Bajaj Finance Q3 net profit surges 40% to Rs 2,973 crore, meets estimates

The average estimate of a poll of five brokerages by Moneycontrol had put Bajaj Finance’s net profit at Rs 2,928 crore

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Bajaj Finance Ltd reported on January 27 a consolidated net profit of Rs 2,973 crore, a jump of 40 percent year-on-year (YoY) for the December quarter, largely in line with analysts’ expectations.

The average estimate of a poll of five brokerages by Moneycontrol had put the lender’s net profit at Rs 2,928 crore for the quarter compared with Rs 2,125 crore reported in the corresponding quarter a year ago.

On a standalone basis, the non-bank finance company's net profit grew by 36 percent to Rs 2,624 crore.

The net profit surge comes on the back of a healthy growth in disbursements that lifted net interest income by 24 percent to Rs 7,435 crore for the December quarter.

In an early update on its quarterly business performance, Bajaj Finance had said that it added 3.1 million new customers during the quarter, which was 21 percent higher than a year ago and 19 percent up sequentially. This was the highest-ever new customer accretion for the lender.

At the same time, the lender reported that new loans added were 7.8 million, a modest growth of 5 percent year-on-year.

AUM growth drivers

In its update, the lender had also said that its asset under management (AUM) grew 27 percent to Rs 2.3 lakh crore from Rs 1.8 lakh crore in the December quarter of FY22. The AUM growth came in as a disappointment to investors and the shares of the lender have corrected more than 10 percent so far this month.

Though Bajaj Finance added record customers during the December quarter, loan accretion and modest AUM growth point to a smaller ticket sizes.

The fastest-growing segments based on AUM growth were loans against securities, loans to small businesses and commercial lending. All these segments grew 33-46 percent. Commercial lending and loans against securities form just 6 percent of the total loan book of the company. Two and three-wheeler finance was the slowest segment with a growth of just 11 percent year-on-year.

Mortgage loans that form 32 percent of the total book grew by a healthy 26 percent.

Asset quality

Another boost to the bottomline was from the decline in gross non-performing assets and reduction in loan loss provisioning. Bajaj Finance reported a gross bad loan ratio of 1.14 percent, down from 1.73 percent a year ago. Loan loss provisions declined 20 percent to Rs 841 crore for the December quarter. Bad loans on a net basis were 0.41 percent of the total loan book, down from 0.78 percent a year ago.