Edelweiss Financial Services Limited · NSE:EDELWEISS
Edelweiss Financial Services — Q1 FY2021 Earnings Presentation
50 slides from Edelweiss Financial Services's earnings presentation, Aug 28, 2020
Slide 1: Cover letter to National Stock Exchange
EW/Sec/2020/178 August 27, 2020 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 first qu
Slide 2: Edelweiss Financial Services Limited Q1FY21 Quarterly Update
US $ version Edelweiss Financial Services Limited Q1FY21 Quarterly Update
Slide 3: Contents
Contents 1 Q1FY21 Highlights 3 2 Business Update 14 3 Balance Sheet Highlights 29 4 Organization. Governance. Sustainability. 40 2
Slide 4: Q1FY21 Highlights
Q1FY21 Highlights ‘o Edelweiss Ideas create, values protect
Slide 5: Edelweiss at a Glance – Q1FY21
Edelweiss at a Glance – Q1FY21 Net Worth Liquidity $1,102 Mn $755 Mn As on 12th Aug’20 Customer Assets Book Value $29,526 Mn $0.87 Face Value $0.01 4
Slide 6: Our Six Businesses are Well-Capitalized
Our Six Businesses are Well – Capitalized.. Edelweiss Financial Services Ltd (EFSL) Corporate Wealth Asset General Retail Credit Life Insurance Credit Management Management Insurance • ECL Finance • Edelweiss • Edelweiss • Edelweiss • Edelweiss • Edelweiss Ltd Retail Finance Securities Ltd Asset Tok
Slide 7: ..And Present In High Growth Segments
..And Present In High Growth Segments Edelweiss Wealth Management is the 2nd largest non bank wealth manager with AuA of ~$17 Bn Edelweiss Asset Management is the largest and most comprehensive player in Indian private credit strategies with AUM of ~$13 Bn Among the fastest growing and digitally ena
Slide 8: Edelweiss Approach
Edelweiss Approach • Our mission is to build successful and dominant businesses that create long-term value for shareholders • EFSL contributes capital, brand, risk management and governance for sustainable growth • Our partners are global entities with impeccable credentials who contribute domain e
Slide 9: Sale of 51% Stake in Edelweiss Wealth Management
Sale of 51% Stake in Edelweiss Wealth Management • We have entered into a stake sale agreement in Wealth Management arm with PAG, largest Asia-focused alternative investment managers • They will acquire 51% stake in Edelweiss Wealth Management (EWM) at a post-money valuation of $583 Mn • EWM busines
Slide 10: Summary Background of PAG
Summary Background of PAG • One of the world’s largest Asia-focused private investment firms About • AUM of ~$40 Bn with 200+ investment professionals PAG • 11 offices in Asia and around the world • Dedicated team of 50+ investment and operational professionals PAG • Focused on large sized buyout/co
Slide 11: Group Near-Term Priorities
Group Near – Term Priorities Progress the unlocking of value from our businesses and become capital surplus Grow each business with the best management teams and right partners Strengthen balance sheet further Accelerate tech-aided cost rationalization across businesses 10
Slide 12: Priorities By Business For FY21
Priorities By Business For FY21 Corporate • Focus on asset quality monitoring and collection efficiency Credit • Expedite sell-down and release equity • Strengthen capital-light business models in partnership with banks Retail Credit • Help clients navigate the post Covid scenario, with active portf
Slide 13: Q1FY21 Financial Snapshot
Q1FY21 Financial Snapshot Consolidated Q1FY21 ($ Mn) Gross Revenue 239 Interest Cost 133 Net Revenue 107 Expenses 120 Impairment 19 PBT (32) PAT Pre MI (35) PAT Post MI (32) 12
