Bajaj Finance Q2 results: Net profit at Rs 4,041 crore, misses estimates

India's Bajaj Finance reported a smaller-than-expected second-quarter profit on Tuesday as it set aside more funds for potential bad loans.

The company reported a consolidated profit after tax of Rs 4,014 crore ($477.6 million) in the three months to Sept. 30.
Analysts, on average, had expected Rs 4,343 crore, as per estimates compiled by LSEG.

Consolidated numbers include the non-banking financial company's (NBFC) subsidiaries, Bajaj Housing Finance and Bajaj Financial Securities.

While demand for consumer credit - including credit card spends - has remained strong over the last few quarters, the quality of lenders' unsecured loans is showing signs of stress due to continuing pressure on cash flows in certain segments, India Ratings said earlier this month.

Bajaj Finance's loan losses and provisions grew 77% on-year to Rs 1,909 crore.

Its gross non-performing asset ratio - the ratio of bad loans to total lending - deteriorated to 1.06% at the end of September, from 0.91% a year earlier.

The NBFC has been grappling with elevated losses in the last few quarters, especially in the personal loan segment in rural regions. It reported lower-than-expected profit in the first quarter as well, hurt by higher funds set aside to cover potential bad loans.
 

Its interest income rose nearly 28% to Rs 14,987 crore, driven by a 29% year-on-year rise in its assets under management.

Net interest income, the difference between interest earned and paid on borrowings, grew 23% to Rs 8,838 crore.

Shares of the company ended 1.5% lower ahead of the results.