Bajaj Finance accelerates Covid provisioning; reports fall in new loans

Bajaj Finance in an performance update for the second quarter of the current fiscal has said it continued to accelerate provisioning for COVID-19 to strengthen its balance sheet.

Bajaj Finance’s overall provisioning made for the pandemic as on June 30 stood at Rs 2,350 crore, which was 10.8% of the consolidated moratorium book.

In an exchange filing, the company also said new loans booked during the second quarter was 3.6 million, compared with 6.5 million in Q2FY20. During the quarter, the company acquired 1.2 million new customers, against 1.92 million in the year-ago period.

“The loan growth has taken a hit as the management has turned risk-averse due to regional lockdowns amid rising COVID-19 cases. However, our channel checks indicate that Bajaj Finance was back to lending and disbursing in September 20,” an Emkay Global analyst report said.

“The sharp decline in disbursement volumes has come as a bit of a disappointment in the context of healthy trends witnessed by peers such as HDFC. Nevertheless, we believe it is a good strategy to curtail disbursements in this uncertain environment. In our opinion, this stance is likely to continue for another quarter or so,” a Motilal Oswal analyst report said.

Bajaj Finance’s assets under management as of September 30, 2020 stood at approximately Rs 137,300 crore, compared with Rs 135,533 crore as of September 30, 2019. There has been a 0.5% de-growth in AUM sequentially from Rs 1,38,055 crore as of June 30.

The NBFC said it remains well capitalised with the capital adequacy ratio of approximately 26.5% as of September 30, 2020 while maintaining the highest-ever liquidity buffer with consolidated liquidity surplus at Rs 22,300 crore. The deposit book stood at Rs 21,600 crore at the end of Q2, compared with Rs 17,633 crore in the same period last year.

The stock fell 4.12% on Wednesday to Rs 3,331.20 on the BSE.