Indian non-banking financial company (NBFC) Bajaj Finance reported a smaller-than-expected rise in third-quarter profit on Monday for a second straight quarter, as it set aside more money for bad loans.
The company's consolidated profit after tax rose 22.4% to 36.39 billion rupees (about $438 million) in the three months to Dec. 31 from the previous year. Analysts, on average, expected a profit of 37.56 billion rupees, according to LSEG data.
Consolidated numbers include the businesses of the lender's subsidiaries, Bajaj Housing Finance and Bajaj Financial Securities.
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Lenders have been expanding their unsecured lending portfolio - personal loans and credit card spends that do not carry collateral and pose a higher risk - as demand for credit has stayed strong and since this business is margin-accretive.
The exuberant lending in the segment led the Indian central bank to increase capital requirements for personal loans and credit cards.
{{/usCountry}}The exuberant lending in the segment led the Indian central bank to increase capital requirements for personal loans and credit cards.
{{/usCountry}}Loan losses and provisions, the money set aside to cover potential defaults, grew more than 48% year-on-year in the quarter to 12.48 billion rupees.
Gross non-performing asset ratio, the ratio of bad loans to total lendings, deteriorated to 0.95% at the end of December, from 0.91% at the end of September.