bajaj housing finance limited...bajaj housing finance ltd. 2 1,600 cr 25,714 cr 2,100 115 monthly...
TRANSCRIPT
BajajHousingFinanceLimited
DebtInvestorsPresentation– Q2FY20
BajajHousingFinanceLtd.
2
1,600Cr 2,10025,714Cr 115
MonthlyAcquisition AssetUnderManagement
(asofSep30,2019)
Employees Locations(Urban-40;Rural-75)
v BajajHousingFinanceLtd.(BHFL)isregisteredwithNationalHousingBank(NHB)asaHousingFinanceCompany(HFC)
v BHFLisa100%subsidiaryofBajajFinanceLtd.(BFL)– aBajajFinservGroupCompany
v BFLhasbeeninthemortgagebusinesssince2008
v BHFLhasbeencarvedoutasHFCtoconductmortgagesbusinessesforthegroupwithdedicatedfocus
v BHFLstarteditsfullfledgedoperationsfromJanuary2018withdedicatedsales,operations,collections,branch&ITinfrastructure
3
BajajHousingFinanceLtd.
DedicatedFunctionalUnitsIndependentBoard
DedicatedSales,Credit,Risk,Ops,Collections,IT,Finance,HRandothersupportfunctions
SeparateandindependentBoard
Committees
Astandalone,fullyfunctionalandoperationallegalentity
DedicatedInfrastructure
DedicatedinfrastructureintermsofseparateHeadoffice,
branchesandITinfrastructure.
4
Financials(asof30Sep’19)₹inCrore
Financialssnapshot Q2FY20 Q2FY19 H1FY20 H1FY19 FY19
Assetsundermanagement 25,714 10,653 25,714 10,653 17,562
Assetsunderfinance 22,875 10,653 22,875 10,653 17,332
Interestincome 539 204 996 319 998
Feeandotherincome 96 37 154 68 158TotalIncome 635 241 1,150 387 1,156Interestexpenses 371 139 688 209 685NetInterestIncome 264 102 462 178 471OperatingExpenses 88 85 170 155 297Loanlossesandprovisions(ECLstage1&2) 4 4 12 9 21
Loanlossesandprovisions(ECLstage3&writeoff) 9 1 10 1 4
Profitbeforetax 163 12 270 13 149
Profitaftertax 130 9 200 11 110
Ratios
OperatingexpensetoNetInterestIncome 33.3% 83.3% 36.8% 87.1% 63.1%
LoanlosstoAverageAUF 0.24% 0.21% 0.22% 0.29% 0.24%
ReturnonAverageAssets 2.4% 0.4% 2.0% 0.3% 1.1%ReturnonAverageEquity 13.7% 1.8% 10.6% 1.1% 4.2%
5
BehaviouralizedALMsnapshot(asof30Sep’19)
AsperpreviousGAAP
Particulars 1m >1to2m >2to3m >3to6m >6mto1yr >1to3yr >3to5yr >5to7yr >7to10yr >10yr Total
Cash&Investments 2,843 - - - - - - - - - 2,843
Advances 374 217 217 643 1,275 4,797 3,598 2,744 3,143 5,998 23,007
Otherinflows 6,138 - - - - 6 - - - 72 6,215
TotalInflows(A) 9,355 217 217 643 1,275 4,803 3,598 2,744 3,143 6,069 32,065
CumulativeTotalInflows(B) 9,355 9,572 9,790 10,432 11,707 16,510 20,109 22,852 25,996 32,065
Borrowingsrepayment 498 2,433 1,193 128 1,586 11,063 6,313 1,268 - - 24,482
CapitalReservesandSurplus - - - - - - - - - 3,807 3,807
OtherOutflows 726 7 28 - 28 2,882 - 0 - 105 3,776
TotalOutflows(C) 1,224 2,440 1,221 128 1,614 13,945 6,313 1,268 - 3,912 32,065
CumulativeTotalOutflows(D) 1,224 3,663 4,885 5,013 6,627 20,572 26,885 28,153 28,153 32,065
E.GAP(A- C) 8,131 (2,223) (1,004) 514 (339) (9,142) (2,715) 1,476 3,143 2,158
F.CumulativeGAP(B-D) 8,131 5,909 4,905 5,419 5,080 (4,062) (6,777) (5,301) (2,157) 0
CumulativeGAPas%(F/D) 665% 161% 100% 108% 77% -20% -25% -19% -8% 0%
PermissiblecumulativeGAP% -15% -15%
