Bajaj Finance Q1 Results: Profit Rises 14% On Higher Other Income, Provisions Up 70%

Bajaj Finance Ltd.'s net profit rose in the first quarter of fiscal 2025.

The company's consolidated bottom line increased 13.8% year-on-year to Rs 3,912 crore for the quarter-ended June, according to an exchange filing on Tuesday. Analysts polled by Bloomberg had pegged a net profit of Rs 3,866 crore.

• Net profit up 13.8% to Rs 3,912 crore versus Rs 3,437 crore (YoY).

• Total income rises 28.8% to Rs 16,102 crore versus Rs 12,500 crore (YoY)

• Gross NPA at 0.86%.

• Net NPA at 0.38%.

Bajaj Finance's net interest income surged 25% in Q1 to Rs 8,365 crore, as compared with the same period last year. Total revenue from operations increased by 28.8% to Rs 16,098 crore in the quarter-ended June from the corresponding period a year ago.

Other income for the lender rose 97.8% year-on-year to Rs 3.64 crore.

Loan losses and provisions, too, rose 70% to Rs 1,685 crore in the first quarter, as compared to Rs 995 crore in the same period a year ago. These were elevated due to muted collection efficiencies, it said in its investor presentation.

"The company is augmenting its debt management infrastructure as a mitigation measure. The company remains watchful across portfolios and is also proactively pruning segments," it said.

Rajeev Jain, managing director of Bajaj Finance, said in a post-results analysts call that even though default rates across portfolios are lower than March, collection efficiencies were muted across.

Given elevated stage-2 assets, loan losses may remain at current levels in the second quarter and should start to normalise by Q3, the presentation said.

The company's net loan loss to average assets under finance stood at 1.99% in Q1. It was, however, projected at 1.75–1.8% in FY25.

The management said that while improvement was expected in the second half of the financial year, there is a marginal upward bias on this metric at this juncture.

Pre-provisioning operating profit soared 25% year-on-year to Rs 6,947 crore, as compared with Rs 5,543 crore.

The non-bank financer's assets under management grew 31% on a yearly basis to Rs 2.70 lakh crore, from Rs 1.80 lakh crore a year ago.

New loans booked by the lender increased 10.3% year-on-year and stood at 10.97 million for the quarter-ended June.

Bajaj Finance's interest income was up 29.8% year-on-year to Rs 14,049 crore.

In Q4, the management said that the cost of funds continued to inch up. In this quarter, too, it rose 8 basis points sequentially and stood at 7.94%.

On this, Jain said that the cost of funds will start coming down from August, and if a rate cut cycle comes in, that would aid further.

Its deposits rose 26% year-on-year to Rs 62,774 crore and they contributed to 20% of the consolidated borrowings of the firm, according to the investor presentation.

On May 2, the Reserve Bank of India also lifted restrictions on the sanction and disbursal of loans under 'eCOM' and 'Insta EMI Card'. A draft red herring prospectus for Bajaj Housing Finance has also been filed with the Securities and Exchange Board of India and stock exchanges for a potential IPO, which now awaits clearance, the presentation said.

Jain said that eCOM business should build up again in the next 2-3 months.

While the lender's rural B2C business was not growing much, it may grow by 10-11% on a full-year basis, the bank's management said. They also added that by October, there would be stabilisation of net interest margin.

Responding to queries on personal loans, the lender's management said that there is about a 3% increase in customers who have multiple loans at this stage. While this number has moved since pre-Covid levels, it isn't significant.

"There is nothing to conclude that there is a problem in unsecured loans," they said. At this point, 58% customers don't have a personal loan, they added.