Bajaj Finserv net grows 44% in Q1

Bajaj Finserv on Tuesday reported a 44% rise in consolidated net profit at Rs 1, 215 crore for the June 2020 quarter. Bajaj Finserv’s consolidated income increased by 16% to Rs 14,192 crore.

There was a degrowth in the finance and insurance business because of the lockdown during Q1FY21, the company said. Bajaj Finserv is the holding company for Bajaj group’s finance business, Bajaj Finance (BFL), insurance business, Bajaj Allianz General Insurance Company (BAGIC) and Bajaj Allianz Life Insurance Company (BALIC).

BFL saw lower disbursements and constraints in recovery of due to lockdown restrictions and moratorium while BAGIC’s gross written premium was lower due to decline in sales of vehicles, travel insurance and tenders for government health business. BALIC maintained its topline in terms of individual rated new business premium at the same level as the previous year. BFL PAT was at Rs 962 crore, BAGIC PAT was Rs 395 crore while life insurance shareholder PAT at BALIC was `130 crore.

Sanjiv Bajaj, CMD, Bajaj Finserv, said the company’s outlook would remain cautious and focus would be on risk and profit over growth. More emphasis would be on strong loan collections and renewals in the insurance business, he said. They will work on enhancing digitisation and getting leaner in each of the business Bajaj said. Bajaj Finance was well capitalised, has sufficient liquidity and solvency, he said. Bajaj said for the first time BALIC had reached networth of Rs 10,000 crore and assets under management of Rs 60,000 crore.

Bajaj Finserv CFO, S Sreenivasan said in the general insurance business, the motor insurance segment saw a degrowth of 32.6% y-o-y on the back of lower sales of vehicles and the travel insurance business also dried up. However, the health and property insurance business grew by 15.5%. There were fewer motor claims during lockdown but is expected to grow with gradual opening. There were lower health claim ratios as non-Covid elective treatments were postponed. BAGIC’s gross written premium de-grew by 19% while combined ration was at 97.6% in Q1FY20. BAGIC PAT increased by 88% to `395 crore.

In the life insurance business, BALIC saw an increase in preference for protection and guaranteed products. BALIC’s individual rated premium growth was flat in Q1FY21 while rest of the industry degrowth was at 18%. The agency and proprietary sales force faced relatively more challenges due to lockdowns but is improving in zones where branches have opened, the company said.

Institutional business was slow in April and May with banks focusing on their core operations but it has started picking up in June, the company said. BALIC’s PAT for Q1FY21 increased 111% to Rs 130 crore. Last year BALIC’s shareholders’ PAT was adversely affected by a provision for impairment of Rs 126 crore. In addition, company had higher realised gains and lower claims.