Bajaj Finance Q3 Net Grows 40% On Stronger Interest Income

Net interest income (NII) increased 24% to ₹7,435 crore during the quarter, as against ₹6,005 crore in the third quarter of the previous financial year. However, NII grew 28% after adjusting NII of ₹203 crore earned in IPO financing in Q3 of FY22, which has since been discontinued due to change in regulations.

Bajaj Finance recorded the highest-ever new customer addition of 3.14 million in Q3 FY23. Given the strong momentum in first three quarters, it expects new customer addition at over 11 million in 2022-23.

“(It was a) good quarter across all financial and portfolio metrics, albeit marginally lower assets under management (AUM) growth," the lender said, adding that it is on track to deliver ₹52,000-53,000 crore of core AUM growth in FY23.

Bajaj Finance said it witnessed the highest-ever loans booked in Q3 and crossed 31 million net users on the mobile app. With its second phase of consumer app starting to go live, it said that it is on track to go fully digital across all products and services by March 2023.

The lender reported an AUM growth of ₹12,476 crore in Q3, and said it was slower in mortgages due to intense pricing pressures.

“Competitive intensity, as I have talked about in the last three-four quarters, remains highly elevated. Everybody seems to want to do retail and between margin and growth, margin takes precedence (for us) and that is our fundamental view at a management philosophy level," said Rajeev Jain, managing director, Bajaj Finance.

Jain said the lender does not believe in compromising margins for growth and that is evident from the fact that while its cost of funds went up by 23 basis points (bps) sequentially to 7.14%, the overall net interest margin (NIM) remained flat and did not dilute.

“We, of course, want to grow and are a growth-oriented business, but between the two (growth and margins), the choice is clearly on margins as it creates a greater sustainability of the business from a long-term standpoint," he said.

Bajaj Finance’s total deposits stood at ₹42,984 crore as of 31 December 2022, showing a net deposit growth of ₹3,562 crore.

The company said that deposits contributed 21% of consolidated borrowings as of 31 December 2022 and it is on track to deliver its goal of 25% of consolidated borrowings from deposits in the medium term.

In Q3, its gross non-performing asset and net non-performing asset ratios stood at 1.14% and 0.41%, respectively, as against 1.17% and 0.44% as on 30 September 2022. Its total capital adequacy stood at 25.14% as of 31 December 2022, of which tier-1 capital was 23.28%.