our journey, there are a few key things we have focused on.. Diversified Bank-like business 1 5 Strengthening Balance Sheet model 2 Long-term Consistency 6 Risk Management 3 Capital Lightness 7 ESG 4 Retailisation 8 Organization Building 38
Slide 40: Underlying all of this is our constant endeavour to build a High Quality Organization
8 Underlying all of this is our constant endeavour to build a High Quality Organization 1 Human Resources & Leadership Development 2 Culture of Ownership 3 Entrepreneurial Mindset 39
Slide 41: Going forward, our growth engines will be..
Going forward, our growth engines will be.. Retail Distressed Wealth Asset Credit Credit Management Management All of our businesses are benefiting from India tailwinds Our business model is a play on India’s structural growth and not cyclical 40
Edelweiss Financial Services — Investor Presentation (February 2019) on 6ix