Executive Summary Q3 FY21
Executive summary - Q3 FY21
Operating expense management
BAJAJ
B FINSERV
17. Operating expenses for Q3 FY21 were 1,389 crore, lower by 9% YoY despite 58 crore increase in recovery costs. It was lower due
to marginally lower business volumes and the measures taken to reduce operating expenses. Some of the opex measures have
now been institutionalized to deliver sustained cost savings going forward.
18. The Company has rolled back some of the transient cost cuts (eg Employee costs) as it reverts to pre-COVID growth. However,
business transformation should lead to structural reductions in call center costs, travel costs, advertising & promotion and
employee trainings costs etc.
Credit Costs
19. Loan losses and provisions for Q3 FY21 was ₹1,352 crore as against ₹ 831 crore in Q3 FY20. During the quarter, the Company has
also done one-time principal write-off of 1,970 crore on account of COVID-19 related stress. The Company holds management
overlay provision of 800 crore as of 31 Dec 2020 for COVID-19 related stress.
20. Loan loss and provisions estimates for FY21 are based on lifetime loss estimates on account of COVID-19. This also means that the
Company is accounting for additional losses that may otherwise occur in FY22.
21. FY22 onwards, the Company expects loan losses and provisions to revert to pre-COVID-19 levels of 160-170 bps of average assets. If
recoveries are better in FY22, we may experience lower net loan loss to average assets.
22. The Company experienced continued improvement in portfolio quality in Q3. In Q3, Collection efficiencies in bucket O was back to
pre-COVID levels and in early buckets (1 and 2), it was significantly better than pre-COVID levels.
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