Investor Presentation Quarter ended March-2020 Fullerton India Home - - PowerPoint PPT Presentation
Investor Presentation Quarter ended March-2020 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
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.
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‘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
36% 48% 51% 64% 69%
2015 2019 2020 2025 2027
India's Millennial as % of Workforce**
Incremental demand
198 164 150 137 56
100 150 200
1980 1990 2000 2010 2015 2019
Credit-to-GDP ratio*
KR UK US MY IN Underpenetrated Market
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. *BIS (KR: Korea UK: United Kingdom US: United States MY: Malaysia IN: India)
8.7 11.8 15.7
2016 2020 2025
GDP in PPP^ (US$ trillion)
Growth potential
Total Household Population
~110 Mio ~140 Mio ~1,100 Mio
Per Capita Income
$ 8,800 $ 3,000 $ 1,200
increasing GDP per capital ($) 2019 at US$ 2,242
emergence of tier-II and tier-III cities, ease of financing, tax incentives to support growth
(INR 27,500 crore in 2020-21 against INR 25,328 crore for 2019-20) under PMAY and extra budgetary allocation of INR 10,000 crore each for PMAY-Urban and PMAY-Rural. This, coupled with the tax incentives on self-occupied properties.
property and rural mortgage products to retail
were extended to affordable segment
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Source: KuntalShah –“India: Wealth Creation Story”, 2019
NHB Refinance
Diversifies funding mix and supplements bank borrowings
Risk Weighted Assets
Lower risk weightage for Home Loans
SARFAESI
Applicable across ticket sizes for Housing Finance Cos.
Valuation premium
100% secured business enhances valuation multiplier of the group
Consumer Benefit
Tax incentives Government subsidies & schemes HFCs’ average loan life is ~7-8 years
Annuity Income Consumer
shortage, CLSS to push affordable housing extended till Mar-21
favoured both home buyers and developers in terms of tax incentives
Developer
effective from April 1, 2019
Regulatory / Government Support
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Fullerton Financial Holdings, Singapore (FFH) is a wholly
Singapore
emerging markets
Fullerton India Credit Co. Ltd. (FICCL) is a wholly-owned subsidiary of FFH
union territories
well as SMEs Grihashakti, Fullerton India Home Finance Co. Ltd. is a wholly-owned subsidiary of FICCL
Wholly owned subsidiary Wholly owned subsidiary Wholly owned subsidiary
Wholly owned subsidiary 96.15% 3.85%
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
INDIA Digital MSME 55K Cust
*FFH is a wholly owned subsidiary of Temasek ^Fullerton Home Finance is a wholly owned subsidiary of Fullerton India
Fullerton Home Finance^
Multi-product offerings support a range of customer needs
Consumer Urban MSME Rural Cross-Sell
Personal Loans, Loans Against Property Commercial Vehicle Loans, Business Loans, Loans Against Property Personal / Group Loans, Loans Against Property, Vehicle Loans Life / General Insurance
AUM (INR)
Customers
Branches
Employees
Villages
Rating*
Data as at FY 20. *Rating CRISIL, ICRA, CARE. (Temasek rated 'AAA/Stable' by S&P Global)
Digital
Tapping expanded (newer & wider) segment of customers
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Be the Company of choice in financial services for our customers, employees, communities and stakeholders, recognized for innovation and high ethical standards.
