#1Financial year 2020-21 BAJAJ B FINSERV BAJAJ FINSERV LIMITED Investor Presentation - Q1 FY21*#2Bajaj Group Structure Bajaj Holdings & Investment Limited (BHIL) 51% 33.43%@ Maharashtra Scooter 39.16%@ Limited Bajaj Auto Limited Bajaj Finserv Limited B BAJAJ FINSERV 52.82%@ Bajaj Finance Limited . Set up in 1987: BFL is a 33 year old company. Diversified across lending (consumer, rural, SME, commercial & mortgage space) and payments Included in NIFTY 50 Index Credit rating - AAA/Stable by CRISIL, India Ratings, CARE Ratings and ICRA Credit rating for short term debt program is A1+ by CRISIL, ICRA & India Ratings Investment grade long term issuer credit rating of BB+/Stable and short term rating of B by S&P Global Ratings 74% Bajaj Allianz General Insurance Company Limited# • Established in 2001 post opening of market for private players • 2nd largest private General insurer in India in terms of Gross Premium • Consistently most profitable amongst the private players. ROE of 18.5% in FY20 •Combined ratio of 100.8% for FY20 and 97.6% for Q1 FY21 • Offers a wide range of products across retail & corporate segments Recognized in the market for claims servicing 74% Bajaj Allianz Life Insurance Company Limited # • Established in 2001 post opening of market for private players • Among the top private sector Life insurers in India on new business Deep, pan India distribution reach • Diversified distribution mix - agency, bancassurance, proprietary sales force, alternate channels, direct etc •AUM of 610 BN as on 30 June 20 .Net worth of 101 BN as on 30 June 2020 •Solvency ratio of 760% 100% Bajaj Housing Finance Limited# 100% Bajaj Financial Securities Limited# BFS shareholding in BFL was 52.82% as on 31 Mar 2020. BHFL is a 100% subsidiary of BFL which became fully operational in Feb 2018. Bajaj Financial Securities Limited is 100% subsidiary of BFL which became fully operational in Aug 2019 Note: Shareholding is as of 30 Jun 2020. Only major subsidiaries shown in this chart | # - Not Listed, @- Represents direct holding 2#3Bajaj Finserv's Vision - A diversified financial services group with a pan- India presence Life cycle needs of Individual & SME customers B BAJAJ FINSERV Asset acquisition Asset protection Family Protection Lending General Insurance Health Insurance Life Insurance Life Insurance Fixed Deposits Mutual funds Investment/ Wealth management Income protection Life Insurance Pensions Retail B BAJAJ FINSERV SME/ Corporate Rural Diversified across products and markets, with a strong retail core Retail Consumer: All Bajaj Finserv's businesses have a strong emphasis on the retail segment with a pan-India brand presence. Retail consumer is served through D2C (Direct to Customer) at Point of Sale, online, dealers for consumer lending, bancassurance and insurance agents. SME and Corporate: Bajaj Finance provides working & growth capital in the high net worth SME space. The insurance companies serve these segments through a suite of corporate and group insurance products Rural Focus: Bajaj Allianz Life is a leading player among private insurers in this space through its branches and business partners. Bajaj Finance has a highly diversified portfolio in the rural locations offering a wide range of products in consumer and RSME business categories under a unique hub and spoke business model. Bajaj Allianz General has penetrated rural markets through its virtual points of presence. 3#4Bajaj Finserv - A resilient diversified financial services business Bajaj Finance Limited BAJAJ B FINSERV BFL's robust liquidity management framework has ensured that it has liquidity to meet its debt service obligations, despite it having to offer repayment moratoriums to its customers. BFL's excellent risk management, strategy of maintaining a longer duration for liabilities than assets, and optimal mix of borrowings positions it well to come out on top through the crisis. Bajaj Allianz General Insurance BBAJAJ Allianz BAGIC's robust solvency, large AUM in relation to its premium, prudent underwriting, stable management team and strong brand positions it quite strongly among the peers and should help it withstand the crisis and take advantage of opportunities once the crisis has passed. Bajaj Allianz Life Insurance BBAJAJ Allianz An excellent solvency margin, a strong multi-channel distribution covering proprietary and partnership business models with extensive geographical reach and strong brand should help BALIC overcome the effects of the pandemic and emerge as a stronger player 4#5Bajaj Finserv performance highlights - Q1 FY21 BAJAJ B FINSERV CY 141,920 PY Hu Performance Highlights of Q1 FY20 over Q1 FY20 (Ind AS) All Figures in Rs Million 12,152 329,571 35,859 16% 44% 32% 13% 122,723 