#1BCG BOSTON CONSULTING GROUP India NBFC Sector Roundup - FY23 JUNE 2023#2Glossary: Classification of Indian banks used in this document HFCS (10 NBFCs) HDFC WITH YOU, RIGHT THROUGH Repco B Chola Home Finance -We value your Dream BAJAJ FINANCE LIMITED Enter a better life LIC HFL LIC HOUSING FINANCE LTD Can Fin Homes Ltd (Sponsor: CANARA BANK) HOME LOANS DEPOSITS Translating Dreams into Reality HeroFinCorp. Finance Made Easy INDOSTAR CAPITAL FINANCE Indiabulls HOUSING FINANCE IIFL HOME LOAN Diversified (14 NBFCs) ADITYA BIRLA FINANCE FINANCIAL HDB SERVICES From the trusted family of HDFC Bank Ltd. L&T Finance IIFL CAPRI GLOBAL CAPITAL LIMITED P SHRIRAM TATA CAPITAL FINANCIAL SERVICES LIMITED Mahindra FINANCE sf Finance Microfinance (3 NBFCs) pnb Housing Finance Limited Ghar Ki Baat YAY GIC HOUSING FINANCE LTD. YOUR ROAD TO A DREAM HOME CreditAccess™ TATA CAPITAL HOUSING FINANCE LIMITED BAJAJ HOUSING FINANCE LIMITED Gold (2 NBFCs) SATIN CREDITCARE NETWORK LTD. Rego Grameen Muthoot Finance ASIRVAD MICROFINANCE LIMITED Subsidiary of MANAPPURAM FINANCE LTD POONAWALLA FINCORP SUNDARAM FINANCE Endlaring values. New age thinking. MANAPPURAM FINANCE LIMITED Make Life Easy Copyright © 2023 by Boston Consulting Group. All rights reserved.#3Key Ratios Profitability Balance Sheet FY23 Results: NBFC Industry Snapshot Balance Sheet Size Total Net Advances Total Borrowings¹ Shareholders Fund *25.7L Crore 18% YoY 22.1L Crore 17% YoYA 17.1L Crore 21% YoY *4.6L Crore $ 19% YoY ^ Total Income Net interest income Non-Interest Income PAT || $ *2.9L Crores 22% YoY^ $ *1.3L Crore 22% YoY *0.2L Crore 31% YoY *0.6L Crore 39% YoY ROA NIM Cost-Income GNPA (%) 5.4% Increased 2.5% Increased by 45 bps YoY 32.0% Increased 2.9% Reduced by by 58 bps YOY by 197 bp YoY 90 bps YoY 1. Total Borrowings include Debt Securities Note: Growth is calculated for FY23 over FY22. Analysis has been made based on 29 NBFCs (10 HFCs, 2 Gold, 3 MFI and 14 Diversified NBFCs) 2 Copyright 2023 by Boston Consulting Group. All rights reserved.#4Summary Snapshot (I/II) Macro Trends Banks vs NBFCs % Key Performance Indicators India's GDP grew at 7.2% in FY23, forecasted to grow between 5.3% to 6.5% YoY in FY24 Most agencies have made upward revision of India's GDP forecast for FY24 . Major BFSI indicators, except insurance, grew at a healthy rate RBI hiked repo rate six times in the FY23, aggregating 250 bps to 6.5% NBFCs post highest credit growth (17.3%) in last 5 years NIMS inched higher for lenders on account of higher yields and increased by 30 bps for both lenders; CIR increased marginally Profitability improved for NBFCs aided by record disbursals and improved asset quality Most Banks/NBFCs reported lower GNPA; Credit costs also continue a downward trend Valuation for NBFCs remained flat in the last 1 year; However, Diversified NBFCs command higher valuation than other categories Absolute profit for the NBFC sector increased 39% YOY in FY23 driven by Diversified (68%) and MFI (220%) NBFCs • Reduction in credit costs (38bps YoY) and higher NIM (37bps YoY) boosting sector profitability Diversified (28%) and Micro Finance (33%) NBFCs driving credit growth for the overall sector (17%) Banks' lending to NBFCs is back, with share of bank's lending to NBFCs -2x during last 10 years 3 Copyright © 2023 by Boston Consulting Group. All rights reserved.#5Summary Snapshot (II/II) 50 NPA and Risk Management • Asset quality of NBFCs is reaching pre-pandemic levels even as they are witnessing a huge jump in credit demand Asset quality improved for all NBFC segments except Gold loan NBFCs in FY23 Despite few NBFCs opting to cut capital buffer, NBFC sector remains well capitalized to withstand shocks Valuation Recent trends Diversified NBFCs commanding premium; most HFCs still trading at discount NBFCs diversifying funding resources, product portfolio (sectors) and service models Issuance of NCDs by NBFCs almost doubled in FY23 and surpassed the FY20 levels Addition of newer products to drive growth - Breaking traditional grid-locks with aid from FinTechs Digital lenders are increasingly vying for NBFC license Post the pandemic, an accelerated shift is witnessed in Digital adoption by NBFCs 4 Copyright © 2023 by Boston Consulting Group. All rights reserved.#6India NBFC Sector Update - FY23 Macro Indicators Key Performance Indicators - (Banks + NBFCs) Key Performance Indicators - NBFC Sector NPA & Risk Management Valuation Recent Trends Player Performance 5 Copyright © 2023 by Boston Consulting Group. All rights reserved.#76.2% 6.1% 4.5% Macro indicators Despite weak macro-economic conditions, Indian economy remains one of the fastest growing economy in the world 4.0% Trend in real GDP growth YoY (%) 21.6% 9.1% FY22: 9.1% 13.1% FY23: 7.2%1 Q4FY23 growth figures were stronger than expected, indicating broad-based recovery across services, manufacturing and agriculture ....... 5.2% 4.0% Upward revision in FY24 GDP growth forecast2 by most agencies Increase/Decrease from last estimate Nomura 5.5% 20 bps JP Morgan 5.5% 50 bps IMF 5.9% 20 bps Fitch 6.0% 20 bps UBS 6.2% 70 bps CITI 6.2% 30 bps Goldman Sachs 6.3% 30 bps Q1FY23 Q2FY23 Q3FY23 Q4FY23 ដី -6.6% Q1FY22 Q2FY22 Q3FY22 Q4FY22 1. GDP growth for FY23 based on provisional estimates; 2: Forecast as of June 5, 2023 Note: Upper-limit has been included where agencies reported forecast range. Latest forecasts considered in case of revision by agency within same month; Source: Analyst reports, BCG analysis RBI 6.5% 10 bps SBI 6.7% 50 bps Copyright © 2023 by Boston Consulting Group. All rights reserved.