Safe Harbour Statement This document contains certain forward-looking statements based on current expectations of Indiabulls Housing Finance Ltd. ’s [CIN: L65922DL2005PLC136029] management. Actual results may vary significantly from the forward-looking statements in this document due to various risks and uncertainties. These risks and uncertainties include the effect of economic and political conditions in India, and outside India; volatility in interest rates and in the securities markets; new regulations and accounting standards, and government policies that might impact the business of Indiabulls Housing Finance Ltd.; the general state of the Indian economy; and the management’s ability to implement the company’s strategy. Indiabulls Housing Finance Ltd. doesn’t undertake any obligation to update these forward-looking statements. It may also be noted that Indian Accounting Standards [IndAS] have been adopted with effect from April 1, 2017. Thus all restated numbers in this document pertaining to period from March 31, 2017 are unaudited. There is a possibility that these financial results for the current and previous periods may require adjustments due to changes in financial reporting requirements arising from new standards, modifications to the existing standards, guidelines issued by Ministry of Corporate Affairs and NHB / RBI or changes in the use of one or more optional assumptions from full retrospective application of certain Ind AS permitted under Ind AS 101. This document does not constitute an offer or recommendation to buy or sell any securities of Indiabulls Housing Finance Ltd. or any of its subsidiaries or associate companies. This document also doesn’t constitute an offer or recommendation to buy or sell any financial products offered by Indiabulls Housing Finance Ltd. Investor Contact Media Contact Ramnath Shenoy Rahat Ahmed indiabulls.update@indiabulls.com mediaquery@indiabulls.com +91 22 6189 1444 +91 22 6189 1155 2
Contents Pg. No. 1. Business Update 04 2. Indiabulls Housing Finance’s Liquidity Standards 10 3. Indian Home Loans Market 13 4. Financial and Operational Highlights 23 5. Home Loans Distribution Model 33 6. Conservative Loan Against Property Portfolio 42 7. LAP Grading 46 8. Static Credit Performance Analysis of LAP and HL Pools 52 9. Liabilities Profile 60 10. Corporate Social Responsibility 65 11. Board of Directors, Ratings, Business Value Proposition, Key Ratios, Valuations and Shareholding 67 12. Detailed Financials 75 3
Business Update 4
Our Journey • Credit rating upgraded to AAA by CRISIL [an S&P Global Company] and ICRA [a Moody’s Investors Service Company] 397.7* • Balance sheet: ₹ 1.32 Tn • PAT: ₹ 38.5 Bn, RoE: 30% • Balance sheet: ₹ 1.04 Tn.; Net worth: ₹ 121 Bn 2017-18 • Launched India’s first digital home loans platform: eHome Loans • IBHFL included in Nifty50 index 422.9 • Balance sheet: ₹ 764.4 Bn, PAT : ₹ 23.4 Bn • ₹ 40 Bn raised through QIP issue 2016-17 • Net worth: ₹ 107 Bn 283.9 • Credit rating upgraded to AAA [CARE and Brickworks] • Gross disbursements cross ₹ 1,000 Bn • Balance sheet: ₹ 572.3 Bn, PAT: ₹ 19.0 Bn 2015-16 • RoE: 29% • Conversion to HFC 198.4 • India’s 3rd largest HFC by size • PAT ₹12.7 Bn, RoE: 26% 2014-15 • Credit rating upgraded to AA+ • PAT crosses ₹ 10 Bn 84.6 • Balance sheet crosses ₹ 300 Bn, RoE: 22% 2012-13 • Mortgage finance focused growth plan. Home loans to prime salaried segments, Retail mortgage constitutes 70% of loan book • In-house sales team ramped up to over 1,000 employees 64.2 Market • Credit rating upgraded to AA 2011-12 Cap • Balance sheet crosses ₹ 200 Bn, RoE : 17% [ ₹ Bn] 48.1 • Credit rating of AA- • Loan book crosses ₹ 100 Bn 2009-11 • Exit from unsecured personal and business loans 105.06 2008 * As on 12 th Oct, 2018 2000 : Started as an NBFC 14.1 2004-06: IPO and listing, Multi-product lending: Launched secured mortgage and commercial vehicle loans 5 IPO: Initial Public Offering; QIP: Qualified Institutional Placement; HFC: Housing Finance Company; NBFC: Non- Banking Financial Company
