#1BAJAJ FINANCE LIMITED Q1 FY18 Presentation 19 July 2017#2PRESENTATION PATH • • . Bajaj group structure Bajaj Finserv group Executive summary What do we stand for • Key strategic differentiators 3 4 5 6 7 • • • Bajaj Finance Shareholder profile Financial snapshot Bajaj Finance Limited product suite Executive summary • Custom er franchise • Key portfolio metrics 8 9 10 12 13 • • • • • • • Strong distribution reach Key performance highlights for Q1 FY18 Other updates for Q1 FY18 Financial statement summary Financial performance trends Q1 FY18 Credit quality Portfolio composition Credit quality Provisioning coverage Disclaimer • Annexures 14 15 16 17 18 21 24 25 27#3BAJAJ GROUP STRUCTURE 3 57.80% Bajaj Finance Limited (Listed) Lending 100% Bajaj Holdings and Investment Limited (Listed) 1 31.54% 2 39.16% Bajaj Auto Limited (Listed) Bajaj Finserv Limited (Listed) Auto Business Arm Financial Services Arm 74% 74% Bajaj Allianz life Insurance Company Limited Bajaj Allianz General Insurance Company Limited Protection and Retiral * Bajaj Housing Finance Limited 2. 1. 49.30% holding through promoter holding company and promoter group 58.35% holding through promoter holding company and promoter group 3. 57.94% holding through promoter holding company and promoter group Above shareholding is as of 30 June 2017 *W.e.f Nov 2014. Bajaj Housing Finance Limited has a 100% subsidiary named Bajaj Financial Securities Limited which does not have any operations 3#4BAJAJ FIN SERV GROUP - EXECUTIVE SUMMARY B BAJAJ FINSERV Bajaj Finserv is the financial services arm of the Bajaj group with business interest in "Lending", "Protection", and "Relationship management" through its various subsidiaries B BAJAJ FINSERV B BAJAJ Allianz ⑪ B BAJAJ | Allianz ⑪ Bajaj Finance Limited A 30 year old non bank finance company Diversified Consumer, SME, Rural & Commercial lender in India Credit rating is AAA/ Stable by CRISIL, India Ratings, CARE Ratings and ICRA ⚫ Credit rating for Short Term Debt . Program is A1+ by CRISIL, ICRA & India Ratings ⚫339 consumer branches and 560 rural locations with over 41,000+ distribution points • Large custom er franchise of 21.69 MM • Bajaj Allianz General Insurance Company 2nd largest private General insurer in India as of FY17 ⚫ Offers a wide range of General insurance products across retail and corporate segments Highest profit after tax among private players in FY17. ROE of 23% in FY17 • Combined ratio of 96.8% in FY17 • Recognized in the market for claims servicing • FY17 PAT of 728 crores • Bajaj Allianz Life Insurance Company Amongst top 5 private players as of FY17 on new business Deep pan India distribution reach Diversified distribution mix consisting of agency, bancassurance, other partners, direct etc. ⚫AUM of over 49K crores as of FY 17 • Net worth of 8,476 cr as of 31st March 2017 One of the most profitable private life insurers in India. • FY17 PAT of 836 Crs • 10.03 MM new loans acquired in FY17 4#5WHAT DO WE STAND FOR "Non bank with strategy & structure of a bank" "Focused on mass affluent & above clients with a strategy to cross sell" "Diversified financial services strategy envisages an optimal mix of risk and profit to deliver a sustainable business model" "Business construct to deliver a sustainable ROA of 3% and ROE of 18-20% in the medium term " "Focused on continuous innovation to transform customer experience to create growth opportunities..." LO 5#6KEY STRATEGIC DIFFERENTIATORS Part of the Bajaj Group - one of the oldest & most respected business houses A trusted brand with strong brand equity Focus on mass affluent and above clients Overall franchise of 21.69 MM and Cross sell client base of 12.19 MM Strong focus on cross selling assets, insurance and wealth products to existing customer Diversified lending strategy Consumer PPC of 3.01 and SME PPC of 4.93 vs corresponding Consumer PPC of 2.88 and SME PPC of 3.76 last year AUM mix for Consumer: SME: Commercial : Rural stood at 46% : 34% : 14% : 6% Highly agile & highly innovative Continuous improvements in product features and digital technologies to maintain competitive edge Deep investment in technology and analytics. Has helped establish a highly metricised company and manage risk & controllership effectively. 