Total Revenue (Consolidated) 8,453 248,762 31,645 Net Worth (Consolidated) Net Worth (Standalone) PAT* (Consolidated) Bajaj Finserv remains a debt free company. Bajaj Finserv's surplus funds (Excluding Group Investments) stood at Rs. 10.6 Bn as on 30 Jun 2020 (Rs. 7.9 Bn. as on 30 Jun 2019) Consolidated Book Value Per Share at Rs. 2,071 as on 30 Jun 2020 (Rs.1,563 as on 30 Jun 2019) Note: *PAT attributable to owners of the company 5#6Consolidated profit components - Q1 FY21 Consolidated profit components for Q1 FY21 (Ind AS) B BAJAJ FINSERV All Figures in Rs Million Unusual items MTM* Gains on BAGIC & BALIC investments Rs 3,300 Mn (post-tax) Intercompany adjustments Impact of COVID - BFL Contingency Bajaj Finserv- Standalone 106 provision - Rs 5,740 Mn (post-tax) Others 10 Life Insurance (250) General Insurance 2,979 Bajaj Finance 4,224 5,083 Consolidated profit components for Q1 FY20 (Ind AS) Intercompany adjustments Others Life Insurance (99) General Insurance 471 Bajaj Finance 1,515 6,561 *MTM - Mark to Market | ** Represents Impact considering BFS Share Bajaj Finserv- Standalone 5 12,152 Bajaj Finserv - Consolidated 8,453 Bajaj Finserv - Consolidated 6#7Q1 FY21 Highlights BBAJAJ FINSERV BAJAJ B FINSERV All Figures in Rs Million Highlights of Group Companies BAJAJ FINSERV# Q1 FY21 Q1 FY20 Growth BAJAJ FINANCE# Q1 FY21 Q1 FY20 Growth Total Revenue 141,920 122,723 16% AUM 1,380,546 1,288,976 7% Net worth 329,571 248,762 32% Total Income 66,497 58,078 14% PAT 12,152 8,453 44% PAT 9,623 11,953 -19% #Consolidated | Ind AS NNPA 0.5% 0.64% 16 bps Consoldiated Profit Components* BAGIC Q1 FY21 Q1 FY20 Growth GWP 22,891 2% 28,433 -19% 5% 15% Investments 196,115 174,656 12% 18% 24% PAT 3,949 2,104 88% 35% Combined Ratio 97.6% 103.1% 5.5% abs 85% 78% -2% 42% BALIC -1% -1% GWP 2019-20 Q1 FY 19-20 Q1 FY 20-21 Investments PAT Q1 FY21 Q1 FY20 Growth 16,997 609,681 18,367 -7% 578,596 5% 1,300 617 111% BFL BAGIC BALIC Others *Others includes Bajaj Finserv Standalone, and all remaining components. Bajaj Finserv and Bajaj Finance figures are as per Ind AS. BAGIC and BALIC figures are as per IRDAI Regulations (Indian GAAP) & the Indian Accounting Standard framework is used only for consolidated numbers ■ Bajaj Finserv's Q1 FY21 PAT excluding BFL's contingency provision for COVID and MTM gains of BAGIC & BALIC is Rs. 14,594 Mn (73% Growth over PY); BFL Q1 FY21 PAT adjusted for Covid-19 provision is Rs. 20,463 Mn(71% growth over PY) #Consolidated | Ind AS#8BAJAJ B FINSERV Bajaj Finance Limited 00#9BFL - KEY STRATEGIC DIFFERENTIATORS B BAJAJ FINSERV STRATEGY Diversified financial services strategy seeking to optimise risk and profit, to deliver a sustainable business model and deliver a superior ROE and ROA • Focused on continuous innovation to transform customer experience to create growth opportunities. DIFFERENTIATORS Focus on mass affluent and above clients Strong focus on cross selling to existing customers Highly agile & highly innovative Deep investment in technology and analytics Diversified asset mix supported by strong ALM and broad-based sources of borrowings Overall customer franchise of 42.95 Mn. and Cross sell client base of 22.59 Mn. Centre of Excellence for each business vertical to bring efficiencies across businesses and improve cross sell opportunity. 70% of new loans in Q1 were to existing clients Continuous improvement in features of products & timely transitions to maintain competitive edge Has helped establish a highly metricised company and manage risk & controllership effectively Consolidated lending AUM mix for Consumer : Rural : SME Commercial: Mortgage stood at 37%: 9%: 13%: 7%: 34% as of 30th June 2020 Consolidated borrowing mix for Banks: Money Markets: Deposits: ECB stood at 39%: 40%: 17%:4% 6#10BFL : Business Segments BAJAJ FINANCE Consumer SME Commercial B BAJAJ FINSERV Rural . • Largest consumer electronics, digital products & furniture lender in India Presence in 1,049 locations with 89,900+ active points of sale Amongst the largest personal loan lenders EMI Card franchise of over 21.5 Mn. cards in force Among the largest new loans acquirers in India 1.75 Mn in Q1 FY20 Bajaj Finserv-Mobikwik active wallet users stood at 15.7 Mn as on 30 June 2020 who have linked EMI card to wallet • Bajaj Finserv- RBL Bank co-branded credit card stood at 1.8 Mn as of 30 June 2020 Focused on affluent SMEs with an average annual sales of around Rs. 15-17 Crores with established financials & demonstrated borrowing track records Offer a range of working capital & growth capital products to SME & self employed professionals Dedicated SME Relationship management approach to cross sell • Wholesale Lending products covering short, medium and long term financing needs of