Total income up 16% | Profit after tax up 44%
A meeting of the Board of Directors of Bajaj Finserv Limited was held today to consider and approve the results for
Details about BFS, the businesses carried by its subsidiaries, its group structure, and GAAP followed, are indicated separately at the bottom of this release.
On 22 June 2020, BFS was included in the benchmark BSE Sensex of the top 30 stocks in India. BFL is already part of BSE Sensex since December 2018.
The national lockdown announced from 25 March 2020 was eased partially from 17 May 2020. However, many large cities continued to be under lockdown for the entire quarter and economic activity was muted. Consequently, all the three businesses were impacted for the whole of Q1 FY21.
excluding unusual items (explained below)
The spread of the COVID-19 pandemic resulted in a sudden and steep fall in the value of shares traded on the stock exchanges in Q4 FY20. As on 30 June 2020, the Nifty 50 index and BSE 200 index have recovered 20% from 31 March 2020 level. Under Ind AS, 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 gain of ₹ 556 crore in Q1 FY21, while in Q4 of FY20, there was a MTM loss of ₹ 768 crore.
Additionally, BFL made a pre-tax provision of ₹ 1,450 crore in the form of contingency provision during Q1 of FY 21, on account of the impact of COVID-19. The same is over and above the provision considered of ₹ 900 crore in FY20 and other usual and necessary provisions for NPAs.
The MTM adjustments of the insurance businesses and the contingency provision of BFL, together considered as unusual items, after adjusting for tax and the Company’s interest in those subsidiaries have negatively impacted consolidated profit after tax of BFS for Q1 FY21 by ₹ 244 crore as explained below.
A synopsis of the quarterly performance of the individual companies is given below:
For Bajaj Housing Finance Limited (BHFL), a 100% mortgage subsidiary of BFL, the capital adequacy ratio (including Tier-II capital) stood at 25.94%.
BAGIC wrote crop insurance of ₹ 18 crore in Q1 FY21 v/s ₹ 119 crore in Q1 FY20.
Gross written premium from core business (excluding crop) for Q1 FY21 was ₹ 2,271 crore v/s ₹ 2,724 crore in Q1 FY20.
As earlier mentioned, faced with COVID-19 and the subsequent lockdowns, the Company and its subsidiaries took immediate steps to handle this extreme situation.
The Company and its subsidiaries are navigating through this challenge, with focus on profitability over growth. They are conserving cash, borrowing long-term, strengthening collections and reducing overheads. As a result, the operating companies have strong solvency, well above the required capital.
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