Bajaj Finance's Q2 net profit jumps 28% to Rs. 3,551cr
What's the story
Bajaj Finance has reported a 28% year-on-year jump in consolidated net profit for Q2 of the current fiscal year, hitting Rs. 3,551 crore. However, it failed to beat the estimates.
The surge was fueled by a boost in net interest income and new loans booked. The firm's asset quality also saw an uptick, with gross non-performing assets (NPA) at 0.91% and net NPA at 0.31%, compared to 1.17% and 0.44% during the same period last year.
Details
Strong growth in loans booked and deposits
In the second quarter, Bajaj Finance saw a 26% rise in the number of loans booked, totaling 85.3 lakh compared to 67.6 lakh in the same period of the previous year.
Deposits also witnessed significant growth, soaring by 39% to Rs. 54,800 crore from Rs. 39,422 crore in the year-ago period.
The company's liquidity position remained robust, with a consolidated net liquidity surplus of Rs. 11,400 crore at September's end.
What Next?
Assets under management grew by 33%
The company's assets under management (AUM) expanded by 33% to Rs. 2.9 lakh crore in Q2 from Rs. 2.1 lakh crore in the same period last year.
This growth can be credited to the firm's solid performance in loan bookings and deposits during the quarter.
The lender's subsidiaries, Bajaj Housing Finance and Bajaj Financial Securities, also played a part in the overall AUM growth.
Insights
Higher provisions for bad loans impact profit
Although net profit experienced strong growth, Bajaj Finance reported a smaller-than-expected increase due to higher provisions for bad loans.
Loan losses and provisions climbed by nearly 47% year-on-year to Rs. 1,077 crore, up from Rs. 734 crore a year ago.
The Reserve Bank of India (RBI) has been warning lenders about rapidly growing personal loan categories for signs of emerging stress, urging them to adopt more robust risk management practices.