Dear Shareholder,
For two consecutive years, your Company had to struggle almost on a
day-to-day basis to overcome the human and business consequences of three waves of
COVID-19, plus an economic slowdown that preceded COVID-19 but intensified during the
pandemic. It was a very tough act and I remember writing in my last letter to you about
'resilience'. To quote: "[the] resilience of your Company in dealing with various
external shocks in recent years - be it the three successive COVID-19 waves, macroeconomic
slowdown that pre-dated COVID or the fundamental changes in the industry that we belong
to. Through these shocks, your Company demonstrated tremendous resilience and financial
strength and took all necessary actions without hurting any aspect of its business model
or its financial position."
This has paid off. We used these two tough years to completely re-alter
the DNA of Bajaj Finance and put in place a fully digitised Omnichannel strategy which
integrates your Company's entire range of products and services for its customers. It has
already started delivering superior business velocity, eliminated unnecessary friction,
reduced operational costs and enabled Bajaj Finance to truly become a single-point
interface for its customers.
Simply put, the Omnichannel strategy enables customers to move between
online and offline and vice-versa in a frictionless manner. It has been a huge structural
shift for your Company, which is now reinventing the way it does everything. The
Omnichannel strategy has six domains: (i) Geographic expansion, (ii) Bajaj Finserv app,
(iii) Bajaj Finserv website, (iv) Payments, (v) Productivity apps, and (vi) Customer data
platform (CDP). During this year, your Company has significantly advanced on all of these.
Once fully implemented, Omnichannel will make Bajaj Finance a truly customer-centric
digital enterprise. I would encourage you to read about this in the chapter on Management
Discussion and Analysis.
Thanks to a relentless focus on this initiative coupled with your
Company's single-minded concentration on operations and results across-the-board, I am
happy to share Bajaj Finance's excellent results for FY2023.
Here are some key consolidated financial numbers:
• Customer franchise: increased by 20% to 69.1 million.
• Number of new loans booked: 29.6 million.
• Number of customers on Bajaj Finserv App: 35.5 million.
• Assets under management: grew by 25% to C 247,379 crore.
• Core AUM (excluding short-term IPO financing receivable):
increased by 29% to C 247,379 crore.
• Total income: increased by 31% to C 41,406 crore.
• Net interest income (NII): rose by 32% to C 28,846 crore.
• Pre-impairment operating profit: increased by 31% to C 18,716
crore.
• Impairment on financial instruments: reduced by 34% to C 3,190
crore.
• Profit before tax (PBT): increased by 63% to C 15,528 crore.
• Profit after tax (PAT): increased by 64% to C 11,508 crore.
• Gross NPA at 0.94% and net NPA at 0.34%.
• Capital adequacy ratio as on 31 MarcRs 2023: 24.97%, which was
well above the RBI norms. Tier-I adequacy was 23.20%.
• Return on average assets (ROA): 5.3%
• Return on average equity (ROE): 23.5%.
Every key business of your Company has done well. On a consolidated
basis, assets under management (AUM) of the urban sales finance increased by 22% in the
course of FY2023; that of SME lending grew by 35%; of urban B2C finance by 29%; of rural
businesses by 25%; of commercial lending by 38%; and of mortgages by 26%.
I am also proud of the performance of Bajaj Housing Finance Limited
(BHFL). In FY2023, BHFL's net interest income increased by 52% to C 2,454 crore;
pre-impairment operating profit grew by 60% to C 1,824 crore; PBT rose by 77% to C 1,700
crore; and PAT increased by 77% to C 1,258 crore.
Though significantly smaller than Bajaj Finance or BHFL, your Company's
other subsidiary, Bajaj Financial Securities Ltd. (BFinsec), generated a total income of C
204 crore and PAT of C 8 crore in FY2023.
I should also share with you that your Board of Directors has further
recognised the key role played by your Company's management by elevating two key
management personnel, Anup Saha and Rakesh Bhatt, as executive directors on the Board.
Where do we go from here? I expect that the extensive digitisation
accompanying your Company's Omnichannel strategy will allow management to not only attract
more customers but also rapidly grow various mutually profitable cross-selling
opportunities - for BFL's, BHFL's and BFinsec's offerings as well as for general, life and
health insurance products. India has a huge and rapidly burgeoning middle class and, for
all our growth, we have barely scratched the surface. There is much more growth to be
captured. And many more consumer dreams to be realised. The opportunities are endless for
the next five years, if not a decade.
We must therefore rapidly create a fully-fledged digital organisation;
use the powers and speed of digitisation to grow each one of our businesses; and
demonstrate to an increasing mass of consumers how a fully digitised financial services
company can help them seamlessly secure innovative goods and services at affordable costs.
I'm sure that with your good wishes and blessings the management team
of your Company will scale hitherto unknown heights. As it must.
Thank you for your support,
Yours sincerely,
Sanjiv Bajaj
Chairman