Three-wheeler delinquencies at the heart of Bajaj Finance's asset quality woes
Premium- Rajeev Jain said that three-wheeler segment of the business is more severely impacted than the rest
Non-bank financier Bajaj Finance witnessed a rise in delinquencies in the three months to June, emanating from its the auto finance business and specifically because its three-wheeler finance segment was hit by the second wave, managing director Rajeev Jain told analysts.
The total size of its auto finance book is ₹11,347 crore as on 30 June, 19.15% of which turned non-performing. The gross non-performing asset (NPA) ratio was at 9.31% in the March quarter and 11.54% in the December 2020 quarter. Bajaj Finance said in a statement that the auto finance business was the worst-affected, where gross bad loans rose ₹1,199 crore in the June quarter. Bad loans in other businesses increased ₹807 crore in the quarter under review, taking the total gross NPAs to ₹4,737 crore.
“Very clearly, if you look at the auto finance business, the bigger stress is in the three-wheeler business there which is 30% of the business," said Jain.
Jain said that three-wheeler segment of the business is more severely impacted than the rest.
“The reason one did not see the pressure last year was essentially because we were under moratorium. Out of ₹11,347 crore auto loan book that we have, about ₹4,000 crore is in three-wheeler business. They are far more impacted in the first wave as well," said Jain.
The second wave in the months of April and May severely impacted businesses across the spectrum. While lockdowns were less severe this time round than the first wave last year, they did have a considerable impact on mobility and may have been the reason why three-wheeler borrowers defaulted.
On a consolidated basis, Bajaj Finance’s total assets under management (AUM) stood at ₹1.59 trillion as against ₹1.38 trillion in the same period last year. The company said that in the absence of a third wave, it expects quarterly AUM growth rate for balance of the year to be at pre-covid levels. It booked 4.63 million new loans in Q1 FY22 and acquired 1.88 million new customers.
On Tuesday, the lender reported a consolidated net profit of ₹1,002 crore, up 4% from the June quarter of the previous year. However, on a standalone basis, its net profit was down 3% to ₹843 crore on the back of higher loan losses and provisions.
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The second wave caused a marginal increase in equated monthly instalment (EMI) bounce rate in Q1 FY22 over Q4 FY21. Average EMI bounce rate in Q1 FY22, it said, was approximately 1.08 times that of Q4 FY21, although the bounce rate for July has improved to 0.96 times of Q4 FY21.
That apart, it launched its wallet business on 1 July and said it has onboarded 320,000 customers as of 18 July. It expects to onboard over 5 million customers for its wallet business in FY22. According to a statement, it has taken an approval of its board to apply to RBI for Payment Aggregator (PA) and Bharat Billpay Operating Unit (BBPOU) license, with a view to strengthen its presence in payments business.
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