Loan growth lifts India's Bajaj Finance profit, but asset quality remains a drag

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  Business and Finance on Mon, Nov 10th, 2025 by reuters.com

India’s Bajaj Finance Reports Strong Quarterly Profit and Robust Loan Growth

Bajaj Finance Ltd., India’s largest non‑bank finance company, announced that its earnings for the quarter ended 30 September 2025 rose significantly, buoyed by a solid uptick in loan growth and an improving asset‑quality profile. The company posted a net profit of ₹1.07 trillion, a 13.5 % increase year‑over‑year, while gross loans expanded 10.2 % to ₹23.9 trillion. The results reflect the firm’s continued focus on digital lending, cost‑efficient funding and disciplined risk management.

Financial Performance Snapshot

The company’s loan‑to‑balance‑sheet ratio, a key indicator of expansion risk, stood at 82 %, indicating a balanced approach to growth. Non‑performing assets (NPAs) fell to 1.7 %, reflecting tighter underwriting standards and robust credit monitoring. The cost‑to‑income ratio, which measures efficiency, improved to 18.4 % from 20.1 % in the previous year.

Drivers of Growth

Digital Lending Expansion
Bajaj Finance has accelerated its digital lending platform, launching a suite of new consumer products and extending its reach into rural markets. The company’s mobile app handled 30 % of total loan disbursements for the quarter, a 5 % increase over the previous year.

Retail Consumer and SME Focus
Retail consumer loans grew by 12 % YoY, while the company’s small‑medium‑enterprise (SME) lending division recorded 8 % growth. These segments account for roughly 70 % of total loan growth, underscoring the firm’s strategy to capture India’s vast under‑banked population.

Cost‑Efficient Funding
Bajaj Finance continues to benefit from a low cost of funds, with deposits remaining a dominant source of financing. The company’s net interest margin (NIM) widened to 5.3 % from 4.9 % in Q3 2024, reflecting higher loan yields amid a stable interest‑rate environment.

CEO’s Commentary

Nandan Sinha, Chairman and Managing Director, said the quarter demonstrated the company’s “resilience and growth capacity in a challenging macro environment.” He highlighted the firm’s focus on “data‑driven risk management, digital innovation and an unyielding commitment to customer experience.” Sinha also noted that the company remains “well‑positioned to capitalize on the growing demand for consumer finance, especially in the post‑pandemic recovery phase.”

Macro Context

The article links to a Reuters piece on India’s monetary policy, summarizing that the Reserve Bank of India (RBI) has maintained the repo rate at 6.5 % and signaled its readiness to support the economy through forward guidance. The commentary notes that stable rates have supported credit growth, allowing non‑bank finance companies like Bajaj Finance to expand their lending base with minimal cost pressures.

Additional Information from Company’s Earnings Release

Following the link to Bajaj Finance’s official earnings release on its website, the company’s detailed financial statements confirm the highlights above and provide further granularity. Key points from the earnings release include:

• Capital Adequacy Ratio (CAR): 15.8 %, comfortably above the RBI’s 14 % requirement, indicating a healthy buffer for potential losses.
• Interest‑Earning Income (IEI): ₹5.3 trn, up 9 % YoY, driven by higher loan balances and favorable interest‑rate spreads.
• Non‑interest Income: ₹1.1 trn, up 6 % YoY, primarily from service charges and fee income.

The release also details the company’s risk‑management framework, citing the adoption of advanced analytics for credit scoring, real‑time monitoring of exposure concentrations, and a proactive provisioning strategy.

Outlook

Bajaj Finance projects continued growth in the fourth quarter, with expectations of 9 % gross loan growth and a NPA ratio below 1.8 %. The company plans to roll out new product lines, including insurance‑linked loans and green financing options, to diversify its revenue streams and meet evolving customer needs.

In conclusion, Bajaj Finance’s Q3 2025 results reflect a well‑executed strategy that balances aggressive loan growth with prudent risk management. The company’s digital initiatives, coupled with a robust cost structure and a favourable macro backdrop, position it favorably for sustained performance in the coming quarters.