selected sectors viz. ✓ Auto component and ancillary manufacturers Light engineering ✓ Financial institutions Structured products collateralized by marketable securities or mortgage Financing against shares, mutual funds, insurance policies and deposits Unique hub-and-spoke model in 1,359 locations and retail presence across 19,600+ points of sale • Diversified rural lending model with 10 product lines across consumer and professional business categories 10#11BFL's - Summary on Covid-19 B BAJAJ FINSERV ☐ Business operations in Q1 FY21 were considerably impacted due to COVID-19 pandemic and the consequent lockdowns which remained for most of Q1 FY21. Restarted its sales finance, auto finance, LAS and Gold loan businesses with stringent loan to value (LTV) and underwriting norms both in urban and rural formats from second week for May 2020. Other businesses are being gradually restarted from July 2020. Home loan and credit card distribution businesses were restarted in June'20. ☐ Loan against property, SME, B2C urban, B2C rural and commercial businesses were restarted in July'20. ☐ The Company's liquidity position remains very strong with overall liquidity surplus of approximately Rs. 17,700 crore as of 30 June 2020 on consolidated basis. The Company's liquidity surplus as of 20 July 2020 was approximately Rs. 20,590 crore. ☐ Augmented collections infrastructure to mitigate its credit costs. It has added 2,800 collections officers and approximately 16,000 collection agency staff to manage the increased bounce rate.#12BFL's - Summary on Covid-19 BAJAJ B FINSERV Consolidated moratorium book has reduced sharply to Rs. 21,705 crore (15.7% of AUM) as of 30 June 2020 from Rs. 38,599 crore (27.1% of AUM) as of 30 April 2020 owing to reduction bounce / dishonor rates coupled with improved collection efficiencies. Company has made an additional contingency provision of 1,450 crore for COVID-19 taking the overall contingency provision for COVID-19 to 2,350 crore as of 30 June 2020. The Company has made an overall contingency provisioning of 10.8% on its moratorium book as of 30 June 2020. On this moratorium book, the Company has an additional ECL provision of 623 crore, taking the overall provision coverage on the moratorium book to 13.7%. In addition, as a matter of prudence, in line with contingency provision, the Company has also reversed interest income to the tune of 220 crore from the interest capitalized during the moratorium period. The Company has strong pre-provision profitability to absorb increased losses caused by Covid-19. 12#13BFL - Key Highlights Q1 2020-21 B BAJAJ FINSERV AUM growth moderated to 7% YoY to Rs. 138,055 crore from Rs. 128,898 crore as of 30 June 2020 New loans booked declined by 76% to 1.7 Mn in Q1 FY21 from 7.27 Mn in Q1 FY20. Company acquired 0.53 Mn new customers in Q1 FY21. Company through its Zero based budgeting exercise have rationalized all opex lines & optimized its expenses. This is reflected in lower opex to NII i.e. 27.9% in Q1 FY21 vs 35% in Q1 FY20 Q1 FY21 Profit contracted by 19% to Rs. 962 crore after taking contingency provision of Rs. 1,450 crore and interest income reversal of Rs. 220 crore. Adjusted for contingency provisions for Covid-19 for same, PAT was up by 71%. Return on Assets for the quarter was 0.7% and Return on Equity was 2.9%. Adjusted for the Covid- 19 provision, ROA for the quarter was 1.49% and ROE was 6.1%. 13#14BFL - Key Highlights Q1 2020-21 B BAJAJ FINSERV The Company is well capitalised with Capital adequacy ratio (including Tier-Il capital) of 26.4% as at 30 June 2020. The Tier-1 capital stood at 22.6%. The Company remains one of the best capitalised large NBFCs in India. Subsidiaries (included in BFL Consolidated Performance) Bajaj Housing Finance Ltd (BHFL) AUM grew by 52% to Rs. 32,982 crore as of 30 June 2020 from Rs. 21,745 crore as of 30 June 2019. BHFL delivered profit after tax growth of 31% to Rs. 92 crore in Q1 FY21 vs Rs. 70 crore in Q1 FY20 BHFL Opex to NII improved to 30.4% in Q1 FY21 as against 41.4% in Q1 FY20. ☐ During the quarter, the Company made contingency provision of 44 crore for COVID-19 taking the overall contingency provision for COVID-19 to 94 crore as of 30 June 2020. BHFL's Capital adequacy ratio (including Tier-Il capital) as of 30 June 2020 stood at 25.94% 14#15BFL - Q1 FY21 highlights B BAJAJ FINSERV Performance Highlights of Q1 FY21 over Q1 FY20 (Ind AS) All Figures in Rs Million CY 1,380,546 PY Ju 7% 1,288,976 Book Size 66,497 14% 58,078 Total Income CY 0.7% 2.9% PY 1.0% 5.9% Return on Assets ROE (Non-annualized) (Non-annualized) 9,623 -19% 11,953 Profit After Tax Borrowing mix is not excessively dependent on banks. (Mix of 39: 40: 17: 4 between banks, money markets, deposits and others as of 30 Jun 2020) The Company has taken an additional pre-tax contingency provision of Rs 14,500 Mn (post-tax - Rs. 10,843 Mn) for Covid-19. 