(Bloomberg) -- Bajaj Finance Ltd. profit fell the most in 12 years after Asia's biggest shadow financier for consumer goods braced for the fallout of the coronavirus pandemic in India by almost tripling the amount it set aside for bad loans.
Net income fell to 8.8 billion rupees ($120 million) for the three months ending September, compared with 13.8 billion rupees a year earlier. That's the biggest drop in profit since March 2008. Provisions rose to 16.3 billion rupees, compared with 5.8 billion rupees, it said in a statement. Of this, the bank set aside 13.1 billion rupees for borrowers hit by the pandemic.
Like many Indian banks, Bajaj Finance, the region's biggest consumer shadow lender by market value, has been hit after a nationwide lockdown forced businesses to close, impacting demand for credit and borrowers' ability to repay. With the economy set to shrink by the most in four decades, the nation's bad loan ratio -- already the worst among major countries -- may soar to 12.5% by March, hampering any hopes for an early recovery.
Read about shadow bank recovery stalling on loan fears
Bajaj Finance said its gross bad loan ratio was 1.03% at the end of September, compared with 1.61% a year earlier. That ratio would be 1.34% if there wasn't an extension of rules covering the classification of bad loans that was due to end on Aug. 31, it said.
Shares in Bajaj Finance shares fell about 1% at 3:10 p.m. in Mumbai, lagging the broader Sensex that was trading 0.5% higher.
Bajaj Finance's loan growth was muted for the period with 3.6 million new loans booked, compared with 6.5 million a year earlier, according to an exchange filing.
The financier had 1.37 trillion rupees of assets under management at the end of September, compared with 1.35 trillion rupees a year earlier.
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