Corporate Presentation FY 2019-20 Contents Company Background - - PowerPoint PPT Presentation

Corporate Presentation FY 2019-20

• Company Background
• Key Differentiators
• Business resilience under Lockdown
• Fullerton India Standalone Financials
• Management Team
• CSR and Accolades
• Housing Finance Standalone Financials
• Consolidated Financials

Contents

Company Background

DUBAI, UAE

6 outlets 34k Cust

INDIA

648 Branches 3,200k Cust Central CHINA 4 Provinces, 41 Outlets 100k Cust

CHINA

127 Community Banks 2400k Customers

MYANMAR

51 Branches 223k Cust

CAMBODIA POST BANK

103 Branches 129k Cust

MALAYSIA

82 Branches 957 k Cust

Fullerton Financial Holdings (FFH) has 8 operating financial services entities located across 6 countries. 4

INDIA Digital MSME 55K Cust

FFH operates financial institutions in emerging markets

Focused on SME and mass market customer segments

*FFH is a wholly owned subsidiary of Temasek ^Fullerton Home Finance is a wholly owned subsidiary of Fullerton India

Fullerton Home Finance^

Early construction Mid stage Growth stage

FFH, parent entity of FICCL is incorporated as a wholly-

• wned subsidiary of Temasek

Holding (P) Ltd

2003

FICCL was acquired by FFH in December 2005

2005

Commercial Launch of NBFC operations. Pan-India presence established.

2006-08

Commercial Vehicle business launched. Network consolidated.

2010

Portfolio reshape and segmental shift to mass affluent. LAP, SME business re-launched. Achieved operational breakeven

2011

Capital infused for growth Rural network expanded. Funding diversified.

2012-13

Accelerated secured business, Rural network Operations process revamp

2014

Capital Infused for growth. Home Fin business launched. Rural franchise expanded. .

2015-17

RoE of 17%+ delivered. INDAS

• implemented. Fullerton Direct
• launched. Branches exceeded 640,

AUM crossed INR 220bn.

2018-20 5

Fullerton India Credit Company

Corporate Evolution

Branches 6

Fullerton India Credit Company Ltd

Quick statistics FY20

Reach Scale Momentum

648

Towns

600

Thousand villages covered

58 46 207 14

INR bn Average Monthly business writing

14

INR bn Asset Under Management

248

mn Customers

3.2

Thousand average accounts

• pened every month

INR bn Net worth Thousand employees

Key Differentiators

Fullerton India has created significant competitive advantage

8

1

Deep inter-linkages, strategic and operational

• versight

Strong Parentage and Governance

2

Granular Pan India portfolio, addressing the under-banked segment with limited access to formal channels

Unique Business Model in Retail Finance

3

Prudent ALM practices, resilient credit and

• perational risk mitigation

Conservative Liquidity and Risk management

4

End to end process digitization Best in class technology ,data infrastructure and strong analytics

Future ready through Investment in Digitization, Technology and Analytics

Fullerton India has created significant competitive advantage

9

1

Deep inter-linkages, strategic and operational

• versight

Strong Parentage and Governance

2

Granular Pan India portfolio, addressing the under-banked segment with limited access to formal channels

Unique Business Model in Retail Finance

3

Prudent ALM practices, resilient credit and

• perational risk mitigation

Conservative Liquidity and Risk management

4

End to end process digitization Best in class technology ,data infrastructure and strong analytics

Future ready through Investment in Digitization, Technology and Analytics

 Board deeply involved in the strategy development, financial planning and oversees business execution  Joint agreement on business strategy and annual targets including investment slates and compensation  ALCO is represented by two FFH executives who provide regular inputs, similarly for Finance and Risk

Strong oversight and Risk Governance by Board & Independent Directors

10

Close and Continuous Engagement with Parent

Strategic and operational guidance, in addition to oversight

Risk Oversight Committee Audit Committee Nomination & Remuneration Committee CSR Committee IT Strategy Committee Oversees credit, market and operational risk Reviews risk appetite and credit policies Monitors portfolio performance and approves mitigation actions Reviews the financial statements and financial reporting process Reviews scope, findings, reports, etc. of Internal and external audit Oversees Internal controls framework Oversees overall Human Capital mission and strategy. Oversees key appointments and compensation matters Reviews structure and composition of the Board and recommends for changes Recommends CSR policy, budgets, projects, etc. Monitors implementation

