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Photo: iStock
Photo: iStock

Bajaj Finance Q2 net profit drops 36% on higher provisioning

  • Gross non-performing assets stood lower at 1.03% of its total loan book during the period under review following the Supreme Court’s order of not classifying customers as NPA after 31 August

MUMBAI : India’s largest non-bank lender Bajaj Finance Ltd on Wednesday reported a 36% fall in consolidated net profit at 965 crore in the September quarter on higher provisioning. It had posted a net profit of 1506 crore in the corresponding period of 2019-20.

The provisions rose 181% to 1635 crore as on 31 September compared to 581 crore during the same period last year.

Gross non-performing assets stood lower at 1.03% of its total loan book during the period under review following the Supreme Court’s order of not classifying customers as NPA after 31 August. In the absence of the court’s standstill, gross bad loans would have been higher at 1.34%.

The NBFC saw a 1% year on year growth in Assets under management to 1.37 lakh crore during the second quarter. The company estimates an AUM growth of 6-7% for fiscal year 2021.

Speaking to analysts, Rajiv Jain, managing director and chief executive officer of Bajaj Finance said that he expects more mortgage and auto loans getting restructured.

The non-bank lender converted 1,750 crore of term loans into flexi loans to provide customers the flexibility of lower repayment and higher prepayment. In the previous quarter, the company had said that it would allow more flexibility to customers with good credit history to switch to flexi loans, offering to service only the interest cost for a time period. As of 31 September, Jain said that the overall flexi loan portfolio stood at 43,000 of which 8600 crore was converted in the first quarter and 1700 crore in the second quarter.

Bajaj Finance's loan disbursements stood at 62% of last year’s volume. The company said that it restarted originating loans and has booked 3.62 million customers during the second quarter compared to 6.72 million in the corresponding period of the previous fiscal. The company is expecting to reach February 2020 loan origination levels by April 2021.

The NBFC also said that it has started to gradually roll back some of its cuts on operating expense. It has reinstated its quarterly incentive plans for its staff from Q3 onwards. However, call center optimization, freeze on travel, advertising & promotion and deferred physical trainings etc will continue in Q3 as well.

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