#1○ ● ● ● Bajaj Housing Finance Limited Debt Investor Presentation Q1FY23 B BAJAJ FINSERV#2AGENDA 01 Executive Summary 02 Key Drivers 03 Financial & Credit Quality Highlights: 04 Portfolio & Treasury Update 05 Business Wise Update 06 Way Forward B BAJAJ FINSERV#3Executive Summary B BAJAJ FINSERV#4Company Overview 3,090 Cr 57,425 Cr 3,567 158 B BAJAJ FINSERV Monthly Acquisition (as of Jun 22) Bajaj Housing Finance Ltd. (BHFL): Asset Under Management (as of Jun 30, 2022) Employees Locations (Urban-49; Rural-109) is registered with National Housing Bank (NHB) as a Housing Finance Company (HFC) and regulated by Reserve Bank of India (RBI) is a 100% subsidiary of Bajaj Finance Ltd. (BFL) – a Bajaj Finserv Group Company started full-fledged operations from January 2018 with dedicated sales, operations, collections, branch & IT infrastructure. The Company operates as a completely independent entity with no common linkages with parent company has completed 5 years of operations and has been profitable since inception - the Company delivered PAT of 12 Cr in FY18, 104 Cr in FY19, 421 Cr in FY20, 453 Cr in FY21 and 710 Cr in FY22 4#5Financial Snapshot for Q1FY23 Assets Under Management 57,425 Q1FY22 40,941 Q1FY22 40% 822 Profit Before Tax 428 Q1FY22 218 GNPA Total Income 1,223 BAJAJ B FINSERV Net Interest Income 594 in Crore 49% Q1FY22 335 Profit After Tax 316 Q1FY22 96% 161 Q1FY22 96% 6,193 Net Worth 9,557 NNPA CRAR 24.57% 0.27% 0.11% 77% 54% 5#6Business Update ☐ ☐ ☐ B BAJAJ FINSERV The Company had a strong quarter in terms of disbursements as well as AUM growth. AUM as of 30 June 2022 grew by 40% and stood at 57,425 crore as against 40,941 crore as of 30 June 2021 The Company registered a strong sequential growth of 24% in disbursals during the quarter as against Q4FY22 and YoY growth of 118% as against Q1FY22. It recorded its highest ever monthly disbursement in the month of Jun'22 Both commercial businesses (Commercial Real Estate and Developer Finance) maintained their performance in current quarter in terms of sanctions as well as disbursements. Retail businesses delivered a good performance in current quarter. Net Interest Income grew by 77% to 594 Cr from 335 Cr in Q1 FY22. In last year same quarter, most of the metrics were muted due to Covid delta impact. The Company delivered post tax profit of 316 crore as against 161 crore in Q1 FY22 registering growth of 96% Capital adequacy ratio stood at 24.57% as of 30 June 2022; BHFL received fresh capital infusion of 2,500 Cr during the quarter from Bajaj Finance Limited.#7Business Update ☐ B BAJAJ FINSERV The Company saw improvement in GNPA and NNPA which stood at 0.27% and 0.11% as of 30 June 2022 as against 0.31% and 0.14% as of 31 March 2022 ☐ Bounce rates inched up marginally by 1 bps at 4.05% in Q1FY23 against 4.04% in Q4FY22 Overall stage 2 assets, stood at 492 Cr as of 30 June 2022 as against 604 Cr as of 31 March 2022. Overall stage 3 assets stood at 134 Cr as of 30 June 2022 as against 146 Cr as of 31 March 2022 The Company had a one-time restructuring (OTR) pool of 0.10% as of 30 Jun 2022 as against 0.32% as of 31 Mar 2022 which is still under moratorium. These loans have been classified under Stage 2 and the Company continues to carry 20% provisioning as against the regulatory requirement of 10% Loss provisioning for the quarter was 7 Cr as against 26 Cr in Q1FY22. The Company holds management overlay of 220 Cr as of 31 Mar 2022 as against 211 Cr as of 31 Mar 2022 Cost of funds moved up marginally in Q1FY23 and stood at 6.28% as against 6.25% for Q4FY22. COF is expected to move up in current quarter post repo rate hikes in May and June. Liquidity buffer stood at 3,500 Cr as of 30 June 2022 Borrowing mix as of 30 June 2022 was at 53%: 32%: 1%: 14% between banks: money market: ICD: assignment. 