Bajaj Finance climbs after Q4 results

Bajaj Finance advanced 1.16% to Rs 1990.15, extending gains for the second day after Q4 earnings.

Shares of the financier have added 2.58% in two sessions from its recent closing low of Rs 1,940 on 18 May 2020.

Bajaj Finance's consolidated net profit declined 19% to Rs 948 crore on 36% increase in total income to Rs 7,231 crore in Q4 March 2020 over Q4 March 2019. The result was announced after market hours on Tuesday (19 May)

On a consolidated basis, profit before tax (PBT) stood at Rs 1,278 crore in Q4 FY20, down by 29% from Rs 1,812 crore reported in Q4 FY19. Net interest income jumped 38% to Rs 4,684 crore in Q4 FY20 over Q4 FY19. Total operating expenses in the fourth quarter increased 25% to Rs 1,452 crore from Rs 1,164 crore in the corresponding period last year. New loans booked during Q4 FY20 increased by 3% to 6.03 million from 5.83 million in Q4 FY19.

Loan losses and provisions for Q4 FY20 was Rs 1,954 crore as against Rs 409 crore in Q4 FY19. During the quarter, the company has taken an accelerated charge of Rs 390 crore for two identified large accounts, an additional provision of Rs 129 crore on account of recalibration of its ECL model and a contingency provision of Rs 900 crore for COVID-19. Adjusted for these additional provisions of Rs 1,419 crore, loan losses and provisions for Q4 FY20 was Rs 535 crore.

The company said it continued to maintain strong focus on growing fees and other income. Fees and other income in Q4 FY20 grew by 45% YoY to Rs 929 crore in Q4 FY20 from Rs 642 crore in Q4 FY19.

The financier's gross non-performing assets (NPAs) stood at Rs 2,363 crore as on 31 March 2020 as against Rs 2,354 crore as on 31 December 2019 and Rs 1,804 crore as on 31 March 2019.

The ratio of gross NPAs to gross advances stood at 1.61% as on 31 March 2020 as against 1.61% as on 31 December 2019 and 1.54% as on 31 March 2019.

The ratio of net NPAs to net advances stood at 0.65% as on 31 March 2020 as against 0.70% as on 31 December 2019 and 0.63% as on 31 March 2019.

The NBFC's consolidated net profit jumped 32% to Rs 5,264 crore on a 43% rise in total income to Rs 26,386 crore in in the year ended March 2020 (FY20) as against the year ended March 2020 (FY19). PBT stood at Rs 7,322 crore in FY20, up by 18% from Rs 6,179 crore reported in FY19.

Assets under management (AUM) grew by 27% to Rs 147,153 crore as of 31 March 2020 from Rs 115,888 crore as of 31 March 2019.

Due to Covid-19 pandemic and the consequent lockdown, the company lost 10 productive days in Q4 FY20 resulting in lower acquisition of nearly 1.0 million loan accounts and lower AUM of approximately Rs 4,500 crore. Adjusted for the impact of lockdown, AUM growth would have been 31%.

The company said it is well capitalised with CRAR of 25.01% as at 31 March 2020. The company reported overall liquidity surplus of approximately Rs 15,725 crore as of 31 March 2020 on consolidated basis. The company's liquidity surplus as of 15 May 2020 was approximately Rs 20,900 crore.

"Start of Q4 FY20 was quite promising aided by various fiscal measures implemented by the GoI in Q2-Q3 supported by good monsoon. Economy was clearly on the mend in Q4. However, due to sudden and unprecedented Covid-19 pandemic, India was under full lockdown and thus the company lost 7-8 productive days of March. Despite this, Q4 was a good quarter with growth in assets, new loans, new customer acquisition and franchise," the company said in earnings release.

"In these unprecedented times, the company is focused on capital preservation, balance sheet protection and operating expenses management. The firm has healthy capital adequacy, strong liquidity position, low gross and net NPA, access to retail deposits, large mass affluent customer franchise, diversified portfolio mix, granular geographical distribution and strong risk management orientation. As a result, the company is confident of navigating the challenges posed by Covid-19," it added.

Bajaj Finance is engaged in lending and allied activities. It focuses on consumer lending, small and medium-sized enterprises (SME) lending, commercial lending, rural lending, fixed deposits and value-added services.

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