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Bajaj Finance Ltd (BFL) reported a 23 per cent year-on-year (yoy) decline in its first quarter standalone net profit at ₹869.50 crore due to Covid-19 related additional credit loss provision.
The non-banking finance company (NBFC) reported a standalone net profit of ₹1,125 crore in the year ago quarter.
The consolidated net profit, including the results of Bajaj Housing Finance and Bajaj Financial Securities, declined 19.5 per cent yoy to ₹962 crore (₹1,195 crore in the year ago period).
During the quarter, the company took an additional contingency provision for Covid-19 of ₹1,450 crore, taking its (standalone) contingency provision for Covid-19 to ₹2,350 crore as of June 30, 2020.
Credit costs to go up
BFL estimates its credit costs to increase by 100-110 per cent ( ₹6,000-6,300 crore for FY21) against the credit cost of the previous year.
According to its last update (April 6) on credit costs, the company had estimated 80-90 per cent increase in credit costs (₹5,400-5,700 crore for FY21), assuming lockdown till May 15, 2020.
Moratorium book
BFL’s consolidated moratorium book reduced to ₹21,705 crore (15.7 per cent of AUM) as of June 30, 2020 from ₹38,599 crore (27.1 per cent of AUM) as of April 30, 2020, the company said.
Further, the company, based on its estimate and judgement, reversed interest income to the tune of ₹220 crore from the interest capitalised during the moratorium period.
AUM growth
The company’s assets under management (AUM) growth moderated to 7 per cent yoy due to the lockdown. It stood at ₹1,38,055 crore in Q1 FY21 (₹1,28,893 crore in Q1FY20). Existing customers contributed to 70 per cent of new loans booked during Q1 FY21.
“At this juncture, based on our assessment, 75+ cities should revert to pre-Covid volumes by October, 40-75 cities by end-November, 10-40 cities by January and top 10 cities by March.
“All this is of course subject to Government of India not enforcing a 2nd national lockdown. Based on this assessment, the company estimates AUM growth of 10-12 per cent in FY21,” as per BFL’s investor presentation.
Flexi loans
Given the lockdown, the company decided to convert some of its existing customers with no overdue and good repayment track record from term loan to a flexi loan for a switch fee. In Q1 FY21, the company has converted about ₹8,600 crore of term loans into flexi loans.
The company has been offering flexi loans to its customers for the last five years. As of March 31, the existing book under flexi stood at ₹36,846 crore.
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