15#16BFL: Growth Continues FY20 Book Size Q1 FY21 FY20 Increase of 26% Increase of 6% Increase of 43% 14,13,760 12,51,130 13,23,678 11,25,128 FY19 FY20 Q1 FY20 Q1 FY21 1,85,002 Total Income BAJAJ B FINSERV All Figures in Rs Million 2,63,857 Q1 FY21 Increase of 14% 58,078 66,497 FY19 FY20 Q1 FY20 Q1 FY21 Net Interest Income FY20 Increase of 42% 1,69,124 1,18,766 FY19 Q1 FY21 Increase of 12% 36,944 41,521 FY20 Q1 FY20 Q1 FY21 Bajaj Finance Consolidated results are as per Ind AS, previous years figures have been re-casted for comparability 16#17BFL: Growth aided by low NPA and control on Opex B BAJAJ FINSERV 40,000 35,000 Loss Provision and Net NPA% 39,295 2.00% 30,000 25,000 20,000 16,857 15,014 0.64% 15,000 10,000 0.63% 0.65% 5,507 5,000 0.5% 0 0.00% FY19 FY20 Q1 FY20 Q1 FY21 Net NPA %* I Loss Provision (Rs. millions) Operating expenses as a % of NII All Figures in Rs Million Loan losses and provisions (expected credit loss) for Q1 FY21 was Rs. 1,686 Cr as against Rs. 551 Cr in Q1 FY20. Adjusted for Covid-19 provision, loan losses and provisions for Q1 FY21 was Rs. 236 Cr. Gross NPA & Net NPA as of 30 June 2020 stood at 1.4% and 0.5% respectively, as against 1.60% and 0.64% as of 30 June 2019. The provisioning coverage ratio as of 30 June 2020 was 65%. Standard assets provisioning (ECL stage 1 and 2) stood at 273 bps including contingency provision for COVID-19 and 101 bps excluding contingency provision FY20 Increase of 32% PAT 52,637 39,950 35.3% 33.5% 35.0% 27.9% FY19 FY20 Q1 FY20 Q1 FY21 FY19 FY20 Q1 FY21 de growth of 19% 11,953 9,623 Q1 FY20 Q1 FY21 *Net NPA, recognized as per extant RBI prudential norms and provisioned as per Expected Credit Loss (ECL) method prescribed in Ind AS. 17#18Bajaj Allianz General Insurance 18#19BAGIC - KEY STRATEGIC DIFFERENTIATORS STRATEGY BBAJAJ Allianz Strive for market share growth in chosen segments through a well-diversified product portfolio and multi-channel distribution supported by prudent underwriting DIFFERENTIATORS Strong selection of Risk & prudent underwriting Balanced Product Mix Deep and wide distribution Retail orientation Industry leading combined ratios consistently over time-BAGIC's Combined Ratio stood at 100.8% FY20 ■ Business construct is to deliver superior ROE Offers a wide range of general insurance products across retail and corporate segments Continuous improvements in product features & investments in digital technologies to maintain competitive edge Multi channel distribution network encompassing broking, direct, multi-line agents, bancassurance network serving retail and corporate segments - Focused on retail segments – mass, mass affluent and HNI while maintaining strong position in institutional business 19#20BAGIC's - Summary on Covid-19 BBAJAJ Allianz The lockdown during Q1 FY21 has adversely impacted new sales in few segments. Although there has been easing of lockdown since later half of May, volumes are still below pre-COVID levels. Motor insurance has seen a de growth of 32.6% YoY on the back of lower sales of vehicles Travel insurance has dried up in the 1st quarter due to limited opening of airlines & railways. With heightened need of protection, demand for health insurance has picked with 15.5% growth in retail health in Q1 FY21 vs Q1 FY20. ☐ Among the commercial lines, Property (fire) line has seen significant growth in Q1 FY21 aided by hardening reinsurance terms. ☐ On claims front, the experience is mixed Fewer motor claims during lockdown; however, with gradual opening claim frequencies have started getting towards normal in the the green zones. ☐ Lower health claim ratios as non-COVID elective treatments are postponed. As normalcy returns there may be an increase in these surgeries. COVID claims are rising for the industry. BAGIC is currently well reserved for expected claims but the extent to which COVID spreads will determine the actual claims. ☐ Delays in Motor Accident Tribunal cases may cause interest cost on such claims to rise. 20#21BAGIC - Key Highlights Q1 2020-21 BAGIC GWP de-grew by 19% in Q1 FY21 vs Industry de- growth of 6%; BBAJAJ Allianz During Q1 FY21, BAGIC's GWP ex-crop, GMC and Government health de - grew by 11.3% vs Industry de growth of 7.1%. BAGIC has been cautious on Employer Employee Group health for some time due to high loss ratios. Combined ratio (COR) improved and stood at 97.6% in Q1 FY21 v/s 103.1% in Q1 FY20 Includes the impact of claims arising from Amphan and Nisarga Cyclone; Combined ratio excluding NATCAT events stands at 95.2% (vs 101.6% in Q1 FY20) Higher margin for adverse deviations provided