Satin Creditcare Network Ltd · NSE:SATIN
Satin Creditcare Network — Q3 FY2019 Earnings Presentation
66 slides from Satin Creditcare Network's earnings presentation, Feb 4, 2019
Slide 1: Cover letter to stock exchanges for investor presentation
February 4, 2019 To, The Manager, The Manager National Stock Exchange of India Ltd. BSE Limited Exchange Plaza, C-1, Block G, Phiroze Jeejeebhoy Towers, Bandra Kurla Complex, Dalal Street, Bandra East, Mumbai-400051 Mumbai – 400023 Scrip Code: SATIN Scrip Code: 539404 Dear Sir/Madam, Sub: Investor P
Slide 2: Q3FY19 Corporate Presentation
SATIN CREDITCARE NETWORK LIMITED Q3FY19 CORPORATE PRESENTATION FEBRUARY 2019 BSE: 539404 | NSE: SATIN Corporate Identity No. L65991DL1990PLC041796
Slide 3: Disclaimer
Disclaimer By accessing this presentation, you agree to be bound by the following terms and conditions. This presentation (which may reflect some price sensitive information in terms of SEBI regulations and Companies Act, 2013, as amended from time to time) has been prepared by Satin Creditcare Netw
Slide 4: Contents
Contents Details Satin Overview 3 Key Investment Thesis 7 Future Business Strategy 38 Annexure Industry Overview – BC Operations, MSME Finance and Small Ticket Housing Finance 41 Financial & Operational Details – Consolidated 45 Financial & Operational Details – Standalone 50 Financial & Operational
Slide 5: Satin Overview
Satin Overview
Slide 6: Company Overview
Company Overview 01 Gross Loan Portfolio (“GLP” or “Gross AUM(1)”) of Rs. 6,208 cr(2), YoY growth of 27.2% 02 Improved operational metrics – RoA 4.2 %, RoE 27.6%, CRAR 30.1% & Cost to Income Ratio 46.2% in Q3 FY19(1) 03 Subsidiaries: -RoE of TSL for 9M FY19 stood at 26.02%; - Excellent Portfolio qua
Slide 7: Key Performance Indicators
Key Performance Indicators(1) Continuing the growth story Particulars AUM Revenue NII PAT RoA RoE CRAR(3) Cost/ Inc (Rs cr) (Rs cr) (Rs cr) (Rs cr) (%) (%) (%) (%) Q3FY19 6,208 402 236 71 4.2 27.6 30.07 46.2 Q3FY18 4,882 260 127 47(2) 3.7(2) 27.4(2) 23.32 71.2 Q2FY19 6,191 365 197 46 2.7 18.8 25.23
Slide 8: Company Overview contd
Company Overview contd Marquee Shareholder Base Key Shareholders As on Dec 31, 2018 Promoter & Promoter Mutual Funds: Others Group DSP Equity & Bond Fund 18.61% 26.73%(1) Aditya Birla Sun Life Trustee Pvt Ltd UTI – Hybrid Equity Fund NMI Mutual 6.89% Funds Foreign Portfolio Investor 18.06% SBI-FMO M
Slide 9: Key Investment Thesis
Key Investment Thesis
Slide 10: Key Investment Thesis
Key Investment Thesis Robust Industry Experienced Fundamentals Management with Strong Team Regulatory Support Excellent Backed by Large, Management Marquee Institutional of Demonetization Investors Strong Operational Robust Fundamentals Capabilities Backed and Established Track By Industry’s Best IT
Slide 11: Improving Liability Profile
Improving Liability Profile Diversified mix of funding One of The Largest Lender Base Source of funds raised during the period 77 active lenders % Share as on Top 10 Funders (1) 21.3% 31 Dec 2018 28.6% 34.0% 39.7% NABARD 17% 5.4% State Bank of India 11% 10.9% 6.4% 2.4% 1.4% Bandhan Bank Limited 6% 1
Slide 12: Dynamic Liability Profile Insulated from Capital Market Turbulence
Dynamic Liability Profile Insulated from Capital Market Turbulence Product-wise Dec’18 Product-wise Mar’18 Securitisation/ CP, 1% Securitisation/ CP, 2% Assignment, Assignment, 21% 15% ECB, 1% ECB, 1% Term Loan, 57% Term Loan, 60% NCD, 20% NCD, 21% • No dependence on funding from commercial papers •
Slide 13: Dynamic Liability Profile Insulated from Capital Market Turbulence
