- Consolidated Profit After Tax (excluding exceptional items): INR 2,902 crore, up 41% year-on-year.
- Consolidated Revenue: INR 39,050 crore, up 30% year-on-year.
- NBFC Portfolio: INR 1,05,639 crore, up 31% year-on-year and 7% sequentially.
- HFC Portfolio: INR 18,420 crore, up 33% year-on-year.
- Mutual Fund Average AUM: INR 3.3 billion, up 21% year-on-year.
- Total Premiums in Life and Health Insurance: Up 18% year-on-year.
- Gross Stage 2 and Stage 3 Ratio (NBFC Portfolio): 4.49%, down 135 basis points year-on-year and 36 basis points sequentially.
- Total Credit Losses (NBFC Business): 1.43% in Q4 FY24.
- Branch Network: Increased by 179 branches in FY24, totaling 1,474 branches.
- Co-located Branches: Increased by 212 to 796 branches across 220 locations.
- ABCD App Registrations: Over 1 lakh registrations.
- Udyog Plus Registrations: Over 8 lakh registrations, with disbursements of about INR 500 crore.
- Payments Lounge GMV: Crossed INR 2,000 crore till March.
- NBFC Disbursements: INR 18,123 crore in Q4 FY24, up 16% year-on-year.
- Housing Finance Disbursements: INR 2,933 crore in Q4 FY24, up 64% year-on-year.
- AMC Average AUM: INR 3,31,709 crore, up 20.5% year-on-year.
- Life Insurance Total Premium: Up 15% year-on-year.
- Health Insurance Gross Premium: INR 3,701 crore, up 36% year-on-year.
- Health Insurance Combined Ratio: 110% in FY24.
- Life Insurance Net VNB Margin: 20.2% in FY24.
- Life Insurance AUM: INR 86,161 crore, up 23% year-on-year.
- Health Insurance Market Share (Sahi): Increased from 10.4% to 11.2%.
- Health Insurance Net Loss: Improved to INR 183 crore from INR 220 crore.
- Health Insurance Claims Settlement Ratio: 96%.
Release Date: May 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Aditya Birla Capital Ltd (BOM:540691, Financial) reported a 41% year-on-year growth in consolidated profit after tax, excluding exceptional items, reaching INR 29.02 crore in FY24.
- The company's NBFC portfolio grew by 31% year-on-year and 7% sequentially, crossing the INR 1 lakh crore milestone during Q4 FY24.
- Mutual fund average AUM increased by 21% to INR 3.3 billion in Q4 FY24.
- The total premiums in life and health insurance grew by 18% year-on-year.
- Aditya Birla Capital Ltd (BOM:540691) launched the ABCD app, which offers a comprehensive portfolio of more than 20 products and services, and has seen over 1 lakh registrations to date.
Negative Points
- The gross Stage 2 and Stage 3 ratio of the NBFC portfolio declined by only 135 basis points year-on-year and 36 basis points sequentially to 4.49%, indicating some lingering asset quality issues.
- Total credit losses in the NBFC business were 1.43% in Q4 FY24, which is within guidance but still a notable figure.
- The combined ratio in the health insurance business was 110% in FY24, indicating that claims and expenses exceeded premiums collected.
- The net VNB margin in the life insurance business declined to 20.2% in FY24 from 23% in the previous year, partly due to a higher proportion of ULIPs and lower G-sec rates.
- The personal and consumer loan book saw a decline of 11% quarter-on-quarter, reflecting a strategic dial-down on small-ticket unsecured loans.
Q & A Highlights
Q: We kind of moved on to the finance business to around 17% of the ROE for this year and now with the merger, again your ROE will come down. So, what kind of ROE guidance would you give us for the next three years?
A: See Nischint right now, we are not making any ROE guidance. What we are focused on is that each one of the businesses is we continue to improve our operating performance. As we mentioned earlier also, Rakesh has been saying that the ROA that we have in the NBFC at 2.5% broadly right now, our endeavor is to expand it to about 3% over the next three years. So that's what we'll be focused on. ROE will be a resultant of the overall capital structure and I think that we will have to wait for how it will emerge.