• f the CSR

activities Oversees IT governance, strategies, policies, spends, etc. Reviewing cyber security matters

Fullerton India has created significant competitive advantage

11

1

Deep inter-linkages, strategic and operational

• versight

Strong Parentage and Governance

2

Granular Pan India portfolio, addressing the under-banked segment with limited access to formal channels

Unique Business Model in Retail Finance

3

Prudent ALM practices, resilient credit and

• perational risk mitigation

Conservative Liquidity and Risk management

4

End to end process digitization Best in class technology ,data infrastructure and strong analytics

Future ready through Investment in Digitization, Technology and Analytics

12

UT-refers to union territory

Strong Pan-India distribution network

648 branches cover 25 states/UT in the Country

*As per Census 2011 Centre Definition- Metropolitan: population >10 lakh; Urban: >1 lakh and <10 lakh; Semi-Urban: >10,000 and <1 lakh; Rural: <10,000

Branch Coverage* 12

5% 53% 42%

Metro Urban Centre Semi Urban & Rural Centre

21% 34% 32% 13%

North South West East

40 3

648

Geographically diversified

Customer Segment Annual Household Income

• No. of Households

Serviced By

Strugglers < INR 150K

82 mio ( 31%)

MFI Lenders Microfinance Affluent > INR 1,100K

17 mio (7%)

Foreign & Private Banks

Servicing the segment below the Foreign and Private banks Addressable market of 140 mio households by 2025 – 50% is underserved

Next Billion INR 150K –500K Aspirers

INR 500K – 1,100K

121 mio (45%) 40 mio (16%)

FICC Positioning

Source : Euro Monitor and BCG

13

Focused on a bankable, underserved segment

Serving customers with limited access to formal banking channels

FICC targets underserved segment not covered by large banks and MFIs 3.2 mio live customers provide a large cross sell and upsell opportunity

14

A Well-diversified asset portfolio

Multiple product, customer and geographic segments create durability Geographically diversified (AUM).. ..across multiple asset classes

Loans against Property, 32% Personal Loans

• Business, 14%

Personal Loans

• Salaried, 19%

Commercial Vehicle, 6% Digital , 6% Rural Loans, 15% Rural Business Loans, 7% Others, 1%

Providing customized, large suite of financial solutions in affluent markets

Catering to consumer, retail businesses and MSME/SME across customer value chain

Direct to customer, faster and convenient Tapping diversified segment

• f customer directly or

through Fintech partnership led model

Urban

Fullerton Point

Neighborhood financer generating employment & income and partnering growth

Serving the underserved largely in under penetrated geographies

Rural

Gramshakti

15

Lines of business

Addressing a wide spectrum of customers, across needs and Affluence

Digital

Fullerton Direct

Wide spread network 236 branches across 25 states and UT’s ; leveraging existing cross business infrastructure Broad customer segment Serving wide variety of customers across consumer,retail business and SME/MSMEs for all kinds of personal and business end use Digital focus Digitizing each step of customer loan life cycle to process efficiencies Retail focus largely present in tier 2 downwards, focus on low ticket, high yield business and ability to upsell/ cross-sell Product suite Customized offering across value chain with clearly defined product strategies and geographical presence inclusive of insurance Distribution channels Tapping all customer touch points – direct, channel based, lead based channels and alternate channels

16

Urban Business

Wide network, resilient business model addressing Individuals and Small business

Personal Loans - Salaried, 32% Personal Loans - Business, 25% Loans against Property, 31% Commercial Vehicle, 11% Others, 1%

Portfolio Distribution

Comprehensive product suite with insurance throughout the life cycle of customers

Life & Health Insurance Livelihood Micro Enterprise Aspirations

• Sell & collect
• Offered to

Women’s Livelihood group

• Business Loans
• Two Wheeler

Loans

• Loan against

Property

‘Fullerton Gramshakti’

Registered Brand Name of Fullerton India’s Rural Business

Woman’s Hand mnemonic Symbolizing elements

• f rural business operations

Empowering women small scale entrepreneurs Close proximity & deep understanding of the customers Last mile door step service Widely spread network with 412 branches in 15 states

