Bajaj Finance's first-quarter net profit surges 159% y-o-y to Rs 2,596 cr

Consumer financier Bajaj Finance’s consolidated net profit jumped 159 per cent year-on-year (YoY) to Rs 2,596 crore in the April–June quarter (first quarter, or Q1) of 2022-23 (FY23), beating Street estimates. It was aided by strong net interest income (NII) growth and lower loan losses and provisions. This is the highest-ever quarterly profit for the lender.

In the corresponding quarter a year ago, it had earned net profit to the tune of Rs 1,002 crore. On a standalone level, the lender’s net profit grew 179 per cent YoY to Rs 2,356 crore, compared with Rs 843 crore in the year-ago period.

Shares of the company closed at Rs 6,393.75 — up 2.14 per cent from the previous days’ close.

NII of the lender was 48 per cent at Rs 6,638 crore in Q1FY23, compared with Rs 4,489 crore in the year-ago period, as loans booked in the quarter jumped 60 per cent YoY to 7.42 million. On a standalone level, NII was up 48 per cent YoY to Rs 6,140 crore.

Loan losses and provisions were down 57 per cent YoY to Rs 755 crore during the quarter, against Rs 1,750 crore in the year-ago period. But the company holds a management and macroeconomic overlay of Rs 1,000 crore as of June 30 on a consolidated level and Rs 780 crore on a standalone level. The company expects its loan losses at 1.35-1.45 per cent of average assets in FY23.

The asset quality of the lender improved as gross non-performing assets (NPAs) stood at 1.25 per cent, down 35 basis points (bps) sequentially. Net NPAs were down 17 bps sequentially to 0.51 per cent.

“An excellent quarter for the company across balance-sheet growth, portfolio quality, and profitability. Highest-ever new customer acquisition in Q1. Overall, a strong start to the financial year. Back to all long-term guidance metrics for the past three quarters. On track to go fully digital across all products and services on application (January 2023) and web (March 2023),” the company said.

In Q1, the lender added 2.73 million new customers to its franchise — its highest-ever customer franchise addition in a quarter — taking the total customer franchise to 60.3 million as of June 30. The company is confident of adding 9-10 million new customers in FY23.

Its deposit book stood at Rs 34,102 crore at the end of Q1, with a net deposit growth of Rs 3,302 crore during the quarter. During the quarter, with rising interest rates, the lender revised its deposit rates upwards by 55-70 bps.

“The company is accelerating retail deposit acquisition to achieve its long-term goal of 25 per cent of consolidated borrowings from deposits,” it said.

The assets under management (AUM) of the lender topped Rs 2 trillion by growing 28 YoY to Rs 2.04 trillion as of June 30. Core AUM growth in the quarter was Rs 11,931 crore.