#1SPANDANA Spandana Sphoorty Financial Limited Celebrating India! Q1 FY24 Investor Presentation#2Safe Harbor This presentation and the accompanying slides (the "Presentation"), which have been prepared by Spandana Sphoorty Financial Limited (the "Company"), have been prepared solely for information purposes and do not constitute any offer, recommendation or invitation to purchase or subscribe for any securities, and shall not form the basis or be relied on in connection with any contract or binding commitment what so ever. No offering of securities of the Company will be made except by means of a statutory offering document containing detailed information about the Company. 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These risks and uncertainties include, but are not limited to, the performance of the Indian economy and of the economies of various international markets, the performance of the industry in India and world-wide, competition, the company's ability to successfully implement its strategy, the Company's future levels of growth and expansion, technological implementation, changes and advancements, changes in revenue, income or cash flows, the Company's market preferences and its exposure to market risks, as well as other risks. The Company's actual results, levels of activity, performance or achievements could differ materially and adversely from results expressed in or implied by this Presentation. The Company assumes no obligation to update any forward-looking information contained in this Presentation. Any forward-looking statements and projections made by third parties included in this Presentation are not adopted by the Company and the Company is not responsible for such third-party statements and projections. 2#3Significant progress made on 5 priorities Part of Vision 2025 articulated in July 2022 1 People 2 Strengthen Governance, Risk and Control 3 Customer Acquisition led growth 4 Scale-up of technology to deliver an end-to-end paperless process 5 Customer focused initiatives with emphasis on Product and Service Status 3#4YOY - AUM up 60%, Client addition up 144%, NII up 102%, GNPA 1.63%, PAT 119 Cr v/s loss of 220 Cr in Q1, FY23. Delivering customer acquisition led growth Improving Portfolio Quality Client Addition Disbursement AUM 1-90 DpD GNPA NNPA 2.6 L *1,664 Cr *8,848 Cr 1.36% 1.63% 0.49% YoY +144% QoQ -39% YOY QoQ YOY QoQ +26% -45% +60% +4% YOY -615 bps QoQ -18 bps YOY -506 bps QoQ -44 bps YOY -276 bps QoQ -15 bps Deepening Lender Relationships Lending Partners Funds raised Cash & Bank balance Robust Financial Performance Net Interest Income PPOP PAT 47 *1,540 Cr *1,056 Cr *328 Cr 189 Cr YOY +102% QoQ -15% YOY +273% QoQ -27% *119 Cr Q1FY23 - 220 Cr QoQ +13%#5Momentum on increasing distribution sustained 188 branches added over last 2 quarters; ~13% YoY growth in borrower base No. of borrowers (in L) AUM per branch (In Cr) 24.1 21.3 21.7 22.4 22.6 86% Rural 14% 5.5 Semi-Urban / Urban 5.3 Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Number