Edelweiss Financial Services Limited · NSE:EDELWEISS
Edelweiss Financial Services — Q3 FY2021 Earnings Presentation
55 slides from Edelweiss Financial Services's earnings presentation, Feb 13, 2021
Slide 1: Cover letter to National Stock Exchange
EW/Sec/2021/34 February 13, 2021 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 in US Dollar on Earnings Updates for the third q
Slide 2: Edelweiss Financial Services Limited Q3FY21 Earnings Update
US $ version Edelweiss Financial Services Limited Q3FY21 Earnings Update
Slide 3: Contents
Contents 1 Q3FY21 Highlights 3 2 Business Update 20 3 Balance Sheet Highlights 44 4 Governance and Sustainability 48 2
Slide 4: Q3FY21 Highlights
Q3FY21 Highlights oO Edelweiss Ideas create, values protect
Slide 5: Edelweiss at a Glance – Q3FY21
Edelweiss at a Glance – Q3FY21 Net Worth Liquidity $1,103 Mn $845 Mn Customer Assets Book Value $36,133 Mn $0.9 Face Value $0.01 4
Slide 6: We Are In Three Business Verticals Across Ten Key Entities
We Are In Three Business Verticals Across Ten Key Entities Edelweiss Financial Services Ltd (EFSL) Housing Wealth Asset Asset General Insurance NBFC Life Insurance Finance Management Management Reconstruction Insurance Broking • ECL Finance • Edelweiss • Edelweiss • Edelweiss • Edelweiss • Edelweiss
Slide 7: Well-Capitalised Businesses And Robust Customer Franchise
Well-Capitalised Businesses And Robust Customer Franchise Businesses Entity Edelweiss Holding Equity ($ Mn) Metric Value NBFC ECLF & ERFL 100% 505 CAPAD 24.1% / 33.1% Housing Finance EHFL 100% 107 CAPAD 23.7% Wealth Management ESL 100% 190 AUA ~$19,777 Mn Mutual Fund EAML 100% 22 AUM ~$6,679 Mn Alte
Slide 8: Q3FY21 Result Highlights (1)
Q3FY21 Result Highlights (1) • Commenced disbursement in select areas; Disbursed ~$20 Mn in this quarter Housing Finance • Asset Light model with focus on AUM growth; continued securitization in Q3FY21 • Pivoting to asset - light MSME credit in order to get back to profitability NBFC • Workouts on-g
Slide 9: Q3FY21 Result Highlights (2)
Q3FY21 Result Highlights (2) Asset • Robust recoveries of ~$300 Mn in Q3FY21 from 103 borrowers even with IBC Reconstruction suspension Life Insurance • 11% YoY growth this quarter in Individual APE; industry witnessed decline in growth General • 50% YoY Gross Direct Premium Income (GDPI) growth in
Slide 10: Distribution of Earnings Across Businesses
Distribution of Earnings Across Businesses Businesses ($ Mn) Key Entities Q3FY21 9MFY21 NBFC ECLF & ERFL 1.9 (13.9) Housing Finance EHFL (0.1) 1.8 Wealth Management ESL 5.3 24.5 Mutual Fund EAML 0.1 0.7 Alternatives Asset Mgt EAAA 1.1 1.6 Asset Reconstruction EARC 7.4 19.2 Insurance Broking EGIBL 0.