• Offered to Small

enterprises or rural self employed

• Available in

different ticket sizes

• Diverse end use

ranging from capital expenses, local transportation or working capital needs

• High ticket size

loans

• Offered to small

and medium scale enterprise

• End use may vary

from Capital expenses to working capital needs

• Rural Loans
• Merchandise

Loans 17

Rural Business

Multiproduct proposition across customer lifecycle

Digital Business Fullerton Direct - Strategy

18

Direct to customer

• Online acquisition (PL & MSME)
• Direct tie-ups with OEM (Go-To-

Market)

• Leveraging

customer franchise through X-sell

• Branchless & centralized processing
• Lean team structure
• Investments in Digital as a separable

single thread yielding results

• Seamless “Do it yourself” journeys built

in-house for greater customer experience

E-aggregators Partnerships

• Online aggregators as a distribution

arm

• Competing with other banks and

NBFCs

• Qualified, warmed leads pushed to

FICC for underwriting & disbursal

• Plug and Play model
• Pseudo “Business rule engines”
• Saathi App: Faster onboarding, Instant

payouts for lead generators

• Forged partnerships with 20+ top e-

aggregators

• Collaborating with Fin-techs for:
• Consumer Segment
• MSME Segment
• Live 20+ Partnerships
• Customer acquisition engine
• Plug and Play model
• FLDG & risk sharing arrangement
• Testing contemporary products for Next-

gen

• Develop insights into use of alternate

data/ transaction data

Model Core Competency

Fullerton India has created significant competitive advantage

19

1

Deep inter-linkages, strategic and operational

• versight

Strong Parentage and Governance

2

Granular Pan India portfolio, addressing the under-banked segment with limited access to formal channels

Unique Business Model in Retail Finance

3

Prudent ALM practices, resilient credit and

• perational risk mitigation

Conservative Liquidity and Risk management

4

End to end process digitization Best in class technology ,data infrastructure and strong analytics

Future ready through Investment in Digitization, Technology and Analytics

 Three pillars of conservative liquidity risk management  Diversification (across instruments, lender category)  Matching asset-liability tenor  Contingency funding via adequate liquidity buffer  Basel III oriented, Board approved policies guide liability management  Bank style Treasury management with Rigorous monitoring via monthly ALCO  Compliance oversight by independent verticals 20

AAA AAA AAA

“Diversified Lender Base” “Comfortable liquidity cushion” “Low reliance on short term funding” “Well managed ALM”

Strong external endorsement

Conservative approach to Liability management

Deep focus on raising renewable and durable resources

21

Well diversified funding book

Maintaining headroom in each source Diversification across instruments …

Funding mix (%)

… and Investors

Sourcing mix (%)

Assignment 5% CP 9% Overseas 13% Sub Debt 4% Bonds 38% Term Loan 31% FII 1% Corporates

2% DFIs 8% Overseas 11% Insurance & Pension 13% Mutual Fund 13% Bank Instrument 17% Bank Loan 35%

22

Well Managed ALM

Yearly Cumulative Mismatch of +66% Structural liability remains positively biased Liabilities maturity aligned with asset profile

• 78
• 60
• 68
• 27
• 59

130 55 24 32 52 66% 34% 1% 3% 0%

Upto 1Y 1-2Y 2-3Y 3-5Y Over 5Y Liabilities Assets Cumulative mismatch (RHS)

30 29 30 32 33 39 38 38 39 42

Mar 19 Jun 19 Sep 19 Dec 19 Mar 20 Borrowings Assets

Operational and Business Units

1st line of defense

Independent Review by Internal Audit , Co-Sourcing by EY

3rd line of defense

ORMC ROC/ Board Oversight External Auditors Regulators

Operational Risk, Fraud Risk, InfoSec and Compliance

2nd line of defense

OR framework components Implementation/ execution

Risk Governance framework

• Regular Operational Risk Management Committee (ORMC) meetings to review OR issues
• Quarterly Risk Oversight Committee meetings to assess OR profile

Policy/ Procedures

• Robust Operational Risk policies and standards
• Internal Financial Controls (IFC) standards as mandated by Companies Act

Risk Identification

• Comprehensive Risk library
• Regular process walkthroughs and reviews

Risk Assessment & Measurement

• Periodic Risk Assessments
• Loss Data management

Control & Mitigation

• Periodic control assessment
• Timely corrective actions

Monitoring & Reporting

• Key Risk Indicators monitoring
• Regular reporting to ORMC and ROC

23

Enterprise level Risk Framework

Agile framework, multilayer controls

Underwriting Risk Policy Risk Analytics Collections

• On-ground approach for controlled

risk

• Partial centralization for efficiencies
• Automated decision support
• Digitization tools such as perfios etc.