Slide 14: Distribution of Earnings Across Entities
Distribution of Earnings Across Entities $ Mn Q1FY21 ECL Finance (21) ERFL & EHFL 1 Edelweiss Wealth Management 8 Edelweiss Asset Management 6 Edelweiss Tokio Life Insurance (9) Edelweiss General Insurance (2) BMU & Corporate (18) Total Consolidated Pre MI PAT (35) 13
Slide 15: Business Update
. ; : & 4 b \ ‘o Edelweiss Business Update Ideas create, values protect
Slide 16: Corporate Credit: ECL Finance Limited
ECL Finance Corporate Credit : ECL Finance Limited Q1FY21 Key Metrics Business Update & Near Term Priorities • Focused on resource raising to generate liquidity Equity ($ Mn) 445 • Raised $238 Mn across PCG and TLTRO schemes in H1FY21 till date and another $53 Mn is in pipeline CAPAD 21.3% • Additio
Slide 17: Business Performance Snapshot: ECL Finance Ltd
ECL Finance Business Performance Snapshot : ECL Finance Ltd $ Mn Q1FY21 EOP Loan Book 1,450 EOP Equity 445 Net Revenue 13 Operating Expenses 17 Credit Costs 16 Profit After Tax (21) Net Interest Margin 2.3% NNPA 2.1% Total provision cover 202% CAPAD 21.3% 16
Slide 18: Retail Credit: ERFL and EHFL
Retail Credit: Edelweiss Retail Finance Ltd and Edelweiss ERFL/EHFL Housing Finance Ltd Q1FY21 Key Metrics Business Update & Near Term Priorities ERFL EHFL • Improving collections - July collections were at ~$40 Mn Equity ($ Mn) 63 102 • Raised $35 Mn across PCG and TLTRO schemes, banks & other sour
Slide 19: Business Performance Snapshot: ERFL and EHFL
ERFL/EHFL Business Performance Snapshot : ERFL and EHFL Q1FY21 ($ Mn) ERFL EHFL EOP Loan Book 174 594 EOP Equity 63 102 Net Revenue 3 5 Operating Expenses 1 4 Credit Costs (0.3) 1 Profit After Tax 1 - Net Interest Margin 5.6% 3.3% NNPA 2.0% 1.4% Total provision cover 120% 69% CAPAD 29.0% 23.2% 18
Slide 20: Edelweiss Wealth Management: Edelweiss Securities Ltd and Others
Edelweiss Wealth Management : Edelweiss Securities EWM Ltd and Others Q1FY21 Key Metrics Business Update & Near Term Priorities • Business continues to be steady despite market AUA ($ Mn) 16,855 volatility Net New Money • Enhanced client engagement driven by tech-first 166 approach ($ Mn) • Strong p
Slide 21: Business Performance Snapshot: Edelweiss Wealth Management
Business Performance Snapshot : Edelweiss Wealth EWM Management Q1FY21 ($ Mn) ESL & Others AuA 16,855 EOP Equity 167 Gross Revenues 35 Net Revenues 28 Operating costs 19 Profit before tax 10 Profit after tax 8 20
Slide 22: Edelweiss Asset Management: EAML, EAAA, EARC & Others
Edelweiss Asset Management : EAML, EAAA, EARC & EAM Others Q1FY21 Key Metrics Business Update & Near Term Priorities EAML EAAA,EARC • Mutual Fund : and others • Bharat Bond ETF Series II oversubscribed 3.7 times and mobilised ~$1.5 Bn with ~40,000 Equity ($ Mn) 21 277 applications • Aim to grow equi
Slide 23: Business Performance Snapshot: Edelweiss Asset Management
Business Performance Snapshot : Edelweiss Asset EAM Management EAAA, EARC & Q1FY21 ($ Mn) EAML others AUM 3,893 8,778 EOP Equity 21.1 277 Gross Revenues 3.3 34 Net Revenues 3.3 14 Operating costs 3.0 7 Profit before tax 0.3 8 Profit after tax 0.3 6 22
Slide 24: Life Insurance: Edelweiss Tokio Life Insurance
Life Insurance : Edelweiss Tokio Life Insurance ETLI Company Ltd Q1FY21 Key Metrics Business Update & Near Term Priorities Equity ($ Mn) 95 • 2nd highest growth in industry: 21% YoY growth in individual APE Individual APE ($ Mn) 8 • Strong channel mix: 75% of channel is controlled channels like agen