Dynamic Liability Profile Insulated from Capital Market Turbulence Category of Lender Dec’18 Category of Lender Mar’18 Domestic Domestic Overseas Overseas Fund, 1% Fund, 1% Fund, 14% Fund, 12% DFI, 13% DFI, 18% Banks, 47% Banks, 52% NBFC, 15% NBFC, 27% • Lower dependence on PSL funding • No dependen
Slide 14: Strong Liquidity and ALM
Strong Liquidity and ALM Strong Liquidity Position to Sustain Growth Benefit of positive ALM continues Amount raised in last 7 days of December 2018: Rs. 944.6 cr ALM as on Dec’18 Average maturity of Assets: 7.3 months Average Maturity of Liabilities: 21.1 months 1,918 1,108 22.3 21.5 21.1 18.4 787
Slide 15: Strong Liquidity Position contd
Strong Liquidity Position contd Static ALM as on Dec 31, 2018 (Rs cr) Jan’19 Feb’19 Mar’19 Apr’19 May’19 Jun’19 Total Inflows Liquidity at the beginning of month* 1,918.1 1,767.9 1,861.7 1,921.7 2,025.4 2,199.1 1,918.1 Principal - Loan portfolio 310.1 273.8 288.3 294.0 306.2 259.7 1,732.1 Interest -
Slide 16: Key Milestones
Key Milestones 20 years to reach AUM of Rs 100 Cr; next 8 years to reach AUM of Rs. 5,000 Cr Business Timeline Registers as JLG business shows Receives MIX Social Reaches 4.9 lac active clients & gross Listing on NSE, Reaches 27.1 lac active Date of inception NBFC strong asset quality Performance AU
Slide 17: Select Accolades & Key Highlights
Select Accolades & Key Highlights Finance: Social: Operations: • First Direct Equity • “C1" grade in Code of HR & IT: • ISO 27001:2013 Investment in Conduct Assessment • ““Digital Innovation certification in Microfinance by Asian (COCA) in January in Microfinance October 2018 for Development Bank 20
Slide 18: Loan Dost – New Initiative in Digital Lending
Loan Dost – New Initiative in Digital Lending Amongst the First MFIs to foray in digital lending with no human intervention, tapping the millennials With the objective to broad base users, Satin launched “Loan Dost”, a fintech venture, to provide short to medium personal loans to salaried individu
Slide 19: Robust Industry Fundamentals with Strong Regulatory Support - Growth to Continue
Robust Industry Fundamentals with Strong Regulatory Support - Growth to Continue Industry Snapshot High growth in loan portfolio and client reach NBFC-MFIs have 2.93 cr borrowers and outstanding GLP 2.3 2.5 2.7 2.9 of Rs. 59,514 cr as at Q2FY19 2.0 2.0 2.1 1.9 1.9 1.71 Average loan disbursed per
Slide 20: Low Penetration of MFI in India – Structural Growth Driver
Low Penetration of MFI in India – Structural Growth Driver Northern and Western states are relatively under penetrated Top 10 states having 84% market share in Sep’2018 State-wise MFI penetration data(1) Market Share (%) 0% Karnataka Others 12% 16% 0% 15% 18% Rajasthan 16% 4% Odisha 11% Kerala 6% 9%
Slide 21: Satin Surges Ahead Faster Than Industry
Satin Surges Ahead Faster Than Industry Industry is growing in last 5 years at a CAGR of Despite the setback of demonetization, Satin ~26% maintained its growth momentum 78,230 5,757 61,623 50,535 4,067 3,271 38,386 2,141 24,499 1,056 Mar'14 Mar'15 Mar'16 Mar'17 Mar'18 Mar'14 Mar'15 Mar'16 Mar'17 Ma
Slide 22: Collection Efficiency Heading Towards Normalcy
Collection Efficiency Heading Towards Normalcy Emerged from the woes of demonetization -Collection efficiency is showing an upward trend on account of increase in credit discipline in disbursement during last 12 months Demand till Collection till Cumulative Period of disbursement 31 Dec’18 31 Dec’18
Slide 23: PAR and Expected Credit Loss (ECL)