Risk oversight committee of the Board Operational Risk framework Fraud Control support 1 2 3 4

• Well defined product boundaries
• Usage of 10 years customer data

leanings for evolution of scorecards and EWS models

• Portfolio management
• Clear structure of collections, legal and

recoveries

• In-house & agency led models
• Propensity models for recovery
• Early warning decision trees
• Over 20 scorecards and propensity

models across customer loan life cycle

• Business rules engines for automation
• f scorecards
• Managing portfolio volatility through

RLM

24

Credit Risk Framework

First line of defense, robust and tested

Fullerton India has created significant competitive advantage

25

1

Deep inter-linkages, strategic and operational

• versight

Strong Parentage and Governance

2

Granular Pan India portfolio, addressing the under-banked segment with limited access to formal channels

Unique Business Model in Retail Finance

฀

3

Prudent ALM practices, resilient credit and

• perational risk mitigation

Conservative Liquidity and Risk management

4

End to end process digitization Best in class technology ,data infrastructure and strong analytics

Future ready through Investment in Digitization, Technology and Analytics

Customer App & Portal API based Sourcing Multi Bureau Integration Robust Verification Platform eConsent API Based eNach Collection Tie-ups Customer Payment Options Multi-lingual Customer App & Portal Chatbot, IVR

ON BOARDING UNDERWRITING DOCUMENTATION COLLECTION SERVICING

26

CREDIT BUREAU

INCOME DOMAIN EMPLOYMENT ANTI FRAUD FIELD

DIGITAL FIRST | MULTI CHANNEL | PRODUCT AGNOSTIC | CUSTOMER CENTRIC

Digitizing customer lifecycle

In-house Sales Apps & Portals Collection App & E-receipts Robust Rule Engine Digital Repositories Customer 360 View

Well-rounded Digital Play

Digital 360

With capabilities for the new normal

Enable Remote Operations

Virtual Private Network & desktop-on-demand solutions Bring Your Own Device, mobility & collaboration support Dialer for home based telesales

• Scale up Digital Collections

Digital app based collections and tracking Strategic alliances with eazypay & Bharat Billpay Robotic Process Automation bots for disbursals

• Enhance Onboarding Efficiency

AI driven credit decision scorecard Extended access to apps for DSAs Secure document management solution

• Truly Omni-channel Sourcing

Channel coverage across mobile, web, chat & APIs White labeled solutions for Go-to-market partners

• Increase Market Penetration

Affiliate portal for retail entrepreneurs Institutional partner portal for FinTechs

• Faster Technology Integration

Open APIs for Digital Lending flow integration Partner policy rules integration & hosting

• Increase Customer Engagement

AI driven cross-sell and top-up offers Digital Payments over UPI, wallets etc. Self service features like bureau score, account statement

• Expand Product Portfolio

New lending products launched: Mortgage, Consumer Durables, Growing Enterprise, Emergency Loan & Loan against property

• Enhance Customer Experience

Conversational lending over WhatsApp Contactless lending via Video KYC, eConsent, eNach Richer, faster Do-it-yourself experience

• 27

Business resilience under Lockdown

• Full-fledged wellness program called FullerLife, supporting employees with Health Care issues

including Covid-19

• We provide “Doctor On Call”, “Counselor On Call”, “Home Isolation Care” Training, Wellness

Portal

Employee Safety

• Entire loans portfolio assessed for industry / sector impact due to COVID. Bureau trends being

watched and recalibration of application and behavioral score cards underway

• Focus on up-sell and cross-sell across the spectrum of over 3.0 million active customers
• Leverage and focus on MSME segments backed by Govt. of India initiatives (Guarantee backed)

Strong focus on portfolio and business resumption

• Capital Infusion of INR 7.5bn in May ; CAR at ~23% as of June 2020
• Maintained over INR 40bn liquidity consistently since March
• Borrowed in every month through lockdown across various instrument
• Holding a robust pipeline across domestic and overseas sources

