Bajaj Finance Q1 profit rises 27% to ₹5,986 crore; asset quality improves as credit costs ease

Bajaj Finance reported a strong set of earnings for the quarter ended June, with profit attributable to owners rising 27.4% year-on-year to ₹5,986 crore, driven by healthy loan growth, steady margins and improving asset quality. The non-banking finance company also struck an optimistic tone on credit costs for the rest of the fiscal year, while outlining an aggressive push to embed artificial intelligence across its operations.

Net interest income (NII), the difference between interest earned and interest paid, increased 23% to ₹12,571 crore during the quarter, while assets under management (AUM) grew 24% year-on-year to ₹5.47 lakh crore. The company added ₹36,969 crore to its loan book during the quarter and disbursed 16.13 million new loans, taking its customer franchise to 124.43 million.

Asset quality strengthens, outlook remains positive

Bajaj Finance's asset quality continued to improve, with gross non-performing assets (GNPA) declining to 0.96% from 1.03% a year ago, while net NPAs fell to 0.39% from 0.50%.

Loan losses and provisions stood at ₹1,993 crore during the quarter, including a prudent management and macroeconomic provision of ₹296 crore. Excluding this additional provision, loan losses declined 14% year-on-year, while the loan loss ratio improved to 1.31% from 1.87%.

The company said credit performance across recent loan vintages continued to improve and expressed confidence in its outlook.

"We are optimistic about credit cost outlook for FY27. This outlook remains contingent on no material adverse effects from geopolitical events," the company said in its investor presentation.

The lender also reported annualised return on assets (ROA) of 4.7%, compared with 4.5% a year ago, while annualised return on equity (ROE) improved to 20.4% from 19.0%. Capital adequacy remained strong at 20.9%, with Tier-I capital at 20.01%.

AI transformation gathers pace

Alongside its financial performance, Bajaj Finance highlighted the rapid expansion of its artificial intelligence strategy under its "FINAI" transformation programme.

The company said it plans to expand its dedicated AI team to 400 employees during FY27 while adding another 300 people to its digital platforms unit to accelerate technology-led transformation.

"Our company is doubling down in expanding its FINAI transformation with 400 dedicated people in AI unit and adding another 300 people in digital platforms unit to rapidly accelerate this transformation," it said.

The presentation showed AI is already being deployed across customer acquisition, underwriting, collections and servicing. AI-generated loan offers quadrupled year-on-year to 0.4 million, while disbursals originating from AI voice and text bots surged to ₹2,551 crore. The company has also deployed 62 AI agents and 23 agentic AI use cases across its operations.

Looking ahead, Bajaj Finance expects to disburse 60-62 million new loans and add 18-20 million customers during FY27, while expanding its physical network with 150-175 new locations and significantly scaling its gold loan franchise.

Shares of Bajaj Finance ended 0.34% higher at ₹1,058 apiece on the NSE on Thursday. The stock has gained over 19% in the past year, outperforming the benchmark Nifty 50, which has declined more than 2% over the same period.