PAR and Expected Credit Loss (ECL) The worst is over ECL methodology prescribed in IND AS is based on the principle of providing for expected future losses, rather than incurred losses. Expected Credit Loss (ECL): Probability of credit losses over the expected life of the financial asset. ECL Calcul
Slide 24: Provisioning
Provisioning OD vs ECL as of Dec’18 114 87 85 • Collection against write-off during 9M FY19 is Rs ~11.4 Cr • The Overdue (OD) for more than 90 days is Rs. 85 cr • ECL is Rs. 114 cr OD - PAR 60 OD - PAR 90 ECL Rs cr On standalone basis; ECL amount includes BC provision too 22
Slide 25: Growth Changes Customer Mix
Growth Changes Customer Mix Trend in Loan Cycle Focus is now on acquisition of new customers due to geographical expansion, leading to increase in first cycle customers By GLP (Rs. cr) 3,271 3,585 5,011 5,419 10.4% 14.4% 15.0% 18.6% 25.0% 37.0% 29.1% 38.2% 52.3% 48.8% 44.5% 27.4% FY16 FY17 FY18 9M
Slide 26: Rural Focus of Operations
Rural Focus of Operations Financing the rural growth story Purpose-wise details 15.3% 20.1% 12.1% 3.2% 79.9% 69.4% Rural Urban Agriculture & allied Production Trading Others MFI portfolio excluding MSME 24
Slide 27: Strong Client Demand resulting in Rebound in Disbursements
Strong Client Demand resulting in Rebound in Disbursements, along with Rapid scaling up of Cashless Disbursements Growth While Focusing on Quality1 o Disbursement in H1 usually remains low Average monthly disbursement in Rs cr 658 o Q3FY17 was impacted due to demonetisation 444 460 446 397 422 419 3
Slide 28: Strong Capitalization
Strong Capitalization Healthy CRAR(1) to help Capitalize on Growth Opportunities 30.07% 24.38% 25.23% Q1FY19 Q2FY19 Q3 FY19 • Tie-up with IndusInd Bank and renewed interest of banks for Direct Assignment are reducing the requirement of capital for growth Note: Data on standalone basis; (1) Calculate
Slide 29: Track Record of Delivering Growth
Track Record of Delivering Growth Gross Income (Rs. cr) Cost to Income Ratio (%) 52.8% 51.1% 42.7% 347 384 310 Q1FY19 Q2FY19 Q3FY19 Q1FY19 Q2FY19 Q3FY19 NII1 and PAT (Rs. cr) Opex to GLP (%) NII PAT 6.7% 6.7% 218 179 6.3% 156 70 25 44 Q1FY19 Q2FY19 Q3FY19 Q1 FY19 Q2 FY19 Q3FY19 Note: Data on standal
Slide 30: Operational Highlights (1/2)
Operational Highlights (1/2) Districts, States and Branches Employees & Loan Officers 1,1181 995 431 767 23 6,8742 6,382 11,9404 18 1,335 16 16 4,481 9,004 6,910 1,344 340 2,684 1,109 302 235 10,538 215 7,653 5,801 3,918 FY16 FY17 FY18 Q3FY19 FY16 FY17 FY18 Q3FY19 Districts States Branches Satin Emp
Slide 31: Operational Highlights (2/2)
Operational Highlights (2/2) Disbursement1 (Rs. cr) & No. of Loans1 (‘000) Satin JLG loans - Average Ticket Size2 (Rs) 1,816 1,482 1,689 1,566 30,000 27,000 5,572 24,000 23,000 3,938 3,606 3,594 FY16 FY17 FY18 9MFY19 FY16 FY17 FY18 9MFY19 No. of Loans (‘000) Note: (1) Standalone basis; (2) TSL’s ave
Slide 32: Transparent Operations
Transparent Operations Transparent Operations Smart Campaign – Client Protection Certification Loan Card with transparent terms and conditions Strong Internal Audit Processes and Systems ensure portfolio quality Full fledged in-house Internal Audit department for Group Lending and MSME • 88 member t
Slide 33: Credit Bureau Data For Screening Loan Applications
Credit Bureau Data For Screening Loan Applications Hit Rate for all Products-Q3FY19 CB Rejection Reason-Q3FY19 Over No Hit, 16% indebtedness 24% >1 MFI 62% Defaulters 13% Hit, 84% Ticket Size 1% SCNL Guidelines Rejection Rate for all products is ~15% for Q3FY19 MFIN Note: Limit RBI Guidelines Guidel
Slide 34: Company’s Product Mix - MSME and Housing Finance taking good shape
