Home / Companies / Company Results /  Bajaj Finance Q2 net profit drops to 965 crore

Bajaj Finance today reported a dip in net profit its September quarter as the lender almost tripled provisions for bad loans as the coronavirus pandemic impacted demand for credit and borrowers’ ability to repay.. Net profit fell to 965 crore as compared to the 1,506 crore in the year-ago period. Loan losses and provisions for second quarter ended September 30, 2020, was 1,700 crore as against 594 crore in Q2 FY20. Consolidated assets under management rose to 137,090 crore as compared to 135,533 crore in the year-ago period.

Rajiv Mehta, Lead Analyst - Institutional Equities at Yes Securities, said: "Operational results being better than expectations and credit cost moving in-line imply that earnings estimates may remain unchanged or marginal revised higher. We retain positive stance and believe that Management commentary on growth rebound would be most critical for incremental valuation re-rating."

Other highlights of Bajaj Finance Q2 results

New loans booked during Q2 FY21 were 3.62 million as against 6.47 million in Q2 FY20.

Customer franchise as of 30 September 2020 stood at 44.11 million as against 38.70 million as of 30 September 2019.

Liquidity surplus as of 30 September 2020 stood at 22,414 crore as against 8,107 crore as of 30 September 2019.

Net Interest Income for Q2 FY21 was up by 4% to 4,165 crore from 4,000 crore in Q2 FY20.

With the onset of COVID-19 pandemic, the company had taken significant measures to reduce operating expenses in April 2020. As a result, total operating expenses for Q2 FY21 was down by 16% to 1,160 crore from 1,384 crore.

Gross NPA and Net NPA as of 30 September 2020 stood at 1.03% and 0.37% respectively, as against 1.61% and 0.65% as of 30 September 2019.

The provisioning coverage ratio as of 30 September 2020 was 64%.

"Hon'ble Supreme Court, in a public interest litigation (Gajendra Sharma Vs. Union of India & Anr), vide an interim order dated 3 September 2020, has directed that accounts which were not declared NPA till 31 August 2020 shall not be declared as NPA till further orders. Accordingly, the Company has not classified any accounts which were not NPA as of 31 August 2020, as per RBI norms, as NPA after 31 August 2020. However, if the company had classified borrower accounts as NPA after 31 August 2020, the Company's Gross NPA and Net NPA ratio would have been 1.34% and 0.56% respectively," Bajaj Finance said.

Capital adequacy ratio (including Tier-II capital) as of 30 September 2020 stood at 26.64%. The Tier-I capital stood at 23.01%.

Bajaj Finance shares were down 0.55% in afternoon trade as compared to 0.12% dip in Sensex.

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