7#8Key Drivers B BAJAJ FINSERV#9BHFL Core Strategy ☐ TOP 4 MORTGAGE ORIGINATOR BUILD A LOW-RISK BUSINESS MODEL In 4 years of operations, BHFL ranks among top 7 mortgage originators in India Aim to be amongst the top 4 mortgage originators in the country To create a low-risk sustainable balance sheet delivering GNPA in corridor of 0.6%- 0.8% and ROE of 13-15% Focus largely on salaried home loan opportunity ☐ ☐ B BAJAJ FINSERV FOCUS ON CROSS SELL 60 Mn+ customer base of BFL 17 Lakh Cr+ mortgage opportunity available Focus on customer data enrichment to create right propositions Lower risk DIVERSIFIED HL FOCUSED BUSINESS MIX Entire suite of products available to meet customer mortgage requirements Home loans to contribute 60%-65% of portfolio Risk based business mix to ensure low risk portfolio contribution FOCUS ON FEE INCOME Mortgage is a highly competitive & low margin business with minimal pricing width available Focus on cross-sell income through cross-selling / up-selling customized VAS products & services FOCUS ON MASS AFFLUENT (+) CLIENTS Focus on mass affluent and above customer segment Average age of 35-40 years and average salary of 10-20 lakhs ■ Launched affordable housing vertical#10BHFL Strengths B BRAND NAME Bajaj group is one of the most reputed & vintage groups in the country. Bajaj Finance is a leading financial services name in the industry CUSTOMER BASE (%)+ CAPITAL $ COMMITTED LINE Ex B CREDIT RATING BAJAJ FINSERV 2,500 Cr capital infusion completed taking total infusion to 7,550 Cr till date. Mortgages remain strategic to the group BHFL has a committed credit line from BFL available on tap Agency Long- term Short- term CRISIL AAA (Stable) A1+ India Ratings IND AAA (Stable) A1+ 893 ANALYTICS ORIENTATION FULL PRODUCT SUITE DEBT MANAGEMENT BHFL has access to the vast customer base of BFL (60 Mn+) to cross sell mortgages BHFL mines the vast customer base for eligibility & offer computation through highly sophisticated analytical models Mortgage products for Retail as well as Commercial customers with customized VAS products & services for cross sell / up sell Dedicated and well-staffed Debt Management unit for both urban and rural markets 10 0#11BHFL Product Suite 信 Lease Rental Discounting Home Loans B BAJAJ FINSERV Developer Finance ☑ VAS Products Loan Against Property Rural Mortgages Full suite of mortgages products and services for retail and commercial customers 111#12Strong Underwriting & Debt Management Capabilities B BAJAJ FINSERV Retail Loans Underwriting (Home Loans & Loan Against Property) ■ ■ Separate dedicated underwriting structures for salaried and self-employed loans Salaried loans follow a hub model while self-employed loans are underwritten across all locations to address business and collateral related nuances Tele-PD for all salaried loans while physical PD with underwriter mandatory for all self-employed loans Legal and technical evaluation of collateral though in-house collateral team and empaneled vendors as per the regulatory norms Checkpoints/hind-sighting processes over the life-cycle of the loan Commercial Loans Underwriting (Developer Finance & Lease Rental Discounting) ☐ ☐ Dedicated underwriting structure of subject matter experts with relevant domain experience For LRD transactions: In-depth assessment of customer's borrowing requirement, credit history, financials, market stature, borrowing entity structure, collateral site, credibility of lessee's, lock-in period For DF transactions: Detailed assessment of developers' history, project site, approvals, cash flows, existing projects performance Use of industry best practices and tools for the preparation of Credit Approval Memo (CAM) for each commercial transaction Centralized disbursal of all commercial transaction for better controllership Debt Management Approach ☐ ■ Dedicated debt management structure for all Retail loans - urban as well as rural Debt management is done through in-house debt management team - no external agencies Backed by a strong legal structure focused on SARFAESI wherever needed Dedicated team in place for efficient resolution of legal cases at different stages#13Financial & Credit Quality Highlights B BAJAJ FINSERV#14Financials BAJAJ B FINSERV in Crore