Agility Diversity Collaboration Integrity Innovation Excellence
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Anindo Mukherjee
Chairman – Grihashakti, Non-Executive Director - Fullerton India Credit Co. Ltd
Rakesh Makkar
CEO - Grihashakti, Whole-time Director
Milan Shuster
Independent Director
Rajashree Nambiar
Non-Executive Director, MD & CEO – Fullerton India Credit Co, Ltd
Board of Directors Management Team
Pankaj Malik
Chief Financial Officer
Parag Shah
Chief Risk Officer
Ram Kolli
GM – Head Business & Product
Rakesh Makkar
CEO - Grihashakti, Whole-time Director
FFH has senior level representation on the Board and various committees of Board
Sudha Pillai
Independent Director
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14 Jul-15 Dec-15 Nov-16 Sep-17 Mar-19 Jan-18 Rated AA+ by CARE Received HFC license with equity infusion of INR 1 Bio Started operations with 20 branches Sep-16 Crossed AUM of INR 10 Bio Team size of 425 Nov-17 SARFAESI Approval Crossed AUM of INR 15 Bio Crossed AUM of INR 30 Bio Expanded – Added 20 more branches Expanded network to 60 Branches Jun-19 Crossed AUM of INR 35 Bio Enhanced network of 78 branches Jul-19 Equity infusion of INR 2 Bio Aug-19 CRISIL ‘AAA’ Rated Closed securitization deal worth INR 2 Bio Mar-20 Rated ‘AAA’ by CARE
Nov-19 Crossed AUM of INR 43 Bio
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Financial Performance as of Mar-20
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Strong Parentage Experienced Management Team Strong footprint in Tier 2/3 towns Established niche in self-employed segment Expertise in handling new-to-credit/ borrowers from informal segment Strong Risk Governance Framework Comfortable Liquidity Position
'CRISIL AAA/Stable/CRISIL A1+' and ‘CARE AAA’ stable ratings . Steady infusion of capital Industry veterans form part of Board and Senior Leadership team
Geographically diversified, sizeable play basis network of 78 branches and ~800 active channel partners Leverage parent’s understanding of credit and distribution in underserved markets, product programs customized for SENP Robust delinquency management – from early warning signals to effective SARFAESI implementation
Diversified lender base, low reliance on short term funding, well- managed ALM Region specific specialty teams on board – underwriting, collateral management, valuation policy. Sturdy portfolio across market cycles - demonetization, RERA, GST, liquidity crisis
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311.7% 141.1% 68.1% 68.2% 55.1%
FY16 FY17 FY18 FY19 FY20
246 465 1,065
FY16 FY17 FY18 FY19 FY20
(INR Mio)
23 180 770 1,459 2,369
FY16 FY17 FY18 FY19 FY20
(INR Mio)
137 267 568 768 805
FY16 FY17 FY18 FY19 FY20
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Note - FY16 and FY17 nos. are as per IGAAP while, FY18 and FY19 are as per IndAS
242 4,735 19,022 30,654 43,016
FY16 FY17 FY18 FY19 FY20
(INR Mio)
147 2,348 9,664 16,519 22,892
FY16 FY17 FY18 FY19 FY20
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Product Share Product Suite
Fulfil dream of
Purchase of New and Resale
Home Construction Loans
Loans
Expand Business /Working Capital
Property (LAP)
Discounting
commercial property - New and Resale
construction of commercial property
Access to developers
Financing
Finance (CF)
Programs customized for self- employed segment
Program
Program
Program
Program
Closing AUM (March-20)
Geographic reach
FY20 with ATS of 2 Mio
additional yield kicker
and potential catchments
Collections Management Strengthen footprint in Tier 2-3 towns Fair-mix of Salaried and Self Employed Managing New-To-Credit customers Process Improvisation
Healthy Customer Mix
distribution in underserved markets
sell programs New-To-Credit
Improvements in Operating Model
collection process
boarding and performance monitoring
affordable cases under income to help standardise underwriting across geographies Robust Collections Management
monitoring and service
environment, customer data, bureau trends
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bias and faster processing
low-risk target segments
segmentation of customers (based on bounce and off us) on field to improve customer contact ratio and conversion
sharing with FICC branches
firms, online alliances and developers
new cases for developer funding
loan origination
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WFH - Work From Home
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Risk principles and standards Definitions of roles and responsibilities Governance structure
Key Components
Establish common principles and standards for the management and control of all risks across the
Provide a shared framework to improve awareness of risk management processes Provide clear accountability and responsibility for risk management
Key Objectives Key Principles
Balancing risk and return Responsibility and Accountability Anticipation of Future Risks
Standards Ensuring Portfolio Quality
Management Information System Credit Bureau Policy Credit Exposure Norms Credit Assessment and Eligibility Norms Provisioning and Asset Classification Stress Tests and Periodic Reviews Portfolio on Bureau Watch Triggers Collections and Recovery Norms Data Analytics
Board of Directors Risk Oversight Committee Chief Executive Officer
Policy Approvals Portfolio Purchases & Sell-Offs Risk/ Internal Controls Credit FCU, Legal
Chief Risk Officer
Collections Analytics Policy Technical
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Two Pronged Strategy Inventory reduction In-House model
Early delinquency Tracking Monitoring High Value Cases Aggressive Settlement Leveraging SARFAESI
Pre charge off / Flows
EMI caution calling Dunning / Demand letters / SMS blast Telecalling for FE buckets Resolution of TC - field referral from early buckets Field visits and regular follow ups with customers for overdue payments Representation of bounced accounts basis the payment pattern
Specialized collection support
Separate teams for FE and 90+ DPD DRA certified In-house personnel managing end to end collections Online dunning, e-notices to
Aggressive settlements in potential loss cases.
