Edelweiss Financial Services Limited · NSE:EDELWEISS
Edelweiss Financial Services — Q3 FY2022 Earnings Presentation
63 slides from Edelweiss Financial Services's earnings presentation, Jan 31, 2022
Slide 1: Cover letter to stock exchanges
EW/Sec/2022/17 January 31, 2022 BSE Limited National Stock Exchange of India Limited P J Towers, Exchange Plaza, Dalal Street, Fort, Bandra Kurla Complex, Bandra (E), Mumbai – 400 001. Mumbai – 400 051. Scrip Code: 532922 Symbol: EDELWEISS Dear Sir/Madam, Sub: Investor Presentation Please find attac
Slide 2: Earnings update – Quarter ended Dec 21
US $ version Edelweiss Financial Services Limited Earnings update – Quarter ended Dec 21
Slide 3: Contents
Contents 1 Overview & Highlights 3 2 Update on Key Priorities 20 3 Business Performance 26 4 Governance & Corporate Responsibility 55 Addenda – Update on Mutual Fund & Alternative Asset Management 2
Slide 4: Overview & Highlights
Overview & Highlights Quarter ended Dec 21
Slide 5: Edelweiss at a glance – Quarter ended Dec 21
Edelweiss at a glance – Quarter ended Dec 21 Net Worth Ex-Insurance PAT BVPS $1,166 Mn $17 Mn $1 (FV $0.01) Liquidity Customer Assets $646 Mn $46,755 Mn 4
Slide 6: We are a diversified company across five clusters
We are a diversified company across five clusters 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 Edelwei
Slide 7: Performance overview – Quarter ended Dec 21
Performance overview – Quarter ended Dec 21 1 Steady performance continues across all businesses Slide 7 - 10 2 Growth in customer franchise enabled by digital ecosystem Slide 11 - 13 3 Robust Balance Sheet - comfortable liquidity and well capitalized businesses Slide 14 - 19 4 On track on our 3 key
Slide 8: Steady performance continues across businesses (1)
1 Steady performance continues across businesses (1) • Entered into a CLM partnership with Indian Bank in the quarter; ongoing disbursals NBFC with Central Bank of India • Retail Collection efficiency at 93% for the quarter • 33% QoQ increase in Disbursements; retail collection efficiency at 98% for
Slide 9: Steady performance continues across businesses (2)
1 Steady performance continues across businesses (2) Asset • Robust recoveries at ~$336 Mn of which ~$27 Mn were from retail portfolio Reconstruction • Share of retail assets in capital employed at ~11% in Dec 21, YoY growth of ~4x • Gross Premium grew at 15% YoY Life Insurance • Unique client base
Slide 10: Healthy profitability across clusters
1 Healthy profitability across clusters $ Mn Asset Asset Credit Wealth* Management Reconstruction 9 7 5 3 3 2 2 1 Dec 20 Dec 21 Dec 20 Dec 21 Dec 20 Dec 21 Dec 20 Dec 21 *For comparison, EFSL share in Edelweiss Wealth Management adjusted to ~44% for Dec 20 9
Slide 11: Healthy profitability across businesses
1 Healthy profitability across businesses $ Mn Business Quarter ended Dec 21 Quarter ended Dec 20 NBFC 5 2 Housing Finance - - Mutual Fund 1 - Alternatives Asset Management 2 1 Asset Reconstruction 9 7 Life Insurance (7) (6) General Insurance (4) (3) EFSL share in Edelweiss Wealth Management 3 5 BMU
Slide 12: Strong growth in customer franchise continues
2 Strong growth in customer franchise continues Customer Assets ($ Mn) 46,755 35,638 27,630 Dec 19 Dec 20 Dec 21 Customer assets seeing a steady ~30% YoY growth for the past 2 years 11
Slide 13: Enabled by digital ecosystem (1)