in IBNR reserving due to Lockdown related uncertainties. Profit after tax for Q1 FY21 increased by 88% YoY to Rs.3,949 Mn vs Rs. 2,104 Mn in Q1 FY20 Gains from improved LR (68.1% in Q1 FY21 vs 72.8% in Q1 FY20), no impairment provisions and lower expense ratio During the quarter BAGIC has added new partners across different channels: Punjab and Sind Bank, and Home Credit in Banca; Citroen in Motor Dealers and PayTm *Industry growth excluding specialised insurers & standalone health. Source: Gl Council for Industry figures | GDPI: Gross Direct Premium Income 21#22BAGIC: Q1 FY21 highlights Performance Highlights of Q1 FY21 over Q1 FY20 BBAJAJ Allianz All Figures in Rs Million CY 22,891 13,737 18,178 3,949 -19% -20% -7% 88% 28,433 17,167 19,464 2,104 PY Gross Written Premium Net Written Premium Net Earned Premium Profit After Tax 6.6% 4% ROE (Not Annualized) ■ Ex Crop GWP was Rs. 22,708 Mn in Q1 FY21 (Rs.27,244 Mn Q1 FY20) a degrowth of 17% ■ Solvency Ratio was 280% as against regulatory requirement of 150% as of 30 Jun 2020 22#23BAGIC: Combined Ratio 96.7% 92.3% FY18 FY19 Combined Ratios (COR) 100.8% FY20 BBAJAJ Allianz 103.1% 97.6% Q1 FY20 Q1 FY21 1. Combined Ratios are in accordance with the Master Circular on 'Preparation of Financial statements of General Insurance Business' issued by IRDA effective from 1st April, 2013. (Net claims incurred divided by Net Earned Premium) + ( Expenses of management including net Commission divided by Net Written Premium). 23#24BAGIC: Profit after tax and capital efficiency Rs. Million BBAJAJ Allianz All Figures in Rs Million PAT Q1 FY21 PAT growth of 88% 9,988 9,212 7,799 FY18 FY19 FY20 Total Capital infused is Rs.2,768 Mn No Capital infusion since FY08 BAGIC Capital Invested - Networth - 3,949 2,104 Q1 FY20 56,421 51,640 53,710 44,664 53,653 48,872 50,941 41,896 2,768 2,768 2,768 2,768 FY18 FY19 FY20 Q1 FY20 Capital Invested Reserves Net Worth *Accumulated profit includes reserves Q1 FY21 Accumulated profit* 96% of Net worth as on 30 Jun 2020 62,748 59,980 2,768 Q1 FY21 24#25Rs. Billion FY18 95 61 1,617 1,415 BAGIC : Consistently amongst top 2 private insurers in BAJAJ Allianz terms of Gross Premium 1,056 930 737 Industry GDPI Trend (Rs. Bn.) Q1 FY21 GDPI de growth of 4% 1,787 407 389 678 687 730 234 218 173 171 FY18 FY19 FY20 Q1 FY20 Q1 FY21 PSU ■Private Insurers* Industry FY19 111 70 GWP BAGIC Premium Trend FY20 128 82 62 28 Q1 FY21 Premium de-grew by 19% Ex-crop, GMC and government health de growth of 11.3% Source: IRDAI, GDPI: Gross Direct Premium Income | *Private Insurers: Includes Standalone Health Insurers, PSU excludes AIC of India, GIC and ECGC NEP Q1 FY20 19 23 Q1 FY21 18 25#26BAGIC: Balanced product mix BBAJAJ Allianz Business Mix 8% 8% 10% 11% 10% 1% 13% 4% 20% 19% 19% 15% 33% 15% 13% 14% 18% 9% 11% 13% 6% 5% 5% 5% 7% 44% 44% 41% 43% 36% FY18 FY19 FY20 Q1 FY20 Q1 FY21 ■Motor (Retail) ■Health (Retail) Group Health ■Prop, Liability, Engg Agri (Crop Insurance) Others BAGIC's GWP ex-crop, GMC and Government health de - grew by 11.3% Lockdown has affected new sales significantly especially for Motor insurance; Hence, contribution has dropped from 43% in Q1 FY20 to 36% in Q1 FY21 26#27BAGIC: Diversified Channel Mix Channel Mix BBAJAJ Allianz 20% 23% 24% 27% 31% 40% 37% 39% 32% 37% 7% 4% 6% 9% 4% 12% 12% 13% 13% 8% 20% 21% 20% 20% 21% FY18 FY19 FY20 Q1 FY20 Q1 FY21 Individual Agents I Corporate Agents - Banks Corporate Agents - Others Brokers Direct Business BAGIC has the largest network of bancassurance partners in the industry Major relationships include: Citi Bank, HDFC Bank, Bajaj Finance Ltd., Canara Bank, J&K Bank, IDBI Bank, United Bank of India, KVB, RBL, Union Bank, Karnataka Bank, Bandhan Bank & PNB 10,000 plus bank branches expected to be added due to PSU bank mergers 27#28BAGIC: Assets Under Management Rs. Million 1,48,229 FY18 AUM (cash and investments) Q1 FY21 Increase of 12% 1,96,115 1,87,458 1,72,367 1,74,656 FY19 Investment Leverage AUM as of date / Net worth as of date FY20 Q1 FY20 Q1 FY21 BBAJAJ Allianz BAGIC continues to grow its AUM strongly Investments are largely in fixed income securities Investment Leverage of 3.13x as on 30 Jun 2020 28#29Bajaj Allianz Life Insurance 29#30BALIC - KEY STRATEGIC DIFFERENTIATORS BBAJAJ Allianz STRATEGY Continued focus on sustainable and profitable growth by maintaining balanced product mix and investment in retail growth engines • Business construct is to maximize customer benefits while gaining market share in retail space, maintaining shareholder returns and continued focus on increasing New Business Value (NBV) DIFFERENTIATORS Diversified Distribution • Focus on all retail segments mass and mass affluent customers. Deep pan India distribution reach with presence