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Yes Securities Report
Bajaj Finance Ltd. delivered a mild miss on net interest income/pre-provision operating profit and 4% lower-than-expected earnings on account of 11 basis points QoQ compression in net interest margin and increased credit cost at 1.7%. Assets under management growth was strong at 7% QoQ/35% YoY notwithstanding a sharp growth deceleration in rural B2C (excluding gold loans) and calibration in urban B2C product segments.
Disbursement growth in B2B segments, mortgages and two-wheeler/three-wheeler financing continues to be robust. The small and medium enterprise and commercial portfolios of Bajaj Finance also continue to grow at strong pace.
Overall, new loans booked in the quarter were up 26% YoY and co. added highestever 3.85 million new customers.
The decline in NIM mainly came on the back of 9 bps increase in funding cost.
In the light of increase in risk weights and higher incremental cost of funds, Bajaj Finance has increased rates across all portfolios by 20-30 bps. Company augmented its distribution and resources by 4-6% in the quarter, and hence Opex grew by 5% QoQ.
Except for mortgages, the stage-II and stage-III delinquencies rose meaningfully across most products. The higher delinquency flows during the quarter underpinned the increase in credit cost.
Management assesses that risk metrics across all businesses were stable except for Rural B2C. Loan losses were higher in Urban B2C segment due to lower collection efficiencies, but portfolio remains in good shape.
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