IIFL WEALTH AND ASSET MANAGEMENT Quarterly Performance Review – Q1 FY 20 August 2019 Strictly Private and Confidential - Internal Circulation Only
A LEADER IN WEALTH MANAGEMENT & ALTERNATES #1 Wealth Manager in India #1 Manager of Alternates in India WEALTH MANAGEMENT ASSET MANAGEMENT • Discretionary • Alternate Investment Funds • Non Discretionary • Discretionary Portfolio Management • Broking and Distribution Services • Mutual Funds • Corporate Advisory & Custody Services • Global Asset Management AUM: Rs. 134,506 Cr. AUM: Rs. 22,339 Cr. ENABLERS Credit Solutions Corporate Finance Trust Advisory <4% P.A 33 5,400+ Team Leader OFFICES RELEVANT Attrition Ratio. FAMILIES 1 64 <2.5%% P.A Teams Client with 290+ RMs Attrition Ratio. 1. Relevant Families: Basis Number of families with AUM as on the 30 th of June 2019 in excess of Rs 1 Cr 2. RM Attrition Ratio: Basis Exits of senior RMs over the last 5 years 2 3. Client Attrition Ratio: Basis % of the number of relevant families who have withdrawn their complete AUM over the last 5 years 4. AUM as on 30 th June 2019. Wealth AUM excludes custody assets.
CONTENTS Quarterly Performance Highlights Business Overview Shareholding Pattern & Update on Listing timelines 3
QUARTERLY PERFORMANCE HIGHLIGHTS 4 4
BUSINESS SUMMARY 5
CONSOLIDATED FINANCIALS QUARTERLY TREND Rs in Crs. Q1 FY 20 Q1 FY 19 Y-o-Y % Q4 FY 19 Q-o-Q % Recurring Revenues 129 100 29% 125 3% Transactional / Brokerage Income 82 191 -57% 120 -31% Other Income 6 3 144% 1 810% Net Revenues 217 294 -26% 245 -12% Less - Employee expenses 81 105 -22% 60 36% Less - Other Operating expenses 44 38 15% 58 -23% Less - Amortization of Intangibles 1 0 0% 0 273% Total Expenses 127 143 -11% 118 8% Profit before Tax 90 151 -40% 128 -29% Taxation -29 -41 -31% -44 -35% Profit for the Period 62 110 -44% 84 -27% Other Comprehensive Income (OCI) -1 0 0 Deferred tax impact on OCI 0 0 0 Total Comprehensive Income (after tax) 61 110 -45% 84 -28% Add : FCTR OCI Impact 0 7 -0 Profit After Tax after FCTR 61 117 -48% 84 -27% Key Ratios Cost to Income Ratio 58% 49% 48% ROE 8.3% 21.0% 11.6% Earning Per Share- Basic (Rs ) 7.23 13.67 9.82 Earning Per Share- Diluted ( Rs ) 7.03 13.19 9.54 6
CONSOLIDATED BALANCE SHEET Rs in Crs. ASSETS As at Jun 30, 2019 LIABILITIES AND EQUITY As at Jun 30, 2019 1 Financial Assets 1 Financial Liabilities (a) Cash and cash equivalents 188 (a) Derivative financial instruments 227 (b) Bank Balance other than (a) above 135 (b) Payables 231 (c) Derivative financial instruments 115 (c) Debt Securities 3,815 (d) Receivables (d) Borrowings (Other than Debt Securities) 2,694 (I) Trade Receivables 261 (II) Other Receivables 338 (e) Loans 4,880 (e) Subordinated Liabilities 570 (f) Investments 4,256 (f) Other financial liabilities 297 (g) Other Financial assets 51 Finance Lease Obligation 41 2 Non-Financial Assets 2 Non-Financial Liabilities (a) Inventories - (a) Current tax liabilities (Net) 63 (b) Current tax assets (Net) 32 (b) Provisions 9 (c) Deferred