Company’s Product Mix - MSME and Housing Finance taking good shape Business Correspondent MFI Segment(1) Non-MFI Segment Housing Finance services Product features as on Satin Housing Finance MFI Lending Loans to MSME(2) Taraashna Services Ltd(3) Dec’18 Ltd(4) Start Date May’08 (JLG) Apr’16 May’12(3)
Slide 35: Business Correspondent (BC) Partnership with IndusInd Bank
Business Correspondent (BC) Partnership with IndusInd Bank No of loans disbursed Growing the Asset Under Management • Satin entered into BC partnership with IndusInd Bank in H2 FY18 92,072 • 9 Regional offices and 171 branches are actively 66,686 disbursing under this arrangement 18,033 • Eventually
Slide 36: Diversification – By Geography
Diversification – By Geography Focus on Geographic Diversification1 and limiting Substantially Reducing Geographic concentration concentration per state <20% by 2020 GLP - Q3 Q3 FY19 FY15 States Change CAGR % FY19 Rs cr % mix % mix GLP (Rs.cr) 32,70.8 40,66.5 57,56.8 62,08.4 UTTAR PRADESH 1352.2 21.
Slide 37: Impact of Digital Transformation
Impact of Digital Transformation 01 Mobile Technology Platform – Last Mile Connectivity 02 Process re-engineered to enable customer acquisition within 3 minutes 03 Live Dashboard Every Two Minutes 04 Increased digitization of processes 05 Geo Location Tracking 06 Real-time Credit Checks 07 Instant B
Slide 38: ISO 27001:2013 – Amongst the First MFIs to be Certified
ISO 27001:2013 – Amongst the First MFIs to be Certified Satin’s Aspirational Journey Towards Building a Sensitive Culture Around Information Security • Information security is a key mandate for every organisation • International Organization for Standardization (ISO) is the world’s largest developer
Slide 39: Backed by Large, Marquee Institutional Investors
Backed by Large, Marquee Institutional Investors 7 rounds of equity capital raise with marquee investors with complete profitable exits to 4 investors Investor confidence Raised Rs. 250 cr from marquee institutions via QIP in Oct 2016. Further raised Rs. 150 cr in Oct 2017 via QIP from large dom
Slide 40: Future Business Strategy
Future Business Strategy
Slide 41: Future Business Strategy
Future Business Strategy Core operations (MFI Lending) Focus on Portfolio Quality Geographic diversification – Started operations in Assam and Orissa in FY18; Meghalaya, Tripura, Tamil Nadu, Pondicherry and Karnataka in FY19. Aim to achieve per state exposure to <20% by 2020 Increase penetrati
Slide 42: Guidance for FY19 versus achieved
Guidance for FY19 versus achieved(1) Rs cr 165 145 Guidance FY19 Achieved till Q3FY19 Guidance FY19 Achieved till Q3FY19 Note: (1) On Consolidated basis; 40
Slide 43: Annexure: Industry Overview - BC Operations, MSME Finance and Small Ticket Housing Finance
Annexure Industry Overview -BC Operations, MSME Finance and Small Ticket Housing Finance
Slide 44: BC Operations
BC Operations Number of BC transactions to soar given lower cost of operations BC portfolio of NBFC-MFIs on the rise BC Transactions – Value (Rs. Bn) and Volume (Mn) BC Portfolio of NBFC – MFI (Rs. Bn) 23,858 33% 31% 32% 25% 27% 23% 22% 24% 14,911 12% 9,037 5,316 5,720 3,038 27.0 29.3 27.3 29.8 524
Slide 45: Micro, small and medium enterprise (MSME) finance
Micro, small and medium enterprise (MSME) finance Share of NBFCs and private banks to increase in MSMSE credit NBFCs’ MSME credit to sustain impressive growth Share of MSME Finance By Institutions GLP (Rs. Bn) 1,821 5.3% 6.4% 7.2% 8.1% 8.9% 9.5% 2.5% 3.0% 2.9% 2.9% 1,505 3.0% 3.0% 24.8% 26.0% 27.0%
Slide 46: Small Ticket Housing Finance
