See AUM around Rs 13000cr by Q4-end: Bajaj Finance

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See AUM around Rs 13000cr by Q4-end: Bajaj Finance

In an interview to CNBC-TV18, Rajeev Jain, chief executive officer of Bajaj Finance says, the third quarter has been excellent. According to him, demand has slowed down. “The overall competitive environment remains benign. That is helping us continue to hold our guidance of close to Rs 13,000 crore of AUM by end of Q4,” he adds.

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Bajaj Finance reported a robust 58%, year-on-year, growth in net profit to Rs 120 crore for the third quarter ended December 31, 2011. The company's net interest income rose by 39% to Rs 396 crore.

In an interview to CNBC-TV18, Rajeev Jain, chief executive officer of Bajaj Finance says, the quarter has been excellent. According to him, demand has slowed down. "The overall competitive environment remains benign. That is helping us continue to hold our guidance of close to Rs 13,000 crore of AUM by end of Q4," he adds.

Also read: Bajaj Fin Q3 net up 58% at Rs 120cr on higher loan growth

Below is the edited transcript of his interview with CNBC-TV18's Latha Venkatesh and Gautam Broker. Also watch the accompanying video.

Q: Can you take us through the quarter? How was loan growth and more importantly how did the margins pan out?

A: The quarter has been excellent. The street expectations was Rs 100 crore PAT and we have delivered Rs 120 crore.

We ended the quarter with Rs 11,900 crore of assets under management (AUM), net interest income (NII) has held on. Net interest margins (NIMs) are a little lower because the interest expenses have risen significantly larger than the growth in NIMs, expected though, much lower than our peer group competitive players as well.

Q: How much did your cost of money go up in the Q3 compared to either Q2 or the year ago? What were the margins?

A: The interest income was up 53%, whereas the interest expenses were up 99% YoY. Despite that, the overall NII has come in at healthy 40% plus.

Our overall loan loss provisioning is down 20% on year-on-year basis. On an absolute level as well as at net NPA level, we have ended the quarter with net NPA of 25 basis points. That is amongst the lowest that we have ever had probably and clearly the lowest in the last five years.

The overall credit performance, across the line of businesses, continues to board exceedingly well. So, as the interest rate cycle turns and interest costs start to taper off, hopefully in the next two-three quarters, if our portfolio performance holds, we should have a reasonably strong next year as well.

Q: As the rate cycle is turning, do you expect to be able to improve upon the current margins? Asset quality, are you seeing stable trends and also the outlook on disbursement?

A: We have just one quarter to go. Has the demand slowed? The answer is yes, but not in line with what we estimated it to be. The overall competitive environment remains benign. That is helping us continue to hold our guidance of close to Rs 13,000 crore of AUM by end of Q4.

Margins have held on. The pass through has been complete, which has been so for the last two quarters. Because of benign competitive environment, we are not seeing much problem on the demand side. But Q4 will be a test of what level of demand would slow. So, there is still a small question mark on the Q4 on the overall demand side.