Capital & Liquidity Buffers Business Continuity Action Plan

• WFH has been enabled for all employees and required IT infrastructure support is being provided
• All offices / branches were opened in phase manner. Attendance roster is being maintained
• Employee training, Induction and on-boarding are being done virtually
• 98% of our branches are operational in June 2020

28

Fullerton India Standalone Financials

* Equity Infusion of INR 3bn in FY 20

FY 20 Performance Headlines

INR 11 bn

Profit before tax

• 6%
• 1.0%

3.2%

ROA (post tax)

17.6%

Return on Equity*

• 7.2%

INR 248 bn

AUM

15% 1.4%

Cost to Income

INR 166 bn Disbursal

9%

35.4%

30

FY18E Highlights - YoY INR mn FY 19 FY 20 YoY YoY% Net Revenue 26,972 33,858 6,887 25.5% Expenses 9,924 11,994 2,070 20.9% Working Profit 17,048 21,864 4,817 28.3% Cost of Credit* 5,105 10,614 5,509 >100% Profit Before Tax 11,943 11,250

• 693
• 5.8%

Profit After Tax 7,752 7,473

• 279
• 3.6%

Customer AUM (INR bn) 215 248 33 15.1% Shareholders' Funds 36,519 46,476 9,957 27.2% RoA (Post Tax) (%) 4.2% 3.2%

• 1.0%

RoE (Post Tax) (%) 24.8% 17.6%

• 7.2%

Branches (#) 626 648

• 22

Financial Results

31

* FY20 includes ECL overlay of INR 1.7 bn

Assets Under Management (INR mn) Net NPA (%)

Stable Credit Quality

32

215,419 229,812 240,679 248,047 Mar 19 Jun 19 Sept 19 Mar 20

1.0% 1.0% 1.1% 1.0% Mar 19 Jun 19 Sep 19 Mar 20

36,519 38,665 43,879 46,476

Mar 19 Jun 19 Sep 19 Mar 20 Capital Infusion

3,000

14.2% 14.5% 15.3% 15.4% 19.6% 19.7% 20.2% 19.8% Mar 19 Jun 19 Sep 19 Mar 20

Regulatory Minimum for CAR (15%)

CAR % Tier 1 %

Regulatory Minimum for Tier1 (10%)

Capital Adequacy (%) Shareholders’ funds (INR mn)

Capitalization

33 Capital Infusion of INR 7.5bn in May 20

Management Team

Business & Franchise Development Integrated Risk Management Capital and Finance Infrastructure

• Extensive local experience in

Product development and Distribution in large branch networks in Rural & Urban India.

• Subject matter expertise in

Retail Lending and Housing Finance

• MNC Banking and International

Markets exposure

• In depth experience in Risk

Management in Consumer businesses in MNC Banks and in large Indian NBFC including Housing Finance

• Specialised teams focused
• n Risk Policy,

Underwriting, Operational Risk , Collections, and Legal management

• Strong experience in Global

Markets in leading MNC Banks

• Rapidly growing

relationships with large Indian & MNC Banks and FIs

• Strong Financial Control

experience in MNCs

• Strong international

experience HR management in large MNC retail Financial experience

• Strong Operations

capability with six sigma Process Reengineering expertise

• Advanced technology

deployment and change management skills

Combined senior team experience

200+ years 200+ years 100+ years 100+ years

Depth of management experience

Bankers with deep domain experience and multinational orientation

35

Rajashree Nambiar CEO & Managing Director

Sanjeet Dawar Head – Urban Business Vishal Wadhwa Head – Rural Business Rakesh Makkar CEO - FIHFC Nishant Jasapara Head – Digital Business Pavan Kaushal Chief Risk Officer Anil Noronha Head – Human Resources Pankaj Malik CFO & Chief Compliance Officer Ekhlaque Bari Chief Technology Officer Arvind Sampath Head – Treasury Sanjiv Gyani Head – Operations

36

Management Team

Industry stalwarts with combined experience of over 200 years

Shirish Apte Chairman, Independent Director Hong Ping Yeo Deputy Chairman, Non - Executive Director Rajashree Nambiar Chief Executive Officer & Managing Director Anindo Mukherjee Non - Executive Director Premod P Thomas Independent Director Milan Shuster Independent Director Sudha Pillai Independent Director Radhakrishnan B. Menon Independent Director

