Bajaj Finance, a non-banking finance company, on Wednesday reported a steep 36% year-on-year fall in net profit to Rs 965 crore for the quarter ended September on higher loan losses, provisioning and a drop in new loans booked. Loan losses and provisions nearly tripled to Rs 1,700 crore during the quarter. The company said the ongoing pandemic had prompted it to further increase its provisions on stage I and stage II assets by Rs 1,370 crore to Rs 5,099 crore as on September 30. However, net interest income rose 4% to Rs 4,165 crore. There was a reversal of capitalised interest of Rs 142 crore. New loans booked dropped 44% to Rs 3.62 million. Assets under management went up marginally 1% to Rs 1,37,090 as on September 30.
In a statement, Bajaj Finance said the company had strong pre-provisioning profitability to manage loan losses arising out of Covid-19. The NBFC’s pre-pandemic provisioning used to be around 90-100 basis points, which had gone up to 369 bps as on September 30. The company said it had, during the ongoing health crisis, taken significant measures to reduce operating expenses and achieved a 16% reduction in total expenses to Rs 1,160 crore during the second quarter. The ratio of total operating expenses to net interest income during the quarter under review was at 27.8%. In the June quarter, the same ratio was at 34.6%.
The company’s gross non-performing assets (NPAs) in September 2020 stood at 1.03% while net NPAs were 0.37% against 1.61% and 0.65%, respectively, as on September 30, 2019.
In compliance with the Supreme Court’s direction that accounts not declared NPA till August 31 should not be pronounced NPA, the company did not classify any such account as on August 31 as NPA. Bajaj Fiance said if it had classified these accounts as NPAs on August 31, the gross NPA ratio would have been at 1.34% while the net NPA ratio would have been at 0.56%.
The lender’s B2B consumer lending was down 19% to Rs 20,605 crore while commercial lending declined 11% to Rs 11,882 crore. Mortgage lending during the quarter, however, saw 14% growth to Rs 45,989 crore, a 2% increase in SME to Rs 18.253 crore, while rural B2C lending rose 15% to Rs 10,291 crore. The Bajaj Finance stock fell 1.87% on the BSE on Wednesday to Rs 3,201.10 after the second quarter result announcement.