Business Update Key Financial Highlights: H1 FY 18-19 vs H1 FY 17-18 as per Indian Accounting Standards [IndAS] H1 FY 18-19 H1 FY 17-18 YoY Growth [%] 1,398.04 1,161.31 20.4% Balance Sheet 1,289.08 1,000.12 28.9% Loan Assets 173.50 143.28 21.1% Net Worth 83.27 67.41 23.5% Total Revenues 27.89 21.70 28.5% PBT 20.99 16.71 25.6% PAT Key Financial Highlights: Q2 FY 18-19 vs Q2 FY 17-18 as per Indian Accounting Standards [IndAS] Q2 FY 18-19 Q2 FY 17-18 YoY Growth [%] Total Revenues 42.55 34.52 23.3% 13.87 11.08 25.1% PBT 10.44 8.61 21.2% PAT Amount in ₹ Bn 6
Profit and Loss Statement Under IndAS Amounts in ₹ Bn Q2FY19 H1FY19 Interest Income & Fees 41.88 82.11 Interest Expense 25.56 48.92 Net Interest Income 16.31 33.20 Net gain on excess interest spread on 0.68 1.15 assignment transactions for the quarter Total Net Income 16.99 34.35 Less: Operating Expenses 2.72 5.41 Staff & Other Expenses 2.34 4.65 Adjustment due to Fair Value of Options 0.27 0.57 Depreciation & Amortisation Expenses 0.11 0.19 Less: Credit Costs 0.40 1.05 Profit Before Tax 13.87 27.89 Tax Expenses [net of deferred tax] 3.52 7.05 Other Income 0.09 0.15 Profit After Tax 10.44 20.99 7
Reconciliation of Consolidated Profit with Indian GAAP: Q2 FY 2017-18 Q2 FY 18 8.61 Profit after tax as per previous GAAP IndAS adjustment: Adjustment on account of effective interest rate for financial [1.00] assets and liabilities recognised at amortised cost Adjustment on account of net gain on excess interest spread 1.13 on assignment transactions for the quarter [0.18] Adjustment on account of Expected Credit Loss Adjustment due to fair valuation of employee stock options [0.17] Other Adjustments 0.16 Tax Impact on above including reversal of Deferred Tax 0.06 Liability on 36 [1] [viii] for the quarter Net profit after tax as per IndAS 8.61 Amounts in ₹ Bn 8
Conservative ECL Provisions and Stable Asset Quality As per IndAS Q2 FY19 Q2 FY18 Gross Stage 3 9.9 7.8 % Portfolio in Stage 3 0.77% 0.78% ECL Provision Stage 3 2.5 2.3 Net Stage 3 7.5 5.6 Coverage Ratio % Stage 3 25% 29% Gross Stage 1&2 1,279.1 992.3 % Portfolio in Stage 1&2 99.23% 99.22% ECL Provision Stage 1&2 3.7 2.3 Amounts in ₹ Bn • On total loan assets of ₹ 1,289.1 Bn, the loan assets in loan stage 1 & 2 are ₹ 1,279.1 Bn representing 99.2% of the total assets. The ECL provisions taken on assets in stage 1 & 2 are ₹ 3.7 Bn [As per Indian Accounting Standards [IndAS], all assets less than 90 dpd are standard assets classified in stage 1 & 2] • On total loan assets of ₹ 1,289.1 Bn, the loan assets in stage 3 are ₹ 9.9 Bn representing 0.77% of the total loan assets. The ECL provision taken on loan assets in stage 3 are ₹ 2.5 Bn representing 25% of the loan assets in stage 3 [as per IndAS, all assets that are more than 90 dpd are impaired or non-performing assets and are classified as NPA]. Gross NPA: 0.77% Net NPA: 0.58% 9 dpd: days past due GNPA: Gross non-performing assets ECL: Expected Credit Loss GAAP: Generally Accepted Accounting Principles
Indiabulls Housing Finance’s Liquidity Standards 10
IBHFL Follows a Liquidity Framework Guided by Basel III and in Line with Liquidity Ratios Prescribed for Banks High Quality Liquid Assets Amount [₹ Bn] Cash and bank balance 40.7 Liquid investments including investments in Govt securities, PSU/tax-free bonds 171.8 High Quality Liquid Assets [HQLA] 212.5 30-day Net Outflows Amount [₹ Bn] Outflows 81.7 Debt repayment 69.2 Other liabilities 12.5 Inflows 28.8 Loan portfolio repayments [Contracted] 14.0 Interest repayment and income from mutual funds investments etc 14.8 30-day Net Outflows 52.9 30-day Liquidity Coverage Ratio = 401% HQLA ÷ 30-day Net Outflows Figures as of Sep 30, 2018 IBHFL is the only non-bank company in India to follow strict and conservative practice of repayments through a third- party trust managed by Axis Bank Trustee wherein all scheduled repayments are transferred to the Trust 7 days in advance on a rolling basis, thereby ensuring timely, fail-proof repayment discipline of all obligations 11
Granular Asset Liability Maturity Management ALM: Fully matched for all buckets. 135% cover for 6 months’ liabilities outflows 93% 87% 86% 79% 76% 69% 57% 53% 31% 26% 23% 19% 17% 16% 15% 12% 5% 2% 1d-14d upto 28d upto 3m upto 6m upto 12m upto 3y upto 5y upto 7y upto 10y Assets Liabilities The ALM above is shown on a cumulative basis up to each bucket Figures as of Sep 30, 2018 12
Indian Home Loans Market 13
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