Bajaj Housing Finance Limited...Bajaj Housing Finance Ltd. 2 1,600 Cr 25,714 Cr 2,100 115 Monthly Acquisition Asset Under Management (as of Sep 30, 2019) Employees Locations (Urban-40;

BajajHousingFinanceLimited

DebtInvestorsPresentation– Q2FY20

BajajHousingFinanceLtd.

2

1,600Cr 2,10025,714Cr 115

MonthlyAcquisition AssetUnderManagement

(asofSep30,2019)

Employees Locations(Urban-40;Rural-75)

v BajajHousingFinanceLtd.(BHFL)isregisteredwithNationalHousingBank(NHB)asaHousingFinanceCompany(HFC)

v BHFLisa100%subsidiaryofBajajFinanceLtd.(BFL)– aBajajFinservGroupCompany

v BFLhasbeeninthemortgagebusinesssince2008

v BHFLhasbeencarvedoutasHFCtoconductmortgagesbusinessesforthegroupwithdedicatedfocus

v BHFLstarteditsfullfledgedoperationsfromJanuary2018withdedicatedsales,operations,collections,branch&ITinfrastructure

3

BajajHousingFinanceLtd.

DedicatedFunctionalUnitsIndependentBoard

DedicatedSales,Credit,Risk,Ops,Collections,IT,Finance,HRandothersupportfunctions

SeparateandindependentBoard

Committees

Astandalone,fullyfunctionalandoperationallegalentity

DedicatedInfrastructure

DedicatedinfrastructureintermsofseparateHeadoffice,

branchesandITinfrastructure.

4

Financials(asof30Sep’19)₹inCrore

Financialssnapshot Q2FY20 Q2FY19 H1FY20 H1FY19 FY19

Assetsundermanagement 25,714 10,653 25,714 10,653 17,562

Assetsunderfinance 22,875 10,653 22,875 10,653 17,332

Interestincome 539 204 996 319 998

Feeandotherincome 96 37 154 68 158TotalIncome 635 241 1,150 387 1,156Interestexpenses 371 139 688 209 685NetInterestIncome 264 102 462 178 471OperatingExpenses 88 85 170 155 297Loanlossesandprovisions(ECLstage1&2) 4 4 12 9 21

Loanlossesandprovisions(ECLstage3&writeoff) 9 1 10 1 4

Profitbeforetax 163 12 270 13 149

Profitaftertax 130 9 200 11 110

Ratios

OperatingexpensetoNetInterestIncome 33.3% 83.3% 36.8% 87.1% 63.1%

LoanlosstoAverageAUF 0.24% 0.21% 0.22% 0.29% 0.24%

ReturnonAverageAssets 2.4% 0.4% 2.0% 0.3% 1.1%ReturnonAverageEquity 13.7% 1.8% 10.6% 1.1% 4.2%

5

BehaviouralizedALMsnapshot(asof30Sep’19)

AsperpreviousGAAP

Particulars 1m >1to2m >2to3m >3to6m >6mto1yr >1to3yr >3to5yr >5to7yr >7to10yr >10yr Total

Cash&Investments 2,843 - - - - - - - - - 2,843

Advances 374 217 217 643 1,275 4,797 3,598 2,744 3,143 5,998 23,007

Otherinflows 6,138 - - - - 6 - - - 72 6,215

TotalInflows(A) 9,355 217 217 643 1,275 4,803 3,598 2,744 3,143 6,069 32,065

CumulativeTotalInflows(B) 9,355 9,572 9,790 10,432 11,707 16,510 20,109 22,852 25,996 32,065

Borrowingsrepayment 498 2,433 1,193 128 1,586 11,063 6,313 1,268 - - 24,482

CapitalReservesandSurplus - - - - - - - - - 3,807 3,807

OtherOutflows 726 7 28 - 28 2,882 - 0 - 105 3,776

TotalOutflows(C) 1,224 2,440 1,221 128 1,614 13,945 6,313 1,268 - 3,912 32,065

CumulativeTotalOutflows(D) 1,224 3,663 4,885 5,013 6,627 20,572 26,885 28,153 28,153 32,065