#8100 Jan-22 Mar-23 119 165 9.6 10 5 -5.4 8.7 8.9 0 Jan-22 Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Apr-23 Value (INR Tn) Volumes (INR Bn) Aggregate deposits & credit (INR Tn) Deposits and credit grew by 10% and 15% YoY, resp., in Mar'23 Jun-23 Sept-22 Dec-22 Macro indicators Most BFSI indicators except insurance, growing at healthy rate UPI Mutual funds AUM (INR Tn) UPI value & volume rose by 47% & 65%, respectively YoY in Mar'23 Mutual funds AUM increased by 5% YoY in Mar'23 14.1 14.1 50 37.6 Mar-23 180 137 Jan-22 Aggregate Deposits Aggregate Credit Life Insurance Premium Non Life Insurance Premium 1.Mutual funds Assets Under Management (AUM) represented as recorded at end of every month shown. Mutual Funds AUM include investments from individuals (50.5%) & institutions (49.5%); institutions include domestic and foreign institutions and banks; Provisional figures data used for life & non-life insurance as on 24th Apr'23 2.Non-Life Insurance includes Fire, Marine, Motor, Engineering, Health, Cop Insurance, Credit Guarantee, Aviation, Personnel accident and Miscellaneous Source: DBIE, NPCI, IRDAI, AMFI, GIC, Life Insurance Council of India BCG analysis Jan-22 Mar-22 Jun-22 Insurance premium (INR '000 Cr.) Insurance premium de-grew by 6% YoY in Mar'23 81 Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Apr-23 76 38 Sep-22 Dec-22 Mar-23 Copyright © 2023 by Boston Consulting Group. All rights reserved. 41.6 39.4 Apr-23#90 100 100 50 Feb-22 Apr-22 Figures represent wholesale numbers (including exports) 1.BMW, Mercedes and Volvo Auto data is not available Source: SIAM, CMIE, TMA, Press search, BCG analysis Jun-22 0 Feb-22 400 200 Apr-22 Jun-22 Tractor sales ('000 units) Tractor sales inched down in Apr'23 vs. Apr'22 Aug-22 Oct-22 Dec-22 Feb-23 Apr-23 93 87 0 Feb-22 Aug-22 298 Oct-22 Dec-22 Macro indicators Auto sales recorded degrowth across all segments (except 2W) in Apr 23, driven by inflationary pressures & supply bottlenecks Passenger vehicles sales ('000 units) PV sales fell in Apr'23, after improving from Apr'22 Two-wheeler sales ('0000 units) 2W sales grew for the second consecutive month in Apr 23 Feb-23 Apr-23 400 361 155 325 200 0 Feb-22 Apr-22 Jun-22 Three-wheeler sales ('000 units) 3W sales hit a 4-month low in Apr'23 100 50 57 Apr-22 Jun-22 Aug-22 Oct-22 Dec-22 8 Feb-23 Apr-23 74 66 Aug-22 Oct-22 Dec-22 Feb-23 Apr-23 Copyright © 2023 by Boston Consulting Group. All rights reserved. 154 160#10India NBFC Sector Update - FY23 Macro Indicators Key Performance Indicators (Banks + NBFCs) - Key Performance Indicators - NBFC Sector NPA & Risk Management Valuation Recent Trends Player Performance Copyright © 2023 by Boston Consulting Group. All rights reserved.#11Key Performance Indicators Banks & NBFCs Lenders post highest growth in 5 years after navigating through multiple headwinds 40 33% Global Financial Crisis 30 30 25% 21% 20 20 16% 13% 10 8% Player-group wise y-o-y growth in advances Taper Tantrum¹ 28% 27% 26% 24% 22% 16% Demonetization IL&FS - Onset of Global Liquidity Crisis Covid-19 economy downturn; Ukraine War 27% 19% 19% 16% 15% 15% 10% 15% 8% 18% 13% 17% 8% 11% 5% 10% 8% 6% 5% 4% 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Bank Credit growth (YoY) NBFCS AUM growth (YoY) 1. Taper Tantrum crisis of 2013 refers to foreign investors pulling out money from equities and bonds in emerging markets as a reaction to US Fed announcement of reducing/ceasing its bond purchase program; this led to a tightening of liquidity available in the market, impacting both banks & NBFCs Note: Analysis has been made based on 29 NBFCs (10 HFCs, 2 Gold, 3 MFI and 14 Diversified NBFCs) and 35 Banks (12 PSU, 10 Private-New, 9 Private-old banks and 4 Small Finance Banks) Source: Capitaline, Quarterly Results, Investor Presentation, Annual Report, BCG Analysis 10 % Copyright © 2023 by Boston Consulting Group. All rights reserved.#12Key Performance Indicators Banks & NBFCs NIMs rising steadily for the lenders; CIR increased marginally % Net Interest Margin¹ (%) $ Cost to Income Ratio² (%) (%) 6 (%) 50% 49% 50 47% 48% 49% 5.4% 5.1% 4.9% 4.9% 4.9% 5 40 32% 29% 32% 30 28% 31%' 3.2% 2.8% 2.9% 2.9% 2.7% 0 FY19 FY20 FY21 FY22 FY23 20 FY19 FY20 FY21 FY22 FY23 Banks ⚫ NBFCs 1. NIM is calculated as (Interest Income - Interest Expense)/Average Assets 2 Cost to Income is calculated as Operation expense/(net interest income + other income) Operation Expense excludes "Net loss on fair value changes", "Net loss on derecognition of financial instruments under amortized cost category", "Net Transaction Exchange Loss" and/or "Loss/write-off on Repossessed Assets and Assets acquired in satisfaction of debt"; NIM has been annualized Note: Analysis has been made based on 29 NBFCs (10 HFCs, 2 Gold, 3 MFI and 14 Diversified NBFCs) and 35 Banks (12 PSU Banks, 10 Private-New, 9 Private-Old and 4 Small Finance Banks) Source: Capitaline, Quarterly Results, Investor Presentation, Annual Report, BCG Analysis 11 Copyright © 2023 by Boston Consulting Group. All rights reserved.