Q: Just a second small question was essentially of the GS2 and GS3 in the consumer (inaudible - microphone inaccessible) seeing a fairly sharp rise on sequential and a year-on-year basis. So, any color or any commentary on this?
A: Nischint your question is on personal and consumer the Stage-2 and Stage-3 increase?
Q: Yes.
A: See if you look at that has gone from 2.2% to 2.9% and 2.2% to 2.8%. But that's primarily on the reduction in the book. So, if you see in quarter 3, our personal and consumer book was INR19,600 crore and it came down to about INR17,000 crore something. So, that is a denominator effect, and there is -- we haven't seen any increase in delinquency in personal and consumer.
Q: So, if I look at the numbers, your loan book in this segment is down 11% quarter-on-quarter, but your GS2 is up 17% quarter-on-quarter and GS3 is up 13% quarter-on-quarter. So, the point essentially is that are we kind of closer to the (inaudible - microphone inaccessible) these ratios going up when you're really looking at the static pools probably that you have access to?
A: So, it's primarily a denominator effect and as we had mentioned earlier that we looked at the small ticket unsecured loan and we calibrated below INR50,000 ticket size and that's what we had really and we continue to grow our personal loans through our branches, through our ecosystem and now the ABCD App which we have launched, we will continue to grow this. Yes.
Q: So, is this like the bottom end or do you expect it to sort of run down a little bit more before the book starts growing and the ratio starts improving?
A: So, INR50,000 and above, there is nothing which is left now. So, if you look at our BNPL book is less than 1%, say 0.7%. So INR129 crore-odd is left and that also by April it would have gone off. So, there is nothing, this is already -- it's not there in the portfolio now, the small ticket less than INR50,000 loan.
Q: So, and the final one on the life insurance side if I can see them and the margin compression that we've seen this year, is it purely because of the increase in share of ULIPs or would you also kind of say that payouts to distributors have gone up which is one of the things that some of the other peers in the industry have been talking about?
A: It has no -- because of any payout to the distributor that has gone up. That's not the trend that we are seeing. Largely on two factors, one is that ULIP for the year went to 24%, which obviously means for the last quarter it would have touched about 30%. So larger unit share in the last quarter and the fact that in Q4 the G-sec was lesser than where it is even standing today. Some impact of that on gross margins and product mix on account of ULIP is where the VNB is now at 20.2%.
Q: The first question is on your acquired portfolio. If I see you have almost acquired like [INR4.5000crore-odd] consisting of 1.5 lakh accounts over the last one year. If you can just help us understand about some sort of what kind of a loan from -- what kind of lenders you have acquired this portfolio. So that’s the question one. The second question would be if you were to look in the housing finance business I mean, of course the AUM is growing but you are still sort of investing in branch and people so that cost ratio also is right. Right now, of course the negative credit cost has kind of driven that ROA is still being is comparable to where it was last year. So, if you can provide clarity or color on how these cost- OpEx ratios are going to behave over FY25.
A: So, these are small ticket loan against property primarily that's the nature of the business - nature of the loans which we would have acquired. These would be seasoned portfolio, where we do 100% sampling and we cherry pick the portfolio. So that's how we really look at it and this can be done across different institutions.
Q: (technical difficulty) INR 3 lakh-odd and also if I look at the disclosure in terms of the security cover, it suggests less than 100%, that means there's reasonable size of unsecured also, that is where my question was that I mean. If some mix of unsecured and secured then what kind of unsecured book you're acquiring?
A: So unsecured, if you look at, out of this, is a small portfolio of unsecured and which is I can get back to you with the exact, but there's a small portfolio, INR798 crore out of this is unsecured, remaining is secured.
Q: And my question on housing finance OpEx?
A: So, I think the question that you asked was about the ROA and how we've managed the credit cost and how is it going to be like.
Q: (technical difficulty) No operating costs despite performance.
A: Yes, I will come to OpEx also. As I have observed, I think the growth trajectory is clearly back at ABHFL and last year we grew by 14%, this year we have grown by 33%. So, while that is clearly happening, you would have also seen that the NII for us versus 5.3% of last year, we have actually grown it to 5.39% this year, which is of course a combination of how
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