6#7BAJAJ FINANCE - SHAREHOLDER PROFILE Top 20 investors & their holdings. CORPORATES 5.67% MF 5.83% RESIDENT IND. 10.33% FII & FPI 18.63% As on 31 As on 31 S.No Name of Shareholder Mar'17 Jun '17 OTHERS 1.60% 1 BAJAJ FINSERV LTD 57.80% 57.80% 2 MAHARASHTRA SCOOTERS LIMITED 3.45% 3.45% 3 GOVERNMENT OF SINGAPORE 2.56% 2.49% 4 SMALLCAP WORLD FUND, INC 1.11% 1.11% 5 AXIS LONG TERM EQUITY FUND 0.82% 0.96% 6 NEW HORIZON MASTER FUND 7 NEW WORLD FUND INC. 0.89% 0.89% 0.55% 0.55% 8 VANGUARD EMERGING MARKETS STOCK INDEX FUND 0.49% 0.51% 9 MOTILAL OSWAL MULTICAP FUND 0.43% 0.46% 10 BFL EM PLOYEE WELFARE TRUST 0.56% 0.42% 11 GOLDMAN SACHS INDIA FUND LIMITED 0.39% 0.39% 12 STEADVIEW CAPITAL MAURITIUS LTD. 0.39% 0.39% VANGUARD TOTAL INTERNATIONAL STOCK INDEX 13 0.36% 0.37% FUND 14 ISHARES INDIA INDEX 0.36% 0.36% 15 WF ASIAN SMALLER COMPANIES FUND 0.36% 0.36% PROMOTERS & PROMOTER GROUP 16 HDFC TRUSTEE COMPANY LTD-MID CAP FUND 0.34% 0.34% 57.94% 17 BIRLA SUN LIFE FRONTLINE EQUITY FUND 0.34% 0.34% 18 KOTAK SELECT FOCUS FUND 0.29% 0.30% 19 TVF FUND LTD. 0.33% 0.29% 20 WF ASIAN RECONNAISSANCE FUND LTD. 0.28% 0.28% 7#8FINANCIAL SNAPSHOT in Crs YOY CA GR Financials snapshot FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY16-FY17 (10 years) Assets under management 2,478 2,539 4,032 7,573 13,107 In come from operations 503 599 916 1,406 2,172 3,110 4,073 17,517 24,061 32,410 44,229 60,194 5,418 7,333 10,003 36% 43% 36% 39% Interest expenses 170 164 201 371 746 1,206 1,573 2,248 2,927 3,803 30% 41% Net Interest Income (NII) 332 435 715 1,035 1,426 1,904 2,500 3,170 4,406 6,200 41% 38% Operating Expenses 193 220 320 460 670 850 1,151 1,428 1,898 2,564 35% 33% Loan Losses & Provision 109 164 261 205 154 182 258 385 543 818 51% 25% Profit before tax 30 51 134 370 602 872 1,091 1,357 1,965 2,818 43% 66% Profit after tax 21 34 89 247 406 591 719 898 1,279 1,837 44% 65% Ratios Opex to NII FY08 FY09 FY10 FY11 58.1% 50.6% 44.8% 44.4% FY12 FY13 FY14 FY15 FY16 FY17 47.0% 44.6% 46.0% Return on assets Return on equity Earning per share (Basic) - 7 Net NPA NPA provisioning coverage 0.9% 1.4% 2.8% 4.4% 4.2% 2.0% 3.2% 8.0% 19.7% 24.0% 0.56 0.93 2.42 6.75 11.08 7.05% 5.50% 2.20% 0.80% 0.12% 29% 32% 55% 79% 89% 45.0% 43.1% 4.1% 3.6% 3.3% 3.5% 3.7% 21.9% 19.5% 20.4% 20.9% 21.6% 13.57 14.48 17.99 24.23 34.01 0.19% 0.28% 0.45% *0.28% **0.44% 83% 76% 71% 41.4% 77% 74% As per the RBI regulations, NBFCs were required to transition to 150 dpd by March 2016 and 120 dpd by March 2017. Hence NPA numbers are not comparable *The net NPA & provisioning coverage numbers for FY16 are at 150 days over-due while the same for previous years are at 180 days over-due **The net NPA & provisioning coverage numbers for FY17 are at 120 days over-due ^ EPS numbers adjusted for bonus and split 8#9BAJAJ FINANCE LIMITED PRODUCT SUITE Bajaj Finance Limited Consumer Lending Consumer Durable Financing Digital Product Financing ✰ Lifestyle Product Financing EM I Card 2W & 3W vehicle Financing Personal Loans Cross Sell Sm all Business Lending Commercial Lending Rural Lending Deposits Business Loans ★ Securities Lending Professional Loans Consumer Durable Financing Digital Product Financing Retail term deposits Corporate term deposits Loans Against Property Home Loans for Self Employed Lease Rental Discounting Developer Personal Loans to Salaried⭑ Finance Home Loans for Salaried E-commerce Consumer Finance Urban gold loans EMI card Retail finance Large Value Lease