Bajaj Finance said in its mid-quarter update that it expects an impact of Rs 4000-5000 crore on the Assets Under Management (AUM) growth plan for fiscal year 2022, due disruption caused by the second wave.
The impact on assets under management in the first quarter of fiscal 22 was higher due to lower volumes in the B2B (business to business) segment. The company said it has taken several steps to reduce its operating expenses and cost of funds to partially mitigate the financial impact of lower growth in assets under management.
Given the severity of the second wave and the resulting foreclosure across most of India over the past 35 days, the company estimated an impact on its finances in fiscal year 22. The second wave caused a marginal increase in bounce rates at T1FY22 compared to T4FY21.
Average EMI bounce rates (equivalent monthly payments) at T1FY22 were around 1.08X compared to T4FY21, the company said.
Forward flows on overdue positions were higher due to constraints on collections amid tight foreclosure in most parts of India. As a result, the company estimated its gross non-performing assets and net non-performing assets in Q1FY22 and Q2FY22 to be higher. The disruption caused by Wave 2 also resulted in an additional credit cost of 1,100 crore to 1,300 crore over the expected cost of credit for FY2022.
According to the company update, B2B and auto finance businesses have been hit the hardest due to tight lockdowns. The other branches of activity were less impacted in April and recorded 85% of planned disbursements. The company said it leveraged its digital capabilities to remain largely functional in May and made 60% of planned disbursements.
Bajaj Finance had a good T4FY21 with most major financial indicators normalizing to pre-Covid levels. The company ended FY21 with a GNPA of 1.8% and an NNPA of 0.75%, close to pre-COVID levels. The company entered FY2022 with a COVID overlay provision of Rs 840 crore.