E.GAP(A- C) 8,131 (2,223) (1,004) 514 (339) (9,142) (2,715) 1,476 3,143 2,158

F.CumulativeGAP(B-D) 8,131 5,909 4,905 5,419 5,080 (4,062) (6,777) (5,301) (2,157) 0

CumulativeGAPas%(F/D) 665% 161% 100% 108% 77% -20% -25% -19% -8% 0%

PermissiblecumulativeGAP% -15% -15%

Additionalshorttermborrowingspossible 9,781 7,147

*Otherinflowsincludelineofcreditcommittedbyotherinstitutions,currentandlongtermassets,taxpaidinadvance&interestandincomereceivable*Otheroutflowsincludeloancommitmentspendingdisbursal,linesofcreditcommittedtootherinstitutions,interestpayable on bonds&sundrycreditors

6

ECLSummary(asof30Sep’19)

SummaryofstagewiseassetsandECLprovisioning ₹inCrore

ECLcategorization Sep’18 Dec‘18 Mar’19 Jun’19 Sep’19

Stage1&2(representsstandardassets) 99.98% 99.97% 99.95% 99.94% 99.94%

Stage3(representsGNPA) 0.02% 0.03% 0.05% 0.06% 0.06%

FinancialAssets&ECLprovision Sep’18 Dec‘18 Mar’19 Jun’19 Sep’19

GrossStage1&2assets*(A) 10,746 14,061 17,435 20,601 23,481

ECLProvisionStage1&2(B) 14 20 26 34 37

NetStage1&2assets(C=A-B) 10,731 14,041 17,409 20,567 23,443

ECLProvision%Stage1&2assets(D=B/A) 0.13% 0.14% 0.15% 0.16% 0.16%

GrossStage3assets@(E) 2.3 4.5 9.5 13.1 13.3

ECLProvisionStage3(F) 0.5 1.0 3.4 4.2 6.0

NetStage3assets(G=E-F) 1.8 3.5 6.1 8.9 7.3

CoverageRatio%Stage3assets(H=F/E) 23.1% 23.1% 35.4% 32.3% 45.4%

ECL/TotalAssets 0.14% 0.15% 0.17% 0.18% 0.18%

*GrossStage 1&2assetsrepresentloansbalanceasperIndASafteradjustingfortheimpactofamortisationoffeesearnedand acquisitioncostincurredincludingotherassetslikesecuritydeposits,receivablefromrelatedparties,capitaladvancesetc@GrossStage3assets representsLoansbalanceasperInd ASafteradjustingfortheimpactof(i)amortisationoffeesearnedand acquisitioncostincurredand(ii)overdueinterestconsideredrecoverableunderIndASandotherreceivablesconsideredasnon-performingasattheendofrespectiveperiods.

7

0.06%Spread

2.2%

33%

9.85%8.28%

13.7%2.4%

BHFLKeyRatios

COF

OPEX/NIM

GNPA

ROA ROE

Yield

CapitalAdequacy

19.95%

TargetOPEX/NIMof<20%andROEof13-15%.TheCompanyremainswellcapitalized

8

65%

12%

10%

5%

5%3%

HomeLoan LAP LRD DF Rural Others

PortfolioMixRs.25,714crore

BHFLPortfolioView

88%

4%

8%

Salaried Professionals Self-Employed

HomeLoanPortfolioCustomerCategorisation

Rs.17,146crore

AwelldiversifiedportfoliowithdominantshareofHL

Focusonlow-risk,fastgrowingSalariedHomeLoancustomer

9

Sep2019

49%

18%

26%

7%

TermLoans CP NCD Assignment

Toaddnewbrickofsub-debt,ECB,refinanceasbalancesheetmaturesandplayaggressivelyonassignment