2 Enabled by digital ecosystem (1) Mutual Fund Edelweissmf.com Einvest Mobile App Informative experience with one Android & iOS based of the shortest customer mobile application transaction journeys CRM Edelweiss Galaxy Comprehensive CRM Distributor transaction for customer service portal Leveraging
Slide 14: Enabled by digital ecosystem (2)
2 Enabled by digital ecosystem (2) General Insurance Digitalization across Insurance Value Chain Enterprise Product Channel Underwriting Sales Claims Functions Design Partners 100% Digitized SAP Suite Innovation Partners Paperless Experience Data Driven Customization Digital Assets AWS Full Stack Au
Slide 15: Robust balance sheet with well-capitalised businesses
3 Robust balance sheet with well-capitalised businesses Borrowings reduced by ~$1,642 Mn over 2 years; net D/E stands at 2x Strong capitalization across businesses Adequate liquidity of $646 Mn at ~20% of borrowings Credit assets are conservatively provided for, well above IRAC norms 14
Slide 16: Borrowings reduced by ~$1,642 Mn over last 2 years
3 Borrowings reduced by ~$1,642 Mn over last 2 years Borrowings ($ Mn) 4,959 3,957 3,318 Dec 19 Dec 20 Dec 21 Net D/E improved from 3x in Dec 20 to 2x in Dec 21 15
Slide 17: Strong capitalization across businesses
3 Strong capitalization across businesses Businesses Metric Value NBFC Capital Adequacy 27.7% Housing Finance Capital Adequacy 26.2% Asset Reconstruction Capital Adequacy 37.6% Life Insurance Solvency Ratio 190% General Insurance Solvency Ratio 177% 16
Slide 18: Cash flow plan
3 Cash flow plan $ Mn Jan 22 to Dec 22 Opening Available Liquidity (A) 646 Inflows Expected Inflows 1,346 Fresh Borrowings 740 Total Inflows (B) 2,086 Outflows Repayments 1,507 Disbursements 673 Total Outflows (C) 2,180 Closing Available Liquidity (A+B-C) 552 17
Slide 19: Assets in each tenor range adequately cover liabilities
3 Assets in each tenor range adequately cover liabilities $ Mn Assets Liabilities Gap Upto 1 year 2,322 1,864 458 1-3 years 1,736 1,608 128 3 years+ 1,790 1,460 330 18
Slide 20: Credit assets are conservatively provided for
3 Credit assets are conservatively provided for Balance Sheet Provisions IRAC Provisions IndAS Provisions ($ Mn) 96 92 72 33 30 24 Dec 19 Dec 20 Dec 21 We have consistently provided for higher than IRAC norms 19
Slide 21: Update on Key Priorities
Update on Key Priorities oO Edelweiss Ideas create, values protect
Slide 22: Key priorities for the next 12 months
Key priorities for the next 12 months 1 Demerger and listing of Edelweiss Wealth Management 2 Reduce wholesale credit assets 3 Scale up our Asset Management and Insurance businesses* *Refer to Addenda on Mutual Fund and Alternative Asset Management for deeper insights on our Asset Management cluster
Slide 23: Demerger and listing of Edelweiss Wealth Management
1 Demerger and listing of Edelweiss Wealth Management Phase I • PAG’s strategic investment in Edelweiss Wealth Management By quarter • Segregation of Edelweiss Wealth Management business after regulatory Phase II ending approvals Mar 22 • Filing of regulatory applications for demerger and listing By
Slide 24: Reduce Wholesale Credit Assets
2 Reduce Wholesale Credit Assets • Progress made with successful workouts of over ~$ 404 Mn in the past 18 months by - • Strengthening developer groups through addition or replacement of developers • Syndicated interest for financing RE projects - both for takeover and completion financing • These h
