AUM
INR 311,000 crore
+35% YoY
Assets under management grew 35% year-on-year to INR 311,000 crore.
BAJFINANCE
Financial Services
17 Jan 2024
Bajaj Finance Ltd — Q3 FY24
Bajaj Finance reported a mixed Q3 FY24 with strong AUM growth of 35% to INR 311,000 crore and record new customer acquisitions of 3.85 million.
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2-Minute Summary
✦ AI-Generated from Full Transcript
Bajaj Finance reported a mixed Q3 FY24 with strong AUM growth of 35% to INR 311,000 crore and record new customer acquisitions of 3.85 million. PAT grew 22% to INR 3,639 crore, but was dampened by elevated loan losses of INR 1,248 crore (annualized 1.79% of AUM) and the impact of the RBI embargo on eCom and Insta EMI Card products. Management highlighted that rural B2C stress remains an inside-out problem, with growth deliberately slowed to 10%, while urban B2C delinquencies are seen as transient. The company raised interest rates by 20-30 bps from January to mitigate cost pressures. Long-range strategy targets 130-140 million customers by FY28. Key risk: credit costs may remain elevated if rural B2C stress persists or regulatory restrictions linger.
बजाज फाइनेंस ने तीसरी तिमाही में मिला-जुला प्रदर्शन दिखाया। कंपनी का कुल कर्ज (AUM) 35% बढ़कर 3,11,000 करोड़ रुपये हो गया और 38.5 लाख नए ग्राहक जुड़े। मुनाफा (PAT) 22% बढ़कर 3,639 करोड़ रुपये रहा, लेकिन 1,248 करोड़ रुपये का कर्ज डूबने (loan losses) से इसमें कमी आई। RBI ने eCom और Insta EMI कार्ड पर रोक लगाई, जिससे असर पड़ा। ग्रामीण इलाकों में छोटे कर्ज (rural B2C) पर दबाव है, इसलिए वहां कर्ज बढ़ोतरी सिर्फ 10% रखी गई। शहरी इलाकों में देरी से भुगतान (delinquencies) अस्थायी है। जनवरी से ब्याज दरें 0.20-0.30% बढ़ाई गईं। कंपनी का लक्ष्य 2028 तक 13-14 करोड़ ग्राहकों तक पहुंचना है। खतरा: अगर ग्रामीण दबाव या RBI की पाबंदी जारी रही, तो कर्ज डूबने का खर्च बढ़ सकता है।
Key Numbers
New Customer Acquisition
3.85 million
+35% YoY
Highest ever quarterly new customer additions at 3.85 million.
Cost of Funds
7.76%
+9 bps QoQ
Cost of funds increased 9 basis points sequentially to 7.76%.
Annualized Loan Loss to Avg AUM
1.79%
+10 bps YoY
Excluding management overlays, annualized loan losses were 1.79% of average AUM.
What Changed vs Last Quarter
NEW
Credit cost guidance of 175-185 bps
Management expects annualized loan losses to average AUM to remain in the 175-185 basis points range, consistent with pre-COVID levels.
NEW
Interest rate hike of 20-30 bps from January 1
Effective January 1, the company increased interest rates by 20-30 basis points across portfolios to mitigate higher cost of funds and risk weights.
NEW
Rural B2C growth slowed to 10%
Rural B2C portfolio growth was deliberately reduced to 10% in Q3 from 26% in Q1, reflecting risk actions to control elevated delinquencies.
NEW
KFS compliance for all products by March 2024
The company plans to implement Key Fact Statement (KFS) in vernacular languages and digital signatures for all products by March 2024.
DROPPED
NIM compression of 25-30 bps expected for full year
Management guided for another 25-30 basis points of NIM compression over the remainder of FY24, driven by rising cost of funds and competitive pressure on yields.
DROPPED
ROA to sustain at 5% on exit basis
Despite NIM compression, the company expects to sustain a return on assets of 5% on an exit basis for FY24, supported by operating leverage.
DROPPED
Microfinance pilot to expand to 100 locations by March 2024
The microfinance pilot launched in 12 villages will scale to 100 locations by March 2024, with a target of 300 villages by March 2025.
DROPPED
Capital raise of ₹10,000 crore via QIP and preferential allotment
Board approved raising ₹10,000 crore, comprising ₹8,800 crore through QIP and ₹1,200 crore preferential allotment to Bajaj Finserv, to support growth.
NEW RISK
Rural B2C credit stress persists
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.
NEW RISK
RBI embargo on eCom and Insta EMI Card products
Regulatory restrictions on two key products have temporarily impacted loan volumes and digital metrics. Full compliance submission is pending digital signature and vernacular KFS.
NEW RISK
Urban B2C delinquency uptick may not be transient
Analyst questioned whether rising delinquencies in urban B2C could persist. Management called it 'transient' but acknowledged preventive cuts of INR 450-500 crore quarterly.