Slide 11: Our Fee Income Is Back To Pre-Covid Levels
Our Fee Income Is Back To Pre-Covid Levels Fee Income ($ Mn) 67 65 63 56 52 Q3FY20 Q4FY20 Q1FY21 Q2FY21 Q3FY21 Robust annuity income from Wealth Management, Asset Management and Asset Reconstruction businesses with additional upside from carry 10
Slide 12: We Have Consistently Provided Higher Than IRAC Norms
We Have Consistently Provided Higher Than IRAC Norms ($ Mn) IRAC Provisions IndAS Provisions 123 103 105 94 97 90 92 60 57 33 30 21 20 21 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Q2FY21 Q3FY21 We will continue to provide conservatively until the completion of work outs in wholesale book 11
Slide 13: Update On Our Key Focus Areas
Update On Our Key Focus Areas 1 Reduction in Corporate Credit Exposure 2 Reduction in Debt Equity Ratio 3 Maintaining Asset Quality 4 Reduction in Fixed Costs 5 Maintaining comfortable liquidity 6 Consummation of WM Demerger 12
Slide 14: Corporate Credit Exposure Continues To Scale Down
1 Corporate Credit Exposure Continues To Scale Down Corporate Credit Assets ($ Mn) 2,426 1,898 1,162 Q3FY19 Q3FY20 Q3FY21 Work-outs on the wholesale book is a priority for us 13
Slide 15: Debt Equity Ratio Declined Further
2 Debt Equity Ratio Declined Further D/E (Excl Treasury Assets) 5.2 4.4 3.4 3.5 3.1 3.0 H1FY19 H2FY19 H1FY20 H2FY20 H1FY21 Q3FY21 14
Slide 16: Retail Collection Efficiency Is Strong
3 Retail Collection Efficiency Is Strong Total Retail Credit Collections ($ Mn) 52 46 47 48 36 34 31 15 16 Apr'20 May'20 June'20 July'20 Aug'20 Sept'20 Oct'20 Nov'20 Dec'20 Increased customer engagement has improved collection efficiency to 93% in Q3FY21 15
Slide 17: Cost Rationalisation Measures Under Way
4 Cost Rationalisation Measures Under Way Q3FY21 Fixed Cost comparison ($ Mn) • Achieved cost reduction of 27% in Q3FY21 against average FY20 fixed cost 75 • Targeted reduction of ~25-30% in FY21 against avg 60 FY20 58 55 • Key saving drivers in Q3 vs. Avg. FY20: • People Cost : Decrease of ~20% dri
Slide 18: Maintained Comfortable Liquidity
5 Maintained Comfortable Liquidity % of Borrowings Available Liquidity ($ Mn) 28% 24% 21% 21% 15% Q3FY20 Q4FY20 Q1FY21 Q2FY21 Q3FY21 1,404 1,111 641 900 845 • Raised ~$82 Mn during the quarter • Bought back bonds worth ~$89 Mn • Liquidity cushion will be in the range of 15-20% of borrowings going fo
Slide 19: Progress on WM Demerger Process
6 Progress on WM Demerger Process Transaction is progressing as per plan; PAG investment to come in after receipt of all regulatory approvals NCLT approval for restructuring expected by Q3FY22 WM demerger and listing expected by Q1FY23 18
Slide 20: FY22 and Beyond
FY22 and Beyond Our Future Strategy • Profitable growth from capital - light businesses • Continued value creation • Unlocking value for the benefit of all shareholders Project Udaan - Strategy by Business • Evaluate each of our businesses’ vision and strategic choices in evolving environment • Iden
Slide 21: Business Update
4 ° 3 ' - ‘ : ; : : f : je : ; 4 ' : ' : t be Business Update oO Edelweiss Ideas create, values protect
Slide 22: NBFC: ECLF and ERFL
NBFC NBFC : ECLF and ERFL Q3FY21 Key Metrics Business Update • Total retail collections in 9MFY21 was at ~$191 Mn ECLF ERFL • During the quarter collection efficiency was at 94% with total retail collections at ~$82 Mn Equity 437 69 ($ Mn) • Formed dedicated teams led by senior leaders to formulate
Slide 23: Business Performance Snapshot: ECLF and ERFL
NBFC Business Performance Snapshot : ECLF and ERFL Q3FY21 ($ Mn) ECLF ERFL Total AUM 1,417 196 1,614 Loan Book 1,355 182 1,536 Equity 437 69 505 Net Revenue 2 5 7 Opex 18 1 19 Credit Costs (8) 1 (7) Profit After Tax (1) 3 2 NIM 1.5% 5.2% 1.8% NNPA 2.9% 1.7% 2.8% Total cover 164% 153% 163% CAPAD 24.1
Slide 24: Housing Finance: EHFL
Housing Finance Housing Finance: EHFL Q3FY21 Key Metrics Business Update $ Mn 9MFY21 Q3FY21 Equity ($ Mn) 107 Collections 143 68 Book Securitized 82 14 Funds raised under PCG Scheme 55 14 CAPAD 23.7% • Focus on asset-light growth • Bought back bonds worth ~$16 Mn during current quarter • Incremental
