Bajaj Finance Q3 results: Profit falls on slow loan growth, high provisions

Consumer lending company Bajaj Finance said its net profit declined 29% in the third quarter as loan growth remained weak and the firm had to also reverse some interest income.

Profit shrank to Rs 1,146 crore from Rs 1,614 crore a year ago. New loans booked during the quarter at 6.04 million were lower than the 7.67 million a year ago. Total assets under management dropped 1% to Rs 1.43 lakh crore from Rs 1.45 lakh crore a year earlier.

Bajaj Finance's gross NPA stood at 0.55% down from 1.61% a year ago. However, if not for the Supreme Court stay on the classification of new NPAs, gross NPA would have been 2.86%. Such accounts have been classified as stressed stage 3 and provided accordingly, the company said. Provisioning coverage ratio as of 31 December 2020 was 65%.

"Loan losses and provisions for Q3 FY21 were Rs 1,352 crore as against Rs 831 crore in Q3 FY20. During the quarter, the company has done a one-time write-off of principal outstanding of Rs 1,970 crore and interest outstanding of Rs 365 crore on account of Covid-19 related stress,” Bajaj Finance said. “The company holds a management overlay provision of Rs 800 crore as of 31 December 2020 for Covid-19 related stress."

Net Interest Income (NII) fell 5% to Rs 4,296 crore in December 2020 as against Rs 4,535 crore in a year ago due to a reversal of interest income of 450 crore versus Rs 83 crore last year and a higher cost of liquidity surplus at Rs 213 crore versus Rs 83 crore in December 2019.

The company's total customer franchise stood at 46.31 million as against 40.38 million as of 31 December 2019. It acquired 2.19 million new customers in this fiscal compared to 2.46 million in the same period last year.

During the quarter, the company, as a matter of prudence, has written off principal and interest amounts (including capitalised interest) of less than Rs 1,970 crore and around Rs 365 crore respectively, of potentially unrecoverable loans, which were under moratorium, by utilising the available expected credit loss provision.