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Bajaj Finserv Q4 PAT tumbles 77% on contingency provision, MTM adjustment

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Bajaj Finserv's consolidated net profit slumped 76.81% to Rs 194.43 crore on 2.30% rise in total income to Rs 13,294.25 crore in Q4 March 2020 over Q4 March 2019.

Profit before tax (PBT) stood at Rs 792.90 crore in Q4 FY20, down by 62.77% from Rs 2,130.07 crore in Q4 FY19.

Bajaj Finserv (BFS) is the holding company for the various financial services businesses under the Bajaj group. BFS holds 52.82% stake in Bajaj Finance and 74% stale in Bajaj Allianz General Insurance Company and Bajaj Allianz Life Insurance Company.

Bajaj Finance's profit after tax (PAT) for Q4 FY20 stood at Rs 948 crore in Q4 March 2020, down by 19.38% from Rs 1,176 crore in Q4 March 2019. It has made a pre-tax provision of Rs 900 crore in the form of contingency provision on account of the impact of COVID-19.

Bajaj Allianz General Insurance Company's net profit surged 266.26% to Rs 304 crore in the fourth quarter of the fiscal compared to Rs 83 crore a year ago, mainly on account of higher underwriting profits.

Bajaj Alianz Life Insurance Company's shareholders' profit after tax dropped 66.07% to Rs 38 crore in Q4 FY20 from Rs 112 crore in Q4 FY19, mainly due to lower policyholders' surplus arising from higher group claims and lower investment income.

Further, the spread of the COVID-19 pandemic resulted in a sudden and steep fall in the value of shares traded on the stock exchanges. Accordingly, Bajaj Finserv's insurance subsidiaries have chosen to hold equity securities as fair value through profit and loss account and therefore, the insurance companies had an unrealised mark-to-market (MTM) pre-tax loss of Rs 768 crore in the consolidated financials.

"The MTM adjustment and the contingency provision, together considered as COVID-19 impact, after adjusting for tax and the company's interest in those subsidiaries have impacted consolidated profit after tax of BFS for Q4 and FY20 by 807 crore," the company said in a statement.

Bajaj Finserv's consolidated net profit rose 4.66% to Rs 3,369.13 crore on 27.56% jump in total income to Rs 54,351.47 crore in the year ended March 2020 (FY20) over the year ended March 2019 (FY19). PBT stood at Rs 8,301.66 crore in FY20, up by 1.80% from Rs 8,154.74 crore in FY19.

"Faced with COVID-19 and the lockdown, the company and its subsidiaries took immediate steps to handle this force majeure situation. The situation is still evolving and it is difficult to hazard a guess on how this pandemic will evolve. The company and its subsidiaries will be focusing on profitability over growth, seeking to conserve cash, borrowing long-term, strengthening collections, reducing overheads and preserving capital adequacy", the financial services company said.

Shares of Bajaj Finserv fell 3.64% to Rs 4,537.75 on Thursday. The stock hit a high of Rs 4735.85 and a low of Rs 4520 in intraday trade.

The stock has lost 4.93% in the past one month while the S&P BSE Finance index has lost 6.95% during the same period.

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, May 21 2020. 16:14 IST
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