Bajaj Finance on Tuesday reported an 85% year-on-year increase in its consolidated profit after tax at Rs 2,125 crore in the October-December quarter, which is its highest ever. The company also reported its highest ever quarterly core AUM growth of Rs 14,700 crore during the December quarter. Assets under management to grew by 26% to Rs 1,81,250 crore. Net interest income for Q3FY22 increased by 40% to Rs 6,000 crore, as against Rs 4,296 crore in Q3FY21.
The operating expenditure to NII ratio for Q3FY22 was 34.7%. The company estimates opex to NII metric to normalise to 33-34% in Q4. The Bajaj Finance board on Tuesday approved infusion of Rs 2,900 crore in its housing finance and securities business subsidiaries, Bajaj Housing Finance (BHFL) and Bajaj Financial Securities (BFinsec). BFL will be infusing Rs 2,500 crore of equity share capital in BHFL to support its capital needs for next 24 months.
The company would also be infusing Rs 400 crore of equity share capital in BFinsec to support its two-year growth plan.Loan losses and provisions during the December quarter was Rs 1,051 crore, as against Rs 1,352 crore in Q3FY21. During the quarter, the company increased management overlay provision from Rs 832 crore as of September 30, 2021, to Rs 1,083 crore to protect itself from probable losses arising out of third wave.
During the quarter, the company has done accelerated write-offs of Rs 163 crore of principal outstanding on account of Covid-19 related stress. The company holds a management and macro-economic overlay of Rs 1,083 crore as of December 31, 2021.Given continued uncertainty of Covid waves, the company said it intends to exit FY22 with sufficient management overlay provisions.
The company expected its loan loss and provision to be in the range of Rs 4,800 5,000 crore for FY22.Gross non performing assets (NPAs) and net NPA as of December 31, 2021 stood at 1.73% and 0.78% respectively, as against 2.45% and 1.10% as of September 31, 2021. The company has provisioning coverage ratio of 56% on stage 3 assets and 156 bps on stage 1 and 2 assets as of December 31, 2021.The company said cost of funds had reduced to 6.72% in Q3FY22 as against 6.77% in Q2 FY22. In Q3, the company raised Rs 2,722 crore of NCDs in 3 years and above tenor. This included Rs 2,117 crore raised in 10 year and above tenor.
The company booked 7.44 million new loans in the December quarter, as against 6.04 million in Q3FY21. Bajaj’s customer franchise grew by 20% to 55.36 million, as of December 2021 as compared to 46.31 million as of December 2020. The company’s customer franchise increased by 2.56 million in Q3FY22 as compared to 2.19 million in Q3FY21.Rajiv Jain, managing director, Bajaj Finance, said competitive intensity across products had increased rapidly post second covid wave, but the company has been able to protect its margin profile across businesses. He said the company had a very good quarter with across the board improvement in all metrics.
“The company is well prepared to navigate wave 3 given strong management overlay provisions and significantly improved stage 2 and 3 assets”. AUM composition remained steady as there was no impact on business momentum seen in the first 17 days of January 2022 and if the third wave does not create disruption, company expected Q4 and full year AUM growth to remain strong, Jain said.
With increase in adoption of new app, the annual customer franchise addition should accelerate to eight to nine million as against earlier guidance of seven to eight million, he said. The company’s digital platform has gone live and it plans to transition all consumers to the new digital platform from February onwards.