Rental Discounting Auto Component Vendor Financing Financial Institutions Lending Business Light Engineering Business Corporate Finance Business Warehouse Receipt Financing Personal Loans cross sell Salaried Personal Loans Gold Loans Business Loans Professional Loans Loans Against Property Partnerships & Services Life Insurance Distribution General Insurance Distribution Co-Branded Credit Cards Property Search Services Consumer Financial Fitness Report SM E Financial Fitness Report Property Fitness Report Mutual Fund Distribution Available through Digital channels as well 9#10EXECUTIVE SUMMARY Bajaj Finance 30 year old non bank with a demonstrated track record of profitability • Focused on Consumer, Rural, SME & Commercial lines of businesses Consumer business Rural business 1 Not Annualised • . Portfolio mix for Consumer: SME: Commercial Rural stands at 46% 34% : 14% : 6% • Strategic business unit organization design supported by horizontal com m on utility support functions to drive domain expertise, scalability and operating leverage • Strategy is to focus on cross sell, customer experience and product & process innovations to create a differentiated & profitable business model The company has 68,883 Crs of Assets under Management with a net NPA of 0.53% at 90 days. overdue and a capital adequacy of 20.15% as of 30 Jun 2017. The company in Q1 FY18 has delivered a post tax profit of 602 Crs which is a 42% growth at an ROA¹ of 1.0% and ROE¹ of 6.1% •Two wheeler financing business currently contributes to 37% of Bajaj Auto's domestic two wheeler sales and disbursed 159 K accounts in Q1FY18. Three wheeler financing business currently contributes to 28% of three wheeler sales and disbursed 14K account in Q1FY18 Present in 339 locations with 33,000+ active distribution point of sale • Largest consumer electronics, digital products & furniture lender in India, focused on affluent • consumers Amongst the largest personal loan lenders in India • EMI (Existing Membership Identification) Card franchise crossed 9.8* MM cards (CIF) Amongst the largest new loans acquirers in India (3.77 MM in Q1 FY18) Highly diversified lender in the rural eco system offering 8 products in consumer and MSME business categories with a unique hub and spoke business model • Geographic presence across 560 towns and villages and retail presence across 5,900+ stores Includes EMI Card, and Virtual EMI cards 10 10#11EXECUTIVE SUMMARY (CONTD.) SME Business • • • • • Focused on high net worth SM Es with an average annual sales of 15 Crores with established financials & demonstrated borrowing track records • Offer a range of working capital & growth capital products and mortgage (Loan against property, Lease Rental Discounting & Home Loans) products to SME & self employed professionals Offer full range of growth & working capital lending products to professionals (Doctors & CA's) Built a dedicated SME Relationship Management channel to provide wide range of cross sell products to our SME franchise Retail mortgage product strategy is to sell to existing customers only Commercial Offer wholesale lending products covering short, medium and long term needs of Auto business component & light engineering vendors and financial institutions in India Treasury Credit Quality Credit Rating • Offer a range of structured products collateralized by marketable securities or mortgage • • • . Strategy is to create a balanced mix of wholesale and retail borrowings The company's total borrowings stood at 53,569 Crs with a mix of 32: 58: 10 between banks, money markets and deposits Gross NPA of 1.70% & Net NPA of 0.53% as of 30 Jun 2017 at 90 DPD. The company has moved its NPA recognition policy from 120 days overdue to 90 days overdue. The comparable GNPA and NNPA stood at 1.44% and NNPA of 0.42% as of 30 Jun 2017 vs GN PA 1.47% & NNPA of 0.41% as