Bajaj Finance and HDFC Bank show how the pandemic hit consumption

Bajaj Finance and HDFC Bank show how the pandemic hit consumption

The non-banking financial company (NBFC) said it added 2.3 million new customers and 5.5 million new loans during the quarter. Bajaj Finance has been able to keep the rate of new customer accretion healthy. Bajaj Finance’s fourth-quarter metrics showed a mixed picture. The lender has been able to add new customers at a rate similar to pre-pandemic levels but the drop in AUM growth from the previous year stands out. However, that has been an outcome of not just the company’s efforts but also some luck.

View Full Image Both lenders have released early updates of key metrics for the fourth quarter.

Deep slide Bajaj Finance too has seen sharp erosion in growth of its assets under management (AUM).

Even as the two lenders compete, it is evident that Indians have pruned their consumption spending, mostly discretionary. While analysts expect an improvement in FY22, the risks to loan growth recovery have already started showing. The second wave of the pandemic has resulted in many regional lockdowns. The bank has been giving tough competition to the company on consumer loans since the pandemic outbreak.

Retail loans grew by 7.5%, far lower than the previous years. The fact that HDFC Bank could not issue new credit cards worked in favour of Bajaj Finance. Analysts believe that the competition from HDFC Bank may have reduced a bit after the lender was penalized by the regulator on digital lapses. That penalty seems to have cost HDFC Bank some growth on its retail book. The brisk 13.6% growth of the bank’s loan book came largely from its corporate book.

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