tax Assets (Net) 37 (c) Deferred tax liabilities (Net) 27 (d) Investment Property - (d) Other non-financial liabilities 15 (e) Property, Plant and Equipment 298 3 Equity (f) Capital work-in-progress 3 (a) Equity Share capital 17 (g) Intangible assets under development - (b) Other Equity 2,955 (h) Goodwill 188 (c) Non-controlling interest (i) Other Intangible assets 93 Right to use 40 Other non-financial assets 42 Total Assets 10,960 Total Liabilities and Equity 10,960 7
CONSOLIDATED METRICS YoY • Assets continue to grow at a Net Revenues (Rs. Cr.) & Yields (%) Assets Under Management (Rs. Cr.) Excluding Custody steady pace. Assets under Transactional / Brokerage Income Earning Assets Annual Recurring Revenue management grew 4.18% Other Income Annual Recurring Revenue Earning Assets Overall Yield Transactional / Brokerage Income on an absolute basis (QoQ) 1400 Less: AMC Assets distributed by wealth + Loan Assets double counted 1.08% 1.05% to Rs 1,423 Bn. 142,312 1200 0.92% 1,067 136,601 1,043 44 14 Change in revenue • 112,416 1000 0.86% 786 recognition implemented 85,902 97,930 800 78 from 1 st April 2019 . All 97,220 579 0.62% 662 86,091 509 600 distribution commissions 59,272 469 45 68,540 are now accounted on an 400 43,361 217 356 annuity basis. 63,530 444 58,270 367 6 82 44,852 200 239 29,852 21,144 129 108 • This change will make (12,490) 0 0.00% (18,526) (18,889) (19,149) (5,233) revenues less volatile and FY16 FY17 FY18 FY19 FY 20 Q1 FY16 FY17 FY18 FY19 FY 20 Q1 more predictable in the Profitability (Rs. Cr.) Cost Mix (Rs. Cr.) future years and will result in a much stronger business 24.0% 19.0% 22.0% 16.2% 8.3% 55.5% 51.1% 54.2% 49.7% 58.5% model. RoE % PAT (Rs Crs) 384 Cost to income ratio 566 369 600 • Focus is on growing assets 530 Admin and Other Expenses with Recurring Revenues 170 500 Employee Costs (Fees and Trail 193 264 401 400 commissions). In Q1 FY 20 122 282 these assets have grown 169 300 90 ~10% despite challenging 396 200 337 market conditions. 127 279 61 46 192 100 81 0 FY16 FY17 FY18 FY19 FY 20 Q1 FY16 FY17 FY18 FY19 FY 20 Q1 1. Net Revenues are calculated after setting of all direct operating and financing costs 8 2. Cost to income ratios have been calculated basis Net Revenues 3. Yield = Current year Net Revenue /Avg. of current year Assets and Previous year assets ( Excluding custody Assets)
CONSOLIDATED METRICS QoQ Net Revenues (Rs. Cr.) & Yields (%) Annual Recurring Revenues Assets Under Management (Rs. Cr.) Excluding Custody • (ARR) remain strong – Annual Recurring Revenue Other Income Transactional / Brokerage Income Earning Assets growing 29% on a YoY Transactional / Brokerage Income Yield Annual Recurring Revenue Earning Assets 500 basis and 2.9% on a QoQ 1.03% Less: AMC Assets distributed by wealth + Loan Assets double counted 1.01% 450 basis. This continues to be 142,312 136,601 130,034 400 our key focus area. 120,217 114,527 0.74% 0.74% 350 295 294 0.62% 300 3 27 • Reduction in revenues are 245 97,930 232 97,220 95,661 1 217 250 primarily due to lower 94,197 13 6 88,179 191 165 200 120 transactional income, no 103 82 150 upfront recognition and 100 63,530 weak capital markets. 