Earnings Review
Bajaj Finserv PAT up 8%; insurance arms' performance weak
This story was originally published at 16:24 IST on 23 October 2024
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--Bajaj Finserv Jul-Sept consol net profit INR 20.87 bln vs INR 19.29 bln
--Bajaj Finserv Jul-Sept consol revenue INR 337.04 bln vs INR 260.23 bln
--Bajaj Finserv Jul-Sept consol total expense INR 277.4 bln vs INR 207.3 bln
--Bajaj Finserv Apr-Sept consol revenue INR 651.84 bln vs INR 493.03 bln
--Bajaj Finserv Apr-Sept consol PAT INR 42.25 bln vs INR 38.72 bln year ago
By Richard Fargose
MUMBAI – Bajaj Finserv Ltd's consolidated net profit for the quarter ended Sept. 30 rose 8% on year to INR 20.87 billion, with its life and general insurance subsidiaries exhibiting subdued performance. The non-bank lender's consolidated revenue for the quarter was higher by 30% on year at INR 337.04 billion.
Bajaj Finserv is the non-operating holding company of Bajaj Finance Ltd., Bajaj Allianz General Insurance Co. Ltd., Bajaj Allianz Life Insurance Co. Ltd., and Bajaj Finserv Asset Management Ltd. Bajaj Finance, in turn, is the promoter of Bajaj Housing Finance Ltd. and Bajaj Financial Securities Ltd.
Also weighing on Bajaj Finserv's profit was the dilution of its stake in subsidiary Bajaj Finance.
"In previous year, Bajaj Finance, the subsidiary of BFS (Bajaj Finserv) had raised capital through qualified institutions placement (QIP). Post this, BFS shareholding in BFL (Bajaj Finance) is reduced to 51.34% from 52.49%. In Q2 FY25 (Jul-Sept), pursuant to IPO of BHFL (Bajaj Housing Finance), BFL's shareholding stands reduced from 100% to 88.75% in BHFL. Together, these items reduced YoY % change in the consolidated profit after tax by 3% for Q2 FY25,” Bajaj Finserv said in a press release on Wednesday.
On Tuesday, Bajaj Finance had informed exchanges that its consolidated net profit rose 13% to INR 40.14 billion in Jul-Sept, missing analysts’ estimate of INR 46.08 billion, amid deterioration in asset quality.
Wednesday, Bajaj Finserv said that its life insurance subsidiary, Bajaj Allianz Life Insurance Co, saw its profit after tax for the reporting quarter reduce to INR 1.48 billion from INR 1.93 billion a year ago due to "new business strain, higher expense overruns and change in product mix”.
Meanwhile, Bajaj Allianz General Insurance Co, also reported muted growth in the bottom line, which was up only 6% on year at INR 4.94 billon in Jul-Sept.
SUBSIDIARY PERFORMANCE
In Jul-Sept, Bajaj Allianz General Insurance's gross written premium fell 20% on year to INR 58.71 billion due to spillover of government health business to October. "Excluding tender-driven crop (insurance) and government health insurance premium, the general insurance subsidiary's gross written premium increased by 22% to 46.64 bln rupees," the company said.
Net earned premium for the quarter under review was INR 26.60 bln rupees, up 18% from a year ago. Underwriting loss stood at INR 480 million in Jul-Sept as against a profit of INR 370 million a year ago. This was mostly due to claims of INR 450 million on account of natural catastrophes. The general insurer's claim ratio increased to 79.7% from 78.0% in the corresponding quarter last year. If the tender-driven crop insurance and government health business and natural catastrophe losses are excluded, the claim ratio fell to 71.5% in the reporting quarter.
As of Sept. 30, Bajaj Allianz General Insurance's solvency ratio was 312%, well above the minimum regulatory requirement of 150%. Assets under management stood at INR 319.49 billion, up 8% on year.
Bajaj Allianz Life Insurance Co's new business premium increased 14% on year to INR 32.02 billion, of which individual rated new business premium was INR 18.95 billion, registering a growth of 34%. Renewal premium for Jul-Sept was INR 33.42 billion, up 33% on year. Consequently, gross written premium increased 23% to INR 65.44 billion.
Net new business value--the metric used to measure the profitability of the life insurance business--was INR 2.45 billion as against INR 2.34 billion a year ago.
The solvency ratio was at a healthy 378% as of Sept. 30, against the minimum regulatory requirement of 150%. Assets under management as of Sept. 30 were at INR 1.23 trillion, up 25% on year.
On Tuesday, Bajaj Finserv Ltd said Allianz SE, the company's partner in life and general insurance firms, is actively considering exiting the joint ventures in view of its strategic priorities. Bloomberg News on Wednesday reported that Mukesh Ambani-led Reliance Group firm Jio Financial Services Ltd. is in talks with Allianz SE to set up life insurance and general insurance joint ventures.
At 1506 IST, shares of Bajaj Finserv were up 1.2% at 1,744.20 rupees on the National Stock Exchange. End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Akul Nishant Akhoury
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