Bajaj Finance jumps 2% after reporting highest ever quarterly net profit in Q3

Bajaj Finance shares surged nearly 2.5% to Rs 7,928.00 on the BSE at 09:20 am after reporting strong Q3 results.

The company recorded 85% year-on-year growth in its profits after tax in the October-December quarter to Rs 2,125 crore, its highest ever. During the December quarter, the company also achieved its highest quarterly core AUM increase of Rs 14,700 crore. Assets under management increased by 26% to Rs 1,81,250 crore. Net interest income grew by 40% to Rs 6,000 crore in Q3FY22, compared to Rs 4,296 crore in Q3FY21.

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Loan losses and provisions totalled Rs 1,051 crore in the December quarter, compared to Rs 1,352 crore in Q3FY21. To protect itself from potential losses from the third coronavirus wave, the company increased its management overlay provision during the quarter from Rs 832 crore as of September 30, 2021, to Rs 1,083 crore.

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Due to Covid-19-related pressures, the company took rapid write-offs of Rs 163 crore of outstanding principal during the quarter. As of December 31, 2021, the company has a management and macroeconomic overlay of Rs 1,083 crore. Given the ongoing uncertainty over Covid waves, the company stated that it aims to exit FY22 with enough management overlay contingencies.

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For FY22, the company anticipated a loan loss and provision in the area of Rs 4,800-5,000 crore. Gross non-performing assets (NPAs) and net NPAs were 1.73% and 0.78%, respectively, as of December 31, 2021, compared to 2.45% and 1.10% as of September 31, 2021. On December 31, 2021, the company had a provisioning coverage ratio of 56% on stage 3 assets and 156 basis points on stage 1 and 2 assets. 

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According to the company, the cost of funds was 6.72% in Q3FY22, down from 6.77% in Q2FY22. In the third quarter, the company raised Rs 2,722 crore in NCDs over a three-year period. This includes Rs 2,117 crore raised with a tenor of ten years.

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In the December quarter, the company recorded 7.44 million new loans, compared to 6.04 million in Q3FY21. Bajaj’s customer franchise increased by 20% to 55.36 million in December 2021, up from 46.31 million in December 2020. In Q3FY22, the company’s customer franchise rose by 2.56 million, compared to 2.19 million in Q3FY21.