#13Key Performance Indicators Banks & NBFCs Most Banks & NBFCs reported lower GNPAS; Credit costs continue the downward movement GNPA (%) (%) 10 19.2% 8.5% 8 7.4% 5.9% 6 Credit Cost¹ (%) (%) 3 2.1% 1.9% 2 1.8% 1.5% 1.4% 1.3% 0.9% 0.9% 4 3.3% 3.5% 3.8% 3.9% 1 0.6% 2.4% 2.9% 2 FY19 FY20 FY21 FY22 FY23 1. Credit Cost is calculated as provision and contingencies/average assets Banks 0.6% 0 FY19 FY20 FY21 FY22 FY23 NBFCs Note: Analysis has been made based on 29 NBFCs (10 HFCs, 2 Gold, 3 MFI and 14 Diversified NBFCs) and 35 Banks (12 PSU Banks, 10 Private-New, 9 Private-Old and Small Finance Banks) Source: Quarterly Results, Investor Presentation, Annual Report, RBI, BCG Analysis 12 Copyright © 2023 by Boston Consulting Group. All rights reserved. %#14Key Performance Indicators Banks & NBFCs Resulting in improved profitability for both Banks and NBFCS Return on Assets 1 Return on Equity² (%) 3 (%) 20 20 2.6% 16%, 15% 2.4% 2 2.4% 2.1% 16% 12% 1.8%' 10% 10 13% 1.1% 10% 1 0.8% 7% 0% 0.0% 0.6% 0 0-0.3% -3% -1 FY19 FY20 FY21 FY22 FY23 Banks -10 FY19 FY20 FY21 FY22 FY23 NBFCs 1. Return on Assets is calculated as net profit/average assets 2. Return on Equity is calculated as net profit/average shareholders' fund Note: Analysis has been made based on 29 NBFCs (10 HFCs, 2 Gold, 3 MFI and 14 Diversified NBFCs) and 35 Banks (12 PSU Banks, 10 Private-New, 9 Private-Old and 4 Small Finance Banks); Both ROA and ROE have been annualized Source: Capitaline, Quarterly Results, Investor Presentation, Annual Report, BCG Analysis 13 Copyright © 2023 by Boston Consulting Group. All rights reserved. %#15200 150 100 Key Performance Indicators Banks & NBFCs PSU Banks have outperformed peers and overall market since Apr'21 Significant uptick in valuation seen across banks and NBFCs in the past 2-3 months Index (weighted by market cap.) for PSU, Pvt Banks and NBFCs % 139.0 107.9 103.9 50 Apr❜21 Jun'21 Sept'21 Dec'21 Mar'22 Jun'22 Sept❜22 Dec'22 Mar'23 May'23 PSU Index Pvt Banks Index NBFCs Index Total Return (%) Apr 21 to May 23 Source: Capital IQ PSUs 39.0% Private Banks 7.9% NBFCs 3.9% Sensex 24.9% Note: PSU index includes 12 PSU; Private Bank index includes 10 Private-New and 9 Private-Old Banks; NBFC index includes 19 NBFC. Index weighted as per market capitalization of banks 14 Index period from April 1st, 2021 to May 31st, 2023 Copyright © 2023 by Boston Consulting Group. All rights reserved.#16Large NBFCs and Pvt Banks commanding premium; most Large PSUs trading at discount Key Performance Indicators Banks & NBFCs Select Banks & NBFCs 8.2 6.0 Price/Book for select PSUs, Pvt Banks and NBFCs Large PSUs Pvt. Banks NBFCs 4.8 3.7 3.6 3.4 3.2 2.3 2.2 2.1 2.1 1.8 1.8 1.7 1.0 0.9 0.8 0.7 0.6 0.6 Bajaj Finance Chola Kotak Sundaram HDFC ICICI HDFC Bank Axis Bandhan Muthoot MMFSL IDFC IndusInd First SBI BOB Canara Indian Union PNB Bol 423 86 396 28 487 663 901 282 43 45 35 47 100 518 96 56 34 49 57 30 XX 1. Large NBFCs and Private Banks selected basis Market Capitalization Source: Capitaline; BCG analysis Market Cap (INR in '000 crores) (as of May 31, 2023) 15 Copyright © 2023 by Boston Consulting Group. All rights reserved. %#17Note: Market Cap as on May 31, 2023 Source: Capitaline, BCG Analysis IOB SBI P&SB 1.7 2.1 Key Performance Indicators Banks & NBFCs Improved valuation for most PSUs in FY23 with record profitability % 1.7 1.7 1.6 1.5 1.4 0.8 ВОМ UCO 1.0 1.0 0.7 0.7 96 BoB Price/Book for PSUs 0.7 0.9 0.7. 0.9 0.5 0.8 Market Cap¹ 46 (Rs'000 Cr) 46 518 22 22 20 20 31 96 23 44 34 49 49 Return since 8% Mar 22 (%) 11% 26% 23% 8% 10% 12% 9% -6% 7% 11% -1% Central 99 56 Canara Indian Union 0.4 0.7 0.4 40 57 PNB 16 Mar 22 Mar 23 May 23 0.6 0.6 0.4 30 30 Bol Copyright © 2023 by Boston Consulting Group. All rights reserved.#18Note: Market Cap as on May 31, 2023 Source: Capitaline, BCG Analysis Kotak ICICI HDFC 4.8 Key Performance Indicators Banks & NBFCs Mixed performance in valuation for Pvt. Banks in FY23, however, they continue to command premium valuation vs PSUs Price/Book for Private Banks % Axis Market Cap¹ 396 663 901 282 43 100 (Rs'000 Cr) Return since Mar'22 (%) 15% 8% 0.3% 76 Bandhan IndusInd 3.4 3.2 2.3 2.2 1.8 1.8 1.6 1.6 1.2 .1.2 1.2 1.0 0.9 0.7 IDFC 59 IDBI 47 47 59 5 6 27 22 Federal 47 47 Yes 7% 37% 20% 30% 22% 13% -0.5% -5% 8% 2% 10% 15% 17% 11% 18% 15% + 6 9. 10 10 RBL J&K Mar 22 Mar 23 May 23 0.6 0.6 0.5 0.5 Karnataka 6 5 4 0.4 17 SIB Dhanlaxmi Copyright © 2023 by Boston Consulting Group. All rights reserved.#19Note: Market Cap as on May 31, 2023 Source: Capitaline, BCG Analysis Bajaj Fin. Chola 11.7 8.2 5.7 6.0 6.4 4.3 3.8 4.1 Capri Global Key Performance Indicators Banks & NBFCs Mixed performance for NBFCs, however, diversified NBFCs continue to command premium valuation vs others % Poonawalla Fin CreditAccess 3.6 3.8 Sundaram Fin. 3.3 3.7 3.9 3.6 HDFC Can Fin Homes Price/Book for NBFCs Market Cap¹ (Rs'000 Cr) 423 86 14 14 27 27 19 28 487 9 45 52 52 13 1 5 Return since Mar 22 (%) 25% 38% 7.5% 18% 35% 12% 1.0% 34% 14% 11% -11% 51% 37% 18% 3.0 2.6 3.3 2.1 1.2. 1.2 1.3 1.00.7 Muthoot Fin. Shriram Fin. Manappuram Fin. 18 PNB HF Mar 22 Mar 23 May 23 1.0 0.5 0.8 0.5 0.3 Satin Credit Indiabulls HF Copyright © 2023 by Boston Consulting Group. All rights reserved.#20India NBFC Sector Update - FY23 Macro Indicators Key Performance Indicators - (Banks + NBFCs) Key Performance Indicators - NBFC Sector NPA & Risk Management Valuation Recent Trends Player Performance 999 19 Copyright © 2023 by Boston Consulting Group. All rights reserved.