Board of Directors

Promeet Ghosh Non - Executive Director

37

CSR and Accolades

39

Fullerton India Credit Company

Corporate Social Responsibility

• 2. Health
• Jyoti - Save The Eye : Vision care centers and
• utreach camps
• Niramaya - Healthcare for women & children
• Mobile heath care vans, focussed on

malnutrition & TB

• Disaster relief
• 4. Environment
• Krishi Mitra
• Organic Farming
• Maintaining Ecological Balance

Focus sectors & Key Initiatives

• 3. Education
• Sakhi: Digital Financial Literacy for Women
• Akshar : Digital Education, Scholarships &

Science Centres.

1. Livelihood

• Jeevika: Vocational training program for women
• Yuva Kaushal: Skill development for Youth
• Pashu Vikas
• Cattle care camps &
• Integrated Livestock

Development

40

Fullerton India Credit Company

COVID -19 Response

• Over 1lakh kits distributed

across 250+ Gramshakti Branch catchment area, covering more than 1600 villages across 12 states.

• 9 NGOs and local

Gramshakti teams were part

• f the 45 day long activity.

Hygiene kits distribution

• Over 675 health camps

aimed at creating COVID-19 awareness & providing basic health care were organized

• More than 47,000 people

across 7 states were benefitted by the initiative

Health & Awareness camps

• Personal protective kits (PPE

Kits, Sanitizers & N-95 masks) were distributed across 20 Gramshakti branch locations covering 20 hospitals & COVID centers.

• 50 personal protective kits

were distributed to Police personnel & Local administration officials.

Personal Protection kits distribution

CSR budget allocated for COVID-19 relief – INR 20 mio

41

Fullerton India Credit Company

Awards Winning Brand

ISO 27001 Certification March 2020

The Golden Peacock Innovative Product & Service Awards March 2019 Finnoviti Awards January 2019 Best of India Records (CSR) January 2019 World Book of Records (CSR)December 2019 Companies with Great Managers November 2019 Great Place to Work Certified Aug 2019 – Jul 2020

42

Fullerton India Credit Company

Awards Winning Brand

Future of Marketing Summit & Awards – October 2018

“Digital Marketing” Ad Tech India”Awards March 2018 Retail NBFC of the Year Outlook Money Magazine March 2018 Mumbai’s Hot 50 Brands Mumbai Brand Summit March 2018 Best PR Campaign” ACEF Awards – October 2018 mCube Conference & Awards August 2018 Best Digital Campaign” Digital Industry Awards October 2017

Housing Finance Standalone Financials

FY18E Highlights - YoY

INR mn

FY 19 FY 20 YoY YoY% Net Revenue

1,459 2,369 910 62.4%

Expenses

995 1,305 310 31.2%

Cost of Credit

435 851 416 95.6%

Profit Before Tax

30 214 184 >100%

Profit After Tax

5 139 134 >100%

Customer AUM

31 43 12 40.4%

RoA (Post Tax) (%)

0.0% 0.4%

• 0.4%

Leverage

5.5x 5.1x

• 0.4x

Branches (#)

82 78

• 4

Housing : Non Housing mix

59% : 41% 58% : 42%

• 1% : +1%

HFC Financial Results

44

* FY20 includes ECL overlay of INR 0.2 bn

Consolidated Financials

FY18E Highlights - YoY

INR mn

FY 19 FY 20 YoY YoY% Net Revenue 28,431 36,228 7,797 27.4% Expenses 10,918 13,299 2,380 21.8% Cost of Credit 5,540 11,465 5,925 >100.0% Profit Before Tax 11,973 11,464

• 508
• 4.2%

Profit After Tax 7,743 7,604

• 139
• 1.8%

Customer AUM (INR bn) 246 291 45 18.3% RoA (Post Tax) (%) 3.7% 2.8%

• 0.9%

RoE (Post Tax) (%) 25.0% 18.0%

• 7.0%

Branches (#) 649 674

• 25

Consolidated Financial Results

46

* FY20 includes ECL overlay of INR 1.9 bn

Contact:

Fullerton India Credit Company Ltd. Floor 6, B Wing, Supreme Business Park Powai, Mumbai 400 076 INDIA Phone: +91 22 4224 1234 www.fullertonindia.com

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