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Bajaj Finance Ltd on Tuesday ruled out any possibility of becoming a universal bank and, instead, said it has set its eyes on building a full-fledged payments and financial services business in the next 2-3 years. 

“Whatever I understand from shareholders, our view is we are focussed on building financial services business to payments and finance business, and will continue to remain a non-bank and meet all bank like regulations over the next 2-3 years. We would like to reach 100 million customer franchise in next five years," Bajaj Finance managing director Rajeev Jain told analysts during an earnings call.

The company reported 80% year-on-year (y-o-y) growth in consolidated net profit to 2,420 crore in the fourth quarter on account of lower provisions and higher core income. Net profit for the corresponding period of last year stood at 1,347 crore. 

Jain also said the firm will launch its super app by 1 May. It will also build a new web platform to be rolled out over the course of the year. This is part of the omnichannel distribution channel, wherein customers will be able to switch seamlessly between physical and online stores to make payments, transfer funds, borrow, and invest across different channels.  “Phase 1 of web platform will go live by October 2022 and phase 2 by March 2023. Post-implementation of both phases, customers will get full-service platform-agnostic experience (commence on app, conclude on web and vice versa)," he added. 

Due to significant investments for the digital initiatives, Bajaj Finance has seen operating expense to net interest income (NII) remaining elevated at 34.6%. Jain said the company continues to invest in teams and technology for business transformation. It expects operating expenses to remain at 34.5-35.5% in FY23. However, he said the investments will not be at the cost of profitability. 

Its core income growth, however, remained strong with NII growing by 30% y-o-y to 6,068 crore in the March quarter. The other large component of its revenue was in the form of fees and other income of 1,164 crore, up 51% from a year ago. The consolidated results include the results of its wholly-owned subsidiaries, Bajaj Housing Finance Ltd (BHFL) and Bajaj Financial Securities Ltd (BFinsec).

Its new-loans book grew 15% year-on-year to 6.28 million in Q4 FY22. Among the fastest-growing segments were the loan against securities segment, which grew at 79%, rural business-to-business lending at 43% and commercial lending at 39%. Its total deposits stood at 30,290 crore, up 19% from the corresponding period of last year.

The management said asset quality was back to pre-covid levels. Its gross non-performing asset (NPA) as a percentage of total assets stood at 1.6% in March, compared to 1.73% on 31 December 2021. Provisioning coverage ratio stood at 58%. The company said it has not availed the deferment that Reserve Bank of India (RBI) has allowed till 30 September with regards to upgradation of NPA accounts. Its loan losses and provisions fell 79% y-o-y to 702 crore in Q4 FY21. As of 31 March, it had a liquidity buffer of 10,110 crore. 

On RBI’s recent credit card rules, Jain said the company is studying these guidelines but remains committed to all co-branded partners including DBS Bank and RBL Bank.

Bajaj Finance’s board of directors has recommended a dividend of 20 per share on a face value of 2 (1000%) for FY22. The scrip closed at 7,240 apiece, up 3.3% from the previous day’s close.

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