#21Key performance indicators After a moderation in growth, NBFCs are back on track with a 39% YoY increase in profits % Overall NBFC Sector Growth YOY¹ 21% 20% 22% 31% 24% 32% 20% -21% 50% 39% FY23 2,609 INR Bn 246 1,518 1,272 1,032 -1,337 597 -486 -209 -228 Interest earned Interest expense NII Other Income Total income (Net) Opex PPOP Credit Cost Tax & Other exp. Net profit FY22 INR Bn 2,151 188 1,228 1,040 859 -1,111 -369 430 -265 Interest earned Interest NII expense Other Income Total income Opex PPOP Credit Cost -152 Tax & Net profit (Net) Other exp. 1. YoY growth FY23 vs. FY22 Analysis has been made based on 29 NBFCs (10 HFCs, 2 Gold, 3 MFI and 14 Diversified NBFCs) Source: Capitaline; Press releases; BCG analysis 20 20 Copyright © 2023 by Boston Consulting Group. All rights reserved.#22Key performance indicators Absolute profit for the NBFC sector increased 39% YOY in FY23 driven by Diversified (68%) and MFI NBFCs (220%) % Housing Finance Companies Values for FY23 and in INR Bn Diversified NBFCs 1,065 1,333 158 938 780 574 357 77 434 367 250 286 -553 -364 -708 -67 52 --64° -145 -143- Int. Int. NII inc. exp. Oth inc. Total Opex PPOP Credit inc. Cost Tax PAT Int. Int. NII inc. exp. Oth Total Opex inc. inc. PPOP Credit Tax Cost PAT Growth Growth 20% 22% 16% 21% 17% 18% 17% -7% 19% 24% 26% 21% 29% 33% 30% 37% 26% -25% 83% 68% YoY1 YoY1 MFI NBFCs Gold NBFCs 60 60 151 9 45 99 3 102 36 27 65 47 13 -52 -24 -18 -37 -11 -16. -5 Int. Int. NII Oth inc. exp. inc. Total Opex PPOP Credit inc. Cost Tax PAT Int. Int. NII Oth inc. exp. inc. Total Opex PPOP Credit inc. Tax PAT Cost Growth Growth 22% 12% 31% 173% 45% 19% 71% -8% 218% 220% -2% -1% -3% 37% -3% 16% -11% -49% -9% -10% YoY1 YoY1 1. YoY growth FY23 vs. FY22 Analysis has been made based on 29 NBFCs (10 HFCs, 2 Gold, 3 MFI and 14 Diversified NBFCs) Source: Capitaline; Press releases; BCG analysis 21 21 Copyright © 2023 by Boston Consulting Group. All rights reserved.#23Key Performance Indicators RoA driver tree: NBFCs' ROA improved 45 bps in FY23 on higher NIMs, lower credit costs RoA Tree HFCS Diversified Gold Loan MFIS Industry Particulars1 UOM FY23 FY22 FY23 FY22 FY23 FY22 FY23 FY22 FY23 FY22 Net interest Margin (%) ↑ 2.8 2.7 ↑ 7.9 7.3 ↓9.9 11.0 ↑ 10.1 9.1 ↑ 5.4 5.0 Fee + Other Income (%) 0.6 0.6 ↑ 1.6 1.4 ↑ 0.3 0.2 ↑ 2.4 1.1 ↑ 1.0 0.9 Operating expenses (%) 0.5 0.5 ↑ 3.7 3.2 13.7 3.4 5.1 5.1 ↑ 2.1 1.8 Pre-Provision Profit² (%) ↑ 2.9 2.8 ↑ 5.8 5.6 ↓6.5 7.8 ↑ 7.5 5.1 ↑ 4.4 4.1 Credit costs (%) ↓0.4 0.5 1.5 2.4 ↓0.1 0.2 ↓3.0 3.9 ↓↓0.9 1.3 Tax (%) 0.5 0.5 ↑ 1.5 0.9 1.6 1.9 ↑ 1.4 0.5 ↑ 1.0 0.7 Return on Assets (%) ↑ 2.0 1.8 ↑ 2.9 2.1 ↓ 4.8 5.6 ↑ 3.7 1.4 ↑ 2.5 2.1 1. All the above #s are as a % of Average Assets, 2. Pre-provision profit may not tally due to rounding off error 3. Other Expenses include "Net loss on fair value changes", "Net loss on derecognition of financial instruments under amortized cost category", "Net Transaction Exchange Loss" and/or "Loss/write-off on Repossessed Assets and Assets acquired in satisfaction of debt" 1. Note: Analysis has been made based on 29 NBFCs (10 HFCS, 2 Gold, 3 MFI and 14 Diversified NBFCs) 2. Source: Capitaline, Quarterly Results, Investor Presentation, Annual Report, BCG Analysis 22 Copyright © 2023 by Boston Consulting Group. All rights reserved. %#24Key performance indicators Diversified (28%) and Micro Finance (33%) NBFCs driving credit growth for the overall sector (17%) Category-wise y-o-y growth in loan book (%) % (%) 40 30 20 20 12 10 ↑ 28 24 20 21 18 10 10 11 9 7 5 ↓ ↑ ↑ 36 33 15 14 12 10 98 8 LO 5 10 17 1 0 FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23 HFCs Diversified Gold MFI Industry Loan book as on 12.0 FY23 (INR lakh Cr) 9.3 0.9 0.3 22.1 Note: Analysis has been made based on 29 NBFCs (10 HFCs, 2 Gold, 3 MFI and 14 Diversified NBFCs); Growth of FY23 calculated over FY22 Source: Capitaline, Quarterly Results, Investor Presentation, Annual Report, BCG Analysis 23 Copyright © 2023 by Boston Consulting Group. All rights reserved.#25Key performance indicators NBFCs across the spectrum post record disbursement in FY23 due to pick-up in consumption Disbursement trend (INR '000 Cr) Select NBFCs % +87% +4% 70 67 64 62 +80% +105% 60 60 55 50 50 50 49 +31% н 35 30 26 28 19 20 24 15 15 10 34 +58% +44% 26 ↓ +33% 21 19 +8% +83% 12 13 13 15 10 10 11 89 7 4 44 0 Chola LIC HFC M & M Fin. Aditya Birla Fin. Bajaj HFC Sundaram Fin. Credit Acc. Gram. PNB HFC Can Fin Homes Satin Creditcare FY21 FY22 FY23 Source: Investor Presentation, Analyst Report, BCG Analysis 24 14 Copyright © 2023 by Boston Consulting Group. All rights reserved.#26Advances deep-dive (select products) Advances deep-dive: Strong growth seen across products in FY23; NBFCs remain resilient amidst competition from banks Housing loans O/S (INR Lakh Cr.) Personal loans O/S (INR Lakh Cr.) 30.2 10.0 25.6 8.1 23.1 21.4 6.7 18.6 16.2 67% 5.8 80% 66% 4.3 66% 66% 81% 61% 63% 3.1 84% 82% 84% 39% FY18 37% 34% 34% 34% 33% 85% 15% 16% 18% 16% 19% 20% FY19 FY20 FY21 FY22 FY23P FY18 FY19 FY20 FY21 FY22 FY23P MSME loans O/S (INR Lakh Cr.) IIII Gold loans outstanding (INR Lakh Cr.) 24.0 5.7 21.4 5.1 4.5 18.4 15.5 16.3 16.8 2.9 3.1 75% 81% 81% 2.5 75% 74% 80% 78% 78% 79% 75% 71% 74% 20% 22% 22% 21% 19% 19% 26% 25% 29% 26% 25% 25% FY18 FY19 FY20 FY21 FY22 FY23P FY18 FY19 FY20 FY21 FY22 FY23P Banks NBFC Source: Analyst Reports 25 Copyright © 2023 by Boston Consulting Group. All rights reserved.#27Share of bank's lending to NBFCs -2x during last 10 years Deployment of Bank Credit to NBFCs (INR lakh cr.) 4.5 2.9 9.6 13.3 FY14 FY17 FY20 FY23 Share of lending to NBFCs in 5.2% 5.5% 9.3% 9.7% overall bank exposure Source: RBI; BCG Analysis Key Performance Indicators 250 bps rise in Repo Rate within 12 months increased cost of borrowing for NBFCs from market instruments, leading to banks term loans becoming the preferred source of borrowing Also supported by improved credit growth across all segments leading to higher demand of bank credit from NBFCs 26 26 % Copyright © 2023 by Boston Consulting Group. All rights reserved.