Financial results –Q2FY20 Bajaj Finserv Net Profit 71% - MYREALITY.In, Real Estate, Share Market, Mutual Fund, Insurance
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Thursday, October 24, 2019

Financial results –Q2FY20 Bajaj Finserv Net Profit 71%



Financial results –Q2FY20
Bajaj Finserv

Total income­ 47% | Profit after tax­ 71%

A meeting of the Board of Directors of Bajaj Finserv Limited was held today i.e. 22 October 2019, to consider and approve the results for Q2FY20.

Bajaj Finserv Limited (BFS) is the holding company for the various financial services businesses under the Bajaj group. It serves millions of customers in the financial services space by providing solutions for asset acquisition through financing, asset protection through general insurance, family protection and income protection in the form of life and health insurance and retirement and savings solutions.

BFS participates in the financing business through its 54.81% holding in Bajaj Finance Limited (BFL) and in the protection business through its 74% holding in two unlisted subsidiaries, Bajaj Allianz General Insurance Company Limited (BAGIC) and Bajaj Allianz Life Insurance Company Limited (BALIC).Bajaj Housing Finance Limited (BHFL), which does mortgage business, is a wholly-owned subsidiary of Bajaj Finance Limited.

The results of these subsidiaries are reflected in the consolidated results of the Company.


As required by regulation, BFS has adopted Indian Accounting Standards (Ind AS) from FY19 and the previous period figures are comparable.

The insurance companies are not covered under IndAS. They have prepared IndAS financials only for the purpose of consolidation. Accordingly, for BAGIC and BALIC, standalone numbers reported below are based on non-Ind AS accounting standards (Indian GAAP) as applicable to insurance companies.

In the wake of economic conditions continuing to be sluggish with Q1 FY20 GDP growth coming in at 5% and sales of automobiles showing sharp reductions on a year-on-year basis, the Government and the RBI announced a series of measures to boost the economy. The repo rate was reduced by 0.35% in Q2 FY20 ending the quarter at 5.40%, while the Government announced a sharp reduction in corporate income tax rates from 34.94% to 25.17%. Under these difficult conditions, all the three businesses performed very well and the Company has been able to record significant increases in consolidated revenue and profit after tax. Key highlights of the quarter are:

·       All three companies – BFL, BAGIC and BALIC recorded strong growth in revenues/premiums.

·       BFL continued its stellar performance, recording its highest ever quarterly consolidated profit boosted by strong growth and solid operating performance. BFL’s profit growth was also aided by the lower corporate tax rate.

·       Despite higher claim ratios in
cluding losses from floods in Kerala and Maharashtra affecting the underwriting results for the quarter, BAGIC’s profit after tax recorded strong growth, aided by higher profit on sale of investments and lower corporate tax rate.

·       BALIC too recorded growth in profit after tax mainly due to higher profit on sale of investments and some realignment of provision for impairment consequent to partial recovery against previously impaired investments.






Highlights – Q2 FY20 v/s Q2 FY19
ü Consolidated total income –  Rs.14,224 crore   v/s   Rs.9,698crore  ­47%
ü Consolidated profit after tax           –  Rs.1,204 crore   v/s   Rs.704 crore  ­ 71%

ü Bajaj Finance, consolidated profit after tax         –  Rs.1,506 crore   v/s   Rs.923 crore  ­63%
ü General insurance, profit after tax           –  Rs.294 crore   v/s   Rs.182crore ­ 62%
ü Life insurance, shareholders’ profit after tax      –  Rs.207 crore   v/s   Rs. 132 crore ­ 57%

Highlights – H1 FY20 v/s H1 FY19
ü Consolidated total income –  Rs.26,496 crore   v/s   Rs.18,469 crore  43%
ü Consolidated profit after tax           –  Rs.    2,049 crore   v/s   Rs.1,530 crore  ­ 34%

ü Bajaj Finance, consolidated profit after tax         –  Rs.2,702 crore   v/s   Rs.1,759 crore  ­54%
ü General insurance, profit after tax           –  Rs.504 crore   v/s   Rs.473 crore  ­ 7%
ü Life insurance, shareholders’ profit after tax       –  Rs.269 crore   v/s   Rs. 278 crore ¯ 3%


 Summary of consolidated results is given in AnnexureA.