Slide 25: Significant growth in Asset Management cluster
3 Significant growth in Asset Management cluster Asset Management Cluster AUM ($ Mn) 15,087 10,619 6,864 Dec 19 Dec 20 Dec 21 Asset Management AUM more than doubled over the past 2 years to $15,087 Mn 24
Slide 26: Insurance cluster continues to scale up
3 Insurance cluster continues to scale up LI – Gross Premium for the quarter ($ Mn) GI – Gross Premium for the quarter ($ Mn) 46 16 40 32 8 6 Dec 19 Dec 20 Dec 21 Dec 19 Dec 20 Dec 21 Gross Premium grew at 15% YoY for LI and 92% YoY for GI 25
Slide 27: Business Performance – Credit
Business Performance Credit
Slide 28: Credit cluster at a glance
Credit Credit cluster at a glance Quarter ended Dec 21 Equity Credit Assets Profit After Tax $626 Mn $2,512 Mn $5 Mn 27
Slide 29: NBFC: Business performance snapshot
NBFC NBFC: Business performance snapshot Key Metrics for the quarter Business Update • Focus continues on asset light business model: Equity ($ Mn) 519 o Steady disbursal under CLM program with Central Bank of India Credit Assets ($ Mn) 1,895 o MoU signed with Indian Bank for CLM partnership; in adv
Slide 30: NBFC: Financial performance snapshot
NBFC NBFC: Financial performance snapshot $ Mn Quarter ended Quarter ended Dec 21 Dec 20 AUM 1,164 1,609 Loan book 1,094 1,550 Equity 523 499 Gross Revenue 71 67 Net Revenue 22 7 Opex 13 19 Credit Cost 4 (7) Profit After Tax 5 2 GNPA 3.09% 3.53% NNPA 2.31% 2.80% Total Provision Cover 186.9% 163.0%*
Slide 31: Housing Finance: Business performance snapshot
Housing Finance Housing Finance: Business performance snapshot Key Metrics for the quarter Business Update • Gradual scale up in disbursements; 33% increase QoQ Equity ($ Mn) 103 o ~$54 Mn disbursed during the quarter Credit Assets ($ Mn) 617 • Collection efficiency at 98% for the current quarter •
Slide 32: Housing Finance: Financial performance snapshot
Housing Finance Housing Finance: Financial performance snapshot $ Mn Quarter ended Quarter ended Dec 21 Dec 20 AUM 581 603 Loan book 461 502 Equity 103 105 Gross Revenue 19 17 Net Revenue 8 4 Opex 4 3 Credit Cost 3 2 Profit After Tax - - GNPA 3.80% 1.60% NNPA 2.98% 1.40% Total Provision Cover 47.7%
Slide 33: Business Performance – Asset Management
Business Performance Asset Management
Slide 34: Asset Management cluster at a glance
Asset Management Asset Management cluster at a glance Quarter ended Dec 21 Equity AUM Profit After Tax $52 Mn $15,087 Mn $3 Mn Fee Income $14 Mn Refer to Addenda on Mutual Fund and Alternative Asset Management for deeper insights on our Asset Management cluster 33
Slide 35: Mutual Fund: Business performance snapshot
Mutual Fund Mutual Fund: Business performance snapshot Key Metrics for the quarter Business Update • Strong total net inflows of ~$1,602 Mn during the quarter Equity ($ Mn) 25 of which net equity inflows was at ~$310 Mn • Equity AUM grew ~2.4x YoY to $2,584 Mn AUM ($ Mn) ~11,023 • Equity Gross Sales
Slide 36: Mutual Fund: Financial performance snapshot
Mutual Fund Mutual Fund: Financial performance snapshot $ Mn Quarter ended Quarter ended Dec 21 Dec 20 AUM 11,023 6,595 Net New Money 1,602 363 Equity 25 22 Revenue 6 4 Opex 4 4 Profit After Tax 1 0 35
Slide 37: Consistent expansion of investor and partner reach