Additionalshorttermborrowingspossible 9,781 7,147
*Otherinflowsincludelineofcreditcommittedbyotherinstitutions,currentandlongtermassets,taxpaidinadvance&interestandincomereceivable*Otheroutflowsincludeloancommitmentspendingdisbursal,linesofcreditcommittedtootherinstitutions,interestpayable on bonds&sundrycreditors
6
ECLSummary(asof30Sep’19)
SummaryofstagewiseassetsandECLprovisioning ₹inCrore
ECLcategorization Sep’18 Dec‘18 Mar’19 Jun’19 Sep’19
Stage1&2(representsstandardassets) 99.98% 99.97% 99.95% 99.94% 99.94%
Stage3(representsGNPA) 0.02% 0.03% 0.05% 0.06% 0.06%
FinancialAssets&ECLprovision Sep’18 Dec‘18 Mar’19 Jun’19 Sep’19
GrossStage1&2assets*(A) 10,746 14,061 17,435 20,601 23,481
ECLProvisionStage1&2(B) 14 20 26 34 37
NetStage1&2assets(C=A-B) 10,731 14,041 17,409 20,567 23,443
ECLProvision%Stage1&2assets(D=B/A) 0.13% 0.14% 0.15% 0.16% 0.16%
GrossStage3assets@(E) 2.3 4.5 9.5 13.1 13.3
ECLProvisionStage3(F) 0.5 1.0 3.4 4.2 6.0
NetStage3assets(G=E-F) 1.8 3.5 6.1 8.9 7.3
CoverageRatio%Stage3assets(H=F/E) 23.1% 23.1% 35.4% 32.3% 45.4%
ECL/TotalAssets 0.14% 0.15% 0.17% 0.18% 0.18%
*GrossStage 1&2assetsrepresentloansbalanceasperIndASafteradjustingfortheimpactofamortisationoffeesearnedand acquisitioncostincurredincludingotherassetslikesecuritydeposits,receivablefromrelatedparties,capitaladvancesetc@GrossStage3assets representsLoansbalanceasperInd ASafteradjustingfortheimpactof(i)amortisationoffeesearnedand acquisitioncostincurredand(ii)overdueinterestconsideredrecoverableunderIndASandotherreceivablesconsideredasnon-performingasattheendofrespectiveperiods.
7
0.06%Spread
2.2%
33%
9.85%8.28%
13.7%2.4%
BHFLKeyRatios
COF
OPEX/NIM
GNPA
ROA ROE
Yield
CapitalAdequacy
19.95%
TargetOPEX/NIMof<20%andROEof13-15%.TheCompanyremainswellcapitalized
8
65%
12%
10%
5%
5%3%
HomeLoan LAP LRD DF Rural Others
PortfolioMixRs.25,714crore
BHFLPortfolioView
88%
4%
8%
Salaried Professionals Self-Employed
HomeLoanPortfolioCustomerCategorisation
Rs.17,146crore
AwelldiversifiedportfoliowithdominantshareofHL
Focusonlow-risk,fastgrowingSalariedHomeLoancustomer
9
Sep2019
49%
18%
26%
7%
TermLoans CP NCD Assignment
Toaddnewbrickofsub-debt,ECB,refinanceasbalancesheetmaturesandplayaggressivelyonassignment
TreasuryStrategy- BorrowingMix
Marketexpectedtostabilizeandliquiditystresstoeaseoutover15-18months
BookmixtoshiftmoretowardslongtermBankborrowings
Maturityofbooktoopenavenuesforsub-debtandNCDborrowingsupportingALM
OpenECBandNHBrefinancehelpingdiversificationofborrowings
AssignmentstodrivebalancesheetgrowthandaddressALMmismatch
10
BHFLCoreStrategy
TOP4MORTGAGEORIGINATOR
§ Inlessthan2yearsofoperations,BHFLranksamongtop7mortgageoriginatorsinIndia
§ Aimtobeamongstthetop4mortgageoriginatorsinthecountry
BUILDALOWRISKBUSINESSMODEL
§ Tocreatealowrisksustainablebalancesheetdelivering<0.75%GNPA&13-15%ROE
§ Focuslargelyonsalariedhomeloanopportunity
FOCUSONCROSSSELL
§ 38Mn+customerbase
§ 12LakhCrmortgageopportunityavailable
§ Focusoncustomerdataenrichmenttocreaterightpropositions
