BAJAJ FINANCE : Q2 INTERNATIONAL INVESTOR PRESENTATION

Presentation Path

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Q2 FY24 Executive summary

Good quarter across all financial and portfolio metrics. Delivered AUM growth of $ 2,430 MM, booked 8.53 MM new loans and added 3.58 MM new customers in Q2. As of 30 September 2023, Bajaj Finserv App has 44.68 MM net users.

AUMOpex to NIIPATROENet NPA

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Lead financial indicators (2/6)

Operating efficiencies

1. In Q2, Net interest income (NII) grew by 26% to $ 1,066 MM as against $ 844 MM in Q2 FY23. NIM compression in Q2 over Q1 was 14 bps.
2. In Q2, Opex to NII improved to 34.0% versus 35.9% in Q2 FY23.
3. Employee headcount stood at 51,100 (BFL, BHFL & BFSL) as of 30 September 2023. Company added 4,533 employees in Q2. Annualized attrition in H1 FY24 was 13.4% as against 18.6% in H1 FY23.

Credit cost

1. In Q2, loan losses & provisions were $ 130 MM. The Company holds a management and macro-economic overlay of $ 89 MM as of 30 September 2023. The Company released $ 12 MM from the overlay in Q2.
2. GNPA and NNPA stood at 0.91% and NNPA of 0.31% as of 30 September 2023 as against 1.17% and 0.44% as of 30 September 2022.
3. Stage 3 assets stood at $ 319 MM as of 30 September 2023 as against $ 305 MM as of 30 September 2022.
4. Risk metrics across all businesses were stable except Rural B2C business. The Company has taken risk actions in Rural B2C business resulting in muted AUM growth in first half of FY24.

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Lead financial indicators (3/6)

Profitability and capital

1. Consolidated profit before tax grew by 27% to $ 573 MM in Q2 FY24 as against $ 452 MM in Q2 FY23.
2. Consolidated profit after tax grew by 28% to $ 428 MM in Q2 FY24 as against $ 335 MM in Q2 FY23.
3. In Q2, the Company delivered annualized ROA of 5.16% as against 5.41% in Q2 FY23.
4. In Q2, the Company delivered annualized ROE of 24.10% as against 23.57% in Q2 FY23.
5. Capital adequacy remained strong at 23.19% as of 30 September 2023. Tier-1 capital was 21.88%.

Additional update

1. On 5 October 2023, the Board of Directors has approved, subject to the approval of shareholders, issue of securities for an aggregate amount of up to $ 1,060 MM through Qualified Institutional Placement to Qualified Institutional Buyers and Preferential Issue of up to 1,550,000 warrants convertible into equivalent number of equity shares to Bajaj Finserv Limited, the promoter and holding Company, for an aggregate amount of up to $ 145 MM in accordance with SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended.
2. On 16 October 2023, the Company has entered into a binding term sheet with Pennant Technologies Private Limited ('a technology product company') for acquisition of up to 26% equity stake on a fully diluted basis for an aggregate amount of approximately $ 32 MM. The transaction is expected to be completed on or before 30 December 2023, subject to satisfaction of the conditions to be set out in the definitive agreements to be entered.

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Lead financial indicators (5/6)

BHFL - Credit costs

1. In Q2, loan losses and provisions were $ 2 MM as against $ 4 MM in Q2 FY23. BHFL holds a management and macro- economic overlay provision of $ 21 MM as of 30 September 2023.
2. GNPA & NNPA stood at 0.24% and 0.09% as of 30 September 2023 as against 0.24% and 0.11% as of 30 September 2022.
3. Overall stage 3 assets stood at $ 21 MM as of 30 September 2023 as against $ 16 MM as of 30 September 2022.

BHFL - Profitability and capital

1. Profit before tax grew by 39% to $ 69 MM in Q2 FY24 as against $ 50 MM in Q2 FY23.
2. Profit after tax grew by 47% to $ 54 MM in Q2 FY24 as against $ 37 MM in Q2 FY23.
3. In Q2, the Company delivered annualized ROA of 2.63% as against 2.33% in Q2 FY23.
4. In Q2, the Company delivered annualized ROE of 16.12% as against 12.61% in Q1 FY23.
5. Capital adequacy ratio stood at 22.64% as of 30 September 2023. Tier-1 capital was 21.94%.

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Lead financial indicators (6/6)

Bajaj Financial Securities Limited (BFSL)

1. In Q2, BFSL added 33K customers to its franchise. Retail and HNI customer franchise stood at 618K as of 30 September 2023.
2. Margin Trading Finance AUM grew by 197% at $ 248 MM as of 30 September 2023 as against $ 83 MM as of 30 September 2022.
3. Geographic presence stood at 31 locations. In Q2, BFSL added 3 new locations.
4. In Q2, BFSL delivered significant upgrades to its Web and App platforms with addition of 74 new features.
5. In Q2, total Income was $ 13 MM as against $ 6 MM in Q2 FY23.
6. Profit before tax stood at $ 2 MM as against $ 172K in Q2 FY23.
7. Profit after tax stood at $ 1.6 MM as against $ 123K in Q2 FY23.
8. Total employee headcount stood at 725 as of 30 September 2023.

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