TreasuryStrategy- BorrowingMix

Marketexpectedtostabilizeandliquiditystresstoeaseoutover15-18months

BookmixtoshiftmoretowardslongtermBankborrowings

Maturityofbooktoopenavenuesforsub-debtandNCDborrowingsupportingALM

OpenECBandNHBrefinancehelpingdiversificationofborrowings

AssignmentstodrivebalancesheetgrowthandaddressALMmismatch

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BHFLCoreStrategy

TOP4MORTGAGEORIGINATOR

§ Inlessthan2yearsofoperations,BHFLranksamongtop7mortgageoriginatorsinIndia

§ Aimtobeamongstthetop4mortgageoriginatorsinthecountry

BUILDALOWRISKBUSINESSMODEL

§ Tocreatealowrisksustainablebalancesheetdelivering<0.75%GNPA&13-15%ROE

§ Focuslargelyonsalariedhomeloanopportunity

FOCUSONCROSSSELL

§ 38Mn+customerbase

§ 12LakhCrmortgageopportunityavailable

§ Focusoncustomerdataenrichmenttocreaterightpropositions

§ Lowerrisk

FOCUSONFEEINCOME

§ Mortgageisahighlycompetitive&lowmarginbusinesswithminimalpricingwidthavailable

§ Focusoncross-sellincomethroughcross-selling/up-sellingcustomizedVASproducts&services

DIVERSIFIEDHLFOCUSEDBUSINESSMIX

§ Entiresuiteofproductsavailabletomeetcustomermortgagerequirements

§ Homeloanstocontribute60%-65%ofportfolio

§ Riskbasedbusinessmixtoensurelowriskportfoliocontribution

FOCUSONMASSAFFLUENT(+)CLIENTS

§ Focusonmassaffluentandabovecustomersegment

§ Averageageof35-40yearsandaveragesalaryof10-20lakhs

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BHFLStrengths

BRANDNAME

Bajajgroupisoneofthemostreputed&vintagegroupsinthecountry.BajajFinanceisaleadingfinancialservicesnameintheindustry

COMMITTEDLINE

BHFLhasacommittedcreditlinefromBFLavailableontap

CREDITRATINGCAPITAL

BFLhasinfused3,550CrtilldateandiscommittedtogrowMortgages

CUSTOMERBASE ANALYTICSORIENTATION FULLPRODUCTSUITE DEBTMANAGEMENT

BHFLhasaccesstothevastcustomerbaseofBFL(38Mn+)tocrosssellmortgages

BHFLminesthevastcustomerbaseforeligibility&offercomputationthroughhighlysophisticatedanalyticalmodels

MortgageproductsforRetailaswellasCommercialcustomerswithcustomizedVASproducts&servicesforcrosssell/up-sell

Dedicatedandwell-staffedDebtManagementunitforbothurbanandruralmarkets

Agency Long-term Short-term

CRISIL AAA(Stable)

A1+

IndiaRatings

INDAAA(Stable) A1+

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BHFLProductSuite

HomeLoans

LoanAgainstProperty

VASProducts

DeveloperFinance

LeaseRentalDiscounting

Fullsuiteofmortgagesproductsandservicesforretailandcommercialcustomers

RuralMortgages

13

HomeLoans

75%ofMonthlyAcquisitionMix

93%SalariedHomeLoan

67%ExistingCustomerbasesourcing

59%

FOIR

70%LTVatorigination

11LakhAvg.Customer

salary

41LakhAvg.TicketSize

75%oftheCompany’sincrementalAUMiscontributedbyHLtosalariedindividuals…

16,642CrAssetUnderManagement

85%Customerswith

750+CIBIL

14

HomeLoansVerticals

B2C B2B

5Markets

Micro-Marketapproachbasiscustomerspread

7-8Years

Behaviouralizedmaturityofloan

BHFLcaterstomajorlyEliteA+/Acategory

developers

PSStoembedBHFLindeveloperecosystem;door-openerforlarge

relationship

FocusedonDFfundedprojectsforscale,

relationshipandriskmitigation

Appx.67-70%customersarehavingpriorrelationshipwith

Bajaj

Data-analyticsbasedoffergeneration

approachforbetterriskmgmt.