Financials snapshot Q1 FY23 Q1 FY22 YOY FY22 FY21 YoY Assets under management 57,425 40,941 40% 53,322 38,871 37% Assets under finance 50,039 35,762 40% 46,482 33,419 39% Interest income 1,072 777 38% I 3,482 2,877 21% Fee and other income 136 29 369% I 226 218 4% I Net gain on fair value changes on investment 15 16 (6%) 59 60 (2%) Total Income 1,223 822 49% 3,767 3,155 19% Interest expenses 629 487 29% 2,155 1,966 10% Net Interest Income 594 335 77% 1,612 1,189 36% Operating Expenses 159 91 75% 471 329 43% Loan losses and provisions 7 26 (73%) 181 247 (27%) 7 428 316 ECL stage 1 & 2 ECL stage 3 & write off Profit before tax Profit after tax Ratios Operating expenses to Net Interest Income 26.8% 27.2% 29.2% 27.7% I Loan loss to average AUF* 0.06% 0.30% I 0.45% 0.80% Return on Average Assets* Return on Average Equity * annualized 2.62% 1.86% I 1.78% 1.48% * 15.51% 10.51% 11.11% 7.80% I 14 6 (100%) I 77 199 (61%) 20 (65%) 104 48 117% 218 96% 960 613 57% 161 96% 710 453 57%#15ECL Summary B BAJAJ FINSERV Asset categorization Jun'21 Sep'21 Dec'21 Mar'22 Jun'22 Stage 1 & 2 (represents standard assets) 99.72% 99.65% 99.65% 99.69% 99.73% Stage 3 (represents GNPA) 0.28% 0.35% 0.35% 0.31% 0.27% Summary of stage wise assets and provision for impairment allowance. in Crore Assets and impairment allowance Jun'21 Sep'21 Dec'21 Mar'22 Jun'22 Gross Stage 1 & 2 assets* (A) 36,378 39,892 43,760 46,803 50,370 ECL Provision Stage 1 & 2 (B) 316 330 359 388 388 Net Stage 1 & 2 assets (C = A-B) 36,062 39,562 43,401 46,415 49,983 ECL Provision % Stage 1 & 2 assets (D = B/A) 0.87% 0.83% 0.82% 0.83% 0.77% Gross Stage 3 assets@ (E) 102.5 142.0 152.3 146.4 134.5 ECL Provision Stage 3 (F) 36.6 56.2 74.7 79.5 78.2 Net Stage 3 assets (G = E-F) 65.9 85.9 77.6 66.9 56.3 Coverage Ratio % Stage 3 assets (H= F/E) 36% 40% 49% 54% 58% ECL/Total Assets 0.97% 0.96% 0.99% 1.00% 0.92% *Gross stage 1 & 2 assets represent loans balance as per Ind AS after adjusting for the impact of amortization of fees earned and acquisition cost incurred including other assets like security deposits, receivable from related parties, capital advances etc @ Gross Stage 3 assets represents loans balance as per Ind AS after adjusting for the impact of (i) amortization of fees earned and acquisition cost incurred and (ii) overdue interest considered recoverable under Ind AS and other receivables considered as non-performing as at the end of respective periods. 15#16Provisioning Coverage B BAJAJ FINSERV AUM PCR GNPA % NNPA % in Crore Particulars 30 Jun 22 GNPA NNPA (%) 31 Dec 21 31 Mar 22 30 Jun 22 31 Dec 21 31 Mar 22 30 Jun 22 Home Loans 35,910 75 29 60.62% 0.31% 0.27% 0.23% 0.15% 0.12% 0.09% Loan against property 6,417 30 14 53.65% 0.68% 0.65% 0.59% 0.39% 0.33% 0.28% Lease rental discounting. 7,352 Developer Finance 3,689 0 0 0.04% 0.03% 0.00% 0.03% 0.00% Rural 2,356 23 11 51.73% 1.27% 1.22% 1.33% 0.67% 0.59% 0.65% Others 1,701 7 2 72.00% 0.47% 0.41% 0.42% 0.16% 0.13% 0.12% Total 57,425 134 56 58.16% 0.35% 0.31% 0.27% 0.18% 0.14% 0.11% 16#17Stagewise ECL provisioning B BAJAJ FINSERV Gross Assets Receivable ECL Provision PCR % in Crore Stage 2 Stage 2 Stage 2 Stage 1 Stage 3 Stage 1 Stage 3 Stage 1 Stage 3 OTR* Normal OTR* Normal OTR* Normal Home Loans 31,792 157 117 75 164 41 20 45 0.5% 26.5% 17.1% 60.6% Loan against property 4,867 55 62 30 33 13 10 16 0.7% 23.4% 16.1% 53.7% 0 Lease rental discounting 6,195 2 35 Developer Finance 3,716 о 0 5≈ 0 0.6% 13.4% 27 | 0 0.7% 23.1% Rural 1,607 21 60 23 Others 1,700 11 7 100 15 6 12 0.6% 26.1% 15.7% 51.7% 3 2 50 0.9% 23.7% 28.7% 72.0% Total as of 30 Jun 2022 49,878 244 248 134 283 62 42 78 0.6% 25.6% 16.9% 58.2% Total as of 31 Mar 2022 46,200 363 241 146 260 89 39 79 0.6% 24.5% 16.3% 54.3% Total as of 31 Dec 2019 25.806 185 20 32 11 6 0.1% 6.1% 31.3% 17#18●●●Portfolio & Treasury Update B BAJAJ FINSERV#19BHFL Portfolio View 13% 11% 6% 4% 3% Portfolio Mix Rs. 57,425 crore 12% 51% Home loan incl. top up Rs. 35,910 crore (63%) Home Loan HL Top Up LAP LRD ■DF Rural Others A well diversified