Corporate Presentation H1 FY20 Company Background Key - - PowerPoint PPT Presentation

Corporate Presentation H1 FY20

• Company Background
• Key Differentiators
• H1 FY 20 Financials
• Management Team
• CSR and Accolades

Company Background

DUBAI, UAE

12 outlets 53k Cust

INDIA

648 Branches 3,600k Cust Central CHINA 4 Provinces, 40 Outlets 80k Cust

CHINA

127 Community Banks 1800k Customers

MYANMAR

32 Branches 200k 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. 4

INDIA Digital MSME 42K Cust

FFH operates financial institutions in emerging markets

Focused on SME and mass market customer segments

*FFH is the wholly owned subsidiary of Temasek

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. Digital deployment. Rural franchise expanded. .

2015-17

RoE of 24% delivered. INDAS

• implemented. New products
• launched. Branches exceeded 626,

AUM crossed INR 20bn.

2018-19 5

Fullerton India Credit Company

Corporate Evolution

Branches

648

Towns

600

Thousand villages covered

58

6 INR Bn Monthly business writing

15

INR Bn Net Worth

44

INR Bn Asset Under Management

241

Thousand accounts

• pened every

month

272

Thousand employees

14

Mn Customers

3.6

Reach Scale Momentum

Fullerton India Credit Company Ltd

Quick statistics

Key Differentiators

... Leading to strong and predictable outcomes

Strong Parentage and Governance

• Deep inter-linkages, strategic and operational
• versight

1

Conservative Liquidity and Risk management

• Prudent ALM practices, resilient credit and
• perational risk mitigation

3

Unique Business Model in Retail Finance

• Granular Pan India portfolio, addressing the under-

banked segment with limited access to formal channels

2

💢

4

Future ready through Investment in Digitization , Technology and Analytics

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

strong analytics

Fullerton India has created significant competitive advantage…

Fullerton India has created significant competitive advantage…

9

... Leading to strong and predictable outcomes

Strong Parentage and Governance

• Deep inter-linkages, strategic and operational
• versight

1

Conservative Liquidity and Risk management

• Prudent ALM practices, resilient credit and
• perational risk mitigation

3

Unique Business Model in Retail Finance

• Granular Pan India portfolio, addressing the under-

banked segment with limited access to formal channels

2

💢

4

Future ready through Investment in Digitization , Technology and Analytics

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

strong analytics

• FFH is 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
• Assistance from FFH received in negotiating MNC Banking relationships and for multilateral agencies (IFC, ADB)

Strong oversight by Temasek owned Fullerton Financial Holdings(FFH), Singapore

Risk Oversight Committee Nomination & Remuneration Committee

Oversees credit, market and

• perational risk

Audit Committee

Oversees Internal controls framework Oversees key appointments and compensation matters

Corporate Social Responsibility Committee

Recommends CSR policy, budgets, projects, etc.

IT Strategy Committee

Oversees strategy on IT, implementation and outsourcing

10

Close and Continuous Engagement with Parent

Strategic and operational guidance, in addition to oversight

Fullerton India has created significant competitive advantage…

11

... Leading to strong and predictable outcomes

Strong Parentage and Governance

• Deep inter-linkages, strategic and operational
• versight

1

Conservative Liquidity and Risk management

• Prudent ALM practices, resilient credit and
• perational risk mitigation

3

Unique Business Model in Retail Finance

• Granular Pan India portfolio, addressing the under-

banked segment with limited access to formal channels

2

💢

4

Future ready through Investment in Digitization , Technology and Analytics

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

strong analytics

9 170 117 127 225 Metro Tier 1 Tier 2 Tier 3 Tier 4 +

40 3

Geographically diversified.. Branch Coverage 12

72%

11% 34% 21% 34%

East West North South

648

UT-refers to union territory

Strong Pan-India distribution network

648 branches cover 23 states/UT in the county

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

FICC targets underserved segment not covered by large banks and MFIs 3.6 mio live customers provide a large cross sell and upsell opportunity

Source : Euro Monitor and BCG

13

Focused on a bankable, underserved segment

Serving customers with limited access to formal banking channels

Geographically diversified.. ..across multiple asset classes

Figures as of 30th Sept, 2019

14

West, 28% North, 25% South, 42% East, 5% Loans against Property, 18% Business Loan, 13% Personal Loans

• Salaried, 18%

Commercial Vehicle Loans, 7% Digital , 5% Rural Loans, 17% Rural Business Loans, 22% Others - Urban Secured*, 1%

