E D E L W E I S S F I N A N C I A L S E R V I C E S L I M I T E D Q3FY16 EARNINGS UPDATE
C O N T E N T S FINANCIAL HIGHLIGHTS 1 BUSINESS HIGHLIGHTS 2 ENTERPRISE UPDATES 3 MACRO-ENVIRONMENT 4 DETAILED FINANCIALS 5 2
FINANCIAL HIGHLIGHTS
Q 3 F Y 1 6 K E Y P E R F O R M A N C E H I G H L I G H T S 1 28% YoY growth in consolidated profits 36% growth in Ex Insurance PAT • 17 th quarter of consistent growth in profits • 2 Improved capital efficiency Key Highlights Consolidated RoE 13.0% • Ex Insurance RoE 18.5% • 3 Calibrated Growth in Balance Sheet Diversified Asset Mix • Focus on long term funds – marquee lenders • Liquidity cushion at ` 30 bn • ALM maintained • Adequately Collateralized Credit Book • Capital Adequacy ratio at 17.8% • 4
A Q U A R T E R O F S U S TA I N E D G R O W T H ` in million Consol PAT PAT Ex-Insurance RoE Ex-Insurance Q3FY16 1,057 Q3FY16 1,329 Q3FY16 18.5% 28% 36% 280 YoY YoY bps Q3FY15 829 Q3FY15 981 Q3FY15 15.8% Balance Sheet Credit Book Spread RoA Ex-Insurance Q3FY16 309,982 Q3FY16 5.5% Q3FY16 1.8% 34% 20 YoY bps Q3FY15 232,101 Q3FY15 5.5% Q3FY15 2.0% 5
P R O F I TA B I L I T Y T R A J E C T O R Y Profit after Tax ( ` in million) PAT ex-insurance Consol PAT 1400 1329 1201 1200 1114 981 1034 1000 903 1057 895 957 912 884 800 721 702 692 679 829 792 782 624 568 600 510 484 460 607 578 557 511 348 400 460 461 272 416 398 388 294 200 263 0 Q2'FY12 Q3'FY12 Q4'FY12 Q1'FY13 Q2'FY13 Q3'FY13 Q4'FY13 Q1'FY14 Q2'FY14 Q3'FY14 Q4'FY14 Q1'FY15 Q2'FY15 Q3'FY15 Q4'FY15 Q1'FY16 Q2'FY16 Q3'FY16 CONSISTENT TRACK RECORD OF GROWTH SINCE Q2FY12 6
E X - I N S U R A N C E R O E I M P R O V E D T O 1 8 . 5 % Consolidated RoE % Tangible RoE % Ex-Insurance 18.5% 13.0% 11.3% 15.6% 12.3% 8.2% 11.3% 7.6% FY13 FY14 FY15 Q3FY16 FY13 FY14 FY15 Q3FY16 7
R O A AT T R I B U T I O N ( E X I N S U R A N C E ) 9M ‘FY16 FY15 FY14 NII 5.1% 5.6% 5.3% Interest 12.7% 12.0% 11.6% Treasury 1.2% 2.2% 1.9% Interest Cost -8.9% -8.7% -8.1% Non-interest income 2.6% 2.9% 2.6% Fee & commission 2.3% 2.7% 2.4% Other income 0.3% 0.2% 0.2% Expenses -5.2% -5.7% -5.1% Employee cost -2.6% -2.9% -2.5% Depreciation & amortization -0.3% -0.3% -0.3% Operating expenses -1.6% -1.9% -1.9% -0.7% -0.6% -0.4% Provisions PBT 2.4% 2.8% 2.8% Tax -0.7% -1.0% -0.9% PAT 1.8% 1.9% 1.9% 8
C R E D I T B U S I N E S S M A J O R G R O W T H V E C T O R ` in million Ex-Insurance Revenue Profit after Tax 9MFY16 9MFY16 3,320 43% 15,310 20,340 57% 36% 1,300 2,345 64% Non Credit Businesses Credit Business 9
FINANCIAL HIGHLIGHTS BALANCE SHEET & ALM
D I V E R S I F I E D A S S E T M I X AS ON DEC 31, 2015 On Balance Fixed, tax assets Insurance Sheet Liquidity and others 1% cushion LAS and Others 5% 3% 10% SME & Agri Retail Financing Mortgages 8% 13% Gsecs Distressed 18% Asset Credit Real Estate 189 bn 10% Finance Credit 310 bn Mortgages 25% 61% Agency Structured 12% Collateralized Credit 34% Balance Sheet Split Credit Book Split 11