Slide 25: Business Performance Snapshot: Edelweiss Tokio Life Insurance
Business Performance Snapshot : Edelweiss Tokio Life ETLI Insurance Company Ltd $ Mn Q1FY21 Net Premium Income 20 Investment Income & Other Income 26 Total Business 46 Profit After Tax (9) Minority (4) Edelweiss’ Share in PAT (5) 24
Slide 26: Among The Fastest Growing In The Industry
ETLI Among The Fastest Growing In The Industry Individual APE CAGR Since FY16 vs Industry Individual APE Growth : Outlier During Lockdown in Q1FY21 30% 21% 10% 8% -15% -18% Edelweiss Tokio Peer Set Industry Edelweiss Tokio Peer Set Industry Life Insurance Life Insurance 25
Slide 27: General Insurance: Edelweiss General Insurance Company
General Insurance : Edelweiss General Insurance EGIC Company Ltd Q1FY21 Key Metrics Business Update & Near Term Priorities • Fastest growing insurer among private players Equity ($ Mn) 15 • Health continues to be a large focus area for us - Contribution of health higher than the Industry and our Pee
Slide 28: Digital Model Enabled Seamless Execution During Lockdown
Digital Model Enabled Seamless Execution During EGIC Lockdown Robust growth in GWP continued while Industry Strong performance in Retail Lines compared to faced headwinds in Q1FY21 the Industry in Q1FY21 101% 496% 441% 17% -4% -24% Edelweiss General Industry Motor Retail Health Insurance Edelweiss G
Slide 29: Well Positioned for Strong Growth in the Future
EGIC Well Positioned for Strong Growth in the Future Robust Network and Consistent and Robust Service Footprint Growth Our business parameters and Innovative Products With decisions Focus on Profitable Retail Many Firsts in India demonstrate Segments compelling prospects Diversified Distribution Wit
Slide 30: Balance Sheet Highlights
Balance Sheet Highlights Liquidity. Capital Adequacy. Portfolio Mix
Slide 31: Update on Resources Raising
1. Update on Resources Raising • Raised ~$265 Mn under TLTRO and PCG in H1FY21 till date 1 • $99 Mn is in pipeline • Raised ~$225 Mn mainly from bank borrowings in H1FY21 till date 2 • $26 Mn is in pipeline • Corporate asset sell-down transaction generated liquidity to the tune of ~$62 Mn 3 • Furthe
Slide 32: Liquidity & Cash Flow Plan
1. Liquidity & Cash Flow Plan Particulars ($ Mn) Jul-Dec’ 20 Jan-Jun’ 21 Opening Available Liquidity (A) 622 688 Inflows Contractual Inflows 530 556 Covid-related impact (252) (40) Fresh Borrowings 596 265 Asset Sell downs 172 146 Total Inflows (B) 1,046 927 Outflows Repayments 794 609 Disbursements
Slide 33: Capital Adequacy Strong Both At Group & Key Operating Entities Level
2. Capital Adequacy Strong Both At Group & Key Operating Entities Level Q1FY21 CAPAD Net D/E ECL Finance Ltd 21.3% 4.1x Edelweiss Retail Finance Ltd 29.0% 2.5x Edelweiss Housing Finance Ltd 23.2% 4.5x Edelweiss Asset Reconstruction Company Ltd 32.6% 1.8x EFSL (Consolidated) has capital adequacy rati
Slide 34: Debt Equity Ratio Continues To Decline
2. Debt Equity Ratio Continues To Decline D/E (Excluding Treasury Assets) 5.2 4.6 4.4 3.7 3.4 3.5 3.2 3.0 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Debt Equity Ratio set to decline further through FY21 33
Slide 35: Significantly De-Levered Our Balance Sheet
2. Significantly De-Levered Our Balance Sheet Borrowings ($ Mn) 6,663 5,926 5,720 5,410 5,123 4,879 4,469 4,024 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Borrowings has reduced by 40% over Q2FY19 levels 34