of 30th June 2016 Provisioning coverage ratio stands at 69% as of 30 Jun 2017 Credit rating for Long Term Debt Program is AAA/Stable by CRISIL, ICRA, CARE & India Ratings • Credit rating for Short Term Debt Program is A1+ by CRISIL, ICRA & India Ratings • Credit rating for FD program is FAAA/Stable by CRISIL & MAAA (Stable) by ICRA 11#12CUSTOMER FRANCHISE Jun 2016 17.18 million Total Franchise Jun 2017 21.69 million 11.88 million Credit segment filter 15.79 million Q1 FY17 11,10,102 11.24 million Overall Cross sell franchise 15.04 million 10.15 million Non delinquent customers 13.91 million Cross sell franchise 9.24 million 12.19 million Q2 FY17 8,27,413 Q3 FY17 11,74,444 Q4 FY17 9,56,224 Q1 FY18 15,58,612 Growing customer cross sell franchise by 25-30% every year... 12#13KEY PORTFOLIO METRICS AUM (Crore) Disb. Business Segment Q1 FY17 Q1 FY 18 Yo Y Q1 FY17 Q1 FY18 Yo Y No. of Accounts Range IRR (%) Ticket (Lacs) Consumer Businesses 1. 2W & 3W finance 4,080 5,215 28% 1,059 1,078 2% 173,605 22.0-26.0 0.58 2. Consumer durable finance 6,783 7,974 18% 5,020 6,039 20% 22,61,873 23.0-25.0 0.27 3. Digital product finance 816 1,217 49% 646 1,081 67% 4. Lifestyle product finance 386 513 33% 235 319 36% 5. Retail EMI & Ecommerce 604 579 6. Personal loans cross sell 4,392 6,962 59% 997 1,537 54% 7. Salaried personal loans 2,764 3,877 40% 656 1,063 62% 15,678 8. Salaried Home Loans 1,786 3,268 83% 386 673 74% 527,390 23.0-25.0 65,565 23.0-25.0 0.46 2,04,537 23.0-25.0 0.10-0.27 97,397 16.0-26.0 1.49 14.0-16.0 5.5-6.0 8.5-9.5 37 0.20 9. BFS Direct (HL, PL) 721 1,604 122% 244 445 82% SME Businesses 10. Business loans (BL) 4,866 5,990 23% 1,344 1,299 (3%) 10,293 17.0-20.0 11-14 11. Professional loans 1,265 2,057 63% 371 661 78% 4,974 14.0-17.0 11-14 12. Loan against property (LAP) 8,661 8,582 (1%) 1,132 1,561 38% 10.50 90-110 13. Self employed - Home Loans 3,286 3,970 21% 557 964 73% 8.8-10.5 55-65 14. RM Business 2,136 2,349 10% 504 280 (44%) Commercial Businesses 15. Securities lending 2,975 6,127* 106% 16. Vendorfinancing 1,545 2,014 30% 17. Financial institutions group 433 707 63% 20 105 425% 18. Corporate finance 459 647 41% 120 190 58% 10.0-11.5 10.0-12.5 9.5-12.0 10.0-12.0 19. Infrastructure lending Exited Infra portfolio by selling down its largest exposure and paydown by one of the largest accounts Rural Business 20. Rural lending 1,688 3,916 132% 795 1,627 105% 3,70,985 14.0-26.0 *Includes 2,021 Crs of IPO Financing 13#14STRONG DISTRIBUTION REACH Geographic presence 318 339 91 114 161 193 Consumer 366 262 2 296 57 80 119 538 560 397 232 70 SME Rural FY13 FY14 FY15 FY16 FY17 FY18* 590 393 184 91 Total 926 856 Active distribution Points of sale - 41,000+ 38,000+ 256 191 5,900+ 5,500+ 3,000+ 3,200+ 8,000+ 24,000+ 5,600+ 4,000+ 3,200+ 3,900+ 16,000+ 3,000+ 3,200+ 5,900 + 7,500+ 1,500+ 9,000+ 3,000+ 5,200 + 7,000+ 1,150+ 2,600+ 2,650 + 14,000 + 14,000+ 2,600+ 850+ 3,500+ 1,600 + 9,400 + 7,000+ 4,900 + FY13 FY14 FY15 FY16 FY17 FY 18* Gold Loan Rural 2W -Dealer/ ASCs REMI ■Lifestyle ■Digital CD 14#15KEY PERFORMANCE HIGHLIGHTS FOR Q1 FY18 . • . • • • • Customer franchise as of 30 Jun 2017 26% to 21.69 million from 17.18 million as of 30 Jun 2016. During the quarter, the company acquired 1.56 MM new customers New loans booked during Q1 FY18 48% to 37,71,392 from 25,40,540 in Q1 FY17 AUM as of 30 Jun 2017 was 39% to 68,883 Crs from 49,608 Crs as of 30 Jun 2016. AUM as of 30 Jun 2017 Includes 2,021 Crore of IPO financing. Adjusted for this AUM would have grown by 35% Total income for Q1 FY18 39% to 3,165 Crs from 2,282 Crs in Q1 FY17 Loan losses and provisions for Q1 FY18 were 286 Crs as against 180 Crs in Q1 FY17. During the quarter, the company took an additional charge of 42 Crs across its consumer and infrastructure finance businesses. Adjusted for this additional charge loan loss & provisions were 244 