Bajaj Finance Q1 net profit drops 19 pc to Rs 962 cr on higher provisioning

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Published: July 21, 2020 4:05 PM

Bajaj Financial Securities (BFinsec) posted a net loss of Rs 1.82 crore in Q1 FY21, while the total income stood at Rs 2.52 crore.

Bajaj Finance said the COVID-19 pandemic and the consequent lockdown has considerably impacted the group’s business operations for the quarter ended June 2020.

Bajaj Finance on Tuesday reported a 19 per cent fall in consolidated net profit at Rs 962.32 crore for the first quarter of the current fiscal on higher provisioning. The company had posted a net profit of Rs 1,195.25 crore during the corresponding April-June period of the previous fiscal 2019-20.  Sequentially, the net profit was higher compared to Rs 948.10 crore in the quarter ended March 2020.

Total income (consolidated) rose to Rs 6,649.74 crore in the quarter ended June 2020 from Rs 5,807.76 crore in the same period a year ago, Bajaj Finance said in a regulatory filing. Net interest income for the quarter rose by 12 per cent to Rs 4,152 crore from Rs 3,694 crore. The consolidated financial results include earnings from Bajaj Housing Finance and Bajaj Financial Securities — which are the two fully-owned subsidiaries of the company.

Bajaj Finance said the COVID-19 pandemic and the consequent lockdown has considerably impacted the group’s business operations for the quarter ended June 2020. “Apart from other adverse effects, the pandemic has also resulted in a significantly lower business acquisition and put constraints on recovery of overdues from customers during the quarter ended June 2020. Further…the group has offered EMI moratorium to its customers based on requests as well as on a suo-moto basis,” it said.

Loan losses and provisions for the quarter rose to Rs 1,686 crore as against Rs 551 crore earlier. The group has recognised an additional contingent expected credit loss provision of Rs 1,450 crore during the quarter, taking the overall contingent expected credit loss provision to Rs 2,350 crore as on June 30, 2020, it added. Besides, the group has reversed expected uncollectible component of capitalised interest amounting to Rs 219.51 crore charged on loans under moratorium based on the estimates and judgement of the company, it said.

Given the dynamic and evolving nature of the pandemic, these estimates are subject to uncertainty and may be affected by the severity, duration of the pandemic and other variables, it added. The non-banking financial company’s consolidated assets under management as on June 2020 rose by 7 per cent to Rs 1.38 lakh crore from Rs 1.29 lakh crore.

The company said it has restarted its urban B2B, rural B2B, auto finance, gold loans and loan against securities businesses from May 10, 2020 with stringent loan to value (LTV) and underwriting norms and focus on existing customers. It restarted its home loans and credit card distribution businesses from June 2020.

“The company deferred restart of other businesses viz. loan against property, SME, urban B2C, rural B2C and commercial businesses to July 2020 due to extension of moratorium. “Consolidated moratorium book has reduced to Rs 21,705 crore (or 15.7 per cent of AUM) from Rs 38,599 crore (27 per cent of AUM) as of 30 April 2020 owing to reduction in bounce rate coupled with better collection efficiency,” it said.

Bajaj Finance said its liquidity position remains very strong with overall liquidity surplus of approximately Rs 17,700 crore by the end of the first quarter of FY21. The liquidity surplus as of July 20, 2020 was approximately Rs 20,590 crore. On the assets front, the gross and net NPA ratio as of June 30, 2020 stood at 1.40 per cent and 0.50 per cent respectively, as against 1.60 per cent and 0.64 per cent as on June 30, 2019.

The standalone net profit of Bajaj Housing Finance registered a 31 per cent jump at Rs 92 crore during the quarter on an income of Rs 756 crore, up 47 per cent from a year ago. Bajaj Financial Securities (BFinsec) posted a net loss of Rs 1.82 crore in Q1 FY21, while the total income stood at Rs 2.52 crore. The subsidiary started broking operations in financial year 2019-20.

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