Mutual Fund Consistent expansion of investor and partner reach MF Equity AUM ($ Mn) Monthly average active distributors (#) 2,584 3,880 1,077 1,980 1,630 659 Dec 19 Dec 20 Dec 21 Dec 19 Dec 20 Dec 21 SIP AUM ($ Mn) Active Folios (in Lakhs) 21 9.2 13 7 3.2 3.6 Dec 19 Dec 20 Dec 21 Dec 19 Dec 20 Dec 2
Slide 38: Alternative Asset Mgt: Business performance snapshot
Alternative Asset Mgt Alternative Asset Mgt: Business performance snapshot Key Metrics for the quarter Business Update • Deployed ~$194 Mn during the quarter & ~$390 Mn YTD Equity ($ Mn) 27 Dec 21 AUM ($ Mn) ~4,064 • Launched 2 new funds during the quarter - ISAF III and Credit Plus fund Deployed AU
Slide 39: Alternative Asset Mgt: Financial performance snapshot
Alternative Asset Mgt Alternative Asset Mgt: Financial performance snapshot $ Mn Quarter ended Quarter ended Dec 21 Dec 20 AUM 4,064 4,024 Deployed AUM 2,187 1,615 Equity 27 4 Revenue 10 7 Opex 8 5 Profit After Tax 2 1 38
Slide 40: Alternative assets overview
Alternative Asset Mgt Alternative assets overview Alternative Asset Mgt AUM – Strategy wise Deployed AUM – Strategy wise 11% 11% 37% 20% 44% $4,064 Mn 30% $2,187 Mn 32% 15% Distressed Credit Fund Structured Debt Fund Distressed Credit Fund Structured Debt Fund Real Estate Credit Fund Infrastructure
Slide 41: Business Performance – Asset Reconstruction
Business Performance Asset Reconstruction
Slide 42: Asset Reconstruction: Business performance snapshot
ARC Asset Reconstruction: Business performance snapshot Key Metrics for the quarter Business Update Equity ($ Mn) 324 • Robust recoveries of ~$310 Mn from wholesale portfolio and ~$27 from retail portfolio AUM ($ Mn) ~5,626 • Acquired assets worth ~$162 Mn Capital employed ~713 • Share of retail ass
Slide 43: Asset Reconstruction: Financial performance snapshot
ARC Asset Reconstruction: Financial performance snapshot $ Mn Quarter ended Quarter ended Dec 21 Dec 20 AUM 5,626 5,491 Capital Employed 709 675 Wholesale assets 631 655 Retail assets 78 20 Equity 324 293 Gross Revenue 32 31 Opex 5 3 Profit After Tax 9 7 Edelweiss’ share in PAT 6 4 42
Slide 44: Business Performance – Insurance
Business Performance Insurance
Slide 45: Insurance cluster at a glance
Insurance Insurance cluster at a glance Quarter ended Dec 21 Gross Premium Policies Issued Customer Reach $61 Mn # 1,08,100 ~ 28 lakhs 44
Slide 46: Life Insurance: Business performance snapshot
Life Insurance Life Insurance: Business performance snapshot Key Metrics for the quarter Business Update Equity ($ Mn) 71 • Individual APE CAGR of 26% since FY17 against industry growth at 13% Individual APE ($ Mn) 13 • Dominant share of Traditional Par and Non-Par at ~80% #Policies Issued ~14,000 •
Slide 47: Life Insurance: Financial performance snapshot
Life Insurance Life Insurance: Financial performance snapshot $ Mn Quarter ended Quarter ended Dec 21 Dec 20 Net Premium Income 45 38 Investment Income & Other Income 9 36 Total Income 53 74 Policy benefits & insurance policy liability 38 57 Other expenses 23 23 Profit After Tax (7) (6) Edelweiss’ s
Slide 48: Customer base and gross premium continue to grow
Life Insurance Customer base and gross premium continue to grow No of Unique Clients (#) Individual APE for the quarter ($ Mn) 13 13 344,300 320,000 12 288,200 Dec 19 Dec 20 Dec 21 Dec 19 Dec 20 Dec 21 Gross Premium for the quarter ($ Mn) AUM ($ Mn) 46 687 40 32 528 425 Dec 19 Dec 20 Dec 21 Dec 19 D
Slide 49: General Insurance: Business performance snapshot