of employees No. of Employees 8,294 Jun-22 Sep-22 6.1 Dec-22 6.9 6.8* Mar-23 Jun-23 *AUM per Operational branch is 7.2 Cr at the end of Jun-23 Branch count 1,303 8,426 8,732 10,016 10,671 1,227 140 64 1,117 1,115 1,115 1,163 1,163 No. of Loan officers 8,190 7,800 6,718 6,374 6,099 Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 ■Monthly Weekly 5#6Focus on new member acquisition sustained 144% YoY growth in borrower addition; ~26% new borrowers from 7 focus states New Members acquired (in '000) 26% from 7 focus states 144% 260 123 106 Q1FY23 219 427 Q1 FY24 Q2FY23 Q3FY23 Q4FY23 Other States 74% 7 Focus States 26% 1. Rajasthan 2. Uttar Pradesh 3. Bihar 4. West Bengal 5. Haryana 6. Tamil Nadu 7. Gujarat 6#7AUM growth momentum continues ~60% YoY growth in AUM; 26% YoY growth in Disbursement 60% AUM Growth over last 4 Quarters AUM - QoQ Growth of 4% 5,513 Q1 FY23* 8,848 60% Q1FY24 Disbursement (in * Cr) 4% 8,848 8,511 6,852 5,782 5,513 Q1FY23* Q2FY23 Q3FY23^ Q4FY23# Q1FY24 26% 1,664 1,320 1,391 3,054 2,361 Q1FY23 Q1FY24 Q2FY23 Q3FY23 Q4FY23 7 **702 Cr written-off in Q1; ^Post Sale of 117 Cr portfolio to ARC; # Post sale of 133 Cr portfolio to ARC#8Net Collection Efficiency improves to 98.1%, Current book at 97.1% Collection Efficiency (%) 106.1% 101.3% 102.1% 102.5% 101.5% 97.6% 98.1% 94.0% 93.3% 94.5% Q1FY23 Q2FY23 Q3FY23 AUM & Current book 8,848 8,511 96.6% 97.1% * 92.1% 86.9% 85.8% 6,852 5,782 5,513 Q4FY23 Q1FY24 Q1 FY23* Q2FY23 AUM (in Cr) Q3FY23^ Q4FY23# Q1FY24 Current Book (% of AUM) Gross CE * Net CE **702 Cr written-off in Q1FY23; ^ Post Sale of 117 Cr portfolio to ARC; # Post sale of 133 Cr portfolio to ARC 8#9Portfolio quality: 1-90 book at 1.36% Improvement of +0.18% over previous quarter 1 – 90 dpd 1-30 dpd 14.40% 8.36% 7.51% 4.03% 5.73% 2.86% 2.59% 1.16% 1.54% 1.36% 0.58% 0.55% Q4 FY22 Q1FY23 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q4FY23 Q1FY24 31 - 60 dpd 3.41% 61-90 dpd 2.57% 1.93% 1.49% 0.83% 0.54% 0.42% 1.55% 1.38% 0.60% 0.42% 0.39% Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q4FY23 Q1FY24 9#10accompanied by GNPA and NNPA reduction 18.65% ☑ 10.46% 7.37% 6.69% 5.31% 42% of GNPA is from Pre-April'21 book 3.84% 3.24% 2.52% 2.07% 1.63% 0.64% 0.49% Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q4FY23 Q1FY24 --GNPA -NNPA Flows: 0.5% of AUM has moved forward while balance has been pulled back or stayed in same bucket 10#11Portfolio risk sufficiently covered with PCR at 70% Q1 FY24 Q4 FY23 Provisioning & Coverage Loans Outstanding % of Loans Outstanding (Cr)^ ECL Provision (Cr) Loan Coverage Outstanding (Cr)^ % of Loan Outstanding ECL Provision (Cr) Coverage Stage 1 8,191 97.56% 85 1.04% 7,766 96.97% 90 1.16% Current 8,144 97.01% 84 1.03% 7720 96.39% 89 1.15% - 1-30 46 0.55% 1 2.97% 46 0.58% 1 2.91% Stage 2 68 0.81% 26 38.59% 77 0.96% 30 38.88% Stage 3 137 1.63% 96 70.10% 166* 2.07% 115 69.10% Total 8,395 100% 207 2.47% 8,009 100% 235 2.93% Q1 FY24 Q4 FY23 Impairment on financial instruments in