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Bajaj Finance Announces Q1 Results!

Bajaj Finance Announces Q1 Results!

Last updated: 21 Jul, 2020 | 12:40 pm

Bajaj Finance Announces Q1 Results!

Growth of the company:

  • Bajaj Finance Ltd’s consolidated net profit fell 19% YoY to Rs. 962 crore in Q1FY21 from Rs. 1195 crore in Q1FY20, primarily due to accelerated provisions to combat the disruptions stemming from COVID-19 pandemic.
  • AUM (assets under management) grew 7% YoY to Rs. 1,38,055 crore. 70% of the new loans booked in Q1FY21 were by existing customers.
  • Net Interest Income rose 12% YoY to Rs. 4,152 crore in Q1FY21 compared to Rs. 3,695 crore in Q1FY20 
  • The total assets under moratorium, as of 30th June 2020, reduced to Rs. 21,705 crore (15.7% of AUM) from Rs. 38,599 crore (27.1% of AUM). 
  • The company saw a sizeable growth of 33% YoY in its Fixed deposits which stood at Rs. 20,061 crore (17% of total AUM). 70% of these deposits are retail and the remaining corporate.

Liquidity Health of Bajaj Finance:

  • As of 20th July 2020, the company had a consolidated liquidity buffer of Rs. 20,590 crore and SLR investment of Rs. 2,550 crore. Both of these combined represent about 19.2% of its total borrowing. 
  • The company is keeping an excess liquidity buffer, especially considering the current economic environment. The impact cost of this excess liquidity is almost Rs. 169 crore. The company is ready to bear this cost as they understand that right now, liquidity is more important than growth.
  • The company took an additional contingency provision for Covid-19 of Rs. 1,450 crore in the June quarter, taking the total to Rs. 2,350 crore as of 30th June 2020. This is roughly 10.8% of the total moratorium book.
  • The company also has done an Expected Credit Loss (ECL) provision of Rs. 623 crore. Thus Bajaj Finance’s moratorium book provision stands at 13.7% of the total loans under moratorium.
  • The Gross NPA stands at 1.4% in Q1FY21 compared to 1.61% in Q4FY20. The net NPA stands at 0.5% in Q1FY21 compared to 0.65% in Q4FY20.
  • Company’s Capital Adequacy Ratio remains very strong at 26.4% (one of the highest in the sector) with a Tier-1 capital of 22.6%.

Asset Liability Mismatch

  • 'Bajaj Finance is one of the few companies that have a positive asset-liability mismatch i.e at any given point of time, the company has more money coming in than going out.' {{tweet1}}
  • In the next 1 year, the company has an expected cumulative inflow of Rs. 65,587 crore and an expected cumulative outflow of Rs. 38,477 crore. The difference comes out to be Rs. 27,110 crore. This means that even if borrowers default on Rs. 27,110 crore in the next 1 year, the company would still be able to pay their debts.
  • Similarly in the next 5 years, the company has an expected cumulative inflow of Rs. 1,27,320 crore and an expected cumulative outflow of Rs. 96,181 crore. The difference comes out to be Rs. 31,139 crore.

'All the above analysis proves that even if the entire current moratorium book of Rs. 21,705 crore gets defunct, the company still has the necessary means and provisions to honour its debt commitments.' {{tweet2}}

The company also has emergency credit lines with banks and other companies that allows it to borrow additional money in case of a large redemption.

The View Forward

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