Bajaj Finance Q3 net profit surges 85% as provisions fall

Non-banking finance major Bajaj Finance on Tuesday reported a massive 85% surge in consolidated net profit for the third quarter ended December 2021, helped by lower provisions.

Consolidated profit rose to Rs 2,125 crore from Rs 1,146 crore a year earlier.

Net Interest Income (NII) increased 40% to Rs 6,000 crore from Rs 4,296 crore a year earlier.

Interest income reversal for the quarter was Rs 241 crore, compared with Rs 450 crore in the same period last year.

Bajaj Finance said it booked 7.44 million new loans in the third quarter, as against 6.04 million during the year-ago period.

The company’s profit was boosted by a decline in loan-loss provisions to Rs 995 crore from Rs 1,245 crore in the year-earlier quarter. In particular, loan-loss provisions for stage 3 and write-offs slumped 78% to Rs 816 crore, the company said.

Bajaj Finance also said its board approved fundraising via a debt issue or issue of non-convertible securities as a part of the proposed increase in overall borrowing limit from Rs 1.6 lakh crore to Rs 2.25 lakh crore.

Other key highlights:

1) Assets under management rose 26% during Q3 from a year earlier.

2) Gross non-performing assets at the end of Q3 were at 1.73%.

3) Net non-performing assets in Q3 were at 0.78%.

4) Provisioning coverage ratio of 56% on stage 3 assets and 156 basis points on stage 1 and 2 assets.

5) Consolidated total income was Rs 8,535 crore, up 28%.

Management commentary

Managing Director Rajeev Jain said in an investor call that this was a very good quarter and the company is very well positioned to navigate the third wave of the Covid-19 pandemic.

Bajaj Finance said it recorded across-the-board improvement in all metrics during the quarter.

It also said that competitive intensity across products increased after the pandemic’s second wave last year but it has been able to protect its margin profile across businesses.