Small Ticket Housing Finance Healthy growth expected in low ticket housing finance segment Key Growth Drivers Loan book – less than Rs. 2.5 Miilion Thrust on low ticket housing with Govt. initiatives like ‘Housing for All’ to boost growth and help increase share Pradhan Mantri Awas Yojana – Cred
Slide 47: Annexure: Financial & Operational Details – Consolidated
Annexure Financial & Operational Details – Consolidated
Slide 48: Business Details – Consolidated
Business Details – Consolidated PARTICULARS Q3 FY19 Q3 FY18 Q2FY19 YoY % QoQ % AUM (Rs. cr) 6,208 4,882 6,191 27.2% 0.3% On-Book AUM* 4,293 3,875 5,128 10.8% -16.3% Securitization 446 414 564 7.6% -20.9% Assignment 889 15 218 - 308.4% Business Correspondence – IndusInd Bank 407 - 215 - 89.5% TSL - B
Slide 49: Business Details – Consolidated (Contd)
Business Details – Consolidated (Contd) PARTICULARS Q3 FY19 Q3 FY18 Q2FY19 YoY % QoQ % No. of Loan Accounts 3,530,755 2,713,750 3,231,801 30.1% 9.3% SCNL 3,124,344 2,326,567 2,815,468 34.3% 11.0% TSL 406,042 387,183 416,125 4.9% -2.4% SHFL 369 - 208 - 77.4% Average Ticket Size* MFI Lending (SCNL) 26
Slide 50: P&L Statement – Consolidated (Quarterly)
P&L Statement – Consolidated (Quarterly) Particulars (Rs cr) Q3 FY19 Q3 FY18 YoY% Q2FY19 QoQ% Revenue Interest and Fee Income 283 230 22.9% 303 -6.8% Net Gain On Derecognition of Financial Instruments 68 - - 18 - Treasury Income 25 17 50.2% 23 10.3% Service Charges 23 13 76.7% 18 27.0% Other Operati
Slide 51: P&L Statement – Consolidated (9 months)
P&L Statement – Consolidated (9 months) Particulars (Rs cr) 9M FY19 9M FY18 YoY% Revenue Interest and Fee Income 878 648 35.4% Net Gain On Derecognition of Financial Instruments 86 - Treasury Income 65 51 25.7% Service Charges 59 35 71.1% Other Operating Income 8 2 332.6% Total Revenue 1,095 736 48.
Slide 52: Annexure: Financial & Operational Details – Standalone
Annexure Financial & Operational Details – Standalone
Slide 53: Operational Details – Standalone (Quarterly)
Operational Details – Standalone (Quarterly) PARTICULARS Q3 FY19 Q3 FY18 Q2FY19 YoY % QoQ % Gross AUM (Rs. cr) 5,590 4,304 5,561 29.9% 0.5% No. of districts 340 280 318 21.1% 6.9% No. of branches 937 728 885 28.7% 5.9% No. of States of operation 23 18 20 22.2% 15.0% No. of Employees 10,538 7,121 9,5
Slide 54: Operational Details - Standalone (Quarterly contd)
Operational Details - Standalone (Quarterly contd) PARTICULARS Q3 FY19 Q3 FY18 Q2FY19 YoY % QoQ % Product Financing Gross AUM (Rs. cr) 6.5 0.0 2.1 - 209.7% No. of Loan Accounts 31,677 174 5,747 - 451.2% Disbursement during the period (Rs. cr) 9.3 0.04 1.8 - 406.9% No. of loans disbursed during the p
Slide 55: Operational Details – Standalone (9 Months)
Operational Details – Standalone (9 Months) PARTICULARS 9M FY19 9M FY18 YoY % Gross AUM (Rs. cr) 5,590 4,304 29.9% No. of districts 340 280 21.1% No. of branches 937 728 28.7% No. of States of operation 23 18 22.2% No. of Employees 10,538 7,121 48.0% No. of Loan Officers 5,937 5,125 15.8% No. of Loa
Slide 56: Operational Details - Standalone (9 Months contd)
Operational Details - Standalone (9 Months contd) PARTICULARS 9M FY19 9M FY18 YoY % Product Financing Gross AUM (Rs. cr) 6.5 0.0 - No. of Loan Accounts 31,677 174 - Disbursement during the period (Rs. cr) 12.5 0.0 - No. of loans disbursed during the period 38,244 151 - Average Ticket Size* (Rs.) 3,2
Slide 57: Financial Performance – Standalone
Financial Performance – Standalone RoE Tree 9M FY19 9M FY18 Q3 FY19 Q3 FY18 Q2FY19 Gross Yield (1) 25.98% 23.53% 27.52% 23.70% 25.32% Financial Cost Ratio(2) 12.17% 13.05% 11.89% 12.77% 12.27% (3) Net Interest Margin 13.81% 10.48% 15.63% 10.92% 13.05% (4) Operating Expense ratio 6.67% 6.82% 6.68% 7.
