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Bajaj Finance Q3 results: net profit decline 29% YoY, net interest income falls 5%

By Priyanka Verma 
Updated Date

Consumer lending company Bajaj Finance said its net profit declined 29% in the third quarter as loan growth remained weak and the firm had to also reverse some interest income.

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Bajaj Finance on January 20 reported a 29 percent year-on-year (YoY) fall in consolidated net profit at Rs 1,145.98 crore for the quarter ended December 2020. Profit in the year-ago period was at Rs 1,614.11 crore.

The profit numbers missed market estimates as a CNBC-TV18 poll had estimated the numbers to the tune of Rs 1,190 crore. Consolidated net interest income (NII) came in at Rs 4,296 crore for the said quarter, down 5.3 percent YoY, due to higher reversal of interest income at Rs 450 crore versus Rs 83 crore in Q3FY20 and higher cost of liquidity surplus at Rs 213 crore versus Rs 83 crore in Q3FY20.In the corresponding quarter of the previous financial year, NII was at Rs 4,535 crore.

NII numbers for Q3FY21 beat street expectations as a CNBC-TV18 poll had estimated the numbers at Rs 4,043.5 crore.

Gross NPA and Net NPA as of December 31 2020, stood at 0.55 percent and 0.19 percent, respectively, as against 1.61 percent and 0.70 percent as of 31 December 2019, said the company. The provisioning coverage ratio as of 31 December 2020 was 65 percent. Provisioning coverage on stage 1 and 2 assets were 190 bps as of 31 December 2020.

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“Loan losses and provisions for Q3 FY21 were Rs 1,352 crore as against Rs 831 crore in Q3 FY20. During the quarter, the company has done a one-time write-off of principal outstanding of Rs 1,970 crore and interest outstanding of Rs 365 crore on account of Covid-19 related stress,” Bajaj Finance said. “The company holds a management overlay provision of Rs 800 crore as of 31 December 2020 for Covid-19 related stress.”

The company’s total customer franchise stood at 46.31 million as against 40.38 million as of 31 December 2019. It acquired 2.19 million new customers in this fiscal compared to 2.46 million in the same period last year. During the quarter, the company, as a matter of prudence, has written off principal and interest amounts (including capitalized interest) of less than Rs 1,970 crore and around Rs 365 crore respectively, of potentially unrecoverable loans, which were under moratorium, by utilizing the available expected credit loss provision.

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