Investor Presentation Q1 FY19 Q1 FY19 Highlights 2 Key Q1 FY19 - - PowerPoint PPT Presentation

Investor Presentation

Q1 FY19

Q1 FY19 Highlights

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Key Q1 FY19 Financial & Operational Highlights

Total Income

142

(+25%) (+140%) Net Interest Income

79

(+29%) (+121%) PPOP

33

(+91%) (+539%) Profit After Tax

11 P&L Highlights Business Highlights

Gross AUM

2,521

(+18%) (+91%) Disbursements

761

(-10%) (+176%) Deposits

1,056

(45%) (NA) Net Worth

348

(3%) (-20%)

Operational Highlights

# States & UT

8 States; 1 UT

# Villages

73,331

# Banking Outlets

364

# Employees

4,837

# Customers

11.5 lakh+

Note: PPOP: Pre-Provision Operating Profit. Legend: Q1 FY19 (QoQ growth) (YoY Growth)

# Districts

122

In ₹ Crore In ₹ Crore

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Key Q1 FY19 Ratios

P&L & Balance Sheet Ratios Business Ratios Asset Quality & Efficiency Ratios

CRAR

19.6%

(23.3%) (42.7%) ROE

12.6%

(NA*) (NA*) Secured Book

16.9%

(16.5%) (5.9%) Non-Interest Income

10.6%

(10.5%) (4.6%) PCR

71.9%

(23.5%) (35.9%) Opex/ Business

7.6%

(8.9%) (10.1%) Gross NPA

1.4%

(0.9%) (6.6%) Net NPA

0.4%

(0.7%) (4.3%) PAR 30

1.8%

(1.4%) (12.8%) ROA

1.8%

(NA*) (NA*) CASA %

10%

(5.1%) (NA) Retail Share of Deposits

32.6%

(23.2%) (NA) Cost to Income

64.8%

(76.7%) (86.5%) Credit to Deposit Ratio

187.3%

(249.2%) (NA)

Legend: Q1 FY19 (Q4 FY18) (Q1 FY18)

Cost of Funds

9.2%

(9.2%) (11.4%) NIM

9.8%

(9.7%) (10.8%)

*NA represents negative RoA and RoE for the quarter on account of de-monetization related losses.

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Q1 FY19 Performance Summary (1/2)

Financial Highlights

• Total Income at ₹142 Crore in Q1 FY19 (up 25% QoQ and 140% YoY).
• Robust growth in Net Interest Income at Rs. 79 Crore in Q1 FY19 (up 29% QoQ and up 121% YoY).
• A Well Capitalized Bank - CRAR at 19.6% and Tier I CRAR at 15.7%.
• Healthy NIM maintained, in line with previous quarter - NIM at 9.8% in Q1 FY19.
• Cost of Funds has remained flat at 9.2% in Q1 FY19.
• GNPA has risen to 1.4% in Q1 FY19 as against 0.9% in Q4 FY18.
• In the current FY, the bank has adopted a conservative provisioning policy due to which NNPA has reduced to 0.4% in

Q1 FY19 vs. 0.7% in Q4 FY18 and PCR has moved up to 71.9% in Q1 FY19 vs. 23.5% in Q4 FY18.

• Cost to Income ratio has fallen down to 64.8% in Q1 FY19 as against 77% in Q4 FY18 due to increase in other income

and improvement in operational efficiency.

Operational Highlights

• 364 Banking outlets in place offering all banking products and services to customers.
• Agreement with Oxigen Services to set up Business Correspondent network in AP and Telangana.
• Branch footprint expanded to Rajasthan and NCR: Udaipur, Jaipur, Gurgaon branches opened.
• Net addition of 456 employees across corporate and field roles during the Q1FY19.

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Q1 FY19 Performance Summary (2/2)

Regulatory

• Ravindran Lakshmanan, General Manager, SIDBI joined as a nominee director on the Board of Directors w.e.f. May 19, 2018.
• Praveen Agarwal, General Manager, SIDBI resigned from the Board of Directors w.e.f. May 19, 2018.
• RBI completed the inspection of the Bank during the quarter, for grant of Scheduled Bank status.
• RBS Tranche I, II and III data for the year ended March’ 18 was successfully submitted on time during the quarter.

Our Ratings

Bank Facilities

Term Loans

Long term Bank Facilities & NCD

A- (Stable) A- (Stable) A- (Stable)

Banking – Products and Network Snapshot

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Our Banking Product Suite

Superior Rates. Simplicity. Flexibility. Need Based.

