Subdued Q2 earnings on lower agri biz: Bajaj Finserv

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26 Aug, 2025 12:21

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Sanjiv Bajaj, managing director, Bajaj Finserv, says Q2 was flat for the company's general insurance business.

The company's net profit came in at Rs 441.1 crore versus a profit of Rs 316 crore.  (YoY)Sonia: Can you just take us through the performance this quarter and which are the segments that have done well? A: As you just mentioned our consolidated Profits after Tax (PAT) is up 40 percent to Rs 441 crore. Now Bajaj Finance continues to deliver very strong results. We have seen total income go up 37 percent to Rs 1,701 crore while PAT for Bajaj Finance went up 42 percent to Rs 279 crore. This is their highest ever PAT. So, record results from Bajaj Finance. The life insurance company has seen a lower top line. Our Gross written premium (GWP) fell from Rs 1,401 to 1,172 crore but shareholders PAT has more than doubled from Rs 103 crore to Rs 216 crore. Now of this roughly Rs 60 crore or so is the transfer of profit from policyholders to shareholders account which we used to do till last year only end of the year. This year as we have been saying from first quarter we are doing it every quarter. So, even if you adjust for that we have a growth in the bottom line for the life insurance company. The general insurance company has seen a rather flat quarter. Our gross premiums were up just two percent to Rs 1,500 crore whereas PAT was marginally down from Rs 145 crore to Rs 141 crore. The main reason for this because if you have seen the general insurance business has consistently grown at 10-12 percent quarter-on-quarter (Q-o-Q) but in the second quarter this year a large part of the agricultural insurance business was taken away through very aggressive pricing by government insurance companies. So, we wrote roughly about Rs 130 crore of lower agricultural insurance Q2 on Q2 and as a result we lost out on the reinsurance commission there. So, if I were to compare for example our claims ratio in Q2 it is actually lower than the previous year. It is at 72.9 percent versus 75.3 but the combined ratio is higher. So, we have lost out over there. Once again of course as we said these would still be the best numbers in the industry but compared to how the general insurance is performing earlier the performance was not great in this quarter too. So, effectively it is Bajaj Finance and the life insurance companies profits which have helped us on a consolidated basis take profits up by 40 percent. Anuj: So, for Bajaj Finance your gross NPA has stabilised after last quarter spike, but going forward do you think it can go back to the lower levels that used to exist two or three quarters back? A: When I compare whether from Q2 of this year where from 55 bps it has come down to 46 bps or even from Q2 of last year it has come down from 48 bps it has come down to 46 bps. There is as we can see a marginal decline. We also have done some accelerated provisioning in this quarter. So, if it weren\\'t for that this 46 bps would have been an even lower number. So, yes, it looks right now that this number could further go down a little bit but as we have always said it depends on the mix of business we write between our high return by the relatively riskier consumer loans and the SME and commercial loans which are lower in return relatively but also lower risk. So, it would really depend on the mix of these quarter-on-quarter.Sonia: Before I run out of time, I wanted to ask you about the fact that Insurance Regulatory & Development Authority (IRDA) has issued the final guidelines on Foreign Direct Investment (FDI) in insurance firms, what has the reaction of your own foreign partner been?A: The guidelines we issued some time back and since then as of yesterday IRDA has issued a clarification guideline on what control means and that is what a lot of foreign players naturally were concerned about. They wanted clarity. This of course applies not only if you are bringing in additional money to take your stake up but it also applies for existing companies even if they make no change, so it was important to get this clarity because if you go and talk to different people, you get different answers but since it is on paper now, I think it makes it very clear as we know the requirement of Indian ownership and control is in the act itself so IRDA has only clarified that and explained what it would mean and I think the clarification is very clear, it is very fair and in line with the act. This will make matters, my sense is, much easier to resolve, whether it is for our own partner or for any other joint venture (JV) as well.Sonia: Sure there is clarity now but some share holder agreements had given the foreign investor a veto power on many policy decisions even though their holding was restricted to 26 percent, but this has now been completely done away with. Will that in any way be viewed as a negative?A: To those foreign partners who had such rights, naturally they have lost those rights, but the point is they have not lost those rights after the IRDA clarification; they have lost those rights when the act got passed. There are benefits that they have gained as well, for example they have gained the right to go up to 49 percent. So, there are pros and cons but what is important is that there is clarity over it and based on that, partners have to decide. So for the power that you want and if somebody wants to be in India, they have no choice but to follow those guidelines, that is very clear.