Iifl Finance Limited · NSE:IIFL
Iifl Finance — Q4 FY20 Earnings Presentation
60 slides from Iifl Finance's earnings presentation, May 29, 2020
Slide 1: Cover letter to stock exchanges on results press release and presentation
May 28, 2020 The Manager, The Manager, Listing Department, Listing Department, BSE Limited, The National Stock Exchange of India Ltd., Phiroze Jeejeebhoy Tower, Exchange Plaza, 5 Floor, Plot C/1, G Block, Dalal Street, Bandra - Kurla Complex, Bandra (E), Mumbai 400 001. Mumbai 400 051. BSE Scrip Cod
Slide 2: Press Release: Results update
IIFL Finance Limited (formerly “IIFL Holdings Limited”) Press Release For immediate publication Mumbai, India May 28, 2020 Results update -Profit before tax for Q4FY20 at Rs 296 Cr (up 26% q-o-q) and FY20 at Rs 1,006 Cr (down 2% y-o-y) -Income for Q4FY20 at Rs 705 Cr (up 21% q-o-q) and FY20 at Rs 2,
Slide 3: Press release: AUM, asset quality, segments and liquidity update
IIFL Finance had loan assets under management of Rs 37,951 Cr as at March 31, 2020, with the home loans segment constituting 33%, business loans 21%, gold 24% and microfinance 9% of the total AUM. The company’s ROE and ROA for FY20 stood at 16.9% and 2.2% respectively (excluding exceptional items).
Slide 4: Group Re-organization and Awards and Accolades
Group Re-organization The re-organization of IIFL Group was effected from May 13, 2019. Pursuant to the same, IIFL Wealth Management Limited and IIFL Securities Limited were demerged from IIFL Finance Limited (earlier known as IIFL Holdings Ltd). Consequent to IIFL Finance Limited receiving registra
Slide 5: About IIFL
About IIFL IIFL Finance Limited (Erstwhile “IIFL Holdings Limited”) (Bloomberg Code: IIFL IN, NSE: IIFL, BSE: IIFL) is one of the leading players in the Indian financial services space. Prior to the Composite Scheme of Arrangement (effective May 2019), IIFL Finance Limited was engaged in the busines
Slide 6: Performance Review
Performance Review For the quarter and year ended March 31, 2020 IIFL Finance Limited May 28, 2020 1
Slide 7: I: Key Highlights II: FY20 Results & Business Overview III: Post Corona Strategy- Reinventing
I: Key Highlights 3 II: FY20 Results & Business Overview 6 III: Post Corona Strategy- Reinventing the Business Model 20 IV: Liquidity Position Review 27 V: Deep Dive in Construction & Real Estate Portfolio 32 VI: Review of Core Business Segments 39 25 VII: Corporate Information, Awards and CSR 49 35
Slide 8: Key highlights
Key highlights Profits & ROE show a healthy trend. Q4-FY20 Profit after tax (excluding exceptional Covid provision) was ₹216 Cr (up 16% qoq) and same for full year stood at ₹756 Cr (up 8% y-o-y). FY20 Return on Equity was 16.9% and Return on Assets was 2.2%. Loan assets AUM grew 9% y-o-y to ₹ 37,951
Slide 9: COVID-19 impact update
COVID-19 impact update • The Covid-19 pandemic has disrupted global economies, including India’s and created unprecedented challenges. The NBFC industry is facing disruption in collections due to moratorium but has challenges in raising requisite liquidity. Several liquidity and stimulus measures ha
Slide 10: FY20 Results & Business Overview
I: Key Highlights II: FY20 Results & Business Overview III: Post Corona Strategy- Reinventing the Business Model IV: Liquidity Position Review V: Deep Dive in Construction & Real Estate Portfolio VI: Review of Core Business Segments 25 VII: Corporate Information, Awards and CSR 35 30 5
Slide 11: IIFL Finance – Consolidated results (as per IND AS)
IIFL Finance – Consolidated results (as per IND AS) Quarter and Year ended March 31, 2020 (NBFC, HFC and MFI) Rs Cr Q4FY20 Q3FY20 Q-o-Q Q4FY19 Y-o-Y FY20 FY19 Y-oY Loan book 28,234 25,901 9% 27,525 3% 28,234 27,525 3% Assigned assets 9,717 10,113 (4%) 7,379 32% 9,717 7,379 32% Assets under managemen
Slide 12: IIFL Finance – Consolidated Balance Sheet
IIFL Finance – Consolidated Balance Sheet Year ended March 2020 (NBFC, HFC and MFI) As at As at Assets (₹ Cr) Mar 31 2020 Liabilities and Equity (₹ Cr) Mar 31 2020 Audited Audited 1 Financial Assets 1 Financial Liabilities (a) Cash and Bank Balances 3,216 (a) Payables 84 (b) Receivables 30 (b) Borro
Slide 13: Top-tier NBFC in India