over 524 branches Diverse channels - Agency, Banca, Proprietary sales . Leader in Online investments product sale & strong presence in credit protection segment Strong proprietary channels Innovative products and Sustainable product mix • Large pan-India agency force 3rd highest agency premium amongst private players in FY20. Robust proprietary sales channel to invest in up-selling and cross- selling Balanced product mix; with an aspiration to provide our customers 'Best in class' product suite Our key product offering like Life Goal Assure with differentiated product proposition like ROMC*, GIG** & Goal Suraksha (Non Par Guaranteed Product), and Smart Protect goal (Retail protection product) have helped us cater to different segments and needs of customers Efficient Operations *ROMC: Return of Mortality Charge | **Guaranteed Income Goal • Lean support structure • Providing seamless end to end customer journey through digital enablement 30#31BALIC's - Summary on Covid-19 BAJAJ Allianz ☐ New business is challenged for the Life insurance sector although June was better than April and May. ☐ Preference for protection and guarantees: Higher customer orientation to cover risk and a corresponding drop in Fixed deposits rates has led to increased preference for protection and guaranteed products provided by life insurers; BALIC's share of protection and guaranteed non-PAR savings has increased. ☐ In addition, market volatility has lead to decreased preferences for ULIP - Traditional Mix in Individual rated new business has increased from 38% in Q1 FY20 to 63% in Q1 FY21 Term Protection & Non Par Savings in Q1 FY21 stand at 17% and 33% respectively ☐ Agency and Proprietary Sales force faced relatively more challenges due to lockdowns but is improving in zones where branches have opened. Institutional business was slow in April and May with Banks focusing on their core operations, it has started picking up in June and new relationships like Axis, India Post Payments Bank and Ratnakar Bank starting to do business. ☐ BALIC has been focusing on renewal premium, controlling costs and enhancing digitization of operations and services 31#32BALIC - Key Highlights Q1 2020-21 BBAJAJ Allianz ☐ Despite Covid-19 related lockdown, BALIC Individual Rated premium growth was flat in Q1 FY21 vs Industry de growth of 18% (Private sector de-grew by 23%) Excluding fund business, Group Protection business de - grew by 78% primarily on account of low loan disbursement of loans by NBFCs and Banks due to Covid-19 During the quarter, BALIC has commenced its operations with Ratnakar Bank Ltd (RBL) ☐ Renewals registered a strong growth of 16% in Q1 FY21 ☐ Institutional Business have been a growth driver with 28% growth in IRNB for Q1 FY21 as new partnerships have started delivering ☐ Profit after tax for Q1 FY21 increased by 111% to Rs. 130 crore vs Rs. 62 crore in Q1 FY20 ☐ As compared to this year, last year shareholders' PAT was adversely affected by a provision for impairment of Rs. 126 crore (Rs. 108 crore after tax) ☐ In addition, company had higher realized gains & lower claims. These gains were partially offset by increased new business strain & increased overruns Source Life Council Statistics 32#33BALIC - Q1 FY21 highlights CY 3,306 BBAJAJ Allianz Performance Highlights of Q1 FY21 over Q1 FY20 All Figures in Rs. Million 3,974 9,579 16,997 0% -40% 16% -7% 3,322 6,678 8,227 18,367 PY Individual Rated NB Group NB Renewal Premium Gross Written Premium CY 1,300 111% PY 617 PAT 760% Solvency Ratio as on 30 Jun 2020 Individual Rated NB = (100% of first year premium & 10% of single premium excluding group products) 33#34BALIC: Ticket Size FY20 Regular Premium Ticket Size increase of 10% 56,128 FY19 BBAJAJ Allianz All Figures in Rs. Regular Premium Ticket Size (Agency) FY20 Increase of Q1 FY21 14% decrease of 40% 61,716 60,823 FY20 Q1 FY20 36,465 Q1 FY21 Q1 FY21 Decrease of 52% 87,305 85,211 74,714 FY19 FY20 42,167 Q1 FY20 Q1 FY21 . With increase of smaller ticket term in product mix, average ticket size has dropped significantly Excluding term, average ticket size de-growth stood at 15% 34#35BALIC: Persistency Persistency 13th Month 80% 79% 77% 68% 77% Persistency 13th Month - FY19 FY20 Q1 FY20 Q1 FY21 Persistency 37th Month 58% 55% 54% 57% - Persistency 37th Month FY19 FY20 Q1 FY20 Q1 FY21 Persistency 49th Month 51% 47% 47% 49% Persistency 49th Month FY19 FY20 Q1 FY20 Q1 FY21 BBAJAJ Allianz Persistency 25th Month 71% 69% 67% - Persistency 25th Month FY19 FY20 Q1 FY20 ■Q1 FY21 Persistency 61st Month 38% 40% 40% 39% Persistency - 61st Month FY19 FY20 Q1 FY20 Q1 FY21 Due to Covid-19 lockdown & extreme market volatility, renewal collection for Q1 FY2021 was severely impacted, which has led to