Bajaj Finance Ltd has 27% of its loanbook under the three-month moratorium but has not allowed the deferment to customers with a high probability of default, said its managing director Rajeev Jain.
Jain spoke to analysts on Tuesday after declaring its March quarter results. The company’s consolidated assets under management stood at ₹1.43 trillion, of which ₹38,599 crore is under moratorium.
“We chose to not give moratorium from an accounting standpoint to those customers who had high likelihood of default. Of this 27%, around 70% loans have no recent bounce history, meaning these did not default in January, February and March,” said Jain.
The auto finance business of the company has the highest percentage of loans under moratorium at 70% ( ₹9,611 crore). The company said that around 40% of auto finance business comes from direct cash collection (DCC) mode. Owing to the ongoing lockdown and inability of customer to pay by cash, bounce rate of this portfolio has increased from an average of 19% in January, February, March to about 86% in April and May.
The lender has built multiple scenarios on potential covid-19 credit cost impact. These scenarios take into account various factors including, phasing of lockdown, behaviour of moratorium customers, collection capacity management, changes in regulatory forbearances and response of the economy post lockdown.
“Clearly the modelling is essentially focussed on the moratorium portfolio. The entire exercise risk managers across the world would be doing is on clients who have been given a moratorium,” said Jain.
Jain said that Bajaj Finance has used the last 60 days to augment its collection capacity so that as the markets start to open (green, orange or red) it is ready to rapidly move and collect efficiently.
“We are adding close to 2,800 officers in the company to this activity,” he said.
According to Jain, the lender’s focus at this point of time is on mining its existing base of customers as the new-to-Bajaj customers have always been riskier. “We are using the franchise to do more (business) with them. So, the focus will remain, for the foreseeable future, on existing to Bajaj customers,” said Jain.
Bajaj Finance Ltd on Tuesday reported a 19.4%% year-on-year (y-o-y) decline in consolidated net profit at ₹948.1 crore owing to a covid-19 provisions of ₹900 crore.
Bajaj Finance’s net interest income (NII) surged 38% y-o-y to ₹4,684 crore in the March quarter of FY20. The other large component of its revenues was in the form of fees and other income of ₹929 crore, up 45% from the same period last year. The consolidated results of Bajaj Finance include the results of its wholly-owned subsidiaries — Bajaj Housing Finance Ltd (BHFL) and Bajaj Financial Securities Ltd (BFinsec).
The non-banking financial company (NBFC) said that due to the covid-19 pandemic and the consequent lockdown, the company lost 10 productive days in Q4 FY20 resulting in lower acquisition of nearly 1 million loan accounts and lower asset under management (AUM) of approximately ₹4,500 crore.
Bajaj Finance said that it is well-capitalised with a capital adequacy ratio of 25.01% as on 31 March. “The company’s liquidity position remains very strong with overall liquidity surplus of approximately ₹15,725 crore as of 31 March, 2020 on consolidated basis. The company’s liquidity surplus as on 15 May was approximately ₹20,900 crore,” it said.