Top-tier NBFC in India Company snapshot ₹ 37,951 Cr 88% Retail 2,377 18,580 Assets under Management 12% Wholesale Branches Employees 88% 13.6% / 18.2% 2.3% / 1.0% 2.2%* Return on Assets Provision coverage of GNPA Tier 1 / Total Capital Adequacy Gross NPAs / Net NPAs and 16.9%* Return on Equity (128%
Slide 14: Diversified and granular asset portfolio
i. Diversified and granular asset portfolio - diversified granular retail loans are 88% of loan assets Diversified portfolio disperses exposure and balances cyclical vagaries AUM 3,289 9,867 16,176 22,281 34,904 37,951 (₹ Cr) Microfinance 4% 1% 1% 7% 6% 10% 8% 9% 14% 14% 12% Commercial vehicle finan
Slide 15: Strong asset quality maintained through cycles
ii. Strong asset quality maintained through cycles…. Gross NPA (%) Net NPA (%) ● GNPA as at FY20, was 2.3% and NNPA was 1.0% 180 150 120 90 180 150 120 90 90 DPD 90 DPD DPD DPD DPD DPD DPD DPD DPD DPD ● Under Ind AS, provision Average credit losses coverage (incl. standard over last 10 years assets
Slide 16: …and across products
ii. …and across products Credit quality has been steady across key product segments Core growth segments Synergistic segments Home loans Business loans Construction & Real Estate finance Gross NPAs (%) Gross NPAs (%) Gross NPAs (%) 4.4% 1.4% 3.8% 3.7% 0.8% 0.8% 2.5% 2.4% 0.7% 0.7% 2.1% 2.2% 1.7% 0.6
Slide 17: IIFL Consolidated AUM under moratorium
ii. IIFL Consolidated AUM under moratorium Quarter and Year ended March 31, 2020 (NBFC, HFC and MFI) • The Company has offered moratorium to all its customers by default , on an opt-out basis AUM under % of AUM under % of AUM under Products (₹ Cr) Total AUM moratorium moratorium moratorium Mar 31, 2
Slide 18: Robust financial performance (1/2)
iii. Robust financial performance (1/2) AUM (₹ Cr) Total Comprehensive Income (₹ Cr) Core Non Core ● NIM on Balance Sheet 37,951 756* assets for FY20 stood 34,904 701 at 6.3% and NIM on 31,228 5,178 22,281 5,714 assigned assets for 19,514 463 16,176 10,411 423 FY20 stood at 5.8% 301 339 7,833 8,690
Slide 19: Robust financial performance (2/2)
iii. Robust financial performance (2/2) Return on Assets (%) Return on Equity (%) ● ROE was 16.9% and ROA was 2.2% for FY20 (excluding impact of exceptional 16.9% 16.9% 17.5% 16.9%* items) 2.2% 2.2%* 15.2% 2.0% 1.9% 2.0% 13.3% 1.6% ● Capital adequacy at 18.2%, well above the FY15 FY16 FY17 FY18 FY19
Slide 20: Widespread physical network
iv. Widespread physical network 85% of branches are in Tier 2 and Tier 3 locations Wide spread network across 25 states and over 600 locations Number of branches 2,377 1,947 1,161 191 Mar'11 Mar'15 Mar'19 Mar'20 Regional split of branches South, 35% West, 39% Open branches Closed branches East, 11%
Slide 21: End-to-end digitization through multiple innovations
v. End-to-end digitization through multiple innovations SOURCING Propensity-based targeting built on machine learning model Leads generated are communicated to individual branches to generate action High conversions: More than 15x of natural response rate ONBOARDING Tablet based on-boarding
Slide 22: Cross-sell to large retail customer base
vi. Cross-sell to large retail customer base One stop shop for retail customers, building relationship for life HEALTH INSURANCE HOME LOAN MFI FIXED DEPOSIT 240k BUSINESS LOAN GOLD LOAN 15 lakhs 830k 30 lakhs LIFE INSURANCE CURRENCIES ₹ MUTUAL FUND DERIVATIVES EQUITIES FINANCIAL COMMODITIES PLANNING
Slide 23: Strong risk management framework
vii. Strong risk management framework Multi-level risk governance for efficient monitoring and control of product and entity level risks Scope Board of directors Authority Risk Strategy & Advisory on Risk Appetite Empower Approve large-ticket cases Risk Board Credit Information Asset Liability C
Slide 24: Post Corona Strategy- Reinventing the Business Model
I: Key Highlights II: FY20 Results & Business Overview III: Post Corona Strategy- Reinventing the Business Model IV: Liquidity Position Review V: Deep Dive in Construction & Real Estate Portfolio VI: Review of Core Business Segments 25 VII: Corporate Information, Awards and CSR 35 30 19
Slide 25: Post Corona strategy - reinventing the business model
