Bajaj Finserv net profit plunges 77% to ₹194 crore in March 2020 quarter

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Bajaj Finserv net profit plunges 77% to ₹194 crore in March 2020 quarter
A rise in impairment of lending assets has plunged Bajaj Finserv's profits by 77%Bajaj Finserv
New Delhi, May 21 () Bajaj Finserv Ltd (BFL) on Thursday reported a plunge of 77% in its consolidated net profit to ₹194 crore for the fourth quarter ended March 2020, mainly due to the COVID-19 impact on group companies. The company had posted a net profit of ₹839 crore during the corresponding January-March period of 2018-19.

Excluding the COVID-19 impact, it said the net profit during the March quarter would have been ₹1,001 crore.

Its total consolidated income during the March 2020 quarter, however, increased by a little over 2% to ₹13,294 crore as against ₹12,995 crore in the corresponding period of the previous financial year, BFL said in a release.

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On the yearly basis, the company said it has posted the highest-ever net profit as well as total income, adding that the profit is highest-ever for the sixth consecutive time.

The profit after tax in 2019-20 rose to ₹3,369 crore, against ₹3,219 crore in the year-ago period, the company said.

The consolidated profit after tax, excluding the COVID-19 impact, jumped to ₹4,176 crore from ₹3,219 crore, it added.

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The company's consolidated total income was at a record ₹54,351 crore in 2019-20 as compared to ₹42,606 crore in 2018-19.

"Even without the terrible effects of the COVID-19 pandemic, India's GDP (gross domestic product) growth had shown clear signs of slowing down," BFL said.

Due to lockdown and subsequent moratorium on loan instalments, performance of banks and non-banking financial companies (NBFCs) were impacted in March, it said adding that standstill in new car sales and grace period to customers on premium payment equally impacted the life and general insurance sectors.

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Despite these challenges, the company has been able to record its highest-ever annual consolidated total income and profit after tax, BFL said in the release.

Under the Ind-AS (Indian Accounting Standards), the insurance subsidiaries have chosen to hold equity securities as fair value through profit and loss account and, therefore, the insurance companies had an unrealised mark-to-market (MTM) pre-tax loss of ₹768 crore in the consolidated financials, the company added.

"Additionally, BFL made a pre-tax provision of ₹900 crore in the form of contingency provision on account of the impact of COVID-19," it said.

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The MTM adjustment and the contingency provision, together considered as COVID-19 impact, after adjusting for tax and the company's interest in those subsidiaries have impacted consolidated profit after tax of BFL for the fourth quarter and 2019-20 by ₹807 crore, it added.

The holding company of the financial services of the Bajaj group said it had declared an interim dividend of ₹5 per equity share (100%) on February 21 and paid on March 9.

The said amount has been declared as final dividend for 2019-20.

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BFS holds 52.82% in Bajaj Finance Ltd. It also has 74% holding in unlisted subsidiaries, Bajaj Allianz General Insurance Company Ltd and Bajaj Allianz Life Insurance Co Ltd.

Shares of Bajaj Finserv on Thursday closed 3.64% down at ₹4,537.75 on the BSE.
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