Bajaj Finance : Q4 International Investor Presentation

Q4 FY24 International Investor Presentation

25 April 2024

Presentation Path

Section 01	Section 03		Section 05		Section 07
Executive	Financial		Customer franchise	Update on
summary - Q4	performance - Q4		and distribution		credit quality
FY24 and FY24	3 FY24	37	reach	49	57

Section 02	Section 04			Section 06	Section 08
Bajaj Finance	Asset liability	Business segment	Environment, Social
Limited overview	management	wise AUM	and Governance (ESG)
23	42	54	65

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Section 01

Executive summary - Q4

FY24 and FY24

1.1 Quarter and Year gone by

1. Lead financial indicators
2. Consolidated financial performance - FY24
3. Management assessment for FY25

1.5 Omnipresence strategy update

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Q4 FY24 Executive summary

A good quarter on AUM, customer acquisition, portfolio metrics and operating efficiencies. Dampener for the quarter were elevated loan losses in Rural B2C and continued impact of regulatory restrictions. Delivered AUM growth of $ 2,367 MM, booked 7.87 MM new loans and added 3.23 MM new customers in Q4. Bajaj Finserv App and Web have gone through a major upgrade in Q4, significantly expanding products,

services and new features. Bajaj Finserv App now has 52.41 MM net

users.

AUM	Opex to Net	PAT	ROE	Net NPA
	total income

$ 39,833	34.0%	$ 461	20.5%	0.37%
MM	Q4 FY23	MM	Q4 FY23	Q4 FY23
Growth	Growth
34%	34.2%	21%	23.9%	0.34%

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FY24 Executive summary

Good year across all financial and portfolio metrics. Delivered AUM growth of $ 10,028 MM, disbursed 36.2 MM loans and added a record

14.5 MM new customers in FY24. Regulatory action on two products of the Company was a setback for the year. Remain committed to

compliance in form and spirit. The Company is rapidly implementing key

LRS megatrends - Account aggregator (8.1 MM consents), ONDC

(June'24), Social commerce (July'24), Rewards platform (June'24) and O2O (June'24) to strengthen competitive moat and cost optimisation.

AUM	Opex to Net	PAT	ROE	Net NPA
	total income

$ 39,833	34.0%	$ 1,741	22.1%	0.37%
MM	FY23	MM	FY23	FY23
YoY Growth	35.1%	YoY Growth
34%	26%	23.5%	0.34%

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Lead financial indicators for Q4 FY24 (1/6)

Balance sheet and business metrics

1. Delivered AUM growth of $ 2,367 MM in Q4.
2. AUM was up 34% at $ 39,833 MM as against $ 29,805 MM as of 31 March 2023.
3. New loans booked were up 4% to 7.87 MM in Q4 FY24 as against 7.56 MM in Q4 FY23.
4. New loans booked were lower by approximately 0.8 MM in Q4 and 1.2 MM in FY24 on account of the restrictions placed by
   RBI on the Company, on sanction and disbursal of loans under 'eCOM' and 'Insta EMI Card'.

Customer franchise and geographic footprint

5. In Q4, the Company added 3.23 MM new customers to the franchise.

1. Customer franchise stood at 83.64 MM as of 31 March 2024. Cross sell franchise crossed a milestone of 50 MM and stood at 50.75 MM.
2. In Q4, the Company added 53 new locations and added 7.7K distribution points. Geographic presence stood at 4,145 locations and over 198K active distribution points as of 31 March 2024.

Liquidity and cost of fund

1. Liquidity buffer stood at $ 1,888 MM as of 31 March 2024.
2. In Q4, cost of funds was 7.86%, an increase of 10 bps over Q3 FY24.
3. Deposits book grew by 35% YoY and stood at $ 7,247 MM as of 31 March 2024. In Q4, net deposit growth was $ 258 MM. Deposits contributed to 21% of consolidated borrowings as of 31 March 2024.

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Lead financial indicators for Q4 FY24 (2/6)

Operating efficiencies

1. In Q4, Net interest income grew by 28% to $ 965 MM as against $ 753 MM in Q4 FY23. NIM compression in Q4 over Q3 was 21 bps, primarily contributed by AUM composition changes.
2. In Q4, Net total income grew by 25% to $ 1,170 MM as against $ 937 MM in Q4 FY23.
3. In Q4, Opex to Net total income improved to 34.0% as against 34.2% in Q4 FY23. The Company has deployed various GenAI initiatives across operations, service and contact centers to enhance operating efficiencies.
4. Employee headcount stood at 53,782 (BFL, BHFL & BFSL) as of 31 March 2024. The employee headcount reduced by 499 in Q4. Attrition for FY24 was 14.9% as against 18.7% for FY23.