NEW RISK
Co-branded credit card renewal risk
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.
RISK GONE
Rising industry leverage in small-ticket loans
Management flagged that customers with multiple small-ticket loans (<₹50,000) show higher imprudence and default rates, prompting portfolio cuts of 8-14%.
RISK GONE
NIM compression from rising cost of funds
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.
RISK GONE
Regulatory scrutiny on unsecured lending growth
Analyst raised concern about RBI's focus on unsecured loan growth; management acknowledged moderation in value but noted count growth remains elevated.
RISK GONE
Potential risk weight increase on unsecured loans
Analyst asked about impact of possible risk weight hikes; management said they have levers to manage profitability but did not quantify impact.
🤫 Topics management stopped discussing
Mentioned in Q1 FY24, Q2 FY24
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.
Mentioned in Q1 FY24, Q2 FY24
Management guided for another 25-30 basis points of NIM compression over the remainder of FY24, driven by rising cost of funds and competitive pressure on yields.
Mentioned in Q1 FY24, Q2 FY24
Management flagged that customers with multiple small-ticket loans (<₹50,000) show higher imprudence and default rates, prompting portfolio cuts of 8-14%.
Management Guidance
Credit cost guidance of 175-185 bps
Management expects annualized loan losses to average AUM to remain in the 175-185 basis points range, consistent with pre-COVID levels.
Management guidance marginsInterest rate hike of 20-30 bps from January 1
Effective January 1, the company increased interest rates by 20-30 basis points across portfolios to mitigate higher cost of funds and risk weights.
Management guidance revenueRural B2C growth slowed to 10%
Rural B2C portfolio growth was deliberately reduced to 10% in Q3 from 26% in Q1, reflecting risk actions to control elevated delinquencies.
Management guidance growthKFS compliance for all products by March 2024
The company plans to implement Key Fact Statement (KFS) in vernacular languages and digital signatures for all products by March 2024.
Management guidance otherKey Risks
Rural B2C credit stress persists
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.
high · management_commentaryRBI embargo on eCom and Insta EMI Card products
Regulatory restrictions on two key products have temporarily impacted loan volumes and digital metrics. Full compliance submission is pending digital signature and vernacular KFS.
high · management_commentaryUrban B2C delinquency uptick may not be transient
Analyst questioned whether rising delinquencies in urban B2C could persist. Management called it 'transient' but acknowledged preventive cuts of INR 450-500 crore quarterly.
medium · analyst_questionCo-branded credit card renewal risk
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.
medium · analyst_questionNotable Quotes
Rural B2C continues to be a inside-out problem. I've said this in previous calls as well, and between risk and data, call is always risk, and that's why the growth rates of the business has constantly been brought down until such time that we can start to see gross flow rates in that portfolio improve.
Growth and risk, margin and growth margin. The fortunate thing for us is the tailwind is that there is strong growth. So that means we have the latitude, if you want, to calibrate between these three dimensions of risk, growth and margin, to ensure we deliver what we call the optimized return on asset and return on equity.
We are not in the business of lending, we're in the business of risk. All reduced business eventually leads to control in risk metrics.
Frequently Asked Questions
What was Bajaj Finance's revenue in Q3 FY24?
Bajaj Finance reported revenue of — in Q3 FY24, representing a — change compared to the same quarter last year.
What guidance did Bajaj Finance management give for FY25?
Credit cost guidance of 175-185 bps: Management expects annualized loan losses to average AUM to remain in the 175-185 basis points range, consistent with pre-COVID levels. Interest rate hike of 20-30 bps from January 1: Effective January 1, the company increased interest rates by 20-30 basis points across portfolios to mitigate higher cost of funds and risk weights. Rural B2C growth slowed to 10%: Rural B2C portfolio growth was deliberately reduced to 10% in Q3 from 26% in Q1, reflecting risk actions to control elevated delinquencies. KFS compliance for all products by March 2024: The company plans to implement Key Fact Statement (KFS) in vernacular languages and digital signatures for all products by March 2024.
What are the key risks for Bajaj Finance in FY25?
Key risks include Rural B2C credit stress persists — 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.; RBI embargo on eCom and Insta EMI Card products — Regulatory restrictions on two key products have temporarily impacted loan volumes and digital metrics. Full compliance submission is pending digital signature and vernacular KFS.; Urban B2C delinquency uptick may not be transient — Analyst questioned whether rising delinquencies in urban B2C could persist. Management called it 'transient' but acknowledged preventive cuts of INR 450-500 crore quarterly.; Co-branded credit card renewal risk — 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..
Did Bajaj Finance meet its previous quarter's guidance?
Of 3 tracked promises, management 0 met, 0 close, 3 missed.
Where can I read the full Bajaj Finance Q3 FY24 concall transcript?
The full earnings conference call transcript or source release is available on the linked source material. This page provides an AI-generated summary with filing verification status shown on the financial stats.