marginally lower 13th month persistency. *Note: Persistency as per IRDAI framework | The persistency ratios for the period ended Jun 30, 2020 have been calculated for the policies issued in Jun to May period of the relevant years 35#36BALIC: Individual Rated New Business BBAJAJ Allianz All Figures in Rs Million Individual Rated NB Individual Rated NB Agency FY20 Increase of 11% FY20 decrease of 10% 19,271 17,420 Q1 FY21 growth is flat 12,039 10,826 Q1 FY21 decrease of 16% FY19 3,322 3,306 FY20 Q1 FY20 Institutional Business Individual Rated NB FY20 Increase of 76% 3,561 FY19 6,269 FY20 1,845 1,554 Q1 FY21 FY19 FY20 Q1 FY20 Q1 FY21 Individual Rated NB PSF* FY20 Increase of 20% 2,177 Q1 FY20 Increase of 28% Q1 FY21 decrease of 17% 1,820 1,489 1,160 Q1 FY20 Q1 FY21 FY19 Individual Rated NB = (100% of first year premium & 10% of single premium excluding group products) *PSF Proprietary Sales Force - 316 262 FY20 Q1 FY20 Q1 FY21 36#37BALIC: Balanced product mix BAJAJ Allianz Individual Rated Mix Share of Non-ULIP business in individual business increasing 37% 51% 60% 61% 1% 17% 1% 20% 0% 9% 17% 33% 30% 28% 22% 13% FY19 FY20 Q1 FY20 Q1 FY21 Group NB Mix 41% 40% 54% 78% 59% 60% 46% FY19 FY20 Q1 FY20 22% Q1 FY21 Individual - Unit Linked Individual - Non Par Protection I Individual - Non Par Savings Individual - Par Protection (Group) new business in Q1 FY21 Rs. 886 Mn (Q1 FY20 Rs.3,986 Mn) Group Fund NB I Group Protection NB 37#38Rs Million BALIC: Assets Under Management AUM (Mix) 610 566 561 579 382 365 351 336 230 228 228 196 FY19 Unit Linked Total Capital infused is Rs.12,107 Mn No Capital infusion since FY08 96,538 FY20 Q1 FY20 Other than Unit Linked Q1 FY21 AUM (Rs Bn) Net worth 97,307 97,121 1,01,201 84,431 85,200 85,014 89,094 12,107 FY19 12,107 FY20 12,107 Q1 FY20 12,107 Q1 FY21 ■Capital Invested Reserves & Surplus Networth *Accumulated profit includes reserves BBAJAJ Allianz AUM as on 30 Jun 2020 grew by 5%; Growth is UL AUM stunted primarily due to Covid-19 impact on stock market; Traditional AUM grew by 9% Of the UL Funds of Rs.228 Bn., 58% is equity as on 30 Jun 2020 (61% as on 30 Jun 2019 out of the UL Funds of Rs.228 Bn.) BALIC's accumulated profits are 88% of the Net worth as at 30 Jun 2020 38#39Update on Covid-19 - Bajaj Finserv 39#40Bajaj Finserv - Update on Covid-19 1 2 Activated Business Continuity Plan B BAJAJ FINSERV Emergency response teams monitoring the situation; Implementing actions on real time ☐ Board and Committee meetings being held through video conferencing Swiftly moved the IT infrastructure to ensure availability of adequate bandwidth, setting up virtual private networks, making portable devices available where needed Employees Keeping employee safe as the top priority - Work from home, wherever possible continues A health support hotline was created for employees with doctor on call Branches and offices that have started operations are following all the safety protocols related to Covid-19, as advised by government. Created multiple secure platforms for collaboration and team meetings over digital media Training on end to end digital sales process Facilitate virtual engagements with partners, customers through emailers, WhatsApp, phone calls, social engagement platforms 3 Customers Reaching out to customers to reduce the panic and appraise that their servicing needs & payments can be processed through various digital assets. Came out with dedicated indemnity cover for Covid-19 through partners like PhonePe Enhanced Communication on Safety, investment advisory (Market Recovery stories from past) and Digital assets for service 40 40#41Bajaj Finserv - Update on Covid-19 B BAJAJ FINSERV 4 5 6 Partners/Distribution Continuous engagement with partners Provided virtual product & process trainings; understanding the needs of different partners Mapping of partner capabilities and integration of new processes at priority, ensuring smooth transition Digital on-boarding of insurance agents, POSPs (Point of Sale) and other intermediaries Regulator/Authorities Engaging with regulators wherever needed to see through the Covid-19 challenges Company is making timely and adequate disclosure regarding probable impact of Covid-19 ( both qualitatively & financially) Community Bajaj Group committed Rs. 100 Cr to fight this pandemic 25000 PPE to healthcare workers have been provided Pilot with 50,000 auto rickshaw drivers across 10 cities to make their vehicles Covid-19 safe Group matched BFS & BHIL employees' contribution of Rs. 5 Cr to PM CARES Fund 41#42Bajaj Finserv - Summary on Covid-19 BAJAJ Allianz □ Overall, all our companies are very well capitalized and have sufficient liquidity. Hence, we are confident to see through this crisis. ☐ At this stage all the estimates are based on best judgements - all one can do is to focus on the right drivers To accurately estimate the future impact of this pandemic on the performance of the group is difficult to assess, given the volatile and still evolving environment with fresh lockdowns being imposed. All the estimates are subject to uncertainty. We will continue to focus on conserving cash for maintaining liquidity, focus on profit over growth, tight expense management, enhanced efforts on collections. from loans and renewal premiums and enhanced services to customer adopting greater level of digitisation. 