4-5Years

Behaviouralizedmaturityofloan

HigherprofitabilityinB2Cchanneldrivenbyability

tocross-sell

Combinationoffieldandregionalunderwritingprocessesforbalancing

TATandRisk

Onlydefined,selected,risk-approvedprojectsallowedforsourcing

Continuetoleveragethe38Mn+existingcustomerbasetogrow FocusonthehugemarketopportunityinB2Btoprovideexponentialgrowth.Lessriskyandhighlystableportfolio

70% 30%

CustomersourcingondigitalchannelsacrossBajajFinservassets

15%Contribution

LoanAgainstProperty

15

Operativeintop20citieswithATSof46Lakh.FocusedonMassaffluentandabovesalariedandself-employedcustomers

Morefocusedondirecttocustomerstrategywithintermediarybusinesscontributinglessthan20%ofnewacquisition

ATSrangesfrom30Lakhto100lakhwithacapof300Lakhs.AUMmixis22%fromSalaried,8%fromSEPand70%fromSENP.

47%LTVatOrigination


85%ExistingCustomermix

BusinessfocusedonFreshLAPwithfasterturn-around-timeof72-120hours

Selfoccupiedresidentialproperty(SORP)constitutes77%ofthetotalbook.MaxLTVexposurerestrictedat75%

RuralMortgages

16

Hubandspokemodelwithpresenceacross75upcountrylocationsasHUBand50locationsasSpokethruASSCtie-ups

Onlybusinesswherecompanyacquiresself-employednonprofessionalsinHL.50%Salariedand50%SENPcustomerprofilemix

ATSof16lakhwithaverageHomeLoanLTVof64%andaverageLoanagainstPropertyLTVof42%

75Locations


5.6%Spread

40%ofportfolioisHLand60%isLAP– targeting50:50acquisitionmixbyMarch2020

Higheststandardsofcontrollershipacrossallproductssupportedbyadequatespread

LeaseRentalDiscountingBusiness

17

Offersleaserentaldiscountingtohighnetworthindividuals(HNI)anddevelopersprimarilyforleasedoutofficespaces

LesseesaremajorlyFortune500companies.Thepropertiesarerelativelyeasiertoleaseoutlateraswell

ConservativediscountingandcomfortableLTVs(~55%).Loansizerangesfrom5Cr– 100Cr

AlltheLRDtransactionsarebackedbyrentalsthroughESCROWmechanismwithexclusivecharge

Continuousmonitoringofeachtransactiononamonthlybasisbyadedicatedriskteamstructure

Top8Locations


20-25CrAverageTicketSize

18

DeveloperFinance

15-35CrAverageTicketSize


143ActiveDevelopers

BusinessApproach

§ Focusonbuildingagranularbook

§ Focusedonendunitprice<1CrotherthanMumbaiand<1.5CrinMumbai

§ Nolandfinancing

§ Operativein8locations(notoperationalinDelhi&NCR)

§ FocusonconvertingDFexposuretoretaillowriskHLexposures

DeveloperProfile

§ Developershouldhavebuiltminimum0.75- 1millionsqft.inpast7-10yr.

§ Developershouldnothavemorethan2-3liveprojects

§ Lowleverage

§ Developershouldbelargeintheconcernedmicro-market

OperatingModel

§ Centralizedunderwriting

§ DisbursalonlyafterRERAandBuildingapprovals

§ Deferreddisbursementbasisstageofconstructionandsalesmilestones

§ PrincipalsweepfromDay1

§ Interestservicingmandatorytobedoneonamonthlybasiswithnomoratorium

19

StrongUnderwritinganddebtmanagementcapabilities

RetailLoansUnderwriting

(HomeLoans&LoanAgainstProperty)

§ Dedicatedunderwritingstructureofsubjectmatterexpertswithrelevantdomainexperience

§ ForLRDtransactions:In-depthassessmentofcustomer’sborrowingrequirement,credithistory,financials,marketstature,borrowingentitystructure,collateralsite,credibilityoflessee’s,lock-inperiod

§ ForDFtransactions:detailedassessmentofdevelopershistory,projectsite,approvals,cashflows,existingprojectsperformance