portfolio with dominant share of HL 4% 5% Home Loan Portfolio Customer Categorisation Rs. 29,931 crore* Salaried Professionals 91% B BAJAJ FINSERV ■Self-Employed Focus on low-risk, fast growing Salaried Home Loan customer *Represents home loans portfolio including rural home loans 19#20Treasury Strategy - Borrowing Mix 23% 1% 14% 9% B BAJAJ FINSERV Money market liquidity to support growth over 15-18 months 53% Continued focus on longer tenor borrowings. Rebalancing borrowing with higher money market mix Maturity of book to open avenues for sub- debt and NCD borrowing supporting ALM Open NHB refinance for diversification of borrowings in FY23 Assignments to drive balance sheet growth and address ALM mismatch ■Term Loans ■CP NCD NCD ICD ICD Assignment Jun 2022 20 0#21Behaviouralized ALM snapshot (as of 30 Jun 2022) BAJAJ B FINSERV in Crore 1-7 D 8-14 D 15-30 D >1-2 M >2-3 M >3-6 M >6 M-1 Y >1-3 Y >3-5 Y >5-7 Y >7-10 Y >10 Y Total Cash & Investments 1,467 290 600 748 173 222 3,500 Advances 489 351 538 1,000 1,098 2,715 4,734 13,414 8,305 5,661 5,336 6,398 50,039 Other inflows 6 4 1,536 775 526 1,192 4,044 2,566 2,649 Total Inflows (A) 1,961 645 2,674 2,523 1,798 4,129 Cumulative Total Inflows (B) 1,961 2,607 5,280 7,803 9,601 13,730 8,778 22,508 38,488 15,980 10,954 49,442 601 6,262 55,704 421 1,100 15,421 5,757 7,499 68,960 61,461 68,960 Borrowings 947 1,146 1,576 1,100 3,142 7,021 20,049 10,753 1,940 565 1,799 50,039 Capital and Reserves & Surplus 9,557 9,557 Other Outflows 768 512 988 587 319 Total Outflows(C) 1,715 512 2,134 2,163 1,419 959 4,101 927 7,948 1,791 21,840 10 10,763 2 1,942 2,500 9,363 3,065 11,356 68,960 Cumulative Total Outflows (D) 1,715 2,228 4,362 6,524 7,943 12,045 19,993 41,833 52,596 54,538 57,603 68,960 Mismatch (E = A-C) 246 133 540 360 379 27 830 (5,860) 192 4,320 2,692 (3,857) Cumulative mismatch (F=B-D) 246 379 919 1,279 1,658 1,685 2,515 (3,346) (3,154) 1,166 3,857 0.00 Cumulative mismatch as a % (F/D) 14% 17% 21% 20% 21% 14% 13% -8% -6% 2% 7% 0% Permissible Cumulative gap % -10% -10% -20% Additional borrowings possible 2,238 21 21#22Business Wise Update B BAJAJ FINSERV#23Home Loans 48% 35,910 Cr Asset Under Management B BAJAJ FINSERV of Monthly Acquisition Mix (for Q1FY23) 92% Salaried Home Loan 49% 59% 70% 12.5 Lakhs 78% 50 Lakhs Existing Customer base sourcing FOIR LTV at origination Avg. Customer salary Customers with 750+ CIBIL Avg. Ticket Size 53% of the Company's incremental AUM for the quarter is contributed by HL to salaried individuals 23#24Home Loans Verticals B2C 60% B 阻 11% Contribution B2B 5 7-8 Markets Appx. 45-50% customers are having prior relationship with Bajaj Data-analytics based offer generation approach for better risk management Customer sourcing on digital channels across Bajaj Finserv assets Micro-Market approach basis customer spread Years Behaviouralized maturity of loan B BAJAJ FINSERV 40% BHFL caters to majorly Elite, A+, A category developers (?) 4-5 Years Behaviouralized maturity of loan La T Rec Higher profitability in B2C channel driven by ability to cross-sell 404 Combination of field and regional underwriting processes for balancing TAT and Risk Continue to leverage the 60 Mn+ existing customer base to grow and expand distribution network as an additional funnel Focused on DF funded projects for scale, relationship and risk mitigation Build large array of partners to build scale going ahead Only defined, selected, risk- approved projects allowed for sourcing Focus on the huge market opportunity in B2B to provide exponential growth. Less risky and highly stable portfolio 24#25Loan Against Property 6,417 Cr Asset Under Management 55% Existing Customer mix B 44% BAJAJ FINSERV LTV at Origination Operative in 26 locations with ATS of 59 lakhs. Focused on mass affluent and above salaried and self-employed customers Continued focused on direct to customer strategy along with expansion of intermediary business Minimum ATS of 30 lakhs with a cap of 500 lakhs. AUM mix is 29% from Salaried, 15% from SEP