Bajaj Finance Q3 net falls 30% at ₹1,049 crore

Bajaj Finance Ltd (BFL) reported a 30 per cent decline in third quarter standalone net profit at ₹1,049 crore against ₹1,488 crore in the year-ago period as due to an increase in loan-loss provisions and interest reversals.

Interest income was about 9 per cent lower year-on-year (y-o-y) at ₹4,973 crore in the reporting quarter. Fees and commission income nudged up about 1.50 per cent y-o-y to ₹665 crore.

Finance costs declined about 9 per cent y-o-y to ₹1,870 crore. Loan-loss provisions jumped 52 per cent y-o-y to ₹1,245 crore.

Net interest income (difference between interest earned and interest expended) declined 7 per cent y-o-y to ₹3,977 crore, as per the company’s presentation.

AUM on the decline

The non-banking finance company’s (NBFC) assets under management (AUM) declined 6 per cent y-o-y to ₹1,09,598 crore as of December-end 2020.

“Most businesses have started disbursing 85-100 per cent of last year’s volumes with incremental growth being observed every month...

“In Q3 (October-December), loan disbursements (business to customer, small and medium enterprises, rural, mortgages) were at 81 per cent of last year’s disbursements,” said BFL.

Mortgages AUM growth for the quarter was ₹770 crore against ₹3,700 crore in Q3 FY20 due to significant portfolio attrition caused by pricing pressures, the company said, adding that it has taken pricing actions to revert to pre-Covid growth levels by Q4 FY21 / Q1 FY22.

As per the presentation, commercial business AUM grew by 15 per cent. Loan against securities business AUM de-grew by 22 per cent.

The company expects core AUM growth to resume to pre-Covid levels by Q4 FY21.

In its notes to accounts, the company observed that during the quarter, as a matter of prudence, it has written off principal and interest amounts (including capitalised interest) of ₹1,970 crore and ₹365 crore, respectively, of potentially unrecoverable loans, which were under moratorium, by utilising the available expected credit loss provision (including management overlay).

Post such write off, the company holds a management overlay of ₹ 660 crore as of December 31, 2020.

GNPAs and NNPAs

Gross non-performing assets (NPAs) and net NPAs (based on the Supreme Court’s interim order of not classifying customers as NPA after August 31, 2020) stood at 0.55 per cent and 0.19 per cent, respectively, as of December-end 2020.

Adjusted GNPAs and NNPAs (including the proforma slippages, whereby the Supreme Court directed banks that the accounts which were not declared NPA till August 31, 2020, shall not be declared NPA till further orders) stood at 2.86 per cent and 1.22 per cent, respectively.

GNPAs and NNPAs as of December-end 2019 stood at 1.61 per cent and 0.70 per cent, respectively.

BFL reported a 29 per cent decline in consolidated (including the financial results of subsidiaries Bajaj Housing Finance and Bajaj Financial Securities) net profit at ₹1,146 crore against ₹1,614 crore in the year-ago quarter.