NPAs /Write-off
Legal strategy Leveraging SARFAESI and other litigation tools viz. Arbitration, sec 9, Sec 138/Sec 25 of PSS act. Repossession and disposal of properties by foreclosure team with network of property consultants.
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Formation of Credit Committee Improvised Credit Policy Introduced BRE – automated rules for underwriting for critical deviations Enhanced Credit Underwriting - Geography specific collateral management, city-specific limits on ticket size Framework to identify and track delinquencies, followed by remedial action, Strengthened Collections team with senior hiring Risk-based Analytics Scorecard, Customer Risk Segmentation for Collections SARFAESI initiated on 100% eligible cases Focussed PDD tracking Strengthened property appraisal process
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Borrowing Mix
(INR bio)
37 27
28 19 9 8 7 4
1 Mar 20 Mar 19 Mar 18 Bank Term Loan NCD CP
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* FY20 includes ECL overlay of INR 161 mio
This presentation has been prepared by Fullerton India Home Finance Company Limited (the “Company”) solely for your information. This presentation is for information purposes only and should not be deemed to constitute or form part of any offer or invitation or inducement to sell or issue any securities, or any solicitation of any offer to purchase or subscribe for, any securities of the Company, nor shall it or any part of it or the fact of its distribution form the basis of, or be relied upon in connection with, any contract or commitment therefor. The financial information in this presentation may have been re-classified and reformatted for the purposes of this presentation. You may also refer to the financial statements of the Company available at https://www.grihashakti.com/home.aspx, before making any decision on the basis of this information. This presentation contains statements that may not be based on historical information or facts but that may constitute forward-looking statements. These forward looking statements include descriptions regarding the intent, belief or current expectations of the Company or its directors and officers with respect to the results of operations and financial condition of the Company. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ from those in such forward-looking statements as a result of various factors and assumptions which the Company presently believes to be reasonable in light of its operating experience in recent years but these assumptions may prove to be incorrect. Any opinion, estimate or projection constitutes a judgment as of the date of this presentation, and there can be no assurance that future results or events will be consistent with any such opinion, estimate or projection. The Company does not undertake to revise any forward-looking statement that may be made from time to time by or on behalf of the Company. No representation, warranty, guarantee or undertaking, express or implied, is or will be made as to, and no reliance should be placed on, the accuracy, completeness, correctness or fairness of the information, estimates, projections and opinions contained in this presentation. Potential investors must make their own assessment of the relevance, accuracy and adequacy of the information contained in this presentation and must make such independent investigation as they may consider necessary or appropriate for such purpose. This presentation does not constitute and should not be considered as a recommendation by the Company that any investor should subscribe for, purchase or sell any of Company's securities. By viewing this presentation you acknowledge that you will be solely responsible for your own assessment of the market and the market position of the Company and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of the business of the Company. None of the Company, book running lead managers, their affiliates, agents or advisors, the placement agents, promoters or any other persons that may participate in any offering of any securities of the Company shall have any responsibility or liability whatsoever for any loss howsoever arising from this presentation or its contents or otherwise arising in connection therewith. This presentation and its contents are confidential and should not be distributed, published or reproduced, in whole or part, or disclosed by recipients directly or indirectly to any other person. Viewing this information may not be lawful in certain jurisdictions. In other jurisdictions only certain categories of person may be allowed to view this information. Any person who wishes to view this site must first satisfy themselves that they are not subject to any local requirements which prohibit or restrict them from doing so. Please exit this webpage if you are not permitted to view this presentation on this website or are in any doubt as to whether you are permitted to view these materials. This presentation has been prepared by the Company based on information and data which the Company considers reliable, but the Company makes no representation or warranty, express or implied, whatsoever, and no reliance shall be placed on, the truth, accuracy, completeness, fairness and reasonableness of the contents of this presentation. This presentation may not be all inclusive and may not contain all of the information that you may consider material. Any liability in respect of the contents of, or any omission from, this presentation is expressly excluded.
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