Bajaj Finserv, the holding company for the various financial services businesses of the Bajaj group, has reported a 22 per cent increase in consolidated net profit in the first quarter on the back of strong financial performance of subsidiaries Bajaj Finance (BFL) and Bajaj Allianz General Insurance Company (BAGIC).
In the reporting quarter (Q1) ended June 30, 2017, Bajaj Finserv reported a consolidated net profit of ₹655 crore, compared with ₹538 crore in the year-ago quarter.
The company participates in the financing business through its 57.80 per cent holding in BFL and in the protection business through its 74 per cent holding in BAGIC and Bajaj Allianz Life Insurance Company (BALIC).
Total revenue of the firm rose 26 per cent year-on-year (y-o-y) to ₹6,581 crore. Total expenses were up 25 per cent to ₹5,118 crore.
Bajaj Finance reported a 42 per cent jump in net profit to ₹602 crore in Q1 FY18, compared with ₹424 crore in the year-ago period.
The bottomline is up despite finance costs rising 22 per cent y-o-y to ₹1,078 crore and loan losses and provisions going up 59 per cent to ₹286 crore.
Total revenue rose 39 per cent ₹3,164.51 crore. Total expenses, which include finance costs and loan losses and provisions, climbed 37 per cent to ₹2,239 crore.
The assets under management (AUM) as of June-end 2017 rose 39 per cent y-o-y to ₹68,883 crore from ₹49,608 crore as of June-end 2016. The consumer finance business accounted for 46 per cent of the AUM, followed by SMEs (34 per cent), commercial (15 per cent), and rural (5 per cent).
During the reporting quarter, as required by RBI guidelines, the company moved its NPA recognition policy to 90 days overdue from 120 days overdue earlier.
Gross non-performing assets (NPAs) and net NPAs as of June 30 stood at 1.70 per cent and 0.53 per cent, respectively.
S Sreenivasan, Chief Financial Officer, BFS, said, “We are now going to push more on the mortgage side of the business. We are continuing to grow on the rural side of the business.”
The board of directors of BFL has approved, subject to the approval of its shareholders, issue of securities for an aggregate amount up to ₹4,500 crore through qualified institutional placement to qualified institutional buyers in accordance with SEBI regulations.
The general insurer reported a 62 per cent increase in net profit at ₹213 crore (₹132 crore in the year-ago quarter).
Gross written premium for Q1 FY18 rose 29 per cent to ₹1,973 crore (₹1,527 crore in Q1 FY17).
Sreenivasan said: “Our non-life business continues to do well. It is dependent on the capex cycle. The capex cycle has not yet picked up. Nevertheless, we are still growing. Once the capex cycle picks up, we should see further growth in the non-life sector because there is lot of under-penetration.”
Profit after tax during Q1 FY18 was 20 per cent lower at ₹196 crore (₹244 crore in Q1 FY17).
New business premium was up 18 per cent y-o-y at ₹683 crore, and renewal premium rose 11 per cent to ₹471 crore.
The BFS CFO explained that “in the life business the profit reflected is mostly from the old book. In the new business, in the first year, you always make a loss… Over two-three years as the renewal book swells, we would be seeing the profit starting to grow again at a healthier rate.”
Bajaj Finserv shares closed at ₹4,562.80 apiece, up 3.28 per cent over the previous close on the BSE. And, Bajaj Finance shares closed at ₹1,543 apiece, up 1.99 per cent.