A synopsis of the quarterly performance of the individual companiesis given below:


i)       Total income for Q2FY20increased by48%to`6,322 crorev/s `4,273crore inQ2FY19.
ii)     During Q2 FY20, BFL recorded its highest ever quarterly consolidated profit after tax (PAT) of ` 1,506 crore v/s ` 923 crore in Q2 FY19 – an increase of 63%. This includes the impact of lower corporate tax rate.BFL intends to exercise the option to compute corporate tax at lower rate (25.17%).
iii)   Assets under management (AUM) stood at `135,533crore as on30September2019 v/s `98,013 crore as on30September2018- an increase of38%. This includes AUM of ₹25,714 crore of its housing finance subsidiary, BHFL, which recorded a growth of 141%over the AUM as on 30 September 2018.
iv)   Gross NPA and Net NPA,recognized as per extant RBI prudential norms and provisioned as per Expected Credit Loss (ECL) method prescribed in Ind AS, as on 30September 2019stood at1.61% and0.65% respectively.
v)     The capital adequacy ratio of BFL Standalone as at 30September 2019 (including Tier-II capital) stood at 19.68%. The Tier-I capital stood at 15.86%.
ForBHFL, the capital adequacy ratio (including Tier-II capital) stood at 19.95%.
vi)   To support the growth of the business over the next few years, during the quarter, the Board of Directors of BFL approved, subject to shareholders approval, raising of capital through a Qualified Institutional Placement (QIP) for an amount up to 8,500 crore by issue of equity shares and/or eligible securities in accordance with applicable SEBI regulations and other laws.
vii) During the quarter, BFL has received Economic Times Awards for ‘Corporate Excellence - Company of the Year’.
Summary of financial results is given in AnnexureB.

B.   Bajaj Allianz General Insurance Company Limited (BAGIC)- Indian GAAP
BAGIC’s GWP registered robust growth during the quarter.
i)       Gross written premium for Q2 FY20 increased by 57% to ₹4,279 crore v/s ₹2,718 crore in         Q2 FY19.
Gross written premium from core business (excluding crop) for Q2 FY20increased by 14% to       ₹2,550 crore v/s ₹ 2,243 crore in Q2 FY19.
ii)     Net earned premium for Q2 FY20 stood at `2,131 crore v/s `1,679 crore in Q2 FY19 –                       an increase of 27%.
iii)   Claim ratio stood at 75.0% in Q2 FY20 v/s 68.2% in Q2 FY19. The increase in claim ratio includes losses from claims in Maharashtra and Kerala.
iv)   Combined ratio stood at 102.7% in Q2 FY20 v/s 97.2% in Q2 FY19.
v)     Underwriting loss forQ2 FY20was `91 crore v/s a loss of `12 crore in Q2 FY19. The higher underwriting loss was mainly due to the higher claim ratio.
vi)   Investment and other income for Q2 FY20stood at`462 crore v/s `286 crore in Q2 FY19. Profit on sale of investments were higher by ` 113 crore (before tax).
viii)           Profit after taxfor Q2FY20increased by 62% to`294crore v/s `182 crore inQ2FY19.This includes the impact of lower corporate tax rate.BAGIC intends to exercise the option to compute corporate tax at lower rate (25.17%).
vii) BAGIC continues to hold provision of ` 76 crore representing 60% of the balance outstanding amount in respect of fixed income investments in DHFL, same as previous quarter.
viii)           As on 30September 2019, solvency ratio stood at 243%, which is well above the minimum regulatory requirement of 150%.
ix)   Assets Under Management (AUM), represented by cash and investments as on 30September 2019 stood at `18,139 crorev/s `14,887 crore as on30September 2018a healthy increase of22%.
Summary of financial results and key ratios is given in Annexure C.


