Investor Presentation FINANCIAL RESULTS – FY19 MUMBAI th May 2019 4 th 2019 A Leading Financial Services Conglomerate Aditya Birla Capital Limited
Table of contents 1 | Overview Pg. 3 - 6 2 | Business-wise Performance Pg. 7 - 44 3 | Consolidated Financials & Other Annexures Pg. 45 - 49 NOTE 1: The financials of Aditya Birla Capital Ltd are consolidated financials prepared based on Ind AS unless otherwise specified NOTE 2: The financial figures in this presentation have been rounded off to the nearest Rs 1 Crore Aditya Birla Capital Limited 2
FY19: Key Highlights ✓ ✓ Consolidated PAT grew 26% y-o-y Housing Finance PBT crossed Rs 100 Cr Lending book 1 of Rs 63,000+ Crore with AMC recorded highest ever profitability ✓ ✓ SME + Retail mix at 59% with PBT to AUM at 26 bps Life Insurance Ind. FYP 2 grew 60% y-o-y, ✓ ✓ NBFC NIM expanded 33 bps y-o-y to 4.9% expanding market share by 125 bps Strong value creation in Life Insurance Lending business PBT grew 32% 1 y-o-y ✓ ✓ with Net VNB at 9.5% and RoEV of 15% Raised Rs 11,000+ Crore 1 long term Health Insurance GWP at ~Rs 500 Crore, ✓ ✓ borrowing in H2 FY19 grew 2x y-o-y Aditya Birla Capital Limited 3 1 Includes NBFC and housing finance Business 2 Individual FYP adjusted for 10% of single premium
Delivering strong financial performance Figures in Rs Crore P R O T E C T I N G I N V E S T I N G F I N A N C I N G C O N S O L I D A T E D 6% 23% 29% 26% 30% 63,119 8,008 16,570 871 2,65,109 2,49,937 12,841 693 6,146 51,379 FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19 Premium 1 AAUM 2 Lending Book 3 Revenue 4 PAT 1 Includes Life Insurance and Health Insurance gross total premium (as per IRDAI reporting) 2 AAUM of Asset Management business 3 Includes NBFC and Housing Finance businesses 4 Consolidated segment revenue ; for Ind AS statutory reporting purpose Asset management and wellness business are not consolidated and included under equity accounting Aditya Birla Capital Limited 4
Consolidated PAT Reconciliation (IGAAP Vs. Ind AS) Figures in Rs Crore Figures in Rs Crore FY19 PAT after MI (As per IGAAP) 975 EIR on assets and liabilities (35) ECL methodology adoption (24) MTM/ Fair Valuation (21) Non-controlling interest adj. on above 15 Group share on account of Ind AS on Joint Ventures 1 Others (incl. impact of Deferred Tax) (40) PAT after MI (As per Ind AS) 871 Difference - Ind AS PAT vs. IGAAP PAT (11%) Aditya Birla Capital Limited 5
Performance delivery along stated goals Figures in Rs Crore NBFC Housing Finance Asset Management Life Insurance Health Insurance Focus on retail and SME Increasing equity mix and retail Scale, product mix and quality Building profitable scale Scale and retail to drive value segments to drive value penetration to drive profits to drive value Retail + SME Mix 1 (%) Ind FYP 4 Lending Book Equity Mix (%) GWP 36% 1,693 11,405 497 50% 921 43% 4,136 24% 54 FY17 FY19 FY17 FY19 FY17 FY19 FY17 FY19 FY17 FY19 NIM (incl. fees) (%) Cost Income Ratio (%) Investor Folios (Mn) Protection Mix (%) Retail GWP Mix (%) 4.4% 4.9% 102% 61% 3.9 7.1 3% 6% 5% 65% RoE 2 (%) PBT/ AUM 3 (bps) Net VNB 5 (%) PBT Combined Ratio (%) 1,328 9.5% 283% 7.0% 26 832 19 149% FY17 FY19 FY17 FY19 FY17 FY19 FY17 FY19 FY17 FY19 -5.5% -4.6% Aditya Birla Capital Limited 6 1 Includes Retail, SME and HNI 3 Based on annual average AUM 5 Based on Individual Business basis Management estimates 2 RoE is based on monthly compounding 6 FY17 financials are based on Indian GAAP 4 Individual FYP adjusted for 10% of single premium
Aditya Birla Finance Limited 7
Diversified portfolio with value accretive growth Figures in Rs Crore SME + Retail + HNI Large + Mid Corporate Others Diversified loan book with focus on 43,242 51,714 growth in higher margin segments 3% 3% Loan book SME + Retail + HNI mix grew by 27% y-o-y shift 47% 50% underway 50% 47% +3% NIM expanded by 37 bps to 4.91% FY18 FY19 Q4FY19 NIM at 5.25% (+90 bps over Q4FY18) 37 bps 4.91% Improving Net 4.54% Interest Margins 2 PBT at Rs 1,328 Crore, grew 26% y-o-y FY18 FY19 Maintained RoE 1 at 13.7% & RoA at 1.9% 26% 1,328 Strong growth RoE impacted by ~50 bps on account of: in profitability 1,051 - Lower wealth fee income, and (PBT) - Higher opex (branch and sales force expansion) FY18 FY19 Aditya Birla Capital Limited 8 1 Based on monthly compounding of annualised RoE 2 NIM including fees