Loans Against Gold Loans Against Property Microloans Institutional Finance Fixed Deposits Current Accounts Group Credit Life Insurance

LIABILITY PRODUCTS ASSET PRODUCTS OTHER PRODUCTS

Debit Cards Overdraft Savings Accounts – Regular & Digital Group Health Insurance Payments – NEFT, RTGS, IMPS, NACH, Bill Pay

Asset Products

Target Customers Rural women (group size: 3 to 20) – JLG lending Ticket Size ₹15,000 – ₹45,000 Purpose Income generation only Tenure 2 years Repayment Freq. Monthly # of Outlets 323 # of States 8 States; 1 UT # of Customers 11.5 Lakh Gross AUM ₹2,174 Crore

Microloans Loan Against Gold Loan Against Property

Target Customers Self employed professionals, Proprietorship & Partnership firms, Private Ltd, salaried individuals, Ticket Size ₹1.5-₹50 lakhs Purpose Business expansion, Asset purchase, Debt consolidation, Education, Marriage Tenure 36-120 months Repayment Freq. Monthly # of Outlets 90 # of States 5 states; 1 UT # of Customers 4,035 Gross AUM ₹177 Crore Additional Facilities Overdraft

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Target Customers Micro enterprises, self-employed in semi-urban areas Ticket Size ₹5,000 to ₹25 Lakhs Purpose Immediate short term credit requirement Tenure 3 months to 24 months Repayment Freq. Bullet/ EMI # of loans 4,588 active # of Outlets 78 Gross AUM ₹33 Crore

Institutional Finance

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Target Customers NBFC-MFIs, NBFCs, MSMEs Ticket Size ₹1 Crore – ₹15 Crore Purpose Onward lending to clients’ borrowers; Business requirements Tenure 6 months – 3 years Repayment Freq. Monthly # of Customers 22 Gross AUM ₹137 Crore

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Liability Products

Retail & Rural CASA Retail Term Deposits

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Target Customers HNIs, retail mid and affluent segments, microfinance customers Interest Rate 6% for up to ₹1L balance; 7% for above ₹1L

• Avg. Monthly Balance

Zero Balance – ₹1L (Based on the product) Interest payment Freq. Monthly # of Customers 1,29,292 Card Variants Rupay Classic/ Platinum CASA Book ₹102 Crore Target Customers HNIs, retail mid and affluent segments Interest Rate Up to 9%; additional 0.5% for senior citizens Interest payment Freq. Monthly, Quarterly, Reinvestment # of Accounts 10,980 Ticket Size ₹5,000 to <₹1 Crore Deposit Book* ₹239 Crore Additional Facilities Overdraft

Digital Accounts- 101 Accounts

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Target Customers HENRYs (High Earning Not Rich Yet) & Digital savvy mass retail customer who do digital/branchless banking across India Variants 2 Variants- 101 Fist & 101 Priority Interest Rate 6% for up to ₹1L balance; 7% for above ₹1L AMB 101 First- Zero balance; 101 Priority- INR 25,000 Interest Payment Monthly # of Customers 666 Deposit Book (SA+FD) ₹4 Crore

Bulk Term Deposits

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Target Customers Banks and corporates looking to park excess and HNIs Ticket Size =>₹1 Cr Tenure 7 days - 3 year Interest Rate Up to 9% Interest Payment Options Monthly, Quarterly, Reinvestment # of Active Accounts 71 Deposit Book ₹711 Crore

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OUR BANKING NETWORK

364 Banking Outlets 8 States, 1 UT 73,301 Villages (122) Districts

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Our Customer Touchpoints

PHYSICAL TOUCHPOINTS

364 Banking Outlets

DIGITAL CHANNELS OTHER CHANNELS

Internet and Mobile Banking Tab Banking – all products Doorstep Service – Feet on Street Call Center/ IVR – Toll Free Number; multi-lingual

40+ Cash Recyclers

As on July 2018, 132 Business correspondent outlets have been set up to offer our banking products and services.

