Financial
results –Q2FY20
Bajaj Finserv
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 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 2018–a 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.
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