Slide 25: Business Performance Snapshot: EHFL
Housing Finance Business Performance Snapshot : EHFL Q3FY21 $ Mn AUM 612 Loan Book 488 Equity 107 Net Revenue 4 Opex 4 Credit Costs 2 Profit After Tax (0.1) NIM 3.3% NNPA 1.4% Total cover 117% CAPAD 23.7% 9MFY21 PAT 2 24
Slide 26: Wealth Management: ESL
WM Wealth Management : ESL Q3FY21 Key Metrics Business Update • Franchise continues dominant presence AUA ($ Mn) ~19,777 • AUA grew 30% and Clients grew 22% YoY • Maintained revenue yields within the range of 70-80 bps Net New Money • 90% of revenue comes from fee income 133 ($ Mn) • Started rebuild
Slide 27: Business Performance Snapshot: ESL
WM Business Performance Snapshot : ESL Q3FY21 $ Mn AUA 19,777 Equity 190 Gross Revenues 42 Net Revenues 34 Operating costs 27 Profit before tax 7 Profit after tax 5 9M C/I 68% 9MFY21 PAT 25 26
Slide 28: Wealth Assets Continues To Maintain Robust Growth
WM Wealth Assets Continues To Maintain Robust Growth Wealth Management AUA ($ Mn) No of Clients (#) 672,500 19,777 375,000 4,021 FY16 Q3FY21 FY16 Q3FY21 27
Slide 29: Closed Marquee Transactions
WM Closed Marquee Transactions Key Equity Capital Market & Advisory Transactions Mazgaon Dock Strategic Sale $61 Mn $71 Mn $145 Mn $516 Mn IPO IPO IPO QIP BRLM BRLM BRLM BRLM Sole Advisor October 2020 November 2020 December 2020 December 2020 December 2020 Key Debt Capital Market Transactions $273 M
Slide 30: Mutual Fund: EAML
AM Mutual Fund : EAML Q3FY21 Key Metrics Business Update • Climbed to 15th rank amongst top AMCs in the country from rank 33 in FY16 Equity ($ Mn) 22 • Net equity Q3 inflows of ~$136 Mn against industry outflows of ~$6,270 Mn • Highest net equity inflows (Ex-EPFO contribution) in the AUM ($ Mn) ~6,6
Slide 31: Business Performance Snapshot: EAML
AM Business Performance Snapshot : EAML Q3FY21 $ Mn AUM 6,679 Equity 22 Net Revenues 4 Operating costs 4 Profit before tax 0.14 Profit after tax 0.14 9MFY21 PAT 1 30
Slide 32: Mutual Fund Assets Have Achieved Significant Scale
AM Mutual Fund Assets Have Achieved Significant Scale Mutual Fund AUM ($ Mn) Retail Folios (#) 360,000 6,679 29,000 218 FY16 Q3FY21 FY16 Q3FY21 31
Slide 33: Consistently Rising Share in Equity Sales and SIPs
AM Consistently Rising Share in Equity Sales and SIPs Mutual Fund Equity Gross Sales ($ Mn) Mutual Fund SIP Flows ($ Mn) 25 0 Equity Gross Sales 2.5% SIP Flows SIP Market Share Equity Gross Sales Market Share % 1.3% 2.0% 1.2% 20 0 2.0% 1.1% 1.1% 1.0% 1.5% 0.9% 0.7% 0.7% 0.7% 0.7%0.8% 15 0 1.5% 1.2%
Slide 34: Annuity Income Flows From Long Term Asset Base
AM Annuity Income Flows From Long Term Asset Base Long Term Assets Performance Linked AUM Assets over 3 years duration Share of fixed fee AUM Assets less than 3 years duration Share of performance linked fee AUM 7% 20% Total AUM Total AUM $6,679 Mn $6,679 Mn 80% 93% 33
Slide 35: Alternatives Asset Management: EAAA
AM Alternatives Asset Management : EAAA Q3FY21 Key Metrics Business Update • With total raise of ~$1,199 Mn, FY21 is the largest fund raise year for Alternatives Equity ($ Mn) 4 • Raised $900 Mn in ESOF III, largest fund raise in India for 2020 AUM ($ Mn) ~4,157 • Steady annuity income from assets w
Slide 36: Business Performance Snapshot: EAAA
AM Business Performance Snapshot : EAAA Q3FY21 $ Mn AUM 4,157 Equity 4 Net Revenues 6 Operating costs 5 Profit before tax 1 Profit after tax 1 9MFY21 PAT 2 35
Slide 37: Robust Growth In Alternative Assets
AM Robust Growth In Alternative Assets Alternatives AUM ($ Mn) Alternatives AUM – Strategy wise 4,157 11% 37% 21% $4,157 Mn 31% 463 Distressed Credit Fund Structured Debt Fund FY16 Q3FY21 Real Estate Credit Fund Infrastructure Fund 36
Slide 38: Asset Reconstruction: EARC
ARC Asset Reconstruction : EARC Q3FY21 Key Metrics Business Update • Gross recoveries of $493 Mn in 9MFY21 from 139 Equity ($ Mn) 297 borrowers • Q3 recoveries at $300 Mn from 103 borrowers AUM ($ Mn) ~5,561 • Comfortable liquidity position of ~$85 Mn as on Dec’20 Recoveries ($ Mn) ~300 • Fee income
Slide 39: Business Performance Snapshot: EARC