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Strong Technology and Digital Orientation

• Internet banking
• Mobile banking
• Customer

communication channels- ➢ Responsive website ➢ Live chat for 101accounts

Customer self- service through digital channels

• Tab Banking for account
• pening, funds transfer, bill

payments, service requests and account changes

• M-care- Microfinance loan
• rigination
• LAP. Dlite - LAP origination
• LAG Banking – for LAG
• rigination
• Application for microfinance

collections

• Mobile based fraud risk

management application

Tab banking solutions for front line staff

• NEFT
• RTGS
• IMPS
• Debit Cards
• Bill Pay
• NACH

Full Payments stack

• Algorithm based

credit decisioning

• Aadhaar based e-

KYC

• Real-time

Integration with credit bureau

Instant Delight

• BI & Analytics

platform for decision making and management by exception

• HRMS mobile app
• Employee

biometric attendance

• Helpdesk tool

Employee Productivity tools

Assets Snapshot

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Assets Highlights

• Robust Growth in Gross AUM at ₹2,521 Cr as on June 2018, a 18% increase over March 2018 and a 91% increase over

June 2017.

• Microfinance AUM at ₹2,174 Cr as on June 2018, 19.6% increase over March 2018 and a 76% increase over June 2017.
• Gained momentum in the Secured business portfolio, accounting for 14% share in Q1 FY19 as against 7% in Q1 FY18

➢ AUM of ₹32 Cr for Loan Against Gold, an increase of 60% Q-o-Q. ➢ AUM of ₹137 Cr for Institutional Finance, a decline of 14% Q-o-Q on account of slow disbursal in Q1. ➢ AUM of ₹177 Cr For Loan Against Property, an increase of 31% Q-o-Q.

• Expansion of LAP in new geographies (Rajasthan) and deeper penetration in Tamil Nadu, and introduction of higher

ticket sized variants (₹25-50 lakhs).

• Significant growth in disbursements at ₹761 Cr in Q1 FY19 an increase of 175% over Q1 FY18 ; down 10% over Q4 FY18 on

account of seasonality.

• GNPA increased to 1.4% in Q1 FY19 as against 0.9% in Q4 FY18 due to change in DPD movement and off-book portfolio.
• NNPA at 0.4% as on June, 2018 vs 0.7% respectively as on March, 2018 due to conservative policy adopted by the bank

during FY19.

• Collection Efficiency of the new portfolio post April, 2017 at 99.73%+.

Robust Growth In AUM Strong Disbursements Growth

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Assets Updates

Product Ticket Size (₹) Micro Loans 28,761 Loan Against Property 5,64,021 Loan Against Gold 71,406

Average Ticket Size – Q1 FY19

In ₹ Crore In ₹ Crore

Secured Assets: Gross AUM

In ₹ Crore Q4 FY18 Q1 FY19 Loan Against Property 136 177 Loan Against Gold 20 33 Institutional Finance 160 137 Total 318 347 399 291 203 322

% Off Book AUM

88 124 192 318 347 1,233 1,331 1,462 1,817 2174 1,321 1,455 1,655 2,135 2,521

FY18-Q1 FY18-Q2 FY18-Q3 FY18-Q4 FY19-Q1

Gross AUM

Non MF MF

276 395 555 845 761

FY18-Q1 FY18-Q2 FY18-Q3 FY18-Q4 FY19-Q1

Disbursements

Disbursements

543

Note: For new disbursements

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Improving Asset Quality

Trend in Gross NPA Reduction in Net NPA Higher Provision Coverage Ratio

As NBFC* As a Bank As NBFC* As a Bank As NBFC As a Bank 4.2% 1.4% 2.0% 0.7% 0.4%

FY18-Q1

• FY18-Q2

FY18-Q3 FY18-Q4 FY19-Q1

NNPA%

35.9% 23.4% 29.4% 23.5% 71.9%

FY18-Q1

• FY18-Q2

FY18-Q3 FY18-Q4 FY19-Q1

PCR%

6.6% 1.9% 2.8% 0.9% 1.4%

FY18-Q1

• FY18-Q2

FY18-Q3 FY18-Q4 FY19-Q1

GNPA%

*on account of demonetization

• Conservative provisioning policy adopted in FY

19 leading to higher PCR in Q1

Trend in Gross NPA Reduction in Net NPA Higher Provision Coverage Ratio

Liabilities & Treasury Snapshot

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Liabilities Highlights

Liabilities

• Deposit base of ₹1,056 Crore as on June 2018, an increase of 45% over March 2018.
• Retail deposits accounted for 32.6% of the overall deposits.
• Deposits constituted 53% of net advances in June 2018 as against 40% in March 2018, and 49% of the total liabilities.
• Cost of deposits of the Bank in Q1 FY19 at 8.6% as against 8.3% in Q4 FY18 .
• Over 1.1 lakh Savings Accounts opened for microfinance customers.
• Branch footprint expanded to Rajasthan and NCR: Udaipur, Jaipur, Gurgaon branches opened.
• Current accounts launched, with a focus on acquiring MSMEs who look for 24x7 cash deposits through recyclers.