Post Corona strategy - reinventing the business model Post Corona, the world will never be same again. A new business model has been discussed at the Board to provide for all significant known risks and seize the opportunities. The management team will put in best effort on the new model. The model
Slide 26: Prepare for the worst case scenario
Prepare for the worst case scenario Risk of slowdown in the NBFCs liquidity crisis economy exacerbating may not have an easy the asset quality solution Risks Uneven playing field Advantage - banks, Negative sentiment for handful of NBFCs financial sector limit Disadvantage - others ability to raise
Slide 27: .. without losing sight of opportunities
.. without losing sight of opportunities Acceleration of Banks with huge liquidity, E-everything need retail assets Opportunities Unprecedented cost Consolidation, capital saving opportunities - constraints cause work from home, capacity contraction delayering, telecommuting Rising savings - cross s
Slide 28: New business model - a COVID organization
New business model - a COVID organization Capital Optimized Value Innovation Driven Own the customer- Sell the loan Revenue model - Rising stream of spread & cross sell income Longer term on book assets are 15-20% funded by internal accruals Ring-fence / sponsor to release capital from CRE portfolio
Slide 29: Capital Optimized
Capital Optimized 2,377 branches Win-win partnership 25 states with multiple banks 600 locations • We leverage our network, banks • Banks acquire assets in different ways get quality & priority retail assets o Direct assignment of loan assets • Capital light NBFC, owns the o On-lending, Re-financing
Slide 30: Value Innovation
Value Innovation Cost & scale One stop shop for all Moat in loan origination edge financial needs & collection • Flexible staffing, work • Customer data & • Physical & digital from home, flatter analytics leveraged to presence of branches, organizations maximize wallet share popular website & App •
Slide 31: Liquidity Position Review
I: Key Highlights II: FY20 Results & Business Overview III: Post Corona Strategy- Reinventing the Business Model IV: Liquidity Position Review V: Deep Dive in Construction & Real Estate Portfolio VI: Review of Core Business Segments 25 VII: Corporate Information, Awards and CSR 35 30 26
Slide 32: Well diversified funding mix
Well diversified funding mix Resource profile is well diversified, with increasing share of assigned assets and bank loans Funding mix (₹ Cr) 15,420 17,230 20,176 28,665 35,002 36,759 CBLO 4% 2% Commercial 16% 12% Paper 18% 17% 27% 30% NCD Investor 7% 7% Assignment 4% 7% 24% Categorisation (%) 4% 7%
Slide 33: Availability of long term funding has improved significantly
Availability of long term funding has improved significantly Incremental long term funding (₹ Cr) Term Loan/Refinance NCD (including MTN) 4,554 2,721 2,855 1,939 1,724 975 664 450 403 1,746 1,699 1,275 111 1,274 292 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20 During the quarter : CRISIL reaffirmed IIFL’s lon
Slide 34: Debt repayment obligation schedule
Debt repayment obligation schedule Debt repayment obligation schedule (including interest payable) 5000 ₹ in Crores (cumulative) 4500 4542 4000 3500 3831 3000 3227 2500 Cash + undrawn lines = Rs 2203 Cr 2679 2000 Banks / FIs (moratorium likely) 1797 1500 1686 1564 1271 1282 1000 920 827 500 MF / Ins
Slide 35: Positive ALM mismatch across all buckets
Positive ALM mismatch across all buckets Conservative approach to liquidity, keeping a margin of safety (surplus) Shorter maturity assets enable easier matching of liabilities ₹ Cr Cumulative Cumulative [] Cumulative mismatch Outflow inflow as a % of cumulative outflow 214% 34% 34% 43% 45% 16% 2
Slide 36: Deep Dive in Construction & Real Estate Portfolio
I: Key Highlights II: FY20 Results & Business Overview III: Post Corona Strategy- Reinventing the Business Model IV: Liquidity Position Review V: Deep Dive in Construction & Real Estate Portfolio VI: Review of Core Business Segments 25 VII: Corporate Information, Awards and CSR 35 30 31
Slide 37: Construction & Real Estate projects analysis basis