#28Marginal increase in NIM over the last 5 years; CIR has remained stable Key performance indicators $ Cost to Income Ratio² by NBFC category (%) Net Interest Margin¹ by NBFC category (%) (%) (%) 13.6% 14 50 12 -10.8%. 10 8 -7.4%- 6 4.9% 4 2.6% 43% 10.1% 9.9% 40 -40% 38% -7.9% 30 32% 5.4% 2.8% 20 15% 2 0 FY19 FY20 FY21 10 FY19 FY22 FY23 - HFCS Diversified Infra 39% 39% 36% 32% 15% FY20 FY21 FY22 FY23 Gold Loan NBFC Industry 1 NIM is calculated as (Interest Income-Interest Expense)/Average Assets 2 Cost to Income is calculated as Operation expense/(net interest income + other income) Operation Expense excludes "Net loss on fair value changes", "Net loss on derecognition of financial instruments under amortized cost category", "Net Transaction Exchange Loss" and/or "Loss/write-off on Repossessed Assets and Assets acquired in satisfaction of debt" Note: Analysis has been made based on 29 NBFCs (10 HFCs, 2 Gold, 3 MFI and 14 Diversified NBFCs) Source: Capitaline, Quarterly Results, Investor Presentation, Annual Report, BCG Analysis 27 Copyright © 2023 by Boston Consulting Group. All rights reserved. %#29Key performance indicators Resulting in NBFC sector profitability following upward trajectory and reaching pre-Covid levels % 8 (%) Return on Assets¹ by NBFC category Return on Equity1 by NBFC category (%) 30 5.5%- 4 4.2% 2.6% $2.4% 2 2.0% 21.4% 4.8% 18.8% 20 3.7% 16.7% $2.9% 16.2% 15.2% •*2.5% 10 2.0% 17.0% 16.8% 15.3% 14.0% 12.3% 0 FY19 FY20 FY21 FY22 FY23 0 FY19 FY20 FY21 FY22 FY23 HFCS Diversified ⚫ MFI Gold Loan Industry 1. Return on Assets is calculated as net profit/average assets 2.Return on Equity is calculated as net profit/average shareholders' fund Note: Analysis has been made based on 29 NBFCs (10 HFCs, 2 Gold, 3 MFI and 14 Diversified NBFCs) Source: Capitaline, Quarterly Results, Investor Presentation, Annual Report, BCG Analysis 28 Copyright © 2023 by Boston Consulting Group. All rights reserved.#30India NBFC Sector Update - FY23 < Macro Indicators Key Performance Indicators - (Banks + NBFCs) Key Performance Indicators - NBFC Sector NPA & Risk Management Valuation Recent Trends Player Performance 29 Copyright © 2023 by Boston Consulting Group. All rights reserved.#31NPA and Risk Management Asset quality improved for all NBFC segments except Gold loan NBFCs in FY23 Gross Non-Performing assets (%) % 6 5.0% 4.9% 4.8% 5 4.7% 4.1% 4.8% 3.8% 4 3.5% 3.6% 3.3% 3.3% 3.8% 3.1% 3.1%. 3 2.6%" 2.7% 2.4% 2.9% 2.2% 3.0% 2.1% 2.3% 2 2.4% 2.0% 1.3% 2.0% 1.8% 1 1.2% 1.2% 0.9% 0 FY18 FY19 FY20 FY21 FY22 FY23 HFCs Diversified MFI Gold Industry 1. GNPA for NBFC categories has been calculated based on weighted average Note: Analysis has been made based on 35 Banks: 10 HFCS, 15 Diversified, 3 MFIs and 2 Gold Loan NBFCs Source: Financial Results; BCG analysis 30 Copyright © 2023 by Boston Consulting Group. All rights reserved.#32Majority of the players reported improved asset quality NPA and Risk Management 8.0 7.7 7.4 Select NBFCs Gross Non-Performing assets (%) XX% PCR % (FY23) FY22 FY23 4.5 4.4 3.3 3.3 2.4 2.2 1.9 2.0 2.0 3.1 3.1 2.1 2.2 5.0 4.3 3.8 3.0 2.8 1.7 1.4 1.2 0.6 0.6 Satin Mahindra GIC Poonawalla Capri Creditcare Fin. Housing Fin Global Finance Tata Capital Fin Ser. Bajaj Can Fin ABF Finance Homes IIFL Home Fin. L&T Fin. Muthoot Asirvad MFI Improvement in asset quality Marginal increase Deterioration in asset quality 54% 59% 32% 46% 115% 85% 64% 52% 46% 28% NA 10% NA Source: Investor Presentation, Analyst Report BCG Analysis 31 AL Copyright © 2023 by Boston Consulting Group. All rights reserved.#33Key Performance Indicators Despite few NBFCs opting to cut capital buffer, NBFC sector remains well capitalized to withstand shocks Capital to Risk-weighted assets ratio of NBFC players (%) Select NBFCs 36 23 23 24 24 25 25 20 20 21 23 23 23 16 17 39 40 32 32 29 24 20 Growth FY23 over FY22 (bps) -23 192 150 103 -223 220 -542 -249 -17 -350 57 -523 -36 -143 -223 -1050 1036 37 180 NA -118 78 HFCs Diversified Gold Loan MFIS Source: Capitaline, Investor presentation, Press release, RBI, CARE Ratings, BCG Analysis 32 15 Minimum requirement Copyright 2023 by Boston Consulting Group. All rights reserved. %#34India NBFC Sector Update - FY23 Macro Indicators Key Performance Indicators - (Banks + NBFCs) Key Performance Indicators - NBFC Sector NPA & Risk Management Valuation Recent Trends Player Performance 33 Copyright © 2023 by Boston Consulting Group. All rights reserved.#35Valuations Valuation | Diversified NBFCs commanding premium; most HFCs still trading at discount Market Cap (INR in '000 crores) (as of May 31, 2023) 4 3 1 1 1 0 Price to book ratio (as of May 31, 2023) 8 6 4 4 4 3 2 2 1 Select NBFCs 4 2 1 487 9 13 20 1 5 423 86 14 27 28 17 35 26 52 19 1 45 Housing Finances Source: Capitaline; BCG analysis Diversified 6 MFIS Gold Loan $ 34 Copyright © 2023 by Boston Consulting Group. All rights reserved.#36India NBFC Sector Update - FY23 Macro Indicators Key Performance Indicators - (Banks + NBFCs) Key Performance Indicators - NBFC Sector NPA & Risk Management Valuation Recent Trends Player Performance 35 55 Copyright © 2023 by Boston Consulting Group. All rights reserved.