Third Party Products

• Received the Corporate Agency License from IRDA to distribute third-party insurance products in April 2018. Group

Health insurance pilot launched in collaboration with Religare Health in March, 2018.

• Tied up with Edelweiss Tokio life insurance and Kotak life insurance for life insurance products, to be launched in Q2 FY19.

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Deposits Highlights

Values(%) March 2018 June 2018 Cost of Deposits 8.3% 8.6% Retail to Total Deposit 23.2% 32.6%

1 6 37 106 18 63 132 239 282 449 558 711 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19

Deposits

CASA Retail TD Bulk TD 1,056

As of June 2018 CASA FD CASA + FD Balance (₹ Cr.) 106 950 1,056 As % of total borrowings 4.9% 43.7% 48.6%

• No. of Customers

1,29,292 11,053 1,40,345 Average Balance (₹) 8,180 8,59,865 75,255

Growing Momentum in Deposits Raised

727 518 301

In ₹ Crore

Quarter Ended CASA as a % Customer Deposits Credit to Total Deposits(%) Sep 30, 2017 0.3% 387.2% Dec 31, 2018 1.2% 280.4% Mar 31, 2018 5.1% 249.2% Jun 30, 2018 10% 187.3%

Improving CASA and Credit to Deposit (%) trend

301

In ₹ Crore

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Liabilities Profile

2,173 903 1,302 1,521 1,996

• Deposits constituted 49% of the total liabilities in Q1 FY19, as against 36% in Q4 FY18, and 23% in first quarter of

banking operations.

• Declining Outstanding share of Grandfathered loans – 20% in June, 2018 as against 27% in March, 2018.

23% 34% 36% 49% 97% 58% 42% 27% 20% 17% 20% 22% 20% 5% 5% 10% 7% FY18-Q1 FY18-Q2 FY18-Q3 FY18-Q4 FY19-Q1

Liabilities

Deposits Grandfathered Loans Refinance Tier II IBPC

Deposits constitute ~50% of overall liabilities

• Significant reduction in the Cost of Funds after conversion to Bank due to Deposits raised - 9.2% in Q1 FY19 vs

11.4% in Q1 FY18.

• Increase in incremental cost of funds in Q1 FY19 due to hardening of interest rates.
• New investment instruments leveraged upon conversion to Bank :–
• Raised funds of ₹150 Crore through IBPC in Q1 FY19.
• Income of ₹3.4 Crore booked on PSLC in Q1 FY19.
• Total SLR investment as on June 30, 2018 at ₹333 Crore.

Cost of Funds & Treasury Update

Treasury Updates Incremental Cost of Funds

10.39% 7.89% 7.30% 7.21% 7.71% 7% 9% 11% 13% Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 22

Reduction in Avg. Cost of Funds

11.43% 10.26% 9.67% 9.19% 9.18% 7% 9% 11% 13% Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19

Other updates for Q1 FY19

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Q1 FY19 Other Updates

Digital Banking - 101 Accounts

• Only SFB to launch Digital Savings Accounts (101 Accounts) within 7 months of Bank launch.

✓ 101 Accounts have seen a 441% growth in number of account and 509% growth in balances during the quarter with an average balance of ₹50,000+ per customer being maintained consistently.

Digital Technology

• Full KYC Application rolled out to facilitate conversion of Aadhaar OTP based e-KYC for customers who open

accounts online.

Microfinance migration to Profile

• One of the first SFBs to successfully migrate microfinance business into the Core Banking System(CBS) i.e. Profile.

In the media

Participated in multiple industry stories, panel discussions, conducted press meets, interacted with media persons to ensure media coverage towards promoting SFBs, Fincare SFB and Fincare products and services as well as branch launches

Q1 FY19 Other Updates

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Awards and Accolades

• Fincare Small Finance Bank was conferred with the MFIN Microfinance Award 2018 –

✓ In the category of Customer Literacy and Capacity Building ✓ for its financial literacy movie ‘Pragati’

• Shri Giriraj Singh, Minister of State for Micro, Small and Medium Enterprises (MSME), Govt. of

India handed over the award in New Delhi on May 24, 2018. Mr. Soham Shukla, COO Rural Banking collected the award on behalf of the Bank.