$ 1 2 . 7 B I L L I O N O F A S S E T S As on 31 Dec 2015 ` bn ` USD bn 310 4.7 Assets on Balance Sheet Assets Under Management 295 4.5 Assets Under Advice 234 3.5 Total Assets 839 12.7 12
DIVERSIFIED SOURCES OF BORROWINGS FY11 Q3 FY16 OTHERS 5% 4% RETAIL 14% 5% 20% ASB 14% 26% 26% BANK 50% 37% DEBT MARKET Total Borrowings ` 78.58 bn ` 271.40 bn STEADY DIVERSIFICATION OF SOURCES OF BORROWINGS LEADING TO LOWER DEPENDENCE ON DEBT MARKET BORROWINGS 13
COMFORTABLE ALM PROFILE Dec’15 ` 308.42 bn 1 % of Assets and Liabilities 100% 100% 78% 74% 55% 44% 40% 54% 43% 40% 17% 17% ASB 0-3 Mnth 3-6 Mnth 6-12 Mnth 1-3 years 3+ years Assets Liabilities POSITIVE ALM ALCO MANAGES AND MONITORS ALM, INTEREST RATE RISK AND LIQUIDITY 1 For footnotes, please refer the Safe 14 Harbor slide at the end of this presentation
S H A R E O F L O N G T E R M F U N D S I N C R E A S I N G Long Term Borrowing Breakup Long Term Borrowing ( ` in billion) Sub-debt 8% Structured Product 106.31 10% 59.39 Term NCD Loan 55% 27% Q3FY15 Q3FY16 LTB as % of Total 36% 47% Borrowing ex- Average Tenure 3.07 ASB (years) 15
C O M F O R TA B L E C A P I TA L A D E Q U A C Y R AT I O Liability Structure, Dec’15 ( ` in billion) Tier I 37.33 Consolidated Capital Adequacy 2 Tier II 9.68 17.8% Total Capital 47.01 Risk Weighted 264.65 Assets 16
L I Q U I D I T Y C U S H I O N AT ` 3 0 B N I S 1 0 % O F B A L A N C E S H E E T Liquidity Cushion ` in b illion Including off balance sheet lines 30 17 4 FY14 FY15 Q3FY16 17
BUSINESS HIGHLIGHTS
G R O W I N G B U S I N E S S P R E S E N C E MUMBAI INDIA GLOBAL PRESENCE 1 3 Strong clients/accounts base of 6,156 employees across 233 offices over 730,000 across businesses in 120 cities including eight international offices 2 Over 298,000 Depository 4 Touch points include over 4,700 Authorised Participant Accounts Persons and Sub-brokers across India 19
E D E LW E I S S O P E R AT I N G S T R U C T U R E CREDIT Present across the spectrum of Wholesale and Retail credit : • Mortgages • SME & Agri-Financing. • Distressed Assets Credit • Structured Collateralized Credit • Loans against securities & others NON CREDIT BUSINESSES Strong product franchise serving diverse client needs • Investment Banking & Advisory • Broking • Agri & Other Commodity services • Asset & Wealth Mgmt. • Financial Products Distribution & Others • BMU & Liquidity Management INSURANCE One of the fastest growing Life Insurance companies DIVERSIFIED BUSINESS MIX WITH THREE BUSINESSES 20
BUSINESS HIGHLIGHTS CREDIT BUSINESS
C R E D I T Q3FY16 Q2FY16 Q3FY15 At the end of ( ` in billion ) Total Credit Book 188.66 173.21 120.15 Mortgages 72.49 67.48 49.37 Structured Collateralized Credit 63.74 60.35 46.65 Distressed Assets Credit 17.99 14.42 8.37 SME & Agri Finance 14.59 13.28 6.59 Loans against Securities, Rural Finance & others 19.85 17.68 9.17 Update Creating capabilities on collections in retail, resolutions in distressed assets and sell down in structured finance Risk management continues to be the focus area CREDIT BOOK SCALE UP WITHOUT DILUTING UNDERWRITING STANDARDS 22
