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Motilal Oswal Report
Bajaj Finance’s Q1 FY21 profit after tax declined approximately 20% YoY to Rs 9.6 billion (8% beat). Other operating income of Rs 8.6 billion (versus estimated of Rs 4.6 billion) led to pre-provision operating profit (over 25% YoY) beat of 12%.
Net interest income and opex were in line with expectations. During the quarter, the company took Rs 14.5 billion worth of additional Covid-19 provisions. The total pool of provisions on the moratorium book now stands at Rs 29.7 billion (including an expected credit loss provision of Rs 6.2 billion) -14% of moratorium book and 2.2% of loans.
As of June end approximately 16% of the consolidated asset under management was under moratorium (Rs 217 billion), as against 27% in April (Rs 386 billion). The reduction was driven by the auto, rural, and small and medium enterprise (SME) segments.
The conversion of term loans into flexi loans led to approximately 22% (Rs 36 billion) of overall decline. Gross non-performing assets declined 20 basis points QoQ to 1.4%, aided by high write-off of Rs 4 billion. Provision coverage ratio increased 450 basis points QoQ to 65%.
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