Bajaj Finance beats profit view on higher loan growth, asset quality boost

BENGALURU: India’s Bajaj Finance posted a bigger-than-expected first-quarter profit on Thursday, helped by strong loan growth and improving asset quality.

The non-banking financial company reported a 28% year-on-year rise in consolidated profit after tax to 60.81 billion rupees for the quarter ended June 30, compared with analysts’ expectation of a profit of 58.56 billion rupees, per data compiled by LSEG.

The lender benefited from robust retail credit demand, with assets under management in newer segments such as gold loans and tractor financing doubling from a year earlier.

Overall assets under management grew 24% from a year earlier, the fastest pace in three quarters.

Bajaj Finance’s net interest income – the difference between interest earned on credit and paid on borrowings – rose 23% to 125.71 billion rupees.

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The lender also continued to adopt a more cautious lending approach in segments like micro, small, and medium-sized enterprises (MSMEs) after grappling with higher delinquencies there.

As a result, its credit cost, a measure of provisions set aside for potential loan losses, improved to 1.54% in the first quarter from 1.65% three months ago and 1.87% a year earlier.

The company also set aside an additional 2.96 billion rupees as prudent macroeconomic provisions during the quarter. Excluding these provisions, credit cost was 1.31%, it said.

Its gross non-performing asset ratio improved to 0.96%, compared with 1.01% in the previous quarter and 1.03% a year earlier.