#37Emphasis on diversification across the NBFC sector NBFCs diversifying funding resources, product portfolio (sectors) and service models Recent Trends Resource diversification Steady increase in NCD issuances Diversification from heavy dependence on bank borrowings Issuance of NCDs by NBFCs almost doubled in FY23 and surpassed the FY20 levels Within NBFCs, retail focused NBFCs and Infrastructure financiers saw healthy growth in NCD issuances Securitisation volumes zoomed to Rs 1.8 Tn in FY23 on account of increase in funding requirement to meet the demand Product portfolio diversification Addition of newer products to drive growth Several NBFCs and HFCs are diversifying the product portfolio or adding new products that could drive growth > NBFCs are focusing on under penetrated segments like affordable housing, small business loans and used vehicles Deep-dive on next page Diversified service models Breaking traditional grid-locks with aid from fintechs Platform Model: Partnerships with fintechs to offer loan products on their platform: For platforms-NBFC expertise in risk assessment, credit scoring, compliance, etc. For NBFCS-platform resources, customer base, newer revenue streams Enabler model: fintech provides technology solutions to NBFCs -cost reduction, improve efficiency and productivity 36 Copyright © 2023 by Boston Consulting Group. All rights reserved.#38Recent Trends Several NBFCs and HFCs are diversifying or adding new products to drive growth ל גפן A □ C Company name Bajaj Finance CIFC MMFS Piramal Enterprise PNB HF LTFH Existing segments Diversified with presence in 2W/32, consumer, PL, LAP, mortgage and commercial finance Vehicle finance, housing loan and SME Vehicle finance mainly in ties 3+ markets Wholesale/Home Loan (acquired from DHFL) Mortgage/wholesale Farm eqpt, MFI loans, mortgages, SME and wholesale New segments Further diversifying by entering new segments like LAP for SME, auto loan (non-captive), MFI, tractor financing and emerging corporate loans Further diversifying loan book with personal and professional loans, small enterprise loans and SME loans (expanding product categories) Getting into new segments such as SME, LAP, leasing and unsecured PL. Also, expanding the customer segment to include more affluent rural/ semi-urban customers Diversified into Home loan post-acquisition from DHFL. Diversifying by launching products such as large business loans, unsecured business loan, used car, salaried personal loan and MFI Have started focusing on affordable housing and targeting salaried customer especially government employees Got into consumer loans, SME finance in in last few years; launched new products like rural LAP, agri-allied loan and rural household business loans 37 Copyright © 2023 by Boston Consulting Group. All rights reserved.#39$ Recent Trends Fintechs looking for direct license application or acquisitions of other NBFCs to offer on-book credit along with existing partnership models Digital lenders are increasingly vying for NBFC license Being a regulated entity to result in enhanced trust and compliance systems within the entity Hybrid model of on-balance sheet lending to comply with lending norms and off-balance sheet portion for decent returns on asset light balance sheet for the incumbents However, evolving regulations and funding winter to add to challenges for these players in raising adequate resources for growing the on-balance sheet book Players like Players like Players like Players like MSME lenders like CREDABLE slice PhonePe ES EarlySalary +ftcash Taster than cash MONEYTAP Razorpay indifi and ► LAZYPAY freo 4Fin Bharat Pe Z zest EMI FOR EVERYONE Kredit Bee OkCredit Simple Paperless. Secure LENDINGKAT Think Cash, Think Lendingkart Group! etc. offer a mix of both on and off-balance sheet loans NiYo etc. approached RBI for licenses in the past but turned down PhonePe etc. acquired other NBFCs to offer on-book loans already hold NBFC licenses and can tap on- book lending soon etc. received NBFC license in FY23 38 Copyright © 2023 by Boston Consulting Group. All rights reserved.#40Lenders wary as RBI tags centralised KYC as high risk Recent Trends "Such customers (onboarded through c-KYC and DigiLocker) shall be categorized as high-risk customers and accounts opened in non-face-to-face mode shall be subjected to enhanced monitoring until the identity of the customer is verified in face- to-face manner or through V- CIP (video-based customer identification process)" - RBI in its April 28 update to the master direction on KYC " Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI), which manages the registry, is used by ~5,000 institutions and contains ~700 million KYC records C-KYC database was conceived as a solution to all the KYC challenges given its utility and customer convenience Given the RBI circular, even if a bank uses c-KYC to onboard a customer, it will eventually have to use video KYC or physical check to authenticate the person Video KYC costs between Rs 15 to Rs 30, depending on the process complexity vs Rs 1.10 for downloading data on the C-KYC registry The regulator's move will push up the eventual cost of doing KYC on these customers Source: Press Search#41Recent Trends Digital adoption by NBFCs is on a steadfast rise (I/II) IIFL FINANCE 99% home loans are on-boarded and decisioned through digital platform • 33% increase in overall digital loans O/S FY23 vs. FY22 First to launch an end-to-end loan to disbursal journey on WhatsApp with digital fraud checks and verification pnb Housing Finance Limited Ghar Ki Baat ⚫ 99.7% EMI collections through digital mode ⚫ Launched WhatsApp channel, chatbot for new customers HDFC WITH YOU, RIGHT THROUGH 94% of new loan customers on-boarded digitally Reimagined on boarding journey with both, mobile and web Use of QR codes to help customers access the digital platform Source: Company Documents 40 Copyright © 2023 by Boston Consulting Group. All rights reserved.