General Insurance General Insurance: Business performance snapshot Key Metrics for the quarter Business Update • Robust GDPI growth of 89% YoY vis a vis industry growth of 8% Equity ($ Mn) 17 • Partner integrations with Alliance Insurance Brokers, Tata Motors OEM, Paybhima.com amongst others went li
Slide 50: General Insurance: Financial performance snapshot
General Insurance General Insurance: Financial performance snapshot $ Mn Quarter ended Quarter ended Dec 21 Dec 20 Net Premium Income 8 6 Investment Income & Other Income 2 2 Total Income 10 8 Policy benefits & insurance policy liability 7 7 Other expenses 7 4 Profit After Tax (4) (3) 49
Slide 51: Strong growth enabled by digital platform
General Insurance Strong growth enabled by digital platform Gross Premium for the quarter ($ Mn) Unique Clients (#) 16 266,300 171,900 8 6 74,400 Dec 19 Dec 20 Dec 21 Dec 19 Dec 20 Dec 21 50
Slide 52: Business Performance – Wealth
Business Performance Wealth
Slide 53: Wealth Management: Business performance snapshot
Wealth Mgt Wealth Management: Business performance snapshot Key Metrics for the quarter Business Update • AuA grew ~33% YoY and ~7% QoQ with net new money AUA ($ Mn) ~26,042 for the quarter over $444 Mn LAS loan book ~336 • Strong quarterly financial performance with YoY revenue ($ Mn) growth of 47%
Slide 54: Wealth Management: Financial performance snapshot
Wealth Mgt Wealth Management: Financial performance snapshot $ Mn Quarter ended Quarter ended Dec 21 Dec 20 AUA 26,042 19,528 Equity 240 187 Gross Revenue 59 41 Net Revenue 48 34 Opex 38 26 Profit After Tax 7 5 Edelweiss’ share in PAT* 3 2 *Edelweiss share in Edelweiss Wealth Management currently at
Slide 55: Wealth assets continue to maintain robust growth
Wealth Mgt Wealth assets continue to maintain robust growth Wealth Management AUA ($ Mn) No of Clients (#) 26,042 777,700 19,528 672,500 14,966 552,500 Dec-19 Dec-20 Dec-21 Dec-19 Dec-20 Dec-21 54
Slide 56: Governance & Corporate Responsibility
Governance & Corporate Responsibility
Slide 57: 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 58: Significant institutional ownership
Significant institutional ownership Shareholding Pattern as on Dec 31, 2021 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 TIAA CREF funds 5.0% & Others 23.1% 32.6% 4 Baron Asset Management 4.4% 5 LIC 2.6% 6
Slide 59: 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 ~$67.3 Mn 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 aver
Slide 60: Our investment in communities
Our investment in communities EdelGive Foundation’s commitment to investing in communities 92 Districts Sustainable Women across 13 States Quality Education Livelihoods Empowerment Impacted ~2 million children 30,000 Individuals trained ~ 2 lakh women supported $14.1 Mn * $0.2 Mn committed in Q3 1,0
Slide 61: Trusted partner: EdelGive funding partners & networks
Trusted partner: EdelGive funding partners & networks Foundations, Corporates and HNIs partner with Edelgive Platform for their philanthropic allocation 60
Slide 62: 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 63: Safe Harbour
Safe Harbour Slide 4: Net worth is including MI, investment in CCD by CDPQ of $117 Mn and excluding Edelweiss Wealth Mgt equity Slide 4: Ex-Insurance PAT is excluding MI Slide 4: BVPS has been computed by taking into account potential stake dilution from convertible instruments in NBFC Slide 4,14,17
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