Crs, and have grown 36%. Profit after tax for Q1 FY18 42% to 602 Crs from 424 Crs in Q1 FY17 Return on Assets and Return on Equity for Q1 FY18 were 1.0% and 6.1% respectively, Gross NPA and Net NPA as of 30 Jun 2017 stood at 1.70% and 0.53% respectively. The provisioning coverage ratio stood at 69% as of 30 Jun 2017. During the quarter, as required by RBI guidelines, the company has moved its NPA recognition policy from 120 days overdue to 90 days overdue. The comparable GNPA and NNPA at 120 days overdue stood at 1.44% and NNPA of 0.42% as of 30 Jun 2017 vs GNPA 1.47% & NNPA of 0.41% as of 30th June 2016 Capital adequacy ratio (including Tier II capital) as of 30 Jun 2017 stood at 20.15%. Tier I capital stood at 14.20%. During the quarter, the company raised 600 Crs by way of Tier II bonds to augment its capital base. 15#16OTHER UPDATES FOR Q1 FY18 • . • • Deposit book crossed a milestone of 5,000 crore and stood at 5,095 crore as of 30 June 2017 - at 10% of BFL's overall borrowings book. Retail deposit average size is at 2.93 lacs with weighted tenor of 33 months During the quarter, the Company received AAA rating from ICRA. The company has now AAA rating from. CRISIL, ICRA, CARE & India Ratings During the quarter, the Company's operations have been certified with CM Mi SVC Level 3 (CM Mi for Services). Capability Maturity Model Integration (CM Mi) is best practice model for operations which has been developed by Carnegie Mellon University (USA) and administered by CM Mi institute (USA) The Company has been ranked as one of the "Best Company to Work for" in India, for the fifth year in Great Places to Work Institute. row by The Board of Directors has approved, subject to the approval of shareholders, issue of securities for an aggregate amount up to 4,500 crore through Qualified Institutional Placement to Qualified Institutional Buyers in accordance with SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 1 16#17FINANCIAL STATEMENT SUMMARY in Crores Financials snapshot Q1'18 Q1'17 Yo Y FY'17 FY'16 Yo Y FY'15 Assets under finance (AUF) 65,121 47,923 36% 56,832 42,756 33% 31,199 Assets under management (AUM) 68,883 49,608 39% 60,194 44,229 36% 32,410 Total Interest & fee Income 3,165 2,282 39% 10,003 7,333 36% 5.418 Interest expenses 1,078 883 22% 3,803 2,927 30% 2,248 Net Interest Income (NII) 2,087 1,399 49% 6,200 4,406 41% 3,170 Operating Expenses 876 567 54% 2,564 1,898 35% 1,428 Loan Losses & Provision 286 180 59% 818 543 51% 385 Profit before tax 925 652 42% 2,818 1,965 43% 1,357 Income tax 323 228 42% 981 686 43% 459 Profit after tax 602 424 42% 1,837 1,279 44% 898 Ratios Q1'18 Q1'17 FY'17 FY'16 FY'15 Total Opex to NII 42.0% 40.5% 41.4% 43.1% 45.0% Total Opex to Total Income 27.7% 24.8% 25.6% 25.9% 26.4% Loan loss to AUF* 0.4% 0.4% 1.4% 1.3% 1.2% Return on Average AUF* 1.0% 0.9% 3.7% 3.5% 3.3% Earning per share - Basic (Rs.) * 11.0 7.9 34.0 24.2 18.0 Return on Average Equity 6.1% 5.5% 21.6% 20.9% 20.4% Not annualized 17#18FINANCIAL PERFORMANCE TRENDS - Q1 FY18 # of Loans Disbursed ('000) 48% YoY AUM (Crore) 39% YoY 3,771 68,883 57,605 60,194 49,608 52,332 2,541 2,880 2,177 2,496 Q1'17 Q2'17 Q3'17 Q4'17 Revenue (Crore) Q1'18 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18* 39% YoY Net Interest Income (NII) ( Crore) 49% YoY 3,165 2,087 2,729 2,673 1,749 1,689 2,282 2,366 1,399 1,410 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q1'17 Q2'17 * Q1 FY18 AUM Includes 2,021 Crore of IPO financing. Adjusted for this AUM would have grown by 35% Q3'17 Q4'17 Q1'18 18#19FINANCIAL PERFORMANCE TRENDS - Q1 FY18 Operating expenses % of NII 41.3% Q1'17 43.6% Q2'17 Loan loss provision (Crore)* 59% YoY 290 286 42.0% 41.9% 180 169 180 41.1% Q3'17 Q4'17 Q1'18 Net NPA & Provisioning coverage** Net NPA (%) Coverage (%) 74% 74% 73% 73% Q1'17 Q2'17 Q3'17 Q4'17 Profit Before Tax (Crore) Q1'18 42% YoY 