Multiple products catering to a range of customer needs Figures in Rs Crore SME (27% of Loan Book) Retail (13% of Loan Book) HNI + Others (13% of Loan Book) 4% 2% 7% 16% 27% 27% 14% 14% 21% 55% 25% 44% 23% 24% 73% 73% 41% 38% 40% 33% FY18 FY19 FY18 FY19 FY18 FY19 Broker Funding Supply Chain Finance LAS Unsecured and Digital LAP Treasury LAS LRD LAP TL/ WCDL LAP LTV of ~50% TL/WCDL backed by SME ATS future cash flows and Retail ATS 85% vs. borrower’s Loan against liquid Rs 7 Crore adequate security Rs 6 Lacs office/ residence securities cover of ~1.7x ATS: Rs 2.7 Crore Aditya Birla Capital Limited 9
Multiple products catering to a range of customer needs Figures in Rs Crore Segment ATS Typical Nature of Transactions Large & Mid Corporate (47% of Loan Book) % of total book (Rs Crore) TL/WCDL ▪ Appraisal based on business cash flows along with ~55 19% collaterals to diversified industries 39% 41% ▪ Started in 2011 ▪ Funding towards projects with ring-fenced cashflows Project Loan ▪ ~100 Typically, 25-30% of total debt funding for a project 14% ▪ 96% of exposure is towards operational projects; balance 4% 29% 30% of projects have recourse to pedigreed sponsors Structured ▪ 14% 19% Typically structured with recourse to cash flows of the Finance ~90 obligor and sponsor entities with adequate security coverage 15% 7% 12% FY18 FY19 ▪ >90% of borrowers have a track record of delivering over 5 Construction million square feet TL/ WCDL Project Loan Finance ~55 ▪ Average actual loan tenor 2.5 years Structured Finance Construction Finance 7% ▪ Strong repayment track record from sale of units Aditya Birla Capital Limited 10
Strong focus on growth with quality of loan book Figures in Rs Crore Delivered consistent loan book growth while Stage-wise assets and ECL Provisioning maintaining strong asset quality Asset Quality FY18 FY19 Gross Stage 1 & 2 99.09% 98.51% Secured loan book more than 80% Primarily focused on cash flow based underwriting Excl. IL&FS IL&FS Maintaining robust asset quality Gross Stage 3 0.91% 1.05% 0.44% Gross Stage 3 (excl. IL&FS) at 1.05% Less: ECL Provision 0.49% 0.50% 0.12% Net Stage 3 0.42% 0.55% 0.32% Rs 220 Crore of exposure to 4 IL&FS entities categorized as stage 3 Provision Coverage Ratio 54% 48% 27% Rs 59 Cr has been provided for under ECL on the above exposure Aditya Birla Capital Limited 11
Highest ever margin despite challenging industry scenario Optimised borrowing cost in a hardening interest rate environment 8.3% 8.2% 8.0% 8.0% 7.8% Cost of +40bps Borrowing Factors contributing to margin expansion: ▪ Q4 FY18 Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY19 Increasing product mix towards retail and SME ▪ Ability to pass on borrowing cost increases ▪ Prudent treasury management with diversified 5.2% 1 borrowing mix 4.9% 4.9% Increasing 4.6% +90bps 4.3% NIM (incl. fee) Q4 FY18 Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY19 Aditya Birla Capital Limited 12 1 NIM in Q1 FY19 includes one-time impact of prior period income
Well matched ALM with diversified borrowing mix ALM optimised for liquidity and costs Diversification across instruments and investors Borrowing Mix % Sourcing Mix % Cumulative Outflows Cumulative Inflows 100% 100% 80% 75% Bank Term Loan 53% 41% 41% 39% 29% 23% NCD Mutual Fund 19% 36% 15% 14% CP < 3 months 14% Corporate 11% 0-3 months 3-6 months 6-12 months 1-5 years > 5 years CC/WCDL 4% FII 7% Sub Debt & Others 5% Cumulative Surplus/ (Gap) Insurance 7% CP > 3 months 1% 58% 48% 6% (6)% 0% PF 7% Raised LT borrowing of Rs 16,250+ Crore in FY19 Continue to broad base investor profile (Rs 9,500+ Crore in H2 FY19) Institutional investor base increased to 447 (FY18: 317) ▪ IFC: Rs 1,000 Crore (7 year green loan) ▪ Term Loans: Rs 8,600 Crore | NCDs: Rs 6,400 Crore Actively pursuing overseas funding through ECB ▪ Sub-debt: Rs 250 Crore Adequate liquidity to meet growth requirements Maintaining comfortable capital adequacy LIC sanctioned Rs 1,500 Crore (10 year loan) FY19: CRAR at 17.5% Aditya Birla Capital Limited 13
Key Financials – Aditya Birla Finance Limited Quarter 4 Figures in Rs Crore ∆ LY% Full Year ∆ LY% FY 17-18 FY 18-19 Key Performance Parameters FY 17-18 FY 18-19 (PY) (CY) (PY) (CY) 43,242 51,714 Lending book 43,242 51,714 20% +134 bps 11.12% 12.46% Average yield 11.29% 11.98% +69 bps 6.77% 7.22% Interest cost / Avg. Lending book 6.75% 7.07% +90 bps 4.34% 5.25% Net Interest Margin (Incl. Fee Income) 4.54% 4.91% 173 240 Opex 576 802 36% 37% Cost Income Ratio 31% 34% 35% 35% Cost Income Ratio (Ex. Wealth) 29% 32% 21 59 Credit Provisioning 215 207 281 353 Profit before tax 1,051 1,328 26% 26% 187 227 Profit after tax 696 869 6,229 7,417 Net worth 6,229 7,417 Aditya Birla Capital Limited 14
Aditya Birla Housing Finance Limited 15
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