Earnings Review
Bajaj Finance's consolidated Oct-Dec PAT rises 17% YoY on strong AUM growth
This story was originally published at 20:35 IST on 29 January 2025
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--Bajaj Finance Oct-Dec consol net profit INR 42.47 bln
--Analysts saw Bajaj Finance Oct-Dec consol net profit INR 41.72 bln
--Bajaj Finance Oct-Dec consol PAT INR 42.47 bln vs INR 36.39 bln year ago
--Bajaj Finance Oct-Dec consol revenue INR 180.35 bln vs INR 141.64 bln
--Bajaj Finance Apr-Dec consol PAT INR 121.58 bln vs INR 106.27 bln yr ago
--Bajaj Finance consol gross NPA ratio 1.12% on Dec 31 vs 1.06% qtr ago
--Bajaj Finance consol net NPA ratio 0.48% on Dec 31 vs 0.46% qtr ago
--Bajaj Finance Apr-Dec consol revenue INR 512.26 bln vs INR 400.45 bln
--Bajaj Finance consol AUM at INR 3.98 tln as on Dec 31, up 28% YoY
--Bajaj Finance Oct-Dec consol net interest income INR 93.82 bln, up 23% YoY
--Bajaj Finance Oct-Dec consol loan loss and provisions INR 20.43 bln
--Bajaj Finance consol AUM up INR 241.19 bln in Oct-Dec
--Bajaj Finance: Deposits at INR 687.97 bln as on Dec 31, up 19% YoY
By Kshipra Petkar
MUMBAI – Bajaj Finance Ltd.'s consolidated net profit for the quarter ended December rose 16.7% on year to INR 42.47 billion, beating analysts' estimate of INR 41.72 billion. Sequentially, the net profit was up 6.2%. The company's profitability was driven by rise in assets under management. The assets under management of the company rose 28% on year to INR 3.98 trillion as on Dec. 31, and grew by INR 241.19 billion during the December quarter.
The consolidated revenue from operations increased 27.3% on year and 5.5% on quarter to INR 180.35 billion. Interest income increased by 25.9% on year to INR 157.68 billion. Total income was up 27.5% on year at INR 180.58 billion.
The net interest income of the company was INR 93.82 billion, up 23% on year. The net interest margin was steady in Oct-Dec, according to the company's investor presentation. Total expenditure increased 32.6% on year to INR 122.96 billion in Oct-Dec, mainly led by rise in finance costs and impairment on financial instruments.
On the asset quality front, the consolidated gross non-performing assets ratio increased to 1.12% as on Dec. 31 from 1.06% a quarter ago. The consolidated net NPA ratio was 0.48% as on Dec. 31 against 0.46% a quarter ago. Loan losses and provisions in Oct-Dec were INR 20.43 billion compared with INR 12.48 billion a year ago.
In Oct-Dec, net increase in stage-2 and stage-3 assets was INR 6.08 billion. Net growth in stage-2 and stage-3 stabilised, the company said. "Stage-2 assets increased by INR 1.01 billion and stage-3 assets increased by INR 5.07 billion. The company continues to take proactive risk actions by cutting segments and pruning exposures," it said. The provisioning coverage ratio was 57% as on Dec. 31.
According to an analysis by the company, customers having three or more live unsecured loans showed higher propensity to default and lower collection efficiencies. In view of this, the company has reduced the share of such customers in new disbursements in line with pre-COVID levels, the company said.
The deposit book of the company grew 19% on year to INR 687.97 billion as on Dec. 31. In Oct-Dec, the deposits grew by INR 26.66 billion. Deposits accounted for 20% of the consolidated borrowings as of Dec. 31, the company said in the investor presentation. Cost of funds fell by 1 basis point on quarter to 7.96% in Oct-Dec. Liquidity buffer for the non-bank lender stood at INR 136.56 billion as on Dec. 31.
Bajaj Finance has given a long-term guidance of 25-27% for growth in assets under management and 23-24% growth in profit, it said in the investor presentation. Guidance by the company for gross non-performing asset ratio is in the range of 1.2%-1.4% and for net NPA ratio 0.4-0.5%.
Recently, the company announced a strategic partnership with Bharti Airtel, which will offer Bajaj Finance's retail and MSME products on its Airtel Thanks App. "To start with, two products of Bajaj Finance have been piloted on the Airtel Thanks App. By March 2025, nine products of Bajaj Finance will be available to customers on the Airtel Thanks App. BFL (Bajaj Finance) and Airtel will enable more products through FY26," according to the investor presentation.
During the quarter, the bank also discontinued its co-branded credit card business with RBL Bank and DBS Bank India. The company earned distribution fees and a revenue share under the cobrand arrangement. "This decision will not affect existing cardholders, who will continue to receive services from the respective banks as usual. The discontinuation will not impact the company's future revenue share from this arrangement," the presentation said. The cards-in-force under co-branded credit cards stood at 3.7 million as of Dec. 31.
In Oct-Dec, the company added 5.03 million customers to its franchise. In the nine months ended December, the company added 13.48 million customers and estimates new customer addition to be 17 million by the end of the current financial year.
Among the subsidiaries, Bajaj Housing Finance's home loan assets under management grew by 26% on year to INR 1.08 trillion as on Dec. 31. The net interest income of the company grew 25% on year to INR 8.06 billion and the profit after tax grew 25% to INR 5.48 billion. Bajaj Financial Securities Ltd.'s margin trading facility assets under management rose 70% on year to INR 53.92 billion as on Dec. 31.
On the National Stock Exchange, shares of Bajaj Finance closed 2% higher at INR 7,759.65 on Wednesday. End
Edited by Ashish Shirke
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