Slide 36: Borrowing Profile Is Well Diversified
2. Borrowing Profile Is Well Diversified Borrowing Profile by Instruments Borrowing Profile by Source 1% 18% 39% 42% 11% 60% 29% Loans & OD NCDs CPs Banks Retail MF PF, Insurance & FIs $4,024 Mn $4,024 Mn 35
Slide 37: Assets in each Tenor Range Adequately Cover Liabilities
2. Assets in each Tenor Range Adequately Cover Liabilities ($ Mn) Assets Liabilities Gap Upto 1 year 1,748 1,509 238 1-3 years 1,893 1,854 40 3 years+ 2,118 1,470 649 Total gap represents our equity base 36
Slide 38: Corporate Credit Exposure Continues To Decline
3. Corporate Credit Exposure Continues To Decline Total Corporate Credit Assets ($ Mn) 2,794 2,357 2,391 2,249 2,142 1,844 1,341 1,132 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Corporate credit book will decline by another $265 - 400 Mn by end FY21 37
Slide 39: Retail Credit Assets Are 55% Of Total
3. Retail Credit Assets Are 55% Of Total Q1FY21 ($ Mn) Total book % Retail Credit 1,385 55% Retail Mortgage 862 34% SME & Business Loans 319 13% ESOP and Margin Financing 187 7% Agri and Rural Finance 16 1% Corporate Credit 1,132 45% Structured Collateralised Credit 388 15% Wholesale Mortgage 744 30
Slide 40: Asset Quality at a Glance
3. Asset Quality at a Glance $ Mn Q1FY21 Credit Book 2,502 Of which Stage 3 117 ECL Provision 120 Of which Stage 3 27 NNPA 3.6% Specific Provision Cover 23% Total Provision Cover 103% 39
Slide 41: Organisation. Governance. Sustainability
Organisation. Governance. Sustainability
Slide 42: Prudent Risk Management and Responsible Growth
Prudent Risk Management and Responsible Growth Market Risk Regulatory Reputational Business Risk Credit Risk Liquidity Risk Risk Risk Physical Technology Operational & Infrastructure People Risk Fraud Risk Risk Process Risk Risk Enterprise risk management approach: 11 Risk Framework 41
Slide 43: 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 44: Significant Institutional Ownership
Significant Institutional Ownership Shareholding Pattern as on 30th June, 2020 Key Shareholders above 1% Percent 1 BIH SA 5.2% Employee 2 Pabrai Investment Funds 4.3% Trust 3 Wellington Management 3.7% DIIs, Non 4.8% Promoter Group Institutions 4 TIAA CREF funds 3.2% & Others 5 LIC 2.2% 23.0% 32.9%
Slide 45: Our Sustainability Efforts
Our Sustainability Efforts EdelGive Foundation’s commitment to Achieving the SDGs (Cumulative till date) 111 Districts across 14 States Quality Education No Poverty Gender Equality $17,212* $317,767* $63,553* $1.9 Mn * 18.41 lakh Children 1,240 acres of irrigated land More than 1.63 lakh women commi
Slide 46: 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 45
Slide 47: Annexure
Annexure ‘o Edelweiss Ideas create, values protect
Slide 48: Wealth Management Pro Forma Financials
Wealth Management Pro Forma Financials $ Mn Edelweiss Wealth Management (EWM) PBT 9.5 Profit on sale of shares (5.0) Preference Share Dividends 1.9 Costs carved in from other entities (1.5) Pro-Forma Edelweiss Wealth Management PBT 4.9 47
Slide 49: 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 50: Safe Harbour
Safe Harbour NOTES: Slide 4 : Net worth is including MI and includes investment in equity convertible instrument by CDPQ of $138 Mn, Kora Management of $23 Mn and Sanaka Capital of $15 Mn Slide 4 : Customer Assets are rounded off to nearest 100 Slide 5 : Only key entities are mentioned for wealth &
Edelweiss Financial Services — Q1 FY2021 Earnings Presentation on 6ix