58,270 52,907 125 129 45,021 45,561 116 103 100 50 (18,889) (19,541) (18,534) 0 0.00% (18,674) (19,149) • Retention of clients and FY 19 Q1 FY 19 Q2 FY 19 Q3 FY 19 Q4 FY 20 Q1 FY 19 Q1 FY 19 Q2 FY 19 Q3 FY 19 Q4 FY 20 Q1 RMs continues to be strong – Churn of assets remains Profitability (Rs. Cr.) Cost Mix (Rs. Cr.) below 2% p.a. and RMs below 4% p.a. 25.0% 19.6% 22.0% 17.2% 9.2% 48.6% 47.6% 55.6% 47.9% 58.5% RoAE Ex Goodwill & Intangibles % PAT (Rs Crs) Employee Costs Variable Employee Costs We continue to focus on • 117 Admin and Other Expenses Cost to income ratio rationalizing costs and 108 160 143 118 141 improving productivity – 129 127 140 84 39 46 Cost Q1 have reduced by 75 120 58 50 46 100 11% on a YoY basis and 8% 61 30 25 2 80 on a QoQ basis (excluding 60 impact of Bonus Provision 78 85 78 74 69 40 reversals in Q4 FY 19). 20 0 (25) FY 19 Q1 FY 19 Q2 FY 19 Q3 FY 19 Q4 FY 20 Q1 -20 FY 19 Q1 FY 19 Q2 FY 19 Q3 FY 19 Q4 FY 20 Q1 -40 1. Net Revenues are calculated after setting of all direct operating and financing costs 2. Cost to income ratios have been calculated basis Net Revenues 9 3. Yield = Current year Net Revenue /Avg. of current year Assets and Previous year assets (Excluding custody Assets)
CONSOLIDATED METRICS QoQ Recurring Revenues (Rs. Cr.) Recurring Revenue Assets (Rs. Cr.) PMS - Discretionary / Non-Discretionary & Advisory Fees on PMS - Discretionary / Non-Discretionary & Advisory Funds Managed by IIFL AMC Management Fees on Funds Managed by IIFL AMC Mutual Funds Trail Commission on Mutual Funds 63,530 Managed Accounts Trail Commission on Managed Accounts 129 58,270 125 4,615 Loans ROA on Loans 4,814 116 52,907 4,798 4,736 4,748 103 45,021 45,561 100 2,895 61 21,456 61 5,632 6,191 60 2,547 2,325 19,249 53 48 21,938 8 18,928 18,393 8 7 6 22,339 5 22 20,773 27 25 25 24 18,451 16,353 31 16,187 23 19 10,306 18 19 8,714 4,875 7 2,299 4 6 1,727 2 2 FY 19 Q1 FY 19 Q2 FY 19 Q3 FY 19 Q4 FY 20 Q1 FY 19 Q1 FY 19 Q2 FY 19 Q3 FY 19 Q4 FY 20 Q1 Transactional / Brokerage Assets (Rs. Cr.) Transactional / Brokerage Revenues Direct Stocks Mutual Funds Direct Stocks Commission on Mutual Funds Structured Notes & Bonds Managed Accounts Structured Notes & Bonds Commission on Managed Accounts Other Brokerage / Syndications Carry Income / One time Income 97,220 97,930 95,660 94,196 88,179 191 18,069 18,309 17,286 18,936 165 27 16,780 2 120 33,413 35,764 32,074 33,966 29,791 103 7 99 94 82 11 26 2 2 13,834 17,061 15,629 15,812 13,738 32 16 29 26 31 2 63 30,816 29,147 12 48 27,870 27,315 27,575 8 47 13 19 14 11 8 6 4 FY 19 Q1 FY 19 Q2 FY 19 Q3 FY 19 Q4 FY 20 Q1 FY 19 Q1 FY 19 Q2 FY 19 Q3 FY 19 Q4 FY 20 Q1 1. Recurring Revenues for FY 20 Q1 already reflects a Rs 5 crs reduction in Mutual fund revenues due to TER reduction 10
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