Bajaj Finance FY24 Annual Earnings Summary

Management flagged that customers with multiple small-ticket loans (<₹50,000) show higher imprudence and default rates, prompting portfolio cuts of 8-14%.

Rural B2C portfolio continues to show elevated delinquencies, with growth deliberately slowed to 10%. Management describes it as an 'inside-out problem' requiring ongoing risk actions.

Regulatory restrictions on two key products have temporarily impacted loan volumes and digital metrics. Full compliance submission is pending digital signature and vernacular KFS.

The embargo on two products continues to impact loan bookings and AUM growth; timing of removal is uncertain.

Management flagged increasing leverage in the system, especially in personal loans, and is taking preemptive actions to tighten underwriting.

Rural B2C portfolio flagged as yellow due to elevated risk; business has been cut by INR 200-250 crore per month.

Cost of funds rose 82 bps over three quarters, with NIM compression expected to continue for two more quarters.

Cost of funds is expected to rise as low-cost borrowings mature and are replaced at higher rates, compressing NIM by 25-30 bps for the full year.

Analyst raised concern about RBI's focus on unsecured loan growth; management acknowledged moderation in value but noted count growth remains elevated.

Analyst asked about impact of possible risk weight hikes; management said they have levers to manage profitability but did not quantify impact.

Analyst questioned whether rising delinquencies in urban B2C could persist. Management called it 'transient' but acknowledged preventive cuts of INR 450-500 crore quarterly.

RBI granted only a one-year renewal for the RBL Bank co-branded card partnership due to deficiencies. Management is engaging with RBI to resolve issues.