Bajaj Finance Q4 net up 30% to Rs 3,158 cr on robust net interest income

Bajaj Finance (BFL’s) consolidated net profit increased by 30 per cent year-on-year to Rs. 3,158 crore in the fourth quarter of FY2022-23 (Q4FY23) on the back of a strong increase in Net Interest Income (NII). It made a profit of Rs. 2,420 crore in the period last year.

In FY23, the non-bank finance company’s net profit jumped by 64 per cent year-on-year to Rs.11,508 crore from Rs.7,028 crore in FY22.

The company’s board of directors has recommended a dividend of Rs 30 per share (1,500 per cent) of par value (Rs 2 each) for the fiscal year 23, subject to shareholder approval, according to a stock exchange filing. BFL shares closed down 0.4 percent at Rs 6,054 per BSE share. The capital adequacy ratio was 24.97 percent and the Tier-1 ratio was 23.20 percent at the end of March.

NII, which is the difference between interest earned on loans and paid on deposits, increased by 28 per cent year-on-year to Rs.7,771 crore for the fourth quarter from Rs.6,061 crore a year earlier. In the fourth quarter, cost of funds was 7.39%, an increase of 25 basis points compared to the third quarter.

Given the strong management of liabilities and diversified assets of the balance sheet, there was no impact from higher interest rates on net interest margin in fiscal ’23. BFL officials said on the analyst call that the company expects a gradual moderation in margins (40-50 basis points) in the fiscal year 24 and bears in mind a further increase in the repurchase rate by the Reserve Bank of India.

The Pune-based company said the number of new loans booked during the fourth quarter grew by 20 percent to 7.56 million, compared to 6.28 million last year. Assets under management (AUM) grew by 29% year-on-year to Rs.2,47,379 crore. Growth in assets under management in the fourth quarter was the highest ever at Rs.16,537 crore. The formulation of AUM remained constant and do not expect a significant change in the product mix.

The share of mortgage loans in assets under management was 31 percent, followed by urban business-to-consumer (B2C) loans at 20 percent, and small and medium-sized business lending at 14 percent. B2C rural areas got 8 percent.

The asset quality profile improved with gross non-performing assets (GNPAs) moderating to 0.94 percent in March 2023 from 1.6 percent a year earlier and net NPAs to 0.34 percent from 0.68 percent in March 2022.

Loan losses and provisions for the fourth quarter were Rs.859 crore as against Rs.702 crore a year earlier. The company maintained a total economic and administrative overlay of Rs. 960 crore as of March 31st. It reported a healthy benefit coverage ratio of 63.8 percent, up from 58 percent last year.