Construction & Real Estate projects analysis basis 52 projects having a POS of ₹3,981 Cr as at 31 Mar 2020, i.e. 85% of the total IIFL CRE loans have been analyzed in detail. The remaining 15% of CRE book is represented by very small projects, 127 in number, with POS of ₹746 Cr, i.e. average size of
Slide 38: 92% of finance is for residential projects, 60% in advanced stages
92% of finance is for residential projects, and 60% of projects are in advanced stages of completion No. of POS as at % to Stages of construction Stage projects 31 Mar total • 57% of funded projects are in Residential 49 3,680 92% advanced stages of completion Land stage 3 164 4% • 10% of funded pro
Slide 39: Affordable residential projects contribute 76%
Affordable residential projects contribute 76% Project mix What is the definition of Affordable Residential? Projects where unit sales realisation is less than 2 Cr No. of POS as at in Mumbai, less than 1 Cr in Delhi, Bengaluru, Figs in Cr projects 31 Mar % to total Kolkata and 0.5 Cr in other non-m
Slide 40: High velocity suburbs of Mumbai and Gurgaon have 52% of funded projects
High velocity suburbs of Mumbai and Gurgaon have 52% of funded projects Geography mix No. of POS as at % to Figs in Cr projects 31 Mar total Mumbai 16 2,060 31% Gurgaon 11 431 21% Delhi 2 367 4% Noida 2 307 4% Pune 5 220 10% Bengaluru 3 199 6% Hyderabad 2 119 4% Jaipur 3 84 6% Thane 1 79 2% Ghaziaba
Slide 41: 93% of funded developers have more than 10 years of track record
93% of funded developers have more than 10 years of successful track record RE Experience of Developers Relationship with IIFL No. of POS as at No. of No. of POS as at No. of No. of years No. of years projects 31 Mar Developers projects 31 Mar Developers 5-9 yrs 5 282 5 1-3 yrs 8 304 6 10-14 yrs 10
Slide 42: Post Covid sensitivity analysis – receivable cover
Post Covid sensitivity analysis – 97% of funded projects have a post-Covid receivable cover more than 1 • An in-depth study of the projects in a post CoVid environment have been done and all cashflows have been redrawn considering potential decline in sale prices and velocity and increase in constru
Slide 43: Review of Core Business Segments
I: Key Highlights II: FY20 Results & Business Overview III: Post Corona Strategy- Reinventing the Business Model IV: Liquidity Position Review V: Deep Dive in Construction & Real Estate Portfolio VI: Review of Core Business Segments 25 VII: Corporate Information, Awards and CSR 35 30 38
Slide 44: Our product portfolio
Our product portfolio As on March 31, 2020 Strategic focus on segments that are core strengths and have inter se synergies AUM (₹ Cr) Target customers Unique features Salaried / Self-employed Focused on affordable and non-metro housing segments 12,443 individuals Leverages underwriting skills
Slide 45: Home loans – product overview
Home loans – product overview Affordable home loan Product Non-metro housing loan offering For home purchase, home renovation, home construction and plot purchase Affordable home loan: Salaried and self employed segment wherein household income is below ₹75k pm and are buying Customer proper
Slide 46: Home loans – financial overview
Home loans – financial overview Assets Under Management (₹ Crore) Boarding Yield (%) Self Employed Salaried 800 2,700 5,300 8,579 12,197 12,443 21% 12.0% 35% 41% 10.3% 10.1% 10.8% 48% 54% 58% 9.8% 9.3% 79% 65% 59% 52% 46% 42% FY15 FY16 FY17 FY18 FY19 FY20 FY15 FY16 FY17 FY18 FY19 FY20 Average Ticket
Slide 47: Business loans – product overview
Business loans – product overview Product For business loans backed by cash flows offering Collateral must for loans of more than ₹ 50 Lakh; LTV up to 70% MSME customers having established business performance Customer Lending to manufacturing, trading and service sectors for working capital
Slide 48: Business loans – financial overview
Business loans – financial overview Assets Under Management (₹ Crore) Boarding Yield (%) 8,117 7,805 7,361 19.6% 6,000 16.3% 5,100 14.3% 13.4% 13.5% 14.3% 4,000 FY15 FY16 FY17 FY18 FY19 FY20 FY15 FY16 FY17 FY18 FY19 FY20 Onboarding Average Ticket Size (₹ Lakhs) Gross NPAs (%) 89.0 3.7% 83.0 83.0 3.1