Credit cost

1. In Q4, loan losses and provisions were $ 158 MM. Rural B2C business continued to witness elevated loan losses in Q4 as well. AUM growth of Rural B2C (excl. Gold loan) has been brought down from 25% in March 2023 to 6% in March 2024.
2. Loan loss to average AUF, excluding management overlay was 1.86% in Q4.
3. The Company holds a management and macro-economic overlay of $ 36 MM as of 31 March 2024. During the quarter, the Company utilised $ 15 MM towards strengthening of its ECL model and released $ 20 MM towards loan losses and provisions.
4. GNPA & NNPA stood at 0.85% & 0.37% as of 31 March 2024 as against 0.94% & 0.34% as of 31 March 2023, amongst the lowest in the industry.
5. Risk metrics across all businesses were stable except Rural B2C business. The Company continues to be watchful on risk

actions in Rural B2C business.	7

Lead financial indicators for Q4 FY24 (3/6)

Profitability and capital

1. Consolidated pre-provisioning operating profit grew by 25% to $ 773 MM in Q4 FY24.
2. Consolidated profit before tax grew by 20% to $ 615 MM in Q4 FY24. The profit before tax for Q4 was lower by approximately 4% due to regulatory restrictions on sanction and disbursal of loans under 'eCOM' and 'Insta EMI Card'.
3. Consolidated profit after tax grew by 21% to $ 461 MM in Q4 FY24.
4. In Q4, the Company delivered annualised ROA of 4.84% as against 5.40% in Q4 FY23.
5. In Q4, the Company delivered annualised ROE of 20.48% as against 23.94% in Q4 FY23.
6. Capital adequacy remained strong at 22.52% as of 31 March 2024. Tier-1 capital was 21.51%.

Additional updates

1. The Board of Directors of BHFL, a wholly owned subsidiary of BFL, at its meeting held on 24 April 2024 evaluated various options for meeting the mandatory listing conditions pursuant to BHFL's classification as an NBFC - Upper Layer by RBI, including through a potential initial public offering. In this regard, the Board of BHFL has constituted a committee to undertake various actions and steps.
2. The Company is rapidly implementing key identified LRS megatrends - Account aggregator (8.1 MM consents), ONDC
   (June'24), Social commerce (July'24), Rewards platform (June'24) and Offline to Online (June'24) to strengthen competitive moat and cost optimisation.
3. In Q4, the Company raised $ 725 MM under its external commercial borrowing (ECB) programme.

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Lead financial indicators for Q4 FY24 (4/6)

1. The Company has made required changes in response to the regulatory restriction imposed by RBI on the Company, on sanction and disbursal of loans under 'eCOM' and 'Insta EMI Card'. The Company has formally requested RBI for review and removal of these restrictions.
2. To ensure compliance in form and spirit, the Company, in addition to digital lending products, has implemented KFS for all lending products effective 31 March 2024 and made it available in 20 vernacular languages.

Bajaj Housing Finance Limited (BHFL)

BHFL - Balance sheet and geography

1. AUM was up 32% at $ 11,008 MM as against $ 8,341 MM as of 31 March 2023.
2. Home loans AUM grew by 24%, Loan against property grew by 23%, Lease rental discounting grew by 57%, Developer finance grew by 69%.
3. Portfolio composition for HL : LAP : LRD : DF : Others stood at 58% : 10% : 19% : 11% : 2% as of 31 March 2024.
4. In Q4, overall approvals grew by 19% to $ 2,339 MM as against $ 1,965 MM in Q4 FY23.
5. In Q4, disbursements grew by 26% to $ 1,373 MM as against $ 1,087 MM in Q4 FY23.
6. Geographic presence stood at 174 locations.

BHFL - Liquidity and cost of fund

1. Liquidity buffer stood at $ 241 MM as of 31 March 2024.
2. In Q4, cost of funds was 7.82%, an increase of 12 bps over Q3 FY24.
3. Borrowing mix - Banks : NHB : Money market stood at 51% : 10% : 39 as of 31 March 2024.

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Lead financial indicators for Q4 FY24 (5/6)

BHFL - Operating efficiencies

1. In Q4, Net interest income grew by 11% to $ 76 MM as against $ 68 MM in Q4 FY23.
2. In Q4, Net total income grew by 14% to $ 86 MM as against $ 76 MM in Q4 FY23.
3. In Q4, Opex to Net total income stood at 27.1% as against 26.5% in Q4 FY23.
4. Total employee headcount stood at 2,372 as of 31 March 2024.

BHFL - Credit costs

1. In Q4, loan losses and provisions were $ 4.2 MM as against $ 6.9 MM in Q4 FY23. BHFL holds a management and macro- economic overlay provision of $ 11 MM as of 31 March 2024.
2. GNPA & NNPA stood at 0.27% and 0.10% as of 31 March 2024 as against 0.22% and 0.08% as of 31 March 2023.

BHFL - Profitability and capital

1. Profit before tax grew by 20% to $ 59 MM in Q4 FY24.
2. Profit after tax grew by 26% to $ 46 MM in Q4 FY24.
3. In Q4, the Company delivered annualised ROA of 2.00% as against 2.01% in Q4 FY23.
4. In Q4, the Company delivered annualised ROE of 12.65% as against 11.67% in Q4 FY23.
5. Capital adequacy ratio stood at 21.28% as of 31 March 2024. Tier-1 capital was 20.67%.
6. BHFL raised additional $ 241 MM through rights issue from BFL on 03 April 2024.

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