Corporate Presentation H1 FY20 - Fullerton India · DUBAI, UAE 12 outlets 53k Cust INDIA 648 Branches 3,600k Cust Central CHINA 4 Provinces, 40 Outlets 80k Cust CHINA 127 Community

Corporate Presentation

H1 FY20

Company Background

Key Differentiators

H1 FY 20 Financials

Management Team

CSR and Accolades

Company Background

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

Key Differentiators

... 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…


9 ... Leading to strong and predictable outcomes


oversight 1





channels

2 �





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




oversight 1





channels

2 �





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




oversight 1





channels

2 �





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




oversight 1





channels

2 �





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

Financials- H1 FY 20

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%


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


Capital Infusion

13.4% 13.4% 14.2% 14.5%

15.2%

19.5% 19.2% 19.6% 19.7% 20.1%


Regulatory Minimum for CAR (15%)

CAR

Tier 1 %

Regulatory Minimum for Tier1 (10%)

Management Team

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

CSR and Accolades

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

http://www.fullertonindia.com/

mailto:[email protected]

THANK YOU

Documents

Corporate Presentation H1 FY20 - Fullerton India · DUBAI, UAE 12 outlets 53k Cust INDIA 648 Branches 3,600k Cust Central CHINA 4 Provinces, 40 Outlets 80k Cust CHINA 127 Community