Slide 49: Gold loans – product overview
Gold loans – product overview Product Loan against jewellery provided for personal & business use; offering On-boarding LTV < 70% , Current LTV at 65% Customer Salaried, self-employed and MSME businesses segments 70% are repeat customers Onboarding 89% AUM under AUM Gross/Net NPA Tenor Avera
Slide 50: Gold loans – financial overview
Gold loans – financial overview Assets Under Management (₹ Crore) Boarding Yield (%) 9,125 19.2% 19.2% 18.7% 19.6% 18.1% 18.1% 6,195 3,885 4,037 2,914 2,910 FY15 FY16 FY17 FY18 FY19 FY20 FY15 FY16 FY17 FY18 FY19 FY20 Onboarding Average Ticket Size (₹ ‘000s) Gross NPAs (%) 58 56 53 46 48 43 0.8% 0.6%
Slide 51: Microfinance – product overview
Microfinance – product overview Product Small-ticket loans for purpose of income generation activities offering Customer Target segment is rural and semi-urban self-employed women formed into joint liability groups segments AUM Gross/Net NPAs States Total Customers Tenor 98% AUM under Moratorium
Slide 52: Microfinance – financial overview
Microfinance – financial overview Assets Under Management (₹ Crore) Boarding Yield (%) 3,400 2,286 26.5% 25.9% 24.4% 22.6% 22.0% 22.1% 840 110 238 58 FY15 FY16 FY17 FY18 FY19 FY20 FY15 FY16 FY17 FY18 FY19 FY20 Onboarding Average Ticket Size (₹ ‘000s) Gross NPAs (%) 27 1.5% 21 23 17 15 0.8% 12 0.5% 0
Slide 53: Corporate Information, Awards and CSR
I: Key Highlights II: FY20 Results & Business Overview III: Post Corona Strategy- Reinventing the Business Model IV: Liquidity Position Review V: Deep Dive in Construction & Real Estate Portfolio VI: Review of Core Business Segments 25 VII: Corporate Information, Awards and CSR 35 30 48
Slide 54: Distinguished Board of Directors
Distinguished Board of Directors IIFL Finance – Board of Directors Nirmal Jain, Chairman & Whole-time Director R Venkataraman, Managing Director MBA from IIM Ahmedabad, rank-holder CA MBA from IIM Bangalore, B-Tech from IIT and Cost Accountant. Worked with Unilever for Kharagpur 5 years Worked
Slide 55: Management team with rich domain experience; Marquee investors
Management team with rich domain Marquee investors experience IIFL Finance Chief Executive Officer Sumit Bali Chief Financial Officer Rajesh Rajak Chief Risk Officer Anujeet Kudva IIFL Finance Limited Compliance Officer Gajendra Thakur Public & Others Treasurer B.S. Amarnath 17.2% Promoters 24.9% II
Slide 56: IIFL's brand and credibility recognized at various forums
IIFL’s brand and credibility recognized at various forums IIFL Finance received the 'Most The Economic Times recognized IIFL Finance Limited' has been Admired Service Provider in Financial our Chairman as one of the 'Most awarded the ‘Golden Peacock Award Sector' at the ET Now World BFSI Promising B
Slide 57: Ace cricketer Rohit Sharma is IIFL Finance's Brand Ambassador
Ace cricketer Rohit Sharma is IIFL Finance’s Brand Ambassador #SeedhiBaat The language of money is at its elegant best when done the 'SeedhiBaat‘ way : By keeping our loan products simple; and the process transparent. By valuing the customer above all else; and displaying an un-wavering commitment t
Slide 58: GoFit health challenge in partnership with HealthifyMe
GoFit health challenge in partnership with HealthifyMe IIFL partnered with ‘HealthifyMe App’ to offer employees a corporate digital wellness program. Employees were given access to the premium features of the app including an AI health coach ‘RIA’ The GoFit challenge ran for eight weeks where employ
Slide 59: Corporate Social Responsibility
Corporate Social Responsibility Sakhiyon ki Badi (Rajasthan) Covid-19 relief • IIFL Finance contributed Rs 2.4Cr to the Sakhiyon Ki Baadi (SKB) is a community based learning centre for girls in the age group of PM Cares Fund 4 to 14 years to address the situation of illiteracy among girls in rural R
Slide 60: Thank you
Thank you Published in May 2020 IIFL Finance Ltd. All rights reserved. Regd. Off: IIFL House, Sun Infotech Park, Road No. 16V, Plot No.B-23, Thane Industrial Area, Wagle Estate, Thane – 400604. This report is for information purposes only and does not construe to be any investment, legal or taxation