§ Lowerrisk
FOCUSONFEEINCOME
§ Mortgageisahighlycompetitive&lowmarginbusinesswithminimalpricingwidthavailable
§ Focusoncross-sellincomethroughcross-selling/up-sellingcustomizedVASproducts&services
DIVERSIFIEDHLFOCUSEDBUSINESSMIX
§ Entiresuiteofproductsavailabletomeetcustomermortgagerequirements
§ Homeloanstocontribute60%-65%ofportfolio
§ Riskbasedbusinessmixtoensurelowriskportfoliocontribution
FOCUSONMASSAFFLUENT(+)CLIENTS
§ Focusonmassaffluentandabovecustomersegment
§ Averageageof35-40yearsandaveragesalaryof10-20lakhs
11
BHFLStrengths
BRANDNAME
Bajajgroupisoneofthemostreputed&vintagegroupsinthecountry.BajajFinanceisaleadingfinancialservicesnameintheindustry
COMMITTEDLINE
BHFLhasacommittedcreditlinefromBFLavailableontap
CREDITRATINGCAPITAL
BFLhasinfused3,550CrtilldateandiscommittedtogrowMortgages
CUSTOMERBASE ANALYTICSORIENTATION FULLPRODUCTSUITE DEBTMANAGEMENT
BHFLhasaccesstothevastcustomerbaseofBFL(38Mn+)tocrosssellmortgages
BHFLminesthevastcustomerbaseforeligibility&offercomputationthroughhighlysophisticatedanalyticalmodels
MortgageproductsforRetailaswellasCommercialcustomerswithcustomizedVASproducts&servicesforcrosssell/up-sell
Dedicatedandwell-staffedDebtManagementunitforbothurbanandruralmarkets
Agency Long-term Short-term
CRISIL AAA(Stable)
A1+
IndiaRatings
INDAAA(Stable) A1+
12
BHFLProductSuite
HomeLoans
LoanAgainstProperty
VASProducts
DeveloperFinance
LeaseRentalDiscounting
Fullsuiteofmortgagesproductsandservicesforretailandcommercialcustomers
RuralMortgages
13
HomeLoans
75%ofMonthlyAcquisitionMix
93%SalariedHomeLoan
67%ExistingCustomerbasesourcing
59%
FOIR
70%LTVatorigination
11LakhAvg.Customer
salary
41LakhAvg.TicketSize
75%oftheCompany’sincrementalAUMiscontributedbyHLtosalariedindividuals…
16,642CrAssetUnderManagement
85%Customerswith
750+CIBIL
14
HomeLoansVerticals
B2C B2B
5Markets
Micro-Marketapproachbasiscustomerspread
7-8Years
Behaviouralizedmaturityofloan
BHFLcaterstomajorlyEliteA+/Acategory
developers
PSStoembedBHFLindeveloperecosystem;door-openerforlarge
relationship
FocusedonDFfundedprojectsforscale,
relationshipandriskmitigation
Appx.67-70%customersarehavingpriorrelationshipwith
Bajaj
Data-analyticsbasedoffergeneration
approachforbetterriskmgmt.
4-5Years
Behaviouralizedmaturityofloan
HigherprofitabilityinB2Cchanneldrivenbyability
tocross-sell
Combinationoffieldandregionalunderwritingprocessesforbalancing
TATandRisk
Onlydefined,selected,risk-approvedprojectsallowedforsourcing
Continuetoleveragethe38Mn+existingcustomerbasetogrow FocusonthehugemarketopportunityinB2Btoprovideexponentialgrowth.Lessriskyandhighlystableportfolio
70% 30%
CustomersourcingondigitalchannelsacrossBajajFinservassets
15%Contribution
LoanAgainstProperty
15
Operativeintop20citieswithATSof46Lakh.FocusedonMassaffluentandabovesalariedandself-employedcustomers
Morefocusedondirecttocustomerstrategywithintermediarybusinesscontributinglessthan20%ofnewacquisition
ATSrangesfrom30Lakhto100lakhwithacapof300Lakhs.AUMmixis22%fromSalaried,8%fromSEPand70%fromSENP.