925 850 69% 652 690 626 0.41% 0.43% 0.39% 0.44% 0.53% Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 *In Q1FY18 Company took an additional charge of 42 crore across its consumer and infrastructure finance businesses. Adjusted for this additional charge, loan losses and provisions were 244 crore and have grown 36% **The net NPA & provisioning coverage numbers from Q1 FY178 are at 90 days over-dues while the same for previous quarters are at 120 days over-due. 19#20FINANCIAL PERFORMANCE TRENDS - Q1 FY18 Capital adequacy ratio Earnings per share - Basic (*) 40% YoY Tier I Tier II 21.48% 21.26% 20.30% 20.15% 17.85% 6.5% 6.0% 5.7% 6.0% 3.0% 11.0 10.3 7.9 8.2 7.6 14.8% 15.0% 15.3% 14.6% 14.2% Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 20 20#21CREDIT QUALITY - PORTFOLIO COM POSITION CD loan portfolio 1st Bucket 2nd Bucket 3rd Bucket 4th Bucket 5th Bucket 2.50% 98.11% 98.40% 98.06% 98.11% 97.72% 98.07% 97.83% 98.38% Two & Three wheeler loan portfolio 11st Bucket 2nd Bucket 3rd Bucket 4th Bucket 5th Bucket 5+ Bucket 88.84% 89.80% 89.92% 89.34% 89.15% 83.93% 85.67% 85.88% 18.0% 16.0% 2.00% 14.0% 12.0% 1.50% 10.0% 8.0% 1.00% 6.0% 0.50% 4.0% 2.0% 0.00% 0.0% SEP 15 DEC 15 MAR 16 JUN 16 SEP 16 DEC 16 MAR 17 JUN 17 SEP 15 DEC 15 MAR 16 JUN 16 SEP 16 DEC 16 MAR 17 JUN 17 Lifestyle finance loan portfolio Digital product finance loan portfolio 11st Bucket 2nd Bucket 3rd Bucket 4th Bucket ■5th Bucket 98.37% 98.40% 98.29% 97.48% 97.18% 97.41% 97.32% 97.32% 1st Bucket 2nd Bucket 3rd Bucket 4th Bucket 5th Bucket 4.50% 96.66% 97.24% 96.89% 96.52% 96.12% 96.84% 97.27% 97.87% 3.00% 4.00% 3.50% 2.50% 3.00% 2.00% 2.50% 1.50% 2.00% 1.50% 1.00% 1.00% 0.50% 0.50% 0.00% 0.00% Sep 15 Dec '15 Mar 16 June '16 Sept '16 Dec '16 Mar'17 Jun 17 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 21#22CREDIT QUALITY - PORTFOLIO COMPOSITION Personal loan cross sell portfolio 3.00% 4th Bucket 5th Bucket 1st Bucket 2nd Bucket 3rd Bucket 97.06% 97.14% 97.28% 97.21% 97.21% 97.81% 97.29% 97.18% Salaried personal loan portfolio 0.60% 1st Bucket 2nd Bucket 3rd Bucket 4th Bucket 5th Bucket 99.58% 99.53% 99.53% 99.50% 99.43% 99.47 % 99.52% 99.50% 2.50% 2.00% 1.50% 1.00% 0.50% 0.50% 0.40% 0.30% 0.20% 0.10% 4th Bucket 5th Bucket 98.70% 98.44% 98.21% 0.00% 0.00% SEP 15 DEC 15 MAR 16 JUN 16 SEP 16 DEC 16 MAR 17 JUN 17 SEP 15 DEC'15 MAR 16 JUN 16 SEP 16 DEC 16 MAR 17 JUN 17 Small business loan portfolio 1st Bucket 2nd Bucket 3rd Bucket 99.03% 98.92% 98.80% 98.53% 98.58% Loan against property portfolio. 1st Bucket 2nd Bucket 3rd Bucket 4th Bucket 5th Bucket ■5+ Bucket 98.67% 98.29% 98.19% 99.21% 99.30% 99.12% 99.24% 99.07% 1.80% 1.4% 1.60% 1.2% 1.40% 1.0% 1.20% 0.8% 1.00% 0.80% 0.6% 0.60% 0.4% 0.40% 0.2% 0.20% 0.00% 0.0% SEP 15 DEC 15 MAR 16 JUN 16 SEP 16 DEC'16 MAR 17 JUN'17 SEP 15 DEC'15 MAR 16 JUN 16 SEP 16 DEC 16 MAR 17 JUN 17 22#23CREDIT QUALITY - PORTFOLIO COMPOSITION Home loans portfolio 1st Bucket 2nd Bucket 3rd Bucket 4th Bucket 5th Bucket 5+ Bucket 98.89% 99.18% 98.99% 98.95% 99.03% 99.38% 1.2% Rural Lending portfolio 1st Bucket 2nd Bucket 3rd Bucket 4th Bucket 5th Bucket 98.73% 98.93% 98.89% 98.43% 98.53% 98.82% 99.15% 99.17% 99.02% 98.91% 1.80% 1.60% 1.0% 1.40% 0.8% 1.20% 1.00% 0.6% 0.80% 0.4% 0.60% 0.40% 0.2% 0.20% 0.0% 0.00% SEP 15 DEC 15 MAR 16 JUN 16 SEP 16 DEC 16 MAR 17 JUN 17 Sep '15 Dec 15 Mar 16 Jun 16 Sep 16 Dec 16 Mar 17 Jun '17 23#24CREDIT QUALITY - PROVISIONING COVERAGE Business Segment AUM GNPA NNPA PCR (%) GNPA NNPA (Values in Crs) (Crs.) (Crs.) Consumer Business SME Business 31,468 711 201 72% 2.26% 0.65% 23,410 390 139 64% 1.91% 0.69% Commercial Business 10.089 LO 5 4 34% 0.05% 0.04% Rural Business 3,916 29 8 72% 0.75% 0.21% Bajaj Finance 68,883 1,136 352 69% 1.70% 0.53% PCR Provisioning Coverage Ratio 24#25DISCLAIMER This presentation has been prepared by and is the sole responsibility of Bajaj Finance Limited (together with its subsidiaries, referred to as the "Company" or "Bajaj Finance". By accessing this presentation, you are agreeing to be bound by the trailing restrictions. This presentation does not constitute or does not intend to constitute or form part of any offer or invitation or inducement to sell, or any solicitation of any offer or recommendation to purchase, 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 on 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. