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Business Updates

* On track to go fully digital across all products and services by Jan'23 and on the web platform by Mar'23.

* Launched non-captive 2W market place. Expects to book 3K-3.5K 2W loans in the first month from the 2W market place.

* Product mix is largely the same except for auto finance which declined to 5% (v/s 7% YoY)

Asset quality

* Flow basis credit costs was INR6.25b (excluding the utilization of management overlay and one-off of a large B2B commercial account)

* On portfolio credit quality, 10 portfolios are green and 1 is yellow (2W and 3W).

Omnipresence

* 11m app downloads during the quarter and total net installs (cumulative) stood at 23m. Expects 35-38m customers on the consumer app by Mar'23

* Loans originated through Bajaj Mall (EMI Store) - INR15b [645K loans with average ticket size of INR23K]

Digital EMI Card

* Activation rates on EMI Cards on a 12-month basis would be higher than the activation rate of credit cards.

* 60% of the Digital EMI Card customers are paying INR550/- annual fees for the card.

* From a 12 month vintage, it sees 45%-50% activation rates in Digital EMI Card

Guidance

*  Company will continue to focus on margins and growth in that order.

* Opex to NII will remain elevated between 35.5-36.0% in 2QFY23 and then it should start moderating from 3QFY23 onwards

* Write-offs (other than the one-offs) have remained flattish. Guided that credit costs should be similar to or lower than what it delivered in FY18-19 ? Expects INR500-540b of core AUM growth in FY23

* Company in its AGM guided that it would reach INR3.8-4.0tn in AUM by FY25

* Expects to deliver RoA higher than the guidance of 4.7% in FY23.

* BAF is already doing used-car financing business and it will launch new auto loan business in FY24 as well but it will not venture into CV Finance.

BHFL (Housing Finance)

* AUM was up 40% at INR574.3b. Home Loans AUM grew by 41%, LAP grew by 33%, LRD by 43% and Developer Finance grew by 68%

* Total equity infusion of INR75b in BHFL and it is now well capitalized for INR1tn in AUM

Gold Loans

* BAF has 155 standalone gold loan branches; it will add another 75 standalone gold loan branches in this fiscal and expects 232 gold branches by Mar'23

* Gold loans are not dilutive to the return profile of Bajaj Finance and the company guided that it can be a reasonably large business over the next 3-4 years.

Credit Cards

* Deep strategic partnership with RBL Bank and remains committed to the partnership. Kicked off the DBS partnership and booking around 9K-10K accounts per month and expects to exit with 30-40K accounts per month

Housing Finance

* Risk profile is structurally different. Even through the pandemic, when offices were shut even then the asset quality performance of the LRD was very good.

* Within Developer Finance (DF), it will remain in the ticket size of INR250-500m. Only for select developer loans, it will be go up to INR1.0b-1.2b ? Assignment income of INR1.1b based on assignment of INR9.5b LAP portfolio

SME Lending business

*  MSME with customers having turnover between INR20m-INR150m; 60-70% traders and remaining are manufacturers. This business is being done in 1800+ cities in India

Liabilities

* Banks are taking time in passing on increase in MCLR since the savings/fixed deposits interest rates have not gone up. Incrementally, banks are more receptive to doing MCLR-linked loans

Yields and Margins

* BAF took four interest-rate hikes and it has increased deposit rates by 55-75bp depending on the maturity.

* Increased interest rates by 25-40bp for all the incremental acquisitions;

Others

* BAF had 35,400 employees as on Mar'22. There was an addition of 2400 employees in 1QFY23.

* BAF still has 65%-68% manufacture subvention pool in CD and 55-57% manufacture subvention pool in digital. No material change has been seen in this recently.

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