47%LTVatOrigination
3,040CrAssetUnderManagement
85%ExistingCustomermix
BusinessfocusedonFreshLAPwithfasterturn-around-timeof72-120hours
Selfoccupiedresidentialproperty(SORP)constitutes77%ofthetotalbook.MaxLTVexposurerestrictedat75%
RuralMortgages
16
Hubandspokemodelwithpresenceacross75upcountrylocationsasHUBand50locationsasSpokethruASSCtie-ups
Onlybusinesswherecompanyacquiresself-employednonprofessionalsinHL.50%Salariedand50%SENPcustomerprofilemix
ATSof16lakhwithaverageHomeLoanLTVof64%andaverageLoanagainstPropertyLTVof42%
75Locations
1,290CrAssetUnderManagement
5.6%Spread
40%ofportfolioisHLand60%isLAP– targeting50:50acquisitionmixbyMarch2020
Higheststandardsofcontrollershipacrossallproductssupportedbyadequatespread
LeaseRentalDiscountingBusiness
17
Offersleaserentaldiscountingtohighnetworthindividuals(HNI)anddevelopersprimarilyforleasedoutofficespaces
LesseesaremajorlyFortune500companies.Thepropertiesarerelativelyeasiertoleaseoutlateraswell
ConservativediscountingandcomfortableLTVs(~55%).Loansizerangesfrom5Cr– 100Cr
AlltheLRDtransactionsarebackedbyrentalsthroughESCROWmechanismwithexclusivecharge
Continuousmonitoringofeachtransactiononamonthlybasisbyadedicatedriskteamstructure
Top8Locations
2,651CrAssetUnderManagement
20-25CrAverageTicketSize
18
DeveloperFinance
15-35CrAverageTicketSize
1,301CrAssetUnderManagement
143ActiveDevelopers
BusinessApproach
§ Focusonbuildingagranularbook
§ Focusedonendunitprice<1CrotherthanMumbaiand<1.5CrinMumbai
§ Nolandfinancing
§ Operativein8locations(notoperationalinDelhi&NCR)
§ FocusonconvertingDFexposuretoretaillowriskHLexposures
DeveloperProfile
§ Developershouldhavebuiltminimum0.75- 1millionsqft.inpast7-10yr.
§ Developershouldnothavemorethan2-3liveprojects
§ Lowleverage
§ Developershouldbelargeintheconcernedmicro-market
OperatingModel
§ Centralizedunderwriting
§ DisbursalonlyafterRERAandBuildingapprovals
§ Deferreddisbursementbasisstageofconstructionandsalesmilestones
§ PrincipalsweepfromDay1
§ Interestservicingmandatorytobedoneonamonthlybasiswithnomoratorium
19
StrongUnderwritinganddebtmanagementcapabilities
RetailLoansUnderwriting
(HomeLoans&LoanAgainstProperty)
§ Dedicatedunderwritingstructureofsubjectmatterexpertswithrelevantdomainexperience
§ ForLRDtransactions:In-depthassessmentofcustomer’sborrowingrequirement,credithistory,financials,marketstature,borrowingentitystructure,collateralsite,credibilityoflessee’s,lock-inperiod
§ ForDFtransactions:detailedassessmentofdevelopershistory,projectsite,approvals,cashflows,existingprojectsperformance
§ UseofindustrybestpracticesandtoolsforthepreparationofCreditApprovalMemo(CAM)foreachcommercialtransaction
§ Centralizeddisbursalofallcommercialtransactionforbettercontrollership
§ Separatededicatedunderwritingstructuresforsalariedandself-employedloans
§ Salariedloansfollowahubmodelwhileself-employedloansareunderwrittenacrossalllocationstoaddressbusinessandcollateralrelatednuances
§ Tele-PDforallsalariedloanswhilephysicalPDwithunderwritermandatoryforallself-employedloans
§ Legalandtechnicalevaluationofcollateralthoughin-housecollateralteamandempaneledvendorsaspertheregulatorynorms
§ Checkpoints/hind-sightingprocessesoverthelife-cycleoftheloan
CommercialLoansUnderwriting
(DeveloperFinance&LeaseRentalDiscounting)
DebtManagementApproach
§ DedicateddebtmanagementstructureforallRetailloans– urbanaswellasrural
§ Debtmanagementisdonethroughin-housedebtmanagement team- noexternalagencies
§ Backedbyastronglegalstructure
§ Dedicatedteaminplaceforefficientresolutionoflegalcasesatdifferentstages
BHFLWayForward
20
OptimalBalanceSheetMix Capitaladequacy
§ Maintain CRARofover>15%overthenext3yearsagainstregulatorynormof12%
§ Focusonbuildingalow-riskbalancesheetwithmediumROE.SalariedHLtobethecoregrowthdriveroverthenext3-5years.