i)       During the quarter BALIC signed a corporate agency agreement with Axis Bank Limited.
ii)     New business premium for Q2 FY20stood at` 1,235 crorev/s `1,213 croreinQ2FY19.
a)  Rated individual new business premium increased by 30% to` 450crore in Q2 FY20 v/s `346crore inQ2 FY19.
b)  Group protection new business premium increased by 20%to` 428 crore in Q2 FY20 v/s`356 crore in Q2 FY19.

iii)   Renewal premium for Q2 FY20increased by 15% to`1,000 crore v/s `870 crore in Q2 FY19.
iv)   Gross written premiumincreased by 7% to at `2,235 crore in Q2 FY20 v/s `2,083 crore inQ2 FY19.
v)     During the quarter, some of the fixed income investments in DHFL matured and money was received, while some were sold. After these transactions, BALIC continues to hold provision of ` 89 crore representing 60% of the balance outstanding amount – reduction of` 37 crore from previous quarter’s amount of ` 126 crore.
vi)   Shareholders’ profit after tax during Q2FY20increased by 57% to`207crore v/s ` 132 crore in Q2FY19. Higher profit on sale of investmentsof` 54 crore (`46 crore after tax) and realignment of provision for impairment of ` 37 crore(`32 crore after tax) contributed to this increase.
vii) Solvency ratio stood at a healthy 770%as on 30September 2019 as against the minimum regulatory requirement of 150%.
viii)           Assets Under Management (AUM) represented by total investments stoodat `58,273croreas on30September 2019v/s `53,922 croreas on 30September 2018 – an increase of 8%.
Summary of financial results is given in Annexure D.

S Sreenivasan
CFO

22October 2019

Annexure B - Summary financial results of BFL(consolidated) – (IndAS)


` In Crore
Q2 FY20
Q2 FY19
H1 FY20
H1 FY19
FY19
Total income
6,322
4,273
12,131
8,211
18,502
Interest expenses
2,323
1,565
4,437
2,925
6,624
Net interest income
3,999
2,708
7,694
5,286
11,878
Operating expenses
1,383
958
2,675
1,913
4,198
Loan losses and provisions
594
315
1,145
641
1,501
Profit before tax
2,022
1,435
3,874
2,732
6,179
Profit after tax
1,506
923
2,702
1,759
3,995



Annexure C - Summary financial results of BAGIC – (Indian GAAP)

 ` In Crore
Q2 FY20
Q2 FY19
H1 FY20
H1 FY19
FY19
Gross written premium
4,279
2,718
7,123
5,148
11,097
Net earned premium
2,131
1,679
4,078
3,292
7,010
Underwriting result
(91)
(12)
(82)
116
18
Investment and other income
462
286
772
593
1,134
Profit before tax
371
274
690
709
1,152
Profit after tax
294
182
504
473
780

Key ratios





Claim ratio
75.0%
68.2%
73.9%
67.0%
68.6%
Combined ratio
102.7%
97.2%
102.8%
93.8%
96.7%


                               
Annexure D - Summary financial results of BALIC – (Indian GAAP)

 ` In Crore
Q2 FY20
Q2 FY19
H1 FY20
H1 FY19
FY19
New business premium
1,235
1,213
2,249
1,934
4,923
  Rated individual new business premium*
450
346
782
629
1,742
  Group protection new business premium
428
356
826
617
1,450
Renewal premium
1,000
870
1,823
1,510
3,934
Gross written premium
2,235
2,083
4,072
3,444
8,857






Shareholders’ profit
208
114
300
239
398
Amount transferred from the policyholders’ account to the shareholders’ account (net)
(1)
18
(31)
39
104
Total shareholders’ profit after tax
207
132
269
278
502

* Rated new business premium = 100% of Regular premium + 10% of Single premium policies sold.


Financial results –Q2FY20 Bajaj Finserv Net Profit 71% Reviewed by Investment Guru on October 24, 2019 Rating: 5 Financial results –Q2FY20 Bajaj Finserv Total income ­  47% | Profit after tax ­  71% A meeting of the Board of Directors o...

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