A Well-diversified asset portfolio

Multiple product, customer and geographic segments create durability

Providing customized, large suite of financial solutions in affluent markets

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

Neighborhood financer generating employment & income and partnering growth

Serving the underserved largely in under penetrated geographies

Direct to customer, faster and convenient Tapping expanded (newer & wider) segment of customer directly or through partnership led model, by straight through process

Urban Rural Digital

15

Lines of business

addressing a wide spectrum of customers, across needs and Affluence

Wide spread network 236 branches and 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 Distribution channels Tapping all customer touchpoints – direct, channel based, lead based channels and alternate channels

Salaried and Business Loans 54% 16

Consumer loans, 33% Business loans, 22% Loan against property, 32% Commercial vehicles, 12%

Urban Business

Wide network, resilient business model addressing Individuals and Small business

Comprehensive product suite with insurance throughout the life cycle of customers

Life Insurance

Livelihood Micro Enterprise Aspirations

• Sell & collect
• Offered to

Women’s Livelihood group

• Business Loans
• Two Wheeler

Loans

• Loan against

Property

‘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
• f the customers
• Last mile door step service
• Widely spread network with 397

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 Lending: ~USD 357 Bn opportunity by FY23* 18

Key growth drivers ​Increasing digitally savvy customers ​Rapid technological advances

• Mobile enabled data; Big data

​Rapid rise of innovation models

• Fintechs

​Enabling regulatory environment

• India Stack

Source: CIBIL; BCG Google 2018 Digital Lending Survey; BCG Analysis

Key Offerings

• Acquire & own customers through

Online lending portal & Mobile App

• Catch customers young, and maximize

customer lifecycle value

Direct Sourcing E-Aggregators

• Competing through lead generation

platforms

• Qualified, warmed leads pushed to FICC

for underwriting & disbursal

• 10+ Alliances

Partnerships

• Integrated Financial service provider

within a 3rd party platforms

• Covering the entire eco-system across

various industry segments with near real-time disbursals

• 20+ Partnerships

Digital business strategy for growth

Adding new channels, Scale & Stabilization

Fullerton India has created significant competitive advantage…

19

... Leading to strong and predictable outcomes

Strong Parentage and Governance

• Deep inter-linkages, strategic and operational
• versight

1

Conservative Liquidity and Risk management

• Prudent ALM practices, resilient credit and
• perational risk mitigation

3

Unique Business Model in Retail Finance

• Granular Pan India portfolio, addressing the under-

banked segment with limited access to formal channels

2

💢

4

Future ready through Investment in Digitization , Technology and Analytics

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

strong 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

Diversification across instruments … Borrowings mix (%)

21

… and Investors Sourcing mix (%)

Insurance & Pension 16% Banks - Other Instruments 18% Banks - Loans 29% Development al Finance Institution 6% ECB - Bonds, Loans 13% FPI 2% Mutual Funds 15% Corporate/ HNI 1%

Term Loan 33% NCD 33% Overseas Bonds 5% ECB - Loan 8% Sub Debt 5% CP 16%

Well diversified funding book

Maintaining headroom in each source

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

22

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 of scorecards

• Managing portfolio veracity

through RLM

23

Credit Risk Framework

First line of defense, robust and tested

Fullerton India has created significant competitive advantage…

24

... Leading to strong and predictable outcomes

Strong Parentage and Governance

• Deep inter-linkages, strategic and operational
• versight

1

Conservative Liquidity and Risk management

• Prudent ALM practices, resilient credit and
• perational risk mitigation

3

Unique Business Model in Retail Finance

• Granular Pan India portfolio, addressing the under-

banked segment with limited access to formal channels

2

💢

4

Future ready through Investment in Digitization , Technology and Analytics

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

strong analytics

Technology Digital Analytics

• Adoption of Agile technology
• IT Org Structure, Skills

change to execute IT long term strategy

• Tools include RPA, Data

warehouse

• Branchless & centralized processing E2E

processes

• Full stack of APIs for partner integration

(Serving 40+Partnetships)

• Underwriting based on Alternate data

Robust BRE engines & instant approvals

• Cross sell / Up sell Credit Risk

Monitoring / Stress Testing

• Lifetime profitability, Risk

adjusted Return and Recession Loss Multiplier guide portfolio shape

• ML based scorecards Risk Based

Pricing

25 BOTs APIs

Deep Investments in Technology, Digitization & Data Analytics

To Bullet proof future growth

Financials- H1 FY 20

27 Above results based on Ind AS

H1 FY 20 Performance Headlines

INR 6.8 Bn

Profit before tax

28%

• 0.1%

3.9%

ROA (post tax)

