Investor Presentation Sep-19 Fullerton India Home Finance Co. Ltd. No part of it may be circulated, quoted, or reproduced for distribution outside the organization without prior written approval from Fullerton India Home Finance Co. Ltd.
AGENDA Industry Landscape About Grihashakti Business Highlights Risk Management Liquidity Management 2
Industry Landscape 3
India Growth Story Buoyed by demographics, unmet credit demand India's economy is poised to become third-largest by 2027 with $6 trillion GDP** Underpenetrated Market Incremental demand Growth potential GDP in PPP^ (US$ trillion) Credit-to-GDP ratio* India's Millennial as % of Workforce** KR UK US MY IN 69% 64% 200 199 15.7 51% 171 48% 11.8 151 150 134 36% 8.7 100 56 50 - 2016 2020 2025 1980 1990 2000 2010 2015 2018 2015 2019 2020 2025 2027 "We always over-estimate the Change that will occur in the next two years & underestimate the change that will occur in the next ten.“ – Bill Gates Source –** Morgan Stanley ^PwC – GDP at purchasing power parity (PPP) adjusts for price level differences providing a better measure of the volume of goods and services produced. 4 *BIS (KR: Korea UK: United Kingdom US: United States MY: Malaysia IN: India)
Housing - Catalyst for India’s Development Large opportunity for HFCs India’s 9% Mortgage-to-GDP ratio in 2016 estimated at ~17% by 2026 (Morgan Stanley) Housing Sector Multiplier Effect Key Drivers for Housing Sector Growth Skilled Labour Rapid urbanization* 430 mio in 2015 600 mio by 2030 Architects, Designers Service Sector & Engineers Growing middle class** 250 mio in 2015 583 mio by 2030 Banking & Finance Housing Sector* Housing shortage~ 64 mio in 2018 114 mio by 2022 Primary Sector Raw Materials Household size # Manufacturing Sector Construction Materials 4.85 in 2006 4.44 in 2016 HFC Housing Loans^ Higher Income INR 6.3 tn in 2018 INR 14.8 tn by 2023 Fiscal Impact Increased Tax Revenue • Housing Finance Companies can capture the increasing demand for • Housing sector has impact on construction, cement, steel credit buoyed by favourable demographics and urbanization sectors driving up employment and income levels Source: *Mirae Asset Management **McKinsey ~ORF ^CRISIL [Housing portfolio of HFC’s total outstanding] ~Morgan Stanley #Anarock 5 McKinsey Global Institute defines India’s middle class as households with real annual disposable incomes between 200,000 and 1 million rupees.
Government/ Regulator Support Co-ordinated policy measures to spur growth • Housing for all (Pradhan Mantri Awas Yojana) scheme – deliver 20 million houses by 2022 Home Buyers • Home buyers recognized as financial creditors • CLSS scheme extended till March 2020 • RERA regulation to enhance developer performance, improve buyer confidence • GST rates slashed for under-construction flats to 5% and affordable homes to Real Estate 1%, effective from April 1, 2019 Developers • Smart City Project - plan to build 100 smart cities • Relaxation in LTV norms and risk weight guidelines • Grant of infrastructure status to affordable housing • Better access to funds with revised ECB regulation HFCs • Enhanced Home Loan limit under Priority Sector Lending (PSL) • NHB refinancing limit for HFCs increased to INR 300 billion • Reduction in the minimum holding period for assets to be securitised • Asset purchase under government guarantee scheme 6
About Us – The Group 7
Grihashakti Housing Finance arm of Fullerton India Fullerton Financial Holdings, Singapore (FFH) is a wholly owned subsidiary of Temasek Holdings Temasek Holdings (Private) Ltd. • Temasek is a global investment company, headquartered in Singapore Wholly owned subsidiary • FFH invests in and operates financial institutions in emerging markets Fullerton Financial Holdings Pte. Ltd. Fullerton India Credit Co. Ltd. (FICCL) is a wholly- owned subsidiary of FFH Wholly owned subsidiary • Incorporated in 2005 • Pan-India presence established across 22 states and Fullerton India Credit Company Ltd. 3 union territories • Retail finance products for urban and rural households Wholly owned subsidiary as well as SMEs Grihashakti, Fullerton India Home Finance Co. Ltd. is a wholly-owned subsidiary of FICCL Fullerton India Home Finance Company Ltd. • Commenced operations in December 2015 8
FFH operates financial institutions in emerging markets Focused on SME and mass market customer segments CHINA Central 127 Community Banks CHINA 1800k Customers 4 Provinces, 40 Outlets, 80k Cust INDIA 648 MYANMAR DUBAI, Branches 32 Branches UAE 3600k Cust 200k Cust 12 outlets 53k Cust CAMBODIA POST BANK 50 Branches 122k Cust MALAYSIA 82 Branches 1,040 k Cust Fullerton Financial Holdings (FFH) has 8 operating financial services entities located across 6 countries. 9
