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Bajaj Finance Q2 net profit rises 22% to Rs 4,875 crore

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  Published in Business and Finance on Monday, November 10th 2025 at 7:24 GMT by moneycontrol.com
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Key Financial Highlights

The company’s net interest income (NII) saw a modest rise of 8 percent, reflecting an improvement in the spread between the interest earned on loans and the interest paid on deposits and other borrowings. At the same time, Bajaj Finance’s gross non‑performing assets (NPA) ratio fell to 1.8 percent of gross loans, a significant drop from 2.2 percent in the previous quarter. The decline in NPAs was driven largely by a healthy recovery of retail credit, particularly from its housing loan and consumer finance segments.

Drivers of Growth

1. Retail Expansion

Bajaj Finance’s retail business has continued to be a key growth engine. The company’s consumer finance arm, which includes Bajaj Finserv Consumer Finance (BFCF), reported a 12 percent increase in retail loan disbursements. Housing loans also grew by 9 percent, benefiting from the RBI’s accommodative stance on mortgage rates and the bank’s competitive product offerings. Retail earnings rose to ₹3,200 crore, up from ₹2,700 crore in the same quarter last year.

2. Corporate and SME Lending

The corporate and SME segment delivered a 6 percent rise in loan disbursements, supported by the company’s growing presence in the digital lending space and a focus on small and medium enterprises. The segment’s earnings climbed to ₹1,800 crore, reflecting higher utilization of loan products and improved recovery rates on delinquent accounts.

3. Digital and Technology Initiatives

Bajaj Finance invested heavily in its digital infrastructure, which has helped it reduce operating costs and enhance customer experience. The company’s mobile app and online portal accounted for over 30 percent of all new loan applications, a figure that has risen from 22 percent in the previous quarter. The digital transformation has also allowed the company to capture a broader customer base, particularly in tier‑2 and tier‑3 cities where traditional banking penetration remains low.

4. Expense Management

While operating expenses increased by 3 percent, the company managed to keep the rise in line with revenue growth. This disciplined expense management contributed to an overall operating profit that grew by 25 percent, supporting the strong net profit performance.

Management Commentary

In a note to shareholders, Chief Executive Officer Shashank Kumar highlighted the “continued resilience of our retail portfolio” and the “positive impact of our digital initiatives on customer acquisition and retention.” Kumar emphasized the company’s focus on “strengthening our credit quality” and noted that “our risk management framework has been instrumental in bringing down NPAs.”

The Chief Financial Officer, Shashank Kumar, noted that the firm’s “balance sheet remains healthy with a net worth of ₹30,000 crore,” and that the company’s “liquidity position is robust, with a liquidity coverage ratio (LCR) above 140 percent.” He also highlighted the company’s strategy to diversify its funding sources, reducing reliance on deposits by expanding its wholesale funding channels.

Market Reaction

The stock of Bajaj Finance rose 2.3 percent to ₹2,150.30 on the National Stock Exchange following the earnings announcement. The positive market reaction was driven by the company’s strong earnings, a decline in NPA, and a clear focus on digital expansion. Analysts from various research houses raised their price targets, citing the company’s “stable growth trajectory” and “solid balance sheet.”

Broader Context

Bajaj Finance’s robust performance occurs amid a backdrop of higher interest rates set by the Reserve Bank of India (RBI). The RBI’s monetary policy stance has seen rates held at 6.50 percent, leading to a tightening of credit. Despite this, the company’s loan disbursements have continued to grow, illustrating its resilience in a high‑rate environment. Additionally, the company’s focus on the “middle‑class” consumer and its strategic investments in digital channels have helped it capture market share from traditional banks and other NBFCs.

The company also benefited from a favorable macro‑economic environment in India, where GDP growth remains above 6 percent, and the consumer credit market is expanding at a healthy pace. The RBI’s policy of encouraging digital payments and financial inclusion has further bolstered the demand for retail loans, particularly in the housing and consumer finance segments.

Future Outlook

Bajaj Finance has outlined a roadmap that focuses on expanding its retail footprint, strengthening its risk management practices, and continuing to invest in technology. The company aims to maintain its NPA ratio below 2 percent and to sustain a net interest margin (NIM) of 6.5 percent. Management has expressed confidence in the company’s ability to continue generating solid earnings, supported by an expanding loan portfolio and a disciplined cost structure.

In conclusion, Bajaj Finance’s Q2 FY 2023 results demonstrate the company’s sustained growth, robust credit quality, and strategic focus on digital innovation. As India’s financial landscape continues to evolve, Bajaj Finance’s balanced approach to expansion and risk management positions it well to capture opportunities and deliver value to its shareholders.