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained in this presentation. Such information and opinions are in all events not current after the date of this presentation. There is no obligation to update, modify or amend this communication or to otherwise notify the recipient if information, opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate. However, the Company may alter, modify or otherwise change in any manner the content of this presentation, without obligation to notify any person of such change or changes. These materials are being given solely for your information and may not be copied, reproduced or redistributed to any other person in any manner. The distribution of these materials in certain jurisdictions may be restricted by law and persons into whose possession these materials com es should inform them selves about and observe any such restrictions. Certain statements contained in this presentation that are not statements of historical fact constitute "forward-looking statements." You can generally identify forward-looking statements by terminology such as "aim", "anticipate", "believe", "continue", "could", "estimate", "expect", "intend", "may", "objective", "goal", "plan", "potential", "project", "pursue", "shall", "should", "will", "would", or other words or phrases of similar import. These forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or other projections. Important factors that could cause actual results, performance or achievements to differ materially include, among others: (a) material changes in the regulations governing the Company's businesses; (b) the Company's ability to comply with the capital adequacy norms prescribed by the RBI; (c) decreases in the value of the Company's collateral or delays in enforcing the Company's collateral upon default by borrowers on their obligations to the Company; (d) the Company's ability to control the level of NPAs in the Company's portfolio effectively; (e) internal or external fraud, operational errors, systems malfunctions, or cyber security incidents; (f) volatility in interest rates and other market conditions; and (g) any adverse changes to the Indian economy. This presentation is for general information purposes only, without regard to any specific objectives, financial situations or informational needs of any particular person. The information contained in this presentation is only current as of its date and the Company does not undertake any obligation to update the information as a result of new information, future events or otherwise. 25#26BAJAJ FINANCE LIMITED Q1 FY18 Presentation THANK YOU#27ANNEXURES 27 27#28GLOSSARY 2W Two Wheeler IIP Index of Industrial Production 3W Three Wheeler IRR Internal Rate of Return ACMF Auto Components Manufacturer Financing LAP Loan Against Property AR Assets Receivable LAS Loan Against Securities ARU Activation, Retention & Usage MF Mutual Fund A SC Authorized Service Centers M M Million AUF Assets Under Finance M SME Micro, Small & Medium Enterprise AUM Assets Under Management NII Net Interest Income B2B Business to Business NNPA Net Non Performing Assets B2C Business to Customer NTB New to Bajaj Finance BL Business Loan Opex Operating Expenses CAGR Compounded Annual Growth Rate PAT Profit After Tax CIF Cards in Force PBT Profit Before Tax CPI Consumer Price Index POS Point of