Bajaj Finance Q1 Results: Net Profit Rises 4%, Misses Estimates

Bajaj Finance Ltd. saw its consolidated net profit rise 4% in the first quarter of fiscal year 2022 compared to the year-ago period.

Net profit rose to Rs 1,002 crore in the April-June period from Rs 962 crore crore a year ago, as per its exchange filing. The reported net profit was lower than the Rs 1,356.6 crore consensus estimate of analysts tracked by Bloomberg.

Net interest income rose 8% to Rs 4,489 crore at the end of the June quarter, compared to Rs 4,152 crore a year ago. The reported net interest income was higher than the Rs 4,390 crore consensus estimate of analysts tracked by Bloomberg.

"It was a muted quarter impacted by severe second wave of pandemic. Both businesses and debt management efficiencies were affected due to strict lockdowns across most parts of India. Business transformation remains on track for phase-1 go live in October 2021," the company said in its investor presentation on Tuesday.

Bajaj Finance’s gross non-performing assets ratio as on June 30 stood at 2.96% compared with 1.79% gross NPA as on March 31, while its net non-performing assets rose to 1.46% of its total advances, compared to net NPA of 0.75% in the preceding quarter.

Loan losses and provisions for the first quarter stood at Rs 1,750 crore, compared to Rs 1,686 crore in the year-ago period.

• In absolute terms, gross bad loans increased by Rs 2,006 crore to Rs 4,737 crore as of 30 June 2021.

• Auto finance business was worst affected. Its gross NPA increased by Rs 1,199 crore to Rs 2,426 crore.

• Bad loans across other businesses increased by Rs 807 crore to Rs 2,311 crore.

Stress in the book is visible beyond loans already classified as NPAs as well.

• Non-overdue one-time restructuring book stood at Rs 1,287 crore as of 30 June 2021 vs Rs 1,739 crore as of 31 March 2021. The company holds provisions of Rs 235 crore (18.3%) against this book.

• Assets, not restructured, but overdue by more than 60 days, stand at Rs 6,137 crore as of 30 June 2021 compared to Rs 4,985 crore as of 31 March 2021. The company holds provisions of Rs 1,395 crore (22.7%). against these assets.

Consolidated assets under management rose 4% to Rs 1.59 lakh crore at the end of the June quarter from Rs 1.53 lakh crore in the preceding three months. The reported AUM in the first quarter was in-line the Rs 1.59 lakh crore consensus estimate of analysts tracked by Bloomberg.

Bajaj Finance owns a 100% stake in Bajaj Housing Finance Ltd. and Bajaj Financial Securities Ltd., which are considered in the consolidated assets under management.

According to the company’s investor presentation:

• 4.63 million new loans were booked in Q1 FY22 as against 1.75 million a year ago.

• Deposits grew 39% to Rs 27,972 crore in Q1 FY22 on a year-on-year basis.

• Capital adequacy ratio stood at 28.57% as of June 30.

On a quarter-on-quarter basis, growth in assets under management across most segments remained subdued.

The company said it has taken board approval to apply for a payment aggregator and Bharat Billpay operating unit license to the Reserve Bank of India.

The payments initiatives will help diversify the services Bajaj Finance will offer in its next leg of expansion. On July 1, the company launched its mobile wallet business, after getting a perpetual license from the regulator. Bajaj Finance has already added 3.2 lakh customers to the wallet and aims to have 50 lakh users by the end of this financial year.

Bajaj Finance's consumer app, Bajaj Pay, which was announced in January, is also set for launch in a phased manner. According to disclosures in its investor presentation, the company said that the app will have:

• More than 300 transaction APIs

• Ability to handle over 1 lakh requests per second.

• More than 100 dedicated staff monitoring over 3,000 key performance indicators real time.