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Bajaj Finance Q1 Net Profit Up 159% YoY to Rs 2,596 Crore

Consumer financier Bajaj Finance‘s consolidated net profit for the April-June 2022-23 quarter (Q1), rose 159% year-on-year to Rs 2,596 crore, beating Wall Street expectations. This was supported by strong net interest income (NII) growth and lower loan losses and provisions. It was the bank’s highest-ever quarterly profit.

A year ago, the corresponding quarter posted a net profit of Rs 1,002 crore. On a standalone level, the lender’s net profit rose 179% year-on-year to Rs 2,356 crore compared to Rs 843 crore a year earlier. Shares of the company closed at Rs 6,393.75, up 2.14% from the previous day’s close.

The lender’s NII was 48% at Rs 6,638 crore in Q1FY23 compared to Rs 4,489 crore in the same period last year, with loans registered in the quarter up 60% year-on-year to Rs 7.42 million. NII grew 48% year-on-year to Rs 6,140 crore on a standalone level.

Loan losses and provisions fell 57% year-on-year to Rs 755 crore in the quarter compared to Rs 1,750 crore a year earlier. But as of June 30, the company’s management and macroeconomic coverage stood at Rs 1,000 crore at the consolidated level and Rs 780 crore at the standalone level. The company expects its loan losses to be 1.35-1.45% of average assets in FY23.

Lenders’ asset quality improved, with gross non-performing assets (NPA) at 1.25%, down 35 basis points sequentially. Net NPAs fell 17 basis points sequentially to 0.51%.

“It was an excellent quarter for the company regarding balance sheet growth, portfolio quality and profitability. The first quarter saw the highest number of new clients. Overall, the fiscal year started well; back to this, the last three of all long-term guidance for the quarter. Full digitisation of all products and services on the app (January 2023) and web (March 2023) is on track,” the company said.

In the first quarter, the lender added 2.73 million new customers to its franchises — the highest ever customer franchise additions for the quarter — bringing the total franchise customers to 60.3 million as of June 30 individual. 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 the first quarter, and net deposits rose by Rs 3,302 crore during the quarter. During the quarter, the bank raised its deposit rate by 55-70 basis points as rates rose.

“The company is accelerating the acquisition of retail deposits to meet its long-term goal of 25% of its consolidated borrowings from deposits,” it said.

The lender’s assets under management (AUM) stood at over Rs 2 trillion as of June 30, up 28 to Rs 2.04 trillion year-on-year. Core AUM growth for the quarter was Rs 11,931 crore.

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