Fullerton India Credit Company A wholly-owned subsidiary of Fullerton Financial Holdings Established Customer Connect across Urban and Rural India Villages AUM (INR) Branches 58,000 21,542 Cr 626 Rating* Employees Customers 13,000 AAA 28 Lakh Consumer Personal Loans, Loans Against Property Urban MSME Commercial Vehicle Loans, Business Loans, Loans Against Property Rural Personal / Group Loans, Loans Against Property, Vehicle Loans Cross-Sell Life / General Insurance Multi-product offerings support a range of customer needs Data as at FY19. *Rating CRISIL, ICRA, CARE. (Temasek rated 'AAA/Stable' by S&P Global) 10
The Foundation For our Strategy and Culture Be the Company of choice in financial services for our customers, employees, communities and Vision stakeholders, recognized for innovation and high ethical standards . Agility Collaboration Innovation Values Diversity Integrity Excellence 11
Board & Management Team Strong Oversight and Guidance Board of Directors Milan Shuster Sudha Pillai Anindo Mukherjee Rakesh Makkar Rajashree Nambiar Independent Director Independent Director Chairman – Grihashakti, CEO - Grihashakti, Non-Executive Director, Non-Executive Director - Fullerton Whole-time Director MD & CEO – Fullerton India India Credit Co. Ltd Credit Co, Ltd Management Team Parag Shah Shyam Reddipalli Rakesh Makkar Pankaj Malik GM – Head Business & Product Chief Risk Officer Chief Financial Officer CEO - Grihashakti, Whole-time Director FFH has senior level representation on the Board and various committees of Board 12
About Us - Our Journey 13
Our Journey So Far Steady asset growth, geographical expansion Crossed AUM of INR 40 Bio Equity infusion of INR 2 Bio Sep-19 Aug-19 Jul-19 Crossed AUM of INR 30 Bio CRISIL ‘AAA’ Rated Jun-19 Closed securitization deal worth INR 2 Bio Mar-19 Expanded network to 60 Branches Crossed AUM of INR 35 Bio Jan-18 Enhanced network of 78 branches Nov-17 Rated AA+ by CARE SARFAESI Approval Sep-17 Crossed AUM of INR 15 Bio Started operations with 20 Nov-16 branches Crossed AUM of INR 10 Bio Sep-16 Team size of 425 Dec-15 Expanded – Added 20 more branches Jul-15 Received HFC license with equity infusion of INR 1 Bio 14
Where Are We Today Business Overview Grihashakti is a wholly-owned subsidiary of FICCL Established customer connect in 78 branches across India • Customer segment – Primarily salaried, self-employed PUNJAB DELHI professionals, and MSME firms • Branches # – 3 • Branches # – 1 • Product suite – loans for new/resale home, home HARYANA UTTARAKHAND improvement & extension, home construction, loan • Branches # – 4 • Branches # – 2 against property, loans for commercial property, construction finance, Lease Rental Discounting RAJASTHAN UTTAR PRADESH • Branches # – 6 • Branches # – 6 • Presence – 78 locations; leveraging parent infrastructure GUJARAT WEST BENGAL • Branches # – 7 • Branches # – 3 • Geographies – Focus on Tier 2 and 3 cities with a strong network of associates and direct selling agents MUMBAI MADHYA PRADESH • Branches # – 4 • Branches # – 5 • Average Ticket Size in the range of 20-25 Lakhs REST OF • Employee strength ~800 AP & TELANGANA MAHARASHTRA • Branches # – 11 • Branches # – 10 • Pro-active and continuous monitoring based on TAMIL NADU external environment, customer data, bureau trends KARNATAKA • Branches # – 9 • Branches # – 7 15
Our USP Deepening customer relationships in underserved markets 1 Strong Parentage AAA rated. Steady infusion of capital 2 Experienced Management Team Industry veterans form part of Board and Senior Leadership team Geographically diversified, sizeable play basis network of 78 3 Strong footprint in Tier 2/3 towns branches and ~600 active channel partners Leverage parent’s understanding of credit and distribution in 4 Established niche in self-employed segment underserved markets, product programs customized for SENP Region specific specialty teams on board – underwriting, collateral Expertise in handling new-to-credit/ 5 management, valuation policy. Sturdy portfolio across market cycles borrowers from informal segment - demonetization, RERA, GST, liquidity crisis Pro-active monitoring based on external environment, customer 6 Strong Risk Governance Framework data, bureau trends. Robust delinquency management – from early warning signals to effective SARFAESI implementation Diversified lender base, low reliance on short term funding, 7 Comfortable Liquidity Position well-managed ALM 16
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