Q1FY24 Amount (Cr) SSFL Consolidated SSFL Consolidated On write-off's 6.36 - On GNPA GNPA 1.49% 1.63% 1.95%* 2.07% (5.63) On stage 1, 2 & others (6.26) NNPA 0.45% 0.49% 0.58% 0.64% On Security Receipts 8.12 PCR 70.00% 70.10% 70.00% 69.10% - Amount receivable from assignment portfolio 26.00 Capital Adequacy 38.02% 37.60% 36.87% 36.34% (CRAR %) Total 28.58 * Post sale of 133 Cr portfolio to ARC in Q4FY23 ^ Excludes DA book 11#12• Lender relationships being strengthened ~894% YoY growth in fund mobilization Total borrowing (in * Cr) 155 1,080 Q1 FY23 Q2FY23 2,402 2,138 Q3FY23 Q4FY23 Diversified borrowing mix^ 31% 1,540 Q1FY24 Marginal cost of borrowing slightly lower at 12.3% for Q1FY24 vs. 12.6% in Q4FY23 Weighted average cost of borrowing at 12.5% vs. 12.4% end of Q4FY23 ^ Including Direct Assignment transactions executed since FY23 with outstanding of 486 Cr as on 30-Jun-23 4% 7% *6,868 Cr 40% 18% ■ PSU ■ Private Banks ■ NBFC ■ FPI ■Capital markets 65% borrowings from Banks / FI's 12#13Income and Yields continue to trend higher NII up 102%, Yield at 24%, PAT 119 Cr (-220 Cr in Q1 FY23) Total Income* (* Cr) Net Interest Income* (* Cr) 259 YOY QoQ +104% -1% 527 533 Q1 FY23 Q1 FY24 Q4 FY23 162 YOY +102% QoQ -15% 384 328 Q1 Q1 FY23 FY24 Q4 FY23 Yield (%) YOY +765 bps QoQ +120 bps Cost of Borrowing* (%) YoY +71 bps QoQ +9 bps 24.0% 22.8% 12.5% 11.8% 16.4% Q1 FY23 Q1 FY24 Q4 FY23 *Includes Net gain on fair value change of 3 Cr toward DA transaction undertaken in Q1FY24 & 44 Cr in Q4FY23 *7 Cr income on ARC transaction recognized in Q4FY23 as per IndAS. Including this, Q4 Yield is 23.2% NIM^ (%) YOY +434 bps QoQ +38 bps 14.2% 13.9% 9.9% Q1 FY23 Q1 FY24 Q4 FY23 PPOP (Cr) YOY +273% QoQ -27% 261 51 189 Q1 FY23 Q1 FY24 Q4 FY23 PBT (Cr) Q1FY23 301 Cr QoQ +16% 161 139 12.4% Q1 Q1 FY23 FY24 Q4 FY23 *Cost of borrowing for Q4FY23 is 11.4% including expenses reversal of 13 Cr which were recognized upfront in previous quarter PAT (Cr) Q1FY23 QoQ 220 Cr +13% 119 106 Q1 FY23 Q1 Q4 Q1 Q1 Q4 FY24 FY23 FY23 FY24 FY23 -220 -301 ^*7 Cr income on ARC transaction recognized in Q4FY23 as per IndAS. Including this, Yield is 23.2% in Q4. Normalized Finance cost is 9.0% for Q4, excluding 13 Cr upfront expenses recognized till previous quarter. Due to above, normalized NIM is 13.9% in Q4 vs. actual 15% in Q4. Higher NIM is also due to muted leverage in Q1FY24 13#14ROA at 5.9%, Opex to AUM 6.4%; Net-worth increases to ₹3,228 Cr Cost to income (%) Opex to AUM (%) 7.7% Net-worth (Cr) 68.7% 42.7% 36.2% 6.6% 6.4% Q1 Q1 FY23 FY24 Q4 FY23 Q1 FY23 Q1 FY24 Q4 FY23 ROA (%) ROE (%) 5.9% 5.9% 15.2% 14.1% 3,228 3,099 2,961 2,817 2,867 Q1FY23 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Gearing 1.1x 1.3x 1.7x 2.0x 2.0x -14.2% -29.8% Q1 Q1 Q4 Q1 Q1 FY23 FY24 FY23 FY23 FY24 Q4 FY23 CRAR 47.9% 45.3% 39.1% 36.3% 37.6% 14#15Consolidated Income Statement Particulars (Cr) Revenue from Operations Interest income Net gain on fair value changes Other Income Total income from operations Non-operational Income