Bajaj Finserv reported a slight decline in net profit for the October-December quarter, to ₹2,229 crore, down from ₹2,231 crore in the same period last year. However, the company’s revenue increased by 23% to ₹39,708 crore.
The decline in performance was attributed to Bajaj Finance’s increased provisioning and charges related to the new labour codes. To bolster its balance sheet resilience, Bajaj Finance enhanced its provisioning framework by implementing a minimum Loss Given Default (LGD) floor across all its businesses. Consequently, an accelerated Expected Credit Loss (ECL) provision of ₹1,406 crore was recorded. Additionally, Bajaj Finserv and its subsidiaries accounted for a one-time charge of ₹379 crore due to the new labour codes. The overall net impact on consolidated profit for Bajaj Finserv amounts to ₹540 crore from the accelerated ECL provision and ₹167 crore from the new labour codes.
7.7% increase in net profit for the quarter
Bajaj General Insurance experienced a 7.7% increase in net profit for the quarter, reaching ₹399 crore before factoring in the one-time impact of the new labour codes amounting to ₹31 crore. The gross direct premium income rose by 11.7%. Excluding large-scale tender-driven crop and government health business, the growth in gross direct premium income was 17.7%, compared to the industry growth of 20.2%. The growth was driven by the motor and health segments, although it was partially offset by a decline in the crop insurance. The gross written premium increased by 11.5% to ₹7,389 crore.
In the Bajaj Life Insurance segment, the gross written premium surged by 23.5% to ₹7,854 crore. The company stated that these financial results align with its strategy, which began mid-last year, focusing on sustainable and profitable growth. The value of new business (VNB) skyrocketed by 59.4% to ₹405 crore, with a New Business Margin (NBM) of 16.4%, marking the highest level seen in the past decade on a year-to-date basis. Retail protection grew by 47%, and renewal growth was also positive for the quarter.
Loss of ₹31 crore
The life insurance business faced a setback due to a one-time impact of ₹43 crore associated with the new labour code, resulting in a loss of ₹31 crore compared to a profit of ₹222 crore in Q3FY26. Revenue in this segment saw an 11% decline to ₹6,157 crore. Bajaj is also in the process of establishing a pension fund management business and a branch in the Gift City. The company has initiated the process of regulatory approvals for this.
Bajaj Finserv, together with its promoter group entities, Bajaj Holdings & Investment and Jamnalal Sons Private, completed the acquisition of a 23% equity stake held by Allianz SE in its two insurance subsidiaries: Bajaj General Insurance (formerly Bajaj Allianz General Insurance Company) and Bajaj Life Insurance (formerly Bajaj Allianz Life Insurance Company). Bajaj Finserv acquired a 1.01% equity stake for ₹939.29 crore, bringing its total equity stake to 75.01% in each of the insurance subsidiaries. The Bajaj Group now collectively holds a 97% equity stake in both companies. The boards of Bajaj General and Bajaj Life have approved a buyback offer for the remaining 3% equity stake held by Allianz SE in each company.