*Citi: Bajaj Finance (BJFN.BO) - 1QFY21 Pre-quarter Filing: Drop in Loans under Moratorium*
Bajaj Finance has reported select balance sheet and customer acquisition items for 1QFY20 (full results are on 21st July). These are as follows:
*Drop in loans under moratorium*
Loans under moratorium have fallen from 27% as on 30 April to 15.5% as on 30 June. This implies that AUM under moratorium has fallen by 46% over May-June. Moratorium excluding two wheelers was ~22% as on 30 April; we don't have segmental split for June.
*Potential additional provisions for COVID-19 during 1Q*
In 4Q, Bajaj had made Rs9bn of additional provisions for COVID-19, i.e. 0.6% of total AUM or 2.3% of AUM-under-moratorium. Our recent note – NBFCs - How much is provided? Is it enough? – discussed that Bajaj, along with most other NBFCs, is likely to make additional provisions for COVID-19. We build 4% credit cost in FY21 vs 3% in FY20 (including Covid provisions) and ~1.5% in prior years.
*Lending activity 20-25% of past-year levels*
AUM of Rs1.38tn is up 7% YoY and down 6% QoQ. Lending activity in 1Q has been 20-25% of past-year levels – expected, given the lockdown. 0.5m new customers were acquired in 1QFY21 vs. 2.5m in 1QFY20 and 1.7m new loans were booked vs. 7.3m in 1QFY20. Total customers rose 16% YoY to 43m. We had discussed in our note – Devil's Advocate: Key Concerns on One of Our Top Picks – that long tenor book will support growth.
*Deposit growth, capital, liquidity comfortable*
Deposits grew 33% YoY (though down 7% QoQ). Bajaj has total liquidity of Rs176bn as on June-end vs. Rs157bn as on March. Total CAR is 26.4% vs 25% as on March.