and 56% from SENP Business focused on Fresh LAP with faster turn-around-time of 72-120 hours Self occupied residential property (SORP) constitutes 71% of the total book. Max LTV exposure restricted at 75% 25 25#26Rural Mortgages 2,356 Cr 5.58% Asset Under Management Spread B BAJAJ FINSERV 109 Hub and spoke model with presence across 109 upcountry locations as HUB and 181 locations as Spoke through ASSC tie-ups ATS of 15 lakh with average Home Loan LTV of 62% and average Loan against Property LTV of 44% 59% of portfolio is HL and 41% is LAP; continue to focus on increasing the Home loan mix Highest standards of controllership across all products supported by adequate spread Locations 26 26#27Lease Rental Discounting 7,352 Cr 43 Cr Asset Under Management Average Ticket Size Offers lease rental discounting to high net-worth individuals (HNI) and developers primarily for leased out office spaces Lessees are majorly Fortune 500 companies. The properties are relatively easier to lease out later as well Conservative discounting and comfortable LTVs (~55%). Loan size ranges up to 600 Cr All the LRD transactions are backed by rentals through ESCROW mechanism with exclusive charge Continuous monitoring of each transaction on a monthly basis by a dedicated risk team structure B BAJAJ FINSERV Top 11 Locations 27#28Developer Finance 3,689 Cr Asset Under Management 273 Active Developers B BAJAJ FINSERV 25-30 Cr Average Ticket Size Business Approach Focus on building a granular book Focused on end unit price <1 Cr other than Mumbai and <1.5 Cr in Mumbai No land financing Operative in 11 locations (not operational in Delhi & NCR) Focus on converting DF exposure to retail low risk HL exposures Developer Profile Developer should have built minimum 0.75 - 1 million sq. ft. in past 7-10 years Developer should not have more than 2-3 live projects ☐ Low leverage ☐ Developer should be large in the concerned micro-market Operating Model Centralized underwriting Disbursal only after RERA and Building approvals Deferred disbursement basis stage of construction and sales milestones Principal sweep from Day 1 Interest servicing mandatory to be done on a monthly basis with no moratorium 28 28#29Way Forward B BAJAJ FINSERV#30BHFL Way Forward Optimal Balance Sheet Mix Focus on building a low-risk balance sheet with medium ROE. Salaried HL to be the core growth driver over the next 3-5 years. Developer Finance book to be range bound (7-8% of the portfolio) $$ Capital adequacy Maintain CRAR of over >17% against regulatory norm of 15% B BAJAJ FINSERV Profitability & Risk metrics ROE: 13-15% ☐ ROA: 1.7%-2.0% GNPA: 0.6% -0.8% Granular Portfolio Continue to focus on mass affluent customers as core target segment Continue to focus on ATS of 30 - 100 lakh in retail Operating efficiency Continued focus towards OPEX management through cost out & process efficiencies Diversified Borrowings Maintain optimal borrowing mix of bank lines and money market with focus on increasing money market borrowings Add new lines through refinance in FY23 and sub-debt Assignment -15-20% 30 30#31Thank You B BAJAJ FINSERV#32Disclaimer B BAJAJ FINSERV This presentation has been prepared by and is the sole responsibility of Bajaj Housing Finance Limited referred to as the "Company" or "Bajaj Housing 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 comes should inform themselves 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. 32 32#33Glossary of terms Term OTR ATS AUM AUF ECL COF GNPA VAS FOIR LTV B2C B2B SENP SEP Full form One time Restructuring Average Ticket Size Assets under Management Assets under Finance Expected Credit Loss Cost of funds Gross Non Performing Assets Value added products & services Fixed obligation to income ratio Loan to Value Business to Customer Business to Business Self employed Non Professionals Self employed Professionals Personal discussion Capital adequacy ratio PD CAR ROA ROE Return on average assets Return on average equity ECB External commercial borrowing B BAJAJ FINSERV 33 335