Total income Q1 FY24 Q4 FY23 Q1 FY23 490 419 244 13 66 4 9 13 2 512 498 250 16 35 9 527 533 259 Expenses Finance cost Employee benefit expense 200 149 97 103 85 79 Depreciation and amortization expense 3 4 2 32 34 30 Other expenses 338 272 208 Total Expenses Pre-Provision Operating Profit (PPOP) 189 261 51 Impairment on financial instruments and other provisions 29 122 352 161 139 (301) Profit before Tax 41 33 (81) Tax expense 119 106 (220) Profit after tax 15#16Consolidated Balance Sheet ASSETS (Cr) Jun 30, 2023 Mar 31, 2023 LIABILITIES & EQUITY (Cr) Jun 30, 2023 Mar 31, 2023 Financial Liabilities Financial Assets Debt Securities 3,574 3,369 Cash and bank balances 1,056 1,005 Borrowings (Other than Debt Securities) 2,788 2,685 Loan Portfolio 8,203 7,760 Subordinated Liabilities 20 20 Other Financial liabilities Investments 166 189 122 155 Total Financial Liabilities 6,504 6,230 Other financial assets 78 122 Total Financial Assets 9,504 9,076 Non-Financial Liabilities Non-Financial Assets Current Tax Liabilities (net) Provisions 4 4 14 6 Inventories 1 Other Non-Financial liabilities 36 43 Current tax assets (net) 61 40 Total Non-Financial Liabilities 54 54 Deferred tax assets (net) 159 197 Property, Plant and Equipment 26 25 Equity Intangible assets LO 5 5 Equity Share Capital 71 71 Other Equity 3,157 3,028 Goodwill 17 17 Equity attributable to shareholders of the 3,228 3,099 Other non-financial assets 15 22 company Non-Controlling Interest 0.2 0.2 Total Non-financial assets 283 307 Total Equity 3,228 3,099 Total Assets 9,787 9,383 Total Liabilities and Equity 9,787 9,383 16#17Annexure 17#181,355 Positive ALM and Stable Ratings 394 upto 1m 430 446 303 417 Positive ALM (Cr)* 1,527 1,365 2,527 2,267 Credit Rating - Spandana Sphoorty Financial Ltd 3,233 3,166 Rating Agency Rating Instrument 1,442 1m to 2m 2m to 3m 3m to 6m 6m to 12m 1Y to 3Y ■Assets ■Liabilites 156 75 73 3Y to 5Y Over 5Y Rating Year ICRA Bank Facilities / NCD's / MLD'S A- Positive Mar 2023 India-Ra Bank Facilities / NCD's/ MLD'S CPs A Stable A1 Jan 2023 CRISIL Bank Facilities A Stable Sep 2022 Credit Rating - Criss Financial Ltd Rating Agency Rating Instrument Rating Year Positive ALM on cumulative basis with assets maturing faster than liabilities . Closing Cash and Bank balance (Rs. 1,055 Cr as on 30 Jun'23), sufficient to meet future liquidity needs. India-Ra Bank Facilities ICRA Bank Facilities / MLD's BBB Positive Mar 2023 BBB+ Stable Mar 2023 * Standalone 18#19Well diversified presence AUM concentration* * Standalone 5% 5% 3% -8% 16% 7% 1% 5% 15% 10% 1% 11% 11% District level concentration Largest 2.0% Top 5 7.8% Top 10 13.7% Top 20 23.0% Others 79.0% Branch level concentration Largest 0.3% Top 5 1.3% Top 10 2.4% Top 20 Others 4.6% 95.4% 19#20SPANDANA Spandana Sphoorty Financial Limited Thank you! Investor Relations Rahul Dhamale Head Investor Relations ― +91 40 4547 4763 [email protected] Strategic Growth Advisors Pvt. Ltd Abhishek Shah / Krunali Shah +91 99306 51660 / +91 98209 87564