Bajaj Finance net down 30%, forays into e-payments

Consumer finance giant Bajaj Finance’s net profit fell 30 per cent to ~1,049 crore in October–december quarter (third quarter, or Q3) of 202021 (FY21), compared to ~1,488 crore in the corresponding period in 2019-20 (FY20), owing to a fall in net interest income and rise in provisions. But the company has said as loan-loss provisions, interest reversals, and cost of surplus liquidity normalise to precovid levels by the first quarter of 2021-22 (FY22), its profitability will improve. The lender also said that it will foray into the payments space in the ongoing quarter.

Net interest income of the lender fell 7.24 per cent to ~3,977 crore in the reporting quarter (Q3FY21), compared to ~4,265 crore in Q3FY20 due to higher reversal of interest income at ~456 crore, compared to ~82 crore in the corresponding period of FY20 and also due to high cost of liquidity at ~193 crore, compared to ~72 crore. Total income also fell 7 per cent on a standalone level to ~5,847 crore in Q3FY21, compared to ~6,316 crore in Q3FY20.

Provisions for the lender, on a standalone level, increased 52 per cent to ~1,245 crore in Q3FY21, compared to ~817 crore in Q3FY20 due to a one-time write-off of ~1,970 crore and interest outstanding of ~365 crore because of Covid19-related stress.

While gross non-performing assets (NPAS) for the reporting quarter stood at 0.55 per cent and net NPAS at 0.19 per cent, pro-forma gross NPAS were at 2.86 per cent and net NPAS at 1.22 per cent.

The lender has said it is in the process of launching Bajaj Pay in Q4. The app will offer an integrated payment solution comprising UPI, prepaid payment instruments, EMI card, and credit card to its customers. With this app, Bajaj Finance will make an entry into the digital payments space.

The firm with the help of its group companies is building 5 proprietary marketplaces such as EMI store, insurance marketplace, investment market place, Bajaj Finance health, and a broking app. “These five apps will provide customers with an option to review, compare and buy a host of financial products and services across electronics, insurance, investments and health”, it said.