§ DeveloperFinancebooktoberangebound(7-8%oftheportfolio)
Operatingefficiency
§ ContinuedfocustowardsOPEXmanagementthroughcostout&processefficiencies
§ OPEX/NIM~20%byFY23
GranularPortfolio
§ Continuedtofocusonmassaffluentcustomersascoretargetsegment
§ ContinuetofocusonATS of30– 100Lakhinretail
Profitability&Riskmetrics
§ ROE:13-15%
§ ROA:1.8%– 2.1%
§ GNPA:<0.75%
DiversifiedBorrowings
§ Maintainoptimalborrowingmixofbanklinesandmoneymarket.
§ Addnewlinesthroughrefinance,sub-debtandECB
§ Assignment~18-20%
ThankYou
BajajHousingFinanceLimited
DisclaimerThis presentation has been prepared by and is the sole responsibility of Bajaj Housing Finance Limited (together with its subsidiaries, referred to as the “Company” or “Bajaj HousingFinance”. By accessing this presentation, you are agreeing to be bound by the trailing restrictions.
This presentation does not constitute or does not intend to constitute or form part of any offer or invitation or inducement to sell, or any solicitation of any offer or recommendation topurchase, 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 on in connection with, any contract or commitment therefor.In particular, this presentation is not intended to be a prospectus or offer document under the applicable laws of any jurisdiction, including India. No representation or warranty, express orimplied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained in this presentation. Suchinformation and opinions are in all events not current after the date of this presentation. There is no obligation to update, modify or amend this communication or to otherwise notify therecipient if information, opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate. However, the Company may alter, modify or otherwisechange in any manner the content of this presentation, without obligation to notify any person of such change or changes.
These materials are being given solely for your information and may not be copied, reproduced or redistributed to any other person in any manner. The distribution of these materials incertain jurisdictions may be restricted by law and persons into whose possession these materials comes should inform themselves about and observe any such restrictions. Certainstatements contained in this presentation that are not statements of historical fact constitute “forward-looking statements.” You can generally identify forward-looking statements byterminology such as “aim”, “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “intend”, “may”, “objective”, “goal”, “plan”, “potential”, “project”, “pursue”, “shall”, “should”,“will”, “would”, or other words or phrases of similar import. These forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that maycause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or other projections. Important factors that could cause actual results, performance or achievements to differ materially include, among others: (a) material changes inthe regulations governing the Company’s businesses; (b) the Company's ability to comply with the capital adequacy norms prescribed by the RBI; (c) decreases in the value of the Company'scollateral or delays in enforcing the Company's collateral upon default by borrowers on their obligations to the Company; (d) the Company's ability to control the level of NPAs in theCompany's portfolio effectively; (e) internal or external fraud, operational errors, systems malfunctions, or cyber security incidents; (f) volatility in interest rates and other market conditions;and (g) any adverse changes to the Indian economy.
This presentation is for general information purposes only, without regard to any specific objectives, financial situations or informational needs of any particular person. The informationcontained in this presentation is only current as of its date and the Company does not undertake any obligation to update the information as a result of new information, future events orotherwise.
Glossaryofterms
Term Fullform
SMT SeniorManagementTeam
ATS AverageTicketSize
AUF AssetsunderFinance
ECL ExpectedCreditLoss
COF Costoffunds
GNPA GrossNonPerformingAssets
VAS Valueaddedproducts&services
FOIR Fixedobligationtoincomeratio
LTV LoantoValue
PSS Propertysearchservices
B2C BusinesstoBusiness
B2B BusinesstoCustomer
SENP SelfemployedNonProfessionals
SEP SelfemployedProfessionals
PD Personaldiscussion
CAR Capitaladequacyratio
ROA Returnonaverageassets
ROE Returnonaverageequity
ECB Externalcommercialborrowing