Slide 58: P&L Statement – Standalone (Quarterly)
P&L Statement – Standalone (Quarterly) Particulars (Rs cr) Q3 FY19 Q3 FY18 YoY% Q2FY19 QoQ% Revenue Interest and Fee Income 282 229 22.9% 303 -7.0% Net Gain On Derecognition of Financial Instruments 68 - - 18 Treasury Income 24 16 51.4% 22 10.0% Service Charges 8 - - 3 173.1% Other Operating Income
Slide 59: P&L Statement – Standalone (9 Months)
P&L Statement – Standalone(9 Months) Particulars (Rs cr) 9M FY19 9M FY18 YoY% Revenue Interest and Fee Income 876 648 35.2% Net Gain On Derecognition of Financial Instruments 86 - Treasury Income 62 50 25.4% Service Charges 11 - Other Operating Income 5 2 158.7% Total Revenue 1,040 699 48.8% Expense
Slide 60: Annexure: Financial & Operational Details - TSL
Annexure Financial & Operational Details - TSL
Slide 61: Operational Details – TSL
Operational Details – TSL PARTICULARS Q3 FY19 Q3 FY18 Q2FY19 YoY % QoQ % Gross AUM (Rs. cr) 573 577 604 -0.7% -5.1% Disbursement during the period (Rs. Cr) 152 208 170 -26.9% -10.5% No. of loans disbursed during the period 54,023 80,287 62,878 -32.7% -14.1% No. of Active Customers 406,042 387,183 41
Slide 62: P&L Statement – TSL
P&L Statement – TSL Particulars (Rs cr) Q3 FY19 Q3 FY18 Q2FY19 YoY % QoQ % Revenue Service Charges 15.2 13.1 15.3 15.6% -1.0% Treasury Income 0.7 0.6 0.6 19.2% 29.9% Other Income 1.0 0.0 1.3 -8521.2% -21.4% Total Revenue 16.9 13.7 17.2 23.1% -1.5% Expenses Finance Cost 0.4 0.2 0.4 45.3% -20.7% Emplo
Slide 63: Annexure: Financial & Operational Details – SHFL
Annexure Financial & Operational Details – Satin Housing Finance Limited (SHFL)
Slide 64: Financial & Operational Details – SHFL
Financial & Operational Details – SHFL* Excellent Portfolio Quality with Nil Delinquency Since Inception Particulars (Rs cr) Q3 FY19 Q3 FY18 Q2FY19 YoY % QoQ % Revenue Interest and Fee Income 1.3 - 0.7 - 78.4% Treasury Income 0.2 0.2 0.3 22.0% -23.4% Other income 0.3 - 0.3 - -0.5% Total Revenue 1.8
Slide 65: Contact Information
Contact Information For any queries, please contact: Aditi Singh Head – Capital Markets Satin Creditcare Network Limited E: Aditi.singh@satincreditcare.com T: +91 124 4715 400 (Ext – 222) 63
Slide 66: Thank You
Thank You
Satin Creditcare Network — Q3 FY2019 Earnings Presentation on 6ix