Bajaj Finance on Thursday reported its highest-ever quarterly consolidated net profit at Rs 1,195 crore during the quarter ended June 30, up 43% from the year-ago period. The company had posted a net profit of Rs 836 crore a year ago. Net interest income increased 43% to Rs 3,695 crore from Rs 2,579 crore in Q1FY19. Consolidated assets under management grew 41% to Rs 1,28,898 crore. Given the sectoral challenges, the company has started off the year quit well and has added Rs 34,000 crore in new assets since September 2018 when the crisis hit the NBFCs. There was a granular growth and the 66% growth came from existing customers, said managing director Rajeev Jain.

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Loan losses and provisions for Q1FY20 was up by 69% to Rs 551 crore from Rs 327 crore in Q1FY19. Jain said the financial services company was making provisioning upfront and this was part of its prudent accounting methodology. New loans booked during Q1FY20 increased 29% to 7.27 million from 5.63 million in Q1FY19.
Gross NPA and net NPA stood at 1.60% and 0.64%, respectively, against 1.54% and 0.63% as of March 31, 2019. The provisioning coverage ratio as of June 30, 2019, was 61%. Gross NPAs have only moved by six basis points and net NPA by one basis point, Jain said.

Standalone profit after tax (PAT) grew 35% to Rs 1,125 crore, while net interest margin surged 40% to Rs 3,508 crore. Total income rose 40% to Rs 5,305 crore and total assets under management stood at Rs 1,07,949 crore.

$1.2-bn external borrowing plan

The financial services company is all set to raise around $1 billion to $1.2 billion through external borrowing in around September and October. Jain said this was part of the plan to diversify their liability and would take care of their requirement for the next two years growth plans. They are among the three to four NBFCs in the country that are currently able to raise resources, Jain pointed out. “We have not seen this kind of liquidity squeeze in the bond market. Such is the intensity of the crisis that nobody is able to raise long-term resources,” Jain said. “We raised Rs 4,500 crore in 15-year bonds indicative of the faith in the long term future of the company,” he said. Depending on how Q2FY20 goes, they will decide the external borrowing schedule but it would happen in this calendar year, Jain said.

DHFL default hits Bajaj Finserv PAT

Bajaj Finserv, the holding company for various financial services businesses under the Bajaj group, on Thursday reported a 2.3% growth in PAT to Rs 845 during Q1FY20 as the company’s two insurance companies took a hit owing to their exposure to Dewan Housing Finance’s default on fixed income securities. It reported a 40% rise in total income to Rs 12,272 crore. If it were not for the DHFL hit and the consequent provisioning that had to be made, the company said it would have made a profit of Rs 962 crore and it could have reported a 16% growth in profits.
While the Bajaj Allianz Life Insurance Company and Bajaj Allianz General Insurance Company recorded growth in premium, their profits were adversely impacted by provisioning for impairment on their holding of DHFL fixed income securities, Bajaj Finserv said.