ARC Business Performance Snapshot : EARC Q3FY21 $ Mn AUM 5,561 Capital Employed 682 Equity 297 Gross Revenues 31 Net Revenues 14 Operating costs 4 Profit before tax 10 Profit after tax 7 9MFY21 PAT 19 38
Slide 40: Life Insurance: ETLI
Life Insurance Life Insurance : ETLI Q3FY21 Key Metrics Business Update • Registered 2nd Highest Individual APE growth, while Equity ($ Mn) 85 private industry declined by 6% YoY in YTD FY21 Individual APE ($ Mn) 13 • Launched 2 new products: "Covid Shield” and “Income Assure” Policyholder’s AUM 494
Slide 41: Business Performance Snapshot: ETLI
Life Insurance Business Performance Snapshot : ETLI Q3FY21 $ Mn Net Premium Income 39 Investment Income & Other Income 36 Total Business 75 Profit After Tax (6) Minority (3) Edelweiss’ Share in PAT (3) 9MFY21 PAT (23) 40
Slide 42: Among The Fastest Growing In The Industry
Life Insurance Among The Fastest Growing In The Industry Individual APE CAGR Since Q3FY16 vs Industry Individual APE - Outpaced Industry growth YoY during the quarter 29% 11% 13% 9% -9% -14% Edelweiss Tokio Peer Set Industry Edelweiss Tokio Peer Set Industry Life Insurance Life Insurance 41
Slide 43: General Insurance: EGICL
General Insurance General Insurance : EGICL Q3FY21 Key Metrics Business Update • Consistently registering robust growth - ~50% YoY growth Equity ($ Mn) 16 in Q3FY21; Among the fastest growing insurers in the industry • Continuously expanding our digital partnership base GWP ($ Mn) 8 through addition
Slide 44: Fastest Growing Player In The Industry Enabled By Digital Model
Fastest Growing Player In The Industry Enabled By General Insurance Digital Model Robust YoY growth in GDPI in Q3FY21 Strong YoY GDPI performance in Retail Lines compared to the Industry in Q3FY21 38% 50% 21% 21% 8% 5% Edelweiss General Industry Motor Retail Health Insurance Edelweiss General Insura
Slide 45: Balance Sheet Highlights
Balance Sheet Highlights oO Edelweiss Ideas create, values protect
Slide 46: Liquidity & Cash Flow Plan
Liquidity & Cash Flow Plan Particulars ($ Mn) Jan’21-Jun’21 Jul’21-Dec’21 Opening Available Liquidity (A) 845 791 Inflows Expected Inflows 545 586 Fresh Borrowings 341 382 Asset Sell downs 204 82 Total Inflows (B) 1,090 1,050 Outflows Repayments 804 859 Disbursements 341 259 Total Outflows (C) 1,145
Slide 47: Borrowing Profile Is Well Diversified
Borrowing Profile Is Well Diversified Borrowing Profile by Instruments Borrowing Profile by Source 2% 21% 34% 42% 10% 64% 27% Loans & OD NCDs CPs Banks Retail MF PF, Insurance & FIs $4,009 Mn $4,009 Mn 46
Slide 48: Assets in each Tenor Range Adequately Cover Liabilities
Assets in each Tenor Range Adequately Cover Liabilities ($ Mn) Assets Liabilities Gap Upto 1 year 1,963 1,772 191 1-3 years 1,942 1,806 136 3 years+ 2,010 1,404 607 Total gap represents our equity base 47
Slide 49: Governance and Sustainability
Governance and Sustainability
Slide 50: 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 51: Significant Institutional Ownership
Significant Institutional Ownership Shareholding Pattern as on 31st Dec, 2020 Key Shareholders above 1% Percent 1 Pabrai Investment Funds 7.6% Employee 2 BIH SA 5.2% Trust 3 TIAA CREF funds 3.6% DIIs, Non 4.8% Promoter Group Institutions 4 Baron Asset Management 3.3% & Others 21.3% 32.9% 5 LIC 2.2%
Slide 52: Our Sustainability Efforts
Our Sustainability Efforts EdelGive Foundation’s commitment to Achieving the SDGs (Cumulative till Q3FY21) 111 Districts Sustainable Women across 14 States Quality Education Livelihoods Empowerment $1.2 Mn* $8.1 Mn* $85,870* $12 Mn* 18.41 lakh Children 1,303 acres of irrigated land More than 1.72 la
Slide 53: 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 52
Slide 54: 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 55: Safe Harbour
Safe Harbour NOTES: Slide 4,5,6,14 : Net worth is including MI and includes investment in equity convertible instrument by CDPQ of $118 Mn, Kora Management of $24 Mn and Sanaka Capital of $16 Mn Slide 5 & 6 : Equity numbers are after inter company eliminations within respective businesses Slide 5,6,
Edelweiss Financial Services — Q3 FY2021 Earnings Presentation on 6ix