§ UseofindustrybestpracticesandtoolsforthepreparationofCreditApprovalMemo(CAM)foreachcommercialtransaction

§ Centralizeddisbursalofallcommercialtransactionforbettercontrollership

§ Separatededicatedunderwritingstructuresforsalariedandself-employedloans

§ Salariedloansfollowahubmodelwhileself-employedloansareunderwrittenacrossalllocationstoaddressbusinessandcollateralrelatednuances

§ Tele-PDforallsalariedloanswhilephysicalPDwithunderwritermandatoryforallself-employedloans

§ Legalandtechnicalevaluationofcollateralthoughin-housecollateralteamandempaneledvendorsaspertheregulatorynorms

§ Checkpoints/hind-sightingprocessesoverthelife-cycleoftheloan

CommercialLoansUnderwriting

(DeveloperFinance&LeaseRentalDiscounting)

DebtManagementApproach

§ DedicateddebtmanagementstructureforallRetailloans– urbanaswellasrural

§ Debtmanagementisdonethroughin-housedebtmanagement team- noexternalagencies

§ Backedbyastronglegalstructure

§ Dedicatedteaminplaceforefficientresolutionoflegalcasesatdifferentstages

BHFLWayForward

20

OptimalBalanceSheetMix Capitaladequacy

§ Maintain CRARofover>15%overthenext3yearsagainstregulatorynormof12%

§ Focusonbuildingalow-riskbalancesheetwithmediumROE.SalariedHLtobethecoregrowthdriveroverthenext3-5years.

§ DeveloperFinancebooktoberangebound(7-8%oftheportfolio)

Operatingefficiency

§ ContinuedfocustowardsOPEXmanagementthroughcostout&processefficiencies

§ OPEX/NIM~20%byFY23

GranularPortfolio

§ Continuedtofocusonmassaffluentcustomersascoretargetsegment

§ ContinuetofocusonATS of30– 100Lakhinretail

Profitability&Riskmetrics

§ ROE:13-15%

§ ROA:1.8%– 2.1%

§ GNPA:<0.75%

DiversifiedBorrowings

§ Maintainoptimalborrowingmixofbanklinesandmoneymarket.

§ Addnewlinesthroughrefinance,sub-debtandECB

§ Assignment~18-20%

ThankYou

BajajHousingFinanceLimited

DisclaimerThis presentation has been prepared by and is the sole responsibility of Bajaj Housing Finance Limited (together with its subsidiaries, referred to as the “Company” or “Bajaj HousingFinance”. 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 topurchase, 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 orimplied, 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. Suchinformation 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 therecipient if information, opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate. However, the Company may alter, modify or otherwisechange 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 incertain jurisdictions may be restricted by law and persons into whose possession these materials comes should inform themselves about and observe any such restrictions. Certainstatements contained in this presentation that are not statements of historical fact constitute “forward-looking statements.” You can generally identify forward-looking statements byterminology 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 maycause 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 inthe 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'scollateral 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 theCompany'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 informationcontained 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 orotherwise.

Glossaryofterms

Term Fullform

SMT SeniorManagementTeam

ATS AverageTicketSize

AUF AssetsunderFinance

ECL ExpectedCreditLoss

COF Costoffunds

GNPA GrossNonPerformingAssets

VAS Valueaddedproducts&services

FOIR Fixedobligationtoincomeratio

LTV LoantoValue

PSS Propertysearchservices

B2C BusinesstoBusiness

B2B BusinesstoCustomer

SENP SelfemployedNonProfessionals

SEP SelfemployedProfessionals

PD Personaldiscussion

CAR Capitaladequacyratio

ROA Returnonaverageassets

ROE Returnonaverageequity

ECB Externalcommercialborrowing

Bajaj Housing Finance Limited...Bajaj Housing Finance Ltd. 2 1,600 Cr 25,714 Cr 2,100 115 Monthly Acquisition Asset Under Management (as of Sep 30, 2019) Employees Locations (Urban-40;

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