corporate presentation h1 fy20 - amazon web services · 2020-01-07 · leading to strong and...
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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-
owned 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 200bn.
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 opened every month
272
Thousand employees 14
Mn
Customers 3.6
Reach Scale Momentum
Fullerton India Credit Company Ltd Quick statistics
... Leading to strong and predictable outcomes
Strong Parentage and Governance • Deep inter-linkages, strategic and operational
oversight 1
Conservative Liquidity and Risk management • Prudent ALM practices, resilient credit and
operational 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
oversight 1
Conservative Liquidity and Risk management • Prudent ALM practices, resilient credit and
operational 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 operational 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
oversight 1
Conservative Liquidity and Risk management • Prudent ALM practices, resilient credit and
operational 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 of rural business operations
• Empowering women small scale entrepreneurs
• Close proximity & deep understanding of 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
oversight 1
Conservative Liquidity and Risk management • Prudent ALM practices, resilient credit and
operational 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%
Developmental 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
Op
erat
ion
al R
isk
fram
ewo
rk
Fraud
Co
ntro
l sup
po
rt
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
oversight 1
Conservative Liquidity and Risk management • Prudent ALM practices, resilient credit and
operational 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
Deep Investments in Technology, Digitization & Data Analytics To Bullet proof future growth
Technology Digital Analytics
• Adoption of Agile + DevOps +
CI/CD technology
• Adoption of Liquid
Architecture.
• IT Org Structure, Skills
change to execute IT long
term strategy
• Implement tools like
Jira/confluence
• Branchless & centralized E2E processes
• Full stack of APIs for partner integration
(Serving 40+Partnerships)
• Micro-services based architecture
• Cloud strategy and Cloud first
implementation for customer/ partner
facing systems
• Underwriting based on Alternate data
Robust BRE engines & instant approvals
• Dataware house/Data Lakes
• Cross sell / Up sell Credit Risk
Monitoring / Stress Testing
• Lifetime profitability, Risk
adjusted Return and Recession
Loss Multiplier guide portfolio
shape
• ML based dynamic scorecards Risk
Based Pricing
25
BOTs APIs
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 12,376 16,437 4,061 32.8%
Expenses 4,409 5,967 1,558 35.3%
Working Profit 7,967 10,470 2,503 31.4%
Cost of Credit 2,624 3,643 1,019 38.8%
Profit Before Tax 5,343 6,827 1,484 27.8%
Profit After Tax 3,393 4,364 971 28.6%
Customer AUM 190,600 240,679 50,078 26.3%
Shareholders' Funds 32,245 43,879 11,634 36.0%
RoA (Post Tax) (%) 4.0% 3.9% -0.1% -0.1%
Branches (#) 596 648 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
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
13.4% 13.4% 14.2% 14.5%
15.2%
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%)
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 on 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
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