21.9%

Return on Equity*

• 1.5%

INR 241 Bn

AUM

26% 0.7%

Cost to Income

INR 88.8 Bn Disbursal

17%

36.3%

Above results based on Ind AS *Based on principal only

FY18E Highlights - YoY

28

INR Mn

H1 19 H1 20 YOY

YoY % Net Revenue 12 12,37 ,376 16 16,43 ,437 4,06 ,061 32.8% Expenses 4,40 4,409 5,96 5,967 1,55 1,558 35.3% Working Profit 7,96 7,967 10 10,47 ,470 2,50 2,503 31.4% Cost of Credit 2,62 2,624 3,64 3,643 1,01 1,019 38.8% Profit Before Tax 5,34 5,343 6,82 6,827 1,48 1,484 27 27.8% .8% Profit After Tax 3,39 3,393 4,36 4,364 971 971 28 28.6% .6% Customer AUM 190,6 ,600 240,6 ,679 50,078 26.3% Shareholders' Funds 32 32,24 ,245 43 43,87 ,879 11,634 36.0% RoA (Post Tax) (%) 4.0% 4.0% 3.9% 3.9%

• 0.1%
• 0.1%

Branches (#) 596 596 648 648 52 8.7%

*

Financial Results

Assets Under Management (INR mn)

29

190,600 193,876 215,419 229,812 240,679 Sep 18 Dec 18 Mar 19 Jun 19 Sep 19

Net NPA (%)

1.0% 1.0% 1.0% 1.0% 1.1% Sep 18 Dec 18 Mar 19 Jun 19 Sep 19

Stable Credit Quality

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

30

14.0% 13.0% 13.5% 13.4% 14.2% 19.5% 19.2% 19.6% 19.7% 20.1% Sep 18 Dec 18 Mar 19 Jun 19 Sep 19 Regulatory Minimum for CAR (15%) CAR % Tier 1 % Regulatory Minimum for Tier1 (10%)

Capitalization

32,245 34,283 36,519 38,665 43,879 1,500 3,000

Sep 18 Dec 18 Mar 19 Jun 19 Sep 19 Capital Infusion

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

32

Depth of management experience

Bankers with deep domain experience and multinational orientation

• Ms. Rajashree Nambiar

CEO & Managing Director

• Mr. Sanjeet Dawar

Head – Urban Business

• Mr. Vishal Wadhwa

Head – Rural Business

• Mr. Rakesh Makkar

CEO - FIHFC

• Mr. Nishant Jasapara

Head – Digital Business

• Mr. Pavan Kaushal

Chief Risk Officer

• Mr. Anil Noronha

Head – Human Resources

• Mr. Pankaj Malik

CFO & Chief Compliance Officer

• Mr. Ekhlaque Bari

Chief Technology Officer

• Mr. Arvind Sampath

Head – Treasury

• Mr. Sanjiv Gyani

Head – Operations

33

Management Team

Industry stalwarts with combined experience of over 250 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

Note- BOD status as of Oct-19

Board of Directors

CSR and Accolades

36

• I. LIVELIHOOD
• II. HEALTH
• IV. ENVIRONMENT
• III. EDUCATION

Focus sector and Key initiatives for FICCL CSR

• Jeevika: Vocational training program for

women

• Yuva Kaushal: Skill development for

Youth

• Pashu Vikas
• Cattle care camps &
• Integrated Livestock Development

(ILD)

• Jyoti - Save The Eye
• Vision care centres and outreach

camps

• Niramaya – Healthcare for women and

children

• Primary health care services

through mobile heath care vans

• Krishi Mitra
• Organic farming activities that help

maintain ecological balance

• Donations
• Disaster Relief Support
• Sakhi- Financial literacy for Women
• Akshar – Mini Science center & Scholarships

Fullerton India Credit Company

Corporate Social Responsibility

37

The Golden Peacock Innovative Product & Service Awards Finnoviti Awards 2019 Best of India Records – CSR Awards “Best PR Campaign” Asian Customer Engagement Forum & Awards “Digital Marketing Award” Ad Tech India Award 2018 Retail NBFC of the Year 2017 & 2018 Great Place to Work Certified Aug 2019 – Jul 2020

Fullerton India Credit Company

Awards Winning Brand

Contact:

Fullerton India Credit Company Ltd.

Floor 6, B Wing, Supreme Business Park Powai, Mumbai 400 076 INDIA Phone: +91 22 6749 1234 www.fullertonindia.com

THANK YOU