#42Digital adoption by NBFCs is on a steadfast rise (II/II) Muthoot Finance • 36% of gold loan customers transacting online (including Paytm, PhonePe and Google Pay) ⚫ Launched Al based Chat bot with transactional capabilities WhatsApp banking launched with online-top up facility B BAJAJ FINANCE LIMITED INR 9,400 Cr. of Personal Loans disbursed on App in FY23 209K credit cards acquired on App in FY23 All products and services are now live on Web and App digital platforms ADITYA BIRLA FINANCE Process Automation: 84% service interactions done digitally 99% of customers across businesses onboarded digitally ⚫ 99% EMIS collected digitally Email BOT accuracy: 89% Source: Company Documents Recent Trends 41 41 Copyright © 2023 by Boston Consulting Group. All rights reserved.#43Source: RBI Key regulatory measures (1/2) Recent Trends Framework for Facilitating Small Value Jan 22 Digital Payments in Offline Mode Feb 22 Implementation of 'Core Financial Services Solution' by NBFCs Mar 22 Regulatory Framework for Microfinance Loans Introduction of an offline payment channel, which does not require internet or telecom connectivity to take effect Framework for NBFCs' in terms of which NBFCs with 10 and more branches shall be mandatorily required to implement 'Core Financial Services Solution (CFSS)', akin to the Core Banking Solution (CBS) adopted by banks All collateral-free loans, for households having annual income up to 3,00,000, shall be considered as microfinance loans Apr 22 Disclosures in Financial Statements NBFCs are required to make additional disclosures in their financial statements under Scale Based Regulation for NBFCs Apr 22 Loans and Advances-Regulatory Restrictions-NBFCs Regulatory Restrictions on Loans and Advances to Directors, to senior officers of the NBFC and to Real Estate sector Lending by Commercial Banks to NBFCS May 22 and SFBs to NBFC-MFIs, for the purpose of on-lending to priority sectors Bank credit to NBFCs for on-lending will be allowed up to an overall limit of 5% of an individual bank's total priority sector lending (PSL) in case of commercial banks and 10% for SFBs to lend to NBFC-MFIs and other MFIS 42 Copyright © 2023 by Boston Consulting Group. All rights reserved.#44Key regulatory measures (2/2) Jun 22 Oct 22 May 23 Jun 23 50 Jun 23 Source: RBI Recent Trends Provisioning for Standard assets by NBFC-UL NBFCs in the upper regulatory layer to maintain provisions for standard advances based on category of assets. For all individual housing loans and loans to SMES-NBFCs will have to make provision of 0.25% for standard assets. For all other loans, the rate of provision is 0.4% of the outstanding amount The minimum NOF increased to *300 crore on an ongoing basis from the existing Minimum Net Owned Fund Requirement requirement of *100 crore RBI goals for supervision of NBFCs in 2023-24 In 2023-24, RBI intends to examine licensing requirements and conduct impact assessments of recent modification in asset classification norms for NBFC Guidelines on Default Loss Guarantee (DLG) in Digital Lending RBI may tighten regulations for unsecured lending All regulated entities must ensure that total amount of default loan guarantee cover on an outstanding portfolio does not exceed 5% of the loan portfolio With the increasing share of unsecured loan in overall portfolio, RBI to produce stricter norms to navigate risk of potential defaults 43 Copyright © 2023 by Boston Consulting Group. All rights reserved.#45India NBFC Sector Update - FY23 Macro Indicators Key Performance Indicators - (Banks + NBFCs) Key Performance Indicators - NBFC Sector NPA & Risk Management Valuation Recent Trends Player Performance 44 Copyright © 2023 by Boston Consulting Group. All rights reserved.#46HFCs Player performance (I/III) Player Performance Standalone financials Select NBFCs Period Advances1 Rs Cr NIM² (%) CIR³ (%) GNPA (%) ROA² (%) ROE4 (%) HDFC FY23 6.OL ▲ 10% 2.8 ▲ 4 bps 10 ▲ 23 bps 1.4 ▼90 bps 2.4 ▲ 10 bps 12.8 ▲ 77 bps WITH YOU, RIGHT THROUGH FY22 5.5L 2.7 10 2.3 2.3 12.0 FY23 2.7L ▲ 9% 2.4 ▲ 13 bps 15 ▼ 166 bps 4.4 ▼ 23 bps 1.1 ▲ 15 bps 11.2 ▲ 105 bps LIC HFL LIC HOUSING FINANCE LTD FY22 2.5L 2.2 17 4.6 1.0 10.1 Indiabulls FY23 0.5L ▼ 6% 2.0 ▼ 17 bps 34 ▼ 164 bps 3.7 ▼ 39 bps 1.1 ▲ 26 bps 5.2 ▲ 71 bps HOUSING FINANCE FY22 0.5L 2.2 35 4.1 0.9 4.4 pnb Housing FY23 0.6L ▲ 5% 3.4 ▲ 91 bps 19 ▼ 204 bps 3.8 ▼ 430 bps 1.6 ▲ 39 bps 10.2 ▲ 137 bps Finance Limited Ghar Ki Baat FY22 0.6L 2.5 21 8.1 1.2 8.8 FY23 0.6L ▲ 34% 3.7 ▲ 57 bps 26 352 bps 0.2 ▼ 9 bps 2.2 ▲ 58 bps 14.6 ▲ 348 bps BAJAJ HOUSING FINANCE LIMITED FY22 0.5L 3.1 29 0.3 1.6 11.1 FY23 0.4L ▲ 30% 4.3 ▲ 25 bps 36 526 bps 1.6 ▼ 5 bps 2.3 ▲ 33 bps 19.4 ▲ 236 bps TATA CAPITAL HOUSING FINANCE LIMITED FY22 0.3L 4.1 31 1.6 1.2 17.1 FY23 0.3L ▲ 18% 3.3 ▲ 6 bps 17 ▼ 139 bps 0.6 ▼ 9 bps 2.0 ▲ 15 bps 18.5 ▲ 191 bps Can Fin Homes Ltd [Sponsor CANARA BANK) FY22 0.3L 3.3 18 0.6 1.9 16.6 FY23 0.2L ▲ 16% 5.4 ▲ 70 bps 23 137 bps 2.1 5 bps 4.0 57 bps 19.2 475 bps IIFL HOME LOAN FY22 0.2L 4.8 22 2.1 3.4 23.9 YAY FY23 0.1L ▼ 8% 3.4 ▼ 7 bps 28 ▲ 460 bps 4.4 ▼ 292 bps 1.9 ▲ 45 bps 13.3 ▲ 118 bps GIC HOUSING FINANCE LTD. YOUR ROAD TO A DREAM HOME FY22 0.1L 3.5 23 7.3 1.4 12.1 FY23 0.1L ▲ 6% 4.5 13 bps 24 ▲ 425 bps 5.8 ▼ 120 bps 2.4 ▲ 84 bps 12.5 ▲ 354 bps Repco Home Finance We value your Dream FY22 0.1L 4.7 20 7.0 1.6 8.9 Note: Calculated ratios may not match with reported figures due to differences in formula 1. Advances are half yearly net Advances 2.RoA and NIM are calculated as % of average assets and are annualized 3. CIR is calculated as Opex by Total Income (NII+ Other Income) and is annualized 4. RoE are calculated as % of average shareholder's funds and is annualized 5. NA: Not Available Source: RBI; Capitaline; Press releases; BCG analysis XXX Change vs. last year 45 Copyright © 2023 by Boston Consulting Group. All rights reserved.