Sale EM I Existing Member Identification PPC Products Per Customer EPS Earnings Per Share RBI Reserve Bank of India FIG Financial Institutions Group ROA Return on Assets FII Foreign Institutional Investor ROE Return on Equity FPI Foreign Portfolio Investment SME Small & Medium Enterprise GNPA Gross Non Performing Assets TAT Turn Around Time HL Home Loan TTD Through the Door IFA Independent Financial Advisor WPI Wholesale Price Index#29Product Per Customer (PPC) Product per Customer (PPC) is a measure of cumulative products bought by a custom er over vintages Retail SME Products offered PPC Benchmark PPC (12 MOB) PPC (18 MOB) PPC (24 MOB) Products PPC offered Benchmark PPC (12 MOB) PPC (18 MOB) PPC (24 MOB) 16 3 2.42* 2.74* 3.01* 14 5 4.98* 5.06* 4.93* Product offerings - Retail Loan Products Consumer durable finance, Digital finance, Lifestyle finance, Personal Loan, Salaried Personal Loans, Salaried Home Loans Product offerings - SME Loan Products Business loans, Loan against property, Home loans, Construction equipment loans, Securities lending Fee Products - - EMI Card, Credit Card, EMI Card Preferred, Life Insurance, Health Insurance, Mutual Fund, Fixed Deposit, Extended Warranty Insurance, Credit Vidya, Retail Financial Fitness report Fee Products - EMI Card, EMI Card Preferred, Life Insurance, Health Insurance, Mutual Fund, CRISIL ratings, Property search services, Property fitness report, SM E financial fitness report * Base product is included in the PPC calculation * PPC does not include short tenor & renewable loans (viz. PO, LAS & Retailer finance), TW, infra and Rural lending sourcing 29 29#30Product Per Customer (PPC) Disbursed Value Fresh v/s Repeat Mix - Fresh Repeat 100% Retail Product Per Customer (PPC) Loan Product ■Fee Product 80% 60% 57% 52% 58% 0.97 1.07 1.12 60% 40% 20% 40% 43% 48% 1.45 1.67 1.89 42% 0% Q2'17 Q3'17 Disbursed Value - Fresh v/s Repeat Mix ■Fresh Repeat Q4'17 Q1'18 Upto 12 MOB SME Upto 18 MOB Product Per Customer (PPC) Upto 24 MOB ■Loan Product Fee Product 100% 90% T 80% 27% 39% 37% 38% 70% 60% 50% 40% 73% 30% 61% 63% 62% 20% 10% 0% 3.71 3.66 3.41 1.27 1.40 1.51 Q2'17 Q3'17 Q4'17 Q1'18 Upto 12 MOB *Base product is included in the PPC calculation Upto 18 MOB Upto 24 MOB * PPC does not include short tenor & renewable loans (viz. PO, LAS & Retailer finance), TW, Infra and Rural lending sourcing 30#31ALM STRATEGY - Borrowings Jun '17 (53,569 Crs) Borrowings Mar '17 (49,250 Crs) 350 3,938 5,095 3,832 23,033 300 17,371 4,128 3,338 4,589 19,785 17,060 ■ Banks ■ NCDs ■ Subordinate Debt ■ Deposits ■ CPs ■ CBLO ■ Banks Loan Book (Crs) - NCDs ■Subordinate Debt ■ Deposits Behaviourilised ALM (Crs) On Book AUM Off Book AUM Total AUM 42,263 68,883 ■Liabilities Assets 65,121 60,194 56,832 42,756 44,229 31,199 32,410 28,336 24,390 19,571 H 7,204 4,902 ■CPS = CBLO 16,420 9,614 3,362 3,762 1,211 1,473 FY'15 FY'16 FY'17 FY'18 <= 1 year 1-3 years 3-5 years >5 years 31#32NPA PROVISIONING STANDARDS • Bajaj Finance provides a general provision of 0.40% on all standard assets (0.50% on Mortgages) Consumer Finance provision coverage Consumer Durables: • 3-5 Bucket 75% • Above 5 100% 2 and 3 Wheeler: · • 3-5 Bucket - 40% 6 12 Bucket - 60% - Above 12 100% ⚫Personal Loan Cross Sell: • 3-5 Bucket - 75% •Above 5 100% Salaried Personal Loan : SM E Finance provision coverage •Home Loan Loan against Property: 3-5 Bucket - 15% •6-12 Bucket - 25% . • 13-18 Bucket - 40% 18-24 Bucket - 60% Above 24 100% Unsecured Business & Professional Loans : 3-5 Bucket - 75% Above 5-100% Commercial Lending provision coverage 6-12 Bucket - 10% 12-18 Bucket - 20% •18-24 Bucket - 30% Above 24-100% Graded provision on secured portfolio • Securities Lending • Above 5 - 100% . 3-5 Bucket -75% • Above 5 - 100% Bajaj Finance provisioning standards are substantially stringent than RBI norms applicable for NBFC's. 32