| Julius Baer Capital India Private Limited | ||||||
| Rated amount enhanced for Commercial Paper | ||||||
| Rating Action | ||||||
| ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL AA+/CRISIL PPMLD AA+r/Stable/CRISIL A1+’ ratings on the debt instruments of Julius Baer (Capital) India Pvt Ltd (JBCIL; part of Julius Baer India).
The ratings continue to centrally factor in the strategic importance of the company to, and the expectation of strong support from, its ultimate parent, Julius Baer Group Ltd (JBG). The company has significant linkages with JBG in terms of branding, management, systems and processes. The ratings also factor in the healthy capitalisation and strong risk management systems of Julius Baer India. These strengths are partially offset by small scale of the lending business.
Under the Reserve Bank of India (RBI) Resolution Framework 1.0 and 2.0 for Covid-19-related stress, the Julius Baer India has not done any restructuring as on March 31, 2022. Though the third wave of the pandemic has not disrupted the operations materially, any subsequent waves or any change in the payment discipline of the borrowers may affect delinquency levels and will remain a monitorable. |
Analytical Approach CRISIL Ratings has combined the business and financial risk profiles of Julius Baer Wealth Advisors (India) Private Limited (JBWA) and its subsidiary, JBCIL. This is because these two companies, together referred to as Julius Baer India, have strong operational and financial linkages, common board and senior management, and a shared brand. Moreover, the product offerings of JBCIL compliments that of the bouquet of services that JBG provides in India under the private banking and wealth management arm, JBWA.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths:
Zurich-based JBG is among the leading wealth management players globally with assets under management (AUM) of over CHF 482 billion (~Rs 39 lakh crore) as on December 2021, spread across 25 countries. The Indian business (including NRI business) accounts for around 5% of the AUM and remains a strategically important market for the group. The holding structure is likely to remain unchanged over the medium term and JBG will continue to provide financial and managerial support to Julius Baer India.
Furthermore, Julius Baer India benefits from continued strong management, branding, funding and operational linkages with JBG. Such close operational linkages, 100% ownership and shared name imply a strong moral obligation on the parent to continue supporting Julius Baer India both on an ongoing basis and in case of distress.
Adjusted consolidated networth was Rs 497 crore and adjusted gearing 2.6 times, as on March 31, 2021 (Rs 463 crore and 2.4 times, respectively, as on March 31, 2020). The parent has infused Rs CHF 20 million (~Rs 162 crore) in Julius Baer India in fiscal 2022. Additionally, the lending business had healthy tier-1 capital adequacy ratio (CRAR) of 26.30% and overall CRAR of 26.37% as on March 31 2022. Till date, JBG has invested Rs 1,170 crore (share capital) in JBWA. Capitalisation of JBCIL is comfortable for the proposed scale of operations in India and will continue to be supported by JBG.
Julius Baer India has robust risk management systems, which are at par with those followed globally by JBG. Given the nature of the business the loan book is concentrated, with the top five clients accounting for around 12% of the loan book as on March 31, 2022, nevertheless, the same has been on an improving trend with new client acquisitions. Further, the loan-to-value ratio remains conservative at around 33% (at overall book level; regulatory cap is 50%). Credit underwriting and risk management practices are strong, with nil non-performing assets since inception (around 15 years). Julius Baer India will maintain healthy asset quality over the medium term.
Weakness
Lending operations are relatively small with loan book of Rs 2,335 crore as on March 31, 2022 (Rs 1623 crore as on March 31, 2021). The loan book has grown by a healthy growth rate of ~44% in fiscal 2022 on account of buoyant equity markets and new client acquisitions. JBCIL is present in a single business (loans against security), mainly to support the wealth business of JBWA. Moreover, growth in loan book is generally linked to developments in capital markets and domestic and global economic events. Nevertheless, loan book of JBCIL is expected to grow at a healthy pace, supported by introduction of new products in the wealth business, and institutional broking business leading to addition of new clientele in JBWA. The ability to successfully scale up operations amid economic cycles while managing asset quality and profitability will, however, remain a monitorable. |
Liquidity: Superior Cash and equivalents stood at Rs 261.62 crore as on May 31 2022 in JBCIL, investment in money market funds stood at Rs Nil sanctioned equity line from the parent was of CHF 30 million (~about Rs 240 crore) and unutilised committed lines of credit stood at Rs 250 crore, as on May 31, 2022. Moreover, the company’s lending is mostly against securities that are liquid and has short tenor. These facilities, along with a fairly liquid underlying portfolio, shall be sufficient to meet debt repayment of Rs 1975.00 crore as on May 31, 2022, over the next three months (primarily commercial papers). Also, the commercial papers are well-staggered to avoid any large outgo in any given week. Moreover, JBCIL has been able to raise fresh commercial papers over the last few months despite challenging market conditions. |
Outlook Stable Julius Baer India will remain strategically important to, and will continue to receive financial, managerial and operational support from, JBG. |
Rating Sensitivity factors Upward factors
Downward factors
|
About the Company JBCIL is a systematically important non-deposit-taking, non-banking financial company that is mainly engaged in lending activities. It is a 100% subsidiary of JBWA, which is ultimately held by JBG. The lending business supports the wealth management business carried out by JBWA. As on March 31, 2022, JBCIL had a loan book of Rs 2,335 crore.
Julius Baer India reported total income and profit after tax (PAT) of Rs 229 crore and Rs 25.5 crore, respectively, for financial year 2021; against total income and PAT of Rs 227 crore and Rs 14.9 crore, respectively, for the previous financial year.
JBCIL reported total gross income and PAT of 159 crore and 42.7 crore, respectively, for financial year 2022 (Rs 110 crore and Rs 30.3 crore, respectively, for financial year 2021). |
Key Financial Indicators Financial indicators (consolidated)
Financial indicators (JBCIL)
|
Any other information: Not applicable |
| Note on complexity levels of the rated instrument: CRISIL Ratings' complexity levels are assigned to various types of financial instruments. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments. |
Annexure - Details of Instrument(s)
#yet to be issued |
Annexure – List of entities consolidated
|
| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Criteria Details
|