• Youtube link for the movie:- https://youtu.be/hem6GhSLfcE.

Q1 FY19 Other Updates

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Financials

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P&L Statement

(All figures in ₹ Crore) Q1 FY19 Q4 FY18 Q-o-Q Growth Q1 FY18 Y-o-Y Growth FY18 FY17 Income Interest Earned 127.0 101.7 24.8% 56.3 125.5% 292.3 163 Interest Expended 48.2 39.8 21.0% 20.7 132.3% 121.7 71.6 Net Interest Income (NII) 78.9 61.9 27.4% 35.6 121.5% 170.6 91.3 Other Income 15.0 12.0 25.4% 2.7 447.2% 58.9 22.6 Total Net Income 93.9 73.9 27.0% 38.4 144.8% 229.5 113.9 Expenses Employee Expenses 40.9 35.6 14.9% 24.3 68.5% 119.7 53.3 Other Operating Expenses 20.0 21.0

• 4.8%

8.9 124.7% 56.2 36.7 Operating Profit before Provisions and Contingencies 33.0 17.3 90.8% 5.2 534.6% 53.6 23.9 Provisions (other than tax) and Write-offs 22.2 46.2

• 52.0%

6.5 239.2% 143.5 10.9 Profit Before Tax 10.8

• 29.0
• 137.3%
• 1.4
• 887.9%
• 89.8

13.1 Profit After Tax 10.8

• 29.0
• 137.3%
• 1.4
• 887.9%
• 97.5

8.7

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Balance Sheet

In ₹ Crore Q1 FY19 Q4 FY18 Q-o-Q Growth Q1 FY18 Y-o-Y Growth Liabilities Capital 37 37 0.0% 37 0.0% Reserves & Surplus 311 301 3.3% 396

• 21.5%

Deposits 1,056 727 45.3%

• NA

Borrowings 967 1,069

• 9.6%

903 7.0% Other Liabilities and Provisions 262 140 87.1% 108 142.6% Total Liabilities 2,633 2,274 15.7% 1,444 82.2% Assets Cash and Balance with RBI 64 48 33.3% 439

• 27.8%

Balance with Banks and Money at call and short notice 253 204 24.0% Investments 333 273 22.0% 0.2 NA Advances 1,828 1,630 12.1% 888 105.9% Fixed Assets 23 22 4.5% 9 155.6% Other Assets 132 97 34.3% 108 22.2% Total Assets 2,633 2,274 15.7% 1,444 82.2%

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Key Ratios

Cost-to-Income Ratio

As NBFC As a Bank As NBFC As a Bank

Opex-to-Business Ratio

As NBFC As a Bank 87% 84% 67% 77% 64.8%

FY18-Q1

• FY18-Q2

FY18-Q3 FY18-Q4 FY19-Q1

Cost to Income Ratio 10.1% 10.3% 10.0% 8.9% 7.6%

FY18-Q1

• FY18-Q2

FY18-Q3 FY18-Q4 FY19-Q1

Opex to Business

*NA represents negative RoA and RoE for the quarter on account of de-monetization related losses

NA NA 3% NA 1.9% NA NA 12.5% NA 12.6%

FY 18-Q1

• FY 18-Q2

FY 18-Q3 FY 18-Q4 FY 19-Q1

ROA RoE

RoA and RoE Net Interest Margin

As NBFC As a Bank 10.8% 11.1% 11.5% 9.7% 9.8%

FY18-Q1

• FY18-Q2

FY18-Q3 FY18-Q4 FY19-Q1

Way Forward

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Way Forward – Q2 FY19

Assets

• Pilot launch of two wheeler loan in Gujarat, a new product variant in Secured category.
• Launch of new product - Overdraft against Gold.

Liabilities

• Launch of Salary Accounts and RD.
• Open savings accounts for ~ 2.5 lakh microfinance customers.
• Kick start Retail life insurance business through Edelweiss Tokio Life Insurance.

Distribution Channels

• Expand banking outlet network in Andhra Pradesh and Telangana through Business Correspondents and in Delhi.

Digital Banking & Technology

• Launch new Payment Channels – UPI, APBS(DBT).
• Launch application for BC channel to facilitate account opening and transactions.

Thank You!

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