#47Diversified Player performance (II/III) Player Performance Standalone financials Select NBFCs Period Advances1 Rs Cr NIM² (%) CIR³ (%) GNPA (%) ROA² (%) ROE4 (%) FY23 1.8L ▲ 24% 10.9 ▲ 30 bps 36 ▲ 87 bps 1.2 ▼83 bps 5.4 ▲ 121 bps 22.0 ▲ 571 bps B BAJAJ FINANCE LIMITED FY22 1.4L 10.6 35 2.0 4.2 16.3 FY23 1.7L ▲ 47% 9.3 ▲ 273 bps 28 ▲ 614 bps 6.2 ▼ 86 bps 3.5 ▲ 147 bps 17.2 ▲ 587 bps SHRIRAM Finance FY22 1.2L 6.6 22 7.1 2.0 11.4 FY23 0.7L ▼ 8% 6.7 ▲ 59 bps 38 ▲ 313 bps 5.0 ▼ 68 bps -0.5 ▼ 136 bps -2.9 ▼ 796 bps L&T Financial Services FY22 0.8L 6.1 35 4.3 0.8 5.0 FY23 1.0L ▲ 41% 6.5 ▼ 25 bps 38 ▲ 303 bps 4.6 ▼ 219 bps 2.7 ▼ 1 bps 20.5 ▲ 32 bps Chola Enter a better life FY22 0.7L 6.7 35 6.8 2.7 20.2 FY23 0.8L ▲ 31% 7.1 17 bps 42 ▲ 634 bps 4.5 ▼317 bps 2.3 ▲ 102 bps 12.1 ▲ 561 bps Mahindra FINANCE FY22 0.6L 7.3 36 7.7 1.3 6.5 HDB FINANCIAL FY23 0.7L ▲ 16% 8.2 ▲ 12 bps 55 327 bps 2.7 ▼ 226 bps 3.0 ▲ 134 bps 18.7 ▲ 743 bps SERVICES From the trusted family of HDFC Bank Ltd. FY22 0.6L 8.1 52 5.0 1.6 11.2 ADITYA BIRLA FY23 0.8L ▲ 47% 5.6 ▲ 36 bps 32 145 bps 3.1 ▲ 2 bps 2.2 ▲ 14 bps 14.6 ▲ 274 bps FY22 0.5L 5.2 31 3.1 2.1 11.9 FINANCE FY23 0.7L ▲ 29% 5.0 23 bps 44 ▼ 17 bps 2.0 ▼ 26 bps 2.0 ▲ 47 bps 15.3 406 bps TATA CAPITAL FINANCIAL SERVICES LIMITED FY22 0.5L 5.3 44 2.2 1.5 11.3 FY23 0.3L ▲ 19% 4.4 ▼ 39 bps 33 ▲ 166 bps 1.7 ▼53 bps 2.9 ▲ 28 bps 14.9 ▲ 106 bps SSUNDARAM FINANCE Enduring values. New age thinking. FY22 0.3L 4.8 32 2.2 2.6 13.8 FY23 0.4L ▲ 26% 9.4 ▼ 118 bps 44 ▼ 161 bps 5.4 ▼ 256 bps 1.3 NM 9.0 NM H+FF HeroFinCorp. Finance Made Easy FY22 0.3L 8.3 47 7.9 (0.1) (3.9) Note: Calculated ratios may not match with reported figures due to differences in formula 1. Advances are half yearly net Advances 2.RoA and NIM are calculated as % of average assets and are annualized 3. CIR is calculated as Opex by Total Income (NII+ Other Income) and is annualized 4. RoE are calculated as % of average shareholder's funds and is annualized 5. NA: Not Available Source: RBI; Capitaline; Press releases; BCG analysis XXX Change vs. last year 46 Copyright © 2023 by Boston Consulting Group. All rights reserved.#48Gold Loan●● MFIS ― Diversified → Player performance (III/III) Player Performance Standalone financials Select NBFCs Period Advances¹ Rs Cr NIM² (%) CIR³ (%) GNPA (%) ROA² (%) ROE4 (%) FY23 0.1L ▲ 13% 8.5 ▲ 20 bps 50 ▲ 913 bps 1.8 ▼ 131 bps 3.4 ▲ 12 bps 16.9 ▲ 119 bps IIFL HOME LOAN FY22 0.1L 8.3 40 3.2 3.3 18.1 P POONAMALLA FY23 FINCORP 0.1L ▲ 43% 7.9 ▲ 28 bps 57 ▼ 40 bps 1.4 ▼ 185 bps 3.8 ▲ 126 bps 9.6 ▲ 198 bps FY22 0.1L 8.2 57 3.3 2.5 7.7 FY23 0.06L ▲ 51% 6.9 ▲ 140 bps 69 ▲ 2494 bps 1.9 ▼47 bps 1.9 ▼ 133 bps 5.5 ▼ 399 bps CAPRI GLOBAL CAPITAL LIMITED FY22 0.05L 8.3 44 2.4 3.2 9.5 FY23 0.2L ▲ 29% 10.8 ▼ 105 bps CreditAccess™ Grameen FY22 0.1L 9.7 FY23 0.1L ▲ 60% 10.8 93 bps 48 ASIRVAD MICROFINANCE LIMITED ov Subsidiary of MANAPPURAM FINANCE LTD. FY22 0.1L 9.8 FY23 0.05L ▲ 16% 7.8 ▲ 38 bps SATIN CREDITCARE NETWORK LTD. ing FY22 0.04L 7.3 FY23 0.6L ▲ 8% 9.3 ▼131 bps Muthoot Finance FY22 0.6L 10.6 MANAPPURAM FY23 0.2L ▲ 8% 11.5 45 bps FINANCE LIMITED FY22 0.2L 12.0 A wow w 36 ▼ 342 bps 1.2 ▼ 240 bps 4.2 ▲ 204 bps 17.8 ▲ 905 bps 39 3.6 2.2 8.8 200 bps 2.8 ▼114 bps 2.6 ▲ 233 bps 16.7 ▲ 1524 bps 50 1.7 0.2 1.4 37 ▼ 2689 bps 3.3 ▼ 473 bps 3.5 ▲ 299 bps 15.0 ▲ 1242 bps 64 8.0 0.5 2.6 31 579 bps 3.8 ▲ 80 bps 4.9 ▼ 105 bps 17.6 ▼ 592 bps 25 3.0 5.9 23.6 47 467 bps 1.3 162 bps 4.5 ▼46 bps 15.0 ▼ 261 bps 43 3.0 5.0 17.6 Make Life Easy Note: Calculated ratios may not match with reported figures due to differences in formula 1. Advances are half yearly net Advances 2.RoA and NIM are calculated as % of average assets and are annualized 3. CIR is calculated as Opex by Total Income (NII+ Other Income) and is annualized 4. RoE are calculated as % of average shareholder's funds and is annualized 5. NA: Not Available Source: RBI; Capitaline; Press releases; BCG analysis XXX Change vs. last year 47 Copyright © 2023 by Boston Consulting Group. All rights reserved.#49Disclaimer The services and materials provided by Boston Consulting Group (BCG) are subject to BCG's Standard Terms (a copy of which is available upon request) or such other agreement as may have been previously executed by BCG. BCG does not provide legal, accounting, or tax advice. The Client is responsible for obtaining independent advice concerning these matters. This advice may affect the guidance given by BCG. Further, BCG has made no undertaking to update these materials after the date hereof, notwithstanding that such information may become outdated or inaccurate. The materials contained in this presentation are designed for the sole use by the board of directors or senior management of the Client and solely for the limited purposes described in the presentation. 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