21% increase in earnings for Bajaj Finance; RBI to consider limits

In the fourth quarter, Bajaj Finance’s consolidated net profit increased 21% year over year (y-o-y) to Rs 3,825 crore, helped by an increase in assets under management (AUM). This exceeds the Rs 3,785 crore that Bloomberg experts had predicted.

 

As of March 31, the non-bank lender’s AUM increased 34% year over year to Rs 3.3 trillion. In the March quarter, the lender recorded roughly 7.9 million new loans, an increase of 4% year over year. Because of the RBI’s limitations, the NBFC said that the amount of new loans booked in the March quarter was around 0.8 million less than expected.

Due to composition changes in its AUM, the net interest margin contracted by 21 basis points (bps) even though net interest income increased 28% year over year to Rs 8,013 crore. The company’s yearlyized return on assets was 4.84%, slightly less than 5.40% in the previous year.

However, as of March 31, the deposit book increased 35% year over year to Rs 60,151 crore.

Provisions for losses on loans were Rs 1,310 crore. From 0.94% to 0.85% in the previous year, the gross non-performing asset ratio decreased. A year ago, the net non-performing asset ratio was 0.34%; it is now 0.37%.

As of March 31, the business had a management and macroeconomic overlay of Rs 300 crore. Of that amount, Rs 127 crore had been allocated to improving its estimated credit loss model, and Rs 163 crore had been released for loan losses and provisions. Through its ECB program, it raised almost Rs 6,016 crore in Q4.

The NBFC projects that its AUM would increase by 26-28% in FY25.

The cost of funds is anticipated to peak in July or August, and by September, the composition of AUM will have shifted to include more secured assets. In light of this, we anticipate a 30–40 bps decrease in NIM from current levels over the course of the next two quarters, the NBFC said in an investor presentation.

Examining the limitations
In the meanwhile, the NBFC has asked the RBI to reconsider the limitations placed on the two lending products, the “Insta EMI Card” and “eCOM,” last year. “In response to the limitations on the approval and disbursement of loans under the “eCOM” and “lnsta EMI Card,” we have made the necessary adjustments. In a news statement, Bajaj Finance said, “The company has formally requested RBI for a review and removal of these restrictions.”