Bajaj Finserv Q2 Results: Profit Falls On Higher Provisions In Lending Arm

Bajaj Finserv Ltd.’s quarterly profit fell on the back of increased provisions by its lending arm at a time when the Indian economy is emerging from the disruptions caused by the Covid-19 outbreak and subsequent national lockdowns.

The company’s net profit fell 18% year-on-year to Rs 986 crore in the quarter ended September, according to its exchange filing. Analysts polled by Bloomberg had estimated a net profit of Rs 330 crore.

Total income rose 5.8% year-on-year to Rs 15,052 crore.

The company reported unrealised mark-to-market gains worth Rs 306 crore in the second quarter from its insurance businesses. This was lower than the Rs 556 crore reported in the April-June period. Bajaj Finserv also reported additional loan loss provisions worth Rs 1,370 crore in the second quarter, which were made by Bajaj Finance Ltd.

Bajaj Finserv is the holding company for the group’s financial services firms Bajaj Finance, Bajaj Allianz General Insurance and Bajaj Allianz Life Insurance Co.

While Bajaj Allianz General Insurance’s gross written premium was marginally lower due to the decline in sales of commercial vehicle insurance and travel insurance policies and tenders for government health business, it was able to deliver improvement in its underwriting segment, sustaining a trend from the last quarter.

In case of the life insurance venture, new business premiums rose by 11% year-on-year to Rs 1,372 crore. Renewal premium for the September quarter was at Rs 1,305 crore—a 31% increase from a year ago.

“The company and its subsidiaries remain focused on profitability over growth,” Bajaj Finserv said in its statement to the stock exchanges. “They’re conserving cash, focusing on risk, strengthening collections, improving and digitising processes and reducing overheads.”

The company and its subsidiaries will look at growing in the second half of the financial year, as signs of normalcy are returning, it said.