C R E D I T B O O K G R O W T H A N D E X P O S U R E S Credit Book Growth & Composition as Top Ten Sector Exposures as on on Dec 31, 2015 Dec 31, 2015 200 180 160 Real Estate & Const Co. 4% 3% 140 Mortgages/LAP 5% 120 Distressed Asset Credit 6% 29% ` in bn Consumer 100 Diversified & Others 6% 80 BSFI & Cap Mkt related 6% SME Finance 60 Infrastructure 6% 40 13% Shipping 10% 20 Organized Retail 0 Q1'09 Q3'09 Q1'10 Q3'10 Q1'11 Q3'11 Q1'12 Q3'12 Q1'13 Q3'13 Q1'14 Q3'14 Q1'15 Q3'15 Q1'16 Q3'16 Corporate Finance Retail & SME Finance RETAIL LOANS AT 29% A WELL DIVERSIFIED CREDIT BOOK WITH OF THE TOTAL BOOK ROBUST RISK MANAGEMENT APPROACH 23
C R E D I T At the end of Q3FY16 Q2FY16 Q3FY15 Average Interest Yield 16.2% 16.0% 16.1% Average Cost of Borrowing 10.7% 10.8% 10.6% Interest Spread 5.5% 5.2% 5.5% Net Interest Margin 6.8% 6.6% 7.1% Average collateral cover on Structured 2.1x 2.1x 2.6x Collateralised book 46 cities & 44 cities & 29 cities & Retail Finance presence 1,850 villages 1,800 villages 750 villages ~Number of Retail Finance clients 154,000 78,000 37,200 Housing Finance & LAP portfolio LTV ~50% ~51% ~53% RETAIL FINANCE SPREADING FOOTPRINT THROUGH SMALL-TICKET HOME LOANS, SME & RURAL FINANCE 24
C R E D I T : G O O D A S S E T Q U A L I T Y At the end of ( ` in million) Q3FY16 Q2FY16 Q3FY15 Gross NPLs Net NPLs Total Credit Book 188,659 173,215 120,154 1.4% 1.3% Gross NPLs 2,717 2,504 1,550 0.9% Gross NPL % 1.44% 1.45% 1.29% Net NPLs % 0.50% 0.44% 0.19% 0.5% 0.4% 0.4% Total Provision Held 3 2,334 2,333 1,637 0.2% 0.1% Total Provision Cover 3 86% 93% 106% FY13 FY14 FY15 Q3FY16 RISK MANAGEMENT ENSURING ASSET QUALITY REMAINS UNDER CONTROL 25
BUSINESS HIGHLIGHTS NON CREDIT BUSINESSES
N O N C R E D I T B U S I N E S S E S S C A L I N G U P R A P I D LY ` in billion AUM Wealth AUA 4 234 295 195 267 214 154 Q3'15 Q2'16 Q3'16 Q3'15 Q2'16 Q3'16 ARC Assets Credit Alternatives Equity 27
N O N C R E D I T B U S I N E S S E S U P D AT E At the end of 9MFY16 9MFY15 Number of IB & DCM Deals 75 74 Research Coverage Institutional 214 206 Retail 38 52 Broking ADV ( ` in billion ) 50 48 Retail Financial Markets clients 479,000 445,000 Depository Participant accounts 298,000 278,000 Agri Services Number of Warehouses 226 - Warehousing Capacity (Lac MT) 9.3 - 28
B A L A N C E S H E E T M A N A G E M E N T U N I T H I G H L I G H T S Key Objectives BMU & Corporate Assets, December ’15 ` in billion Liquidity management; Others Fixed & 4 Liquidity cushion raised Tax Assets to ` 30 bn 10 Asset Liability On BS Management Liquidity cushion Manage Treasury assets 9 Corporate Fixed Assets and Investments Gsecs 55 29
BUSINESS HIGHLIGHTS LIFE INSURANCE BUSINESS
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