42#43Annexure#44BAGIC: LOB wise Net Claim ratio (Major LOBS) Line of Business Net Claim Ratio BBAJAJ Allianz Q1 FY21 Q1 FY20 FY20 FY19 Fire** 118.1% 93.8% 68.0% 74.4% Marine Cargo 77.3% 79.6% 67.3% 94.0% Motor OD 50.7% 67.0% 67.7% 60.0% Motor TP 79.8% 66.2% 64.5% 64.5% Motor Total 68.0% 66.5% 65.8% 62.4% Engineering 102.3% 30.4% 52.8% 43.5% PA 49.0% 51.9% 56.0% 50.2% Health 62.0% 85.0% 85.6% 89.5% Crop 84.5% 120.9% 92.0% 74.9% Total 68.1% 72.8% 70.7% 68.6% Total (Ex Crop) 67.8% 71.2% 69.2% 68.4% **Fire portfolio had a higher claims ratio in Q1 FY21 because of higher NATCAT claims. 44 *Health includes Retail, Group and Overseas | PA includes retail and group business | Net Claim Ratio = Net claims incurred divided by Net Earned Premium | LOB trend for major LOB#45Exposure to Downgraded Investments (Debt) : BALIC & BAGIC BALIC THERE WERE NO ADDITIONAL IMPAIRMENTS IN Q1 FY21 BAJAJ Allianz Type of Fund (BALIC) Sr. No. (Amt in Rs. Mn) Total exposure as of 30 June 2020 Of which Of which performing (non performing) Impairment Provided for 1 PAR 2,992 1,042 1,950 2,108 2 N-PAR 408 250 158 206 3 ULIP 994 0 994 871 4 SH 2,818 307 2,512 2,486 Total 7,214 1,598 5,615 5,671 BAGIC Type of Fund (BAGIC) Sr. No. (Amt in Rs. Mn) Total exposure as of 30 June 2020 Of which performing Of which (non performing) Impairment Provided for 1 Total 3,603 1,850 1,753 1,776 *Performing : Interest and / principal payment of the security is regular as per term sheet | All exposure is shown at face value & accrued interest, wherever applicable. 45#46Disclaimer B BAJAJ FINSERV This presentation has been prepared by Bajaj Finserv Limited (the "Company") solely for your information and for your use. This presentation is for information purposes only and should not be deemed to constitute or form part of any offer or invitation or inducement to sell or issue any securities, or any solicitation of any offer to purchase or subscribe for, 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 upon 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. The financial information in this presentation may have been reclassified and reformatted for the purposes of this presentation. You may also refer to the financial statements of the Company available at www.bajajfinserv.in, before making any decision on the basis of this information. This presentation contains statements that may not be based on historical information or facts but that may constitute forward-looking statements. These forward looking statements include descriptions regarding the intent, belief or current expectations of the Company or its directors and officers with respect to the results of operations and financial condition of the Company. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ from those in such forward-looking statements as a result of various factors and assumptions which the Company presently believes to be reasonable in light of its operating experience in recent years but these assumptions may prove to be incorrect. Any opinion, estimate or projection constitutes a judgment as of the date of this presentation, and there can be no assurance that future results or events will be consistent with any such opinion, estimate or projection. The Company does not undertake to revise any forward-looking statement that may be made from time to time by or on behalf of the Company. No representation, warranty, guarantee or undertaking, express or implied, is or will be made as to, and no reliance should be placed on, the accuracy, completeness, correctness or fairness of the information, estimates, projections and opinions contained in this presentation. Potential investors must make their own assessment of the relevance, accuracy and adequacy of the information contained in this presentation and must make such independent investigation as they may consider necessary or appropriate for such purpose. This presentation does not constitute and should not be considered as a recommendation by the Company that any investor should subscribe for, purchase or sell any of Company's securities. 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