India`s Bajaj Finance misses Q2 profit view on higher bad loan provisions
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Indian non-bank lender Bajaj Finance reported a smaller-than-expected rise in second-quarter profit on Tuesday, as provisions for bad loans increased.
The company's consolidated profit after tax rose nearly 28% to 35.51 billion rupees ($430.8 million) in the three months ended September 2023, missing analysts' average estimate of 35.85 billion rupees, according to LSEG data.
Consolidated numbers include the businesses of the lender's subsidiaries, Bajaj Housing Finance and Bajaj Financial Securities.
Loan losses and provisions grew nearly 47% year-on-year in the quarter to 10.77 billion rupees, up from 7.34 billion rupees a year ago. It also rose sequentially from 9.95 billion rupees in April-June.
The RBI has been cautioning lenders about fast-growing personal loan categories for signs of nascent stress, urging them to adopt stronger risk management practices.
The company's gross non-performing asset ratio deteriorated to 0.91% at the end of September, from 0.87% at the end of June.
Loan demand during the quarter stayed strong despite the Reserve Bank of India (RBI) keeping its key lending rate steady for a fourth consecutive policy meeting.
The central bank has raised interest rates by 250 basis points since May 2022.
Bajaj Finance, in an update earlier this month, reported its new loan bookings climbed 26% year-on-year in the quarter, while its deposits book jumped 39%.
It added 3.58 million new customers in the period.
Net interest income, the difference between interest earned on loans and paid on deposits, rose over 26% to 88.45 billion rupees in the September quarter, while interest income jumped nearly 38%.
