Bajaj Finance's Q1 standalone net down 3% on higher loan loss provisions

On a consolidated basis, its net profit was down 4% to Rs 1,002 cr

Consumer financier Bajaj Finance reported a 3 per cent decline in net profit on a standalone basis in the April-June quarter of FY22 compared to the same period a year ago due to higher loan loss provisions.  

In Q1FY22, it posted a net profit of Rs 843 crore as against Rs 870 crore in Q1FY21. However, on a consolidated basis, its net profit was up 4 per cent to Rs 1,002 crore in Q1FY22 compared to Rs 962 crore in the year-ago period. 

Loan loss provisions of the lender rose 5 per cent to Rs 1,741 crore in the reporting quarter as against Rs 1,641 crore in Q1FY21. In the previous quarter, the lender’s loan loss provisions were to the tune of Rs 1,231 crore.

The standalone net interest income of the lender was up 6 per cent to Rs 4,153 crore in Q1FY22 as against Rs 3,197 crore in Q1FY21, with interest income reversal for the quarter being Rs 444 crore as compared to Rs 297 crore in Q1 FY21. The asset under management (AUM) of the lender has grown by 12 per cent to Rs 1.19 trillion on a standalone basis. On a consolidated basis, the AUM of the lender was up 15 per cent to Rs 1.59 trillion.

The core AUM growth in Q1 FY22 was approximately Rs 4,100 crore. But, in the absence of a third wave, the company expects its quarterly AUM growth rate for the balance of the year to be at pre-covid levels.

It booked 4.63 million loans in the April - June quarter of FY21 as against 1.75 million, despite the second wave of the pandemic resulting in localised lockdowns all over the country to check the spread of the virus.

“It was a muted quarter impacted by severe second wave of pandemic. Both businesses and debt management efficiencies were affected due to strict lockdowns across most parts of India”, the company said.

The lender acquired 1.88 million new customers in Q1 FY22 taking the total customer franchise to 50.45 million as of 30 June 2021, a growth of 17 per cent YoY.

In its investor presentation, the lender said, the second wave caused a marginal increase in EMI bounce rate in Q1FY22 over Q4FY21. The average EMI bounce rate in Q1FY22 was approximately 1.08x of Q4 FY21. However, the bounce rate for July 2021 has improved to 0.96x of Q4 FY21.

As far as asset quality is concerned, gross NPAs of the lender went up 117 basis points to 2.96 per cent as of June 30, 2o21 and net NPAs went up 71 basis points to 1.46 per cent. “The second wave resulted in significantly subdued debt management efficiencies leading to higher stage 2 & 3 assets,” the lender said. On an absolute basis, gross NPAs of the lender increased by Rs 2,006 crore, with auto finance being the worst affected segment.

Its restructuring book stood at Rs 1,287 crore at the end of the June quarter compared to Rs 1,739 crore in the March quarter. “The company has considered one-time resolution (OTR) as an indicator of the significant increase in credit risk and as a matter of prudence classified it as Stage 2. The company holds provisions of Rs 235 crore against the OTR book,” it said.

In absence of a severe third wave, the lender has said it will bring down its GNPA to 1.7-1.8 per cent and NNPA to 0.7-0.8 per cent by March 31, 2022. Accordingly, it has estimated and overall credit cost for the year (FY22) to be Rs 4,200-4,300 crore.