/** blogpostTitle: Bajaj Finance Q4 FY26: Scale milestone, improving credit setup, and FINAI acceleration */

Bajaj Finance Q4 FY26: Scale milestone, improving credit setup, and FINAI acceleration

Bajaj Finance ended Q4 FY26 with a clear headline: consolidated assets under management crossed the 5 lakh crore mark. As of 31 March 2026, AUM stood at 5,09,975 crore, up 22% year-on-year. The quarter also delivered strong operating momentum, with 12.89 million new loans booked and 3.93 million customers added. The total customer franchise reached 119.33 million.

Profitability held up well despite one-time items and a presentation change. On a reported basis (after one-time actions and presentation change), consolidated profit after tax for Q4 FY26 was 5,553 crore, up 22% year-on-year, while profit before tax was 7,410 crore, up 31%. The company also provided an “underlying” view “before one-time actions and presentation change”, where Q4 PBT was 7,552 crore and PAT was 5,660 crore.

A key context point for the quarter was an accounting presentation change. Recoveries against written-off loans were reclassified from “Other Operating Income” to “Loan Losses and Provisions”, applied across all periods. Management highlighted that this has no impact on profit, but it changes reported net total income (NTI), provisioning line items, and related ratios like opex to NTI and loan loss to average AUF.

Q4 FY26 at a glance: growth, profitability, and operating leverage

The quarter’s topline drivers remained stable. Consolidated net interest income rose 20% year-on-year to 11,781 crore. Net total income grew 21% to 14,209 crore (post presentation change). Operating expenses increased 22% to 4,801 crore, and the opex-to-NTI ratio was 33.8% versus 33.6% in Q4 FY25 (post presentation change).

Credit costs continued to improve in relative terms. Loan losses and provisions were 2,008 crore versus 2,167 crore in Q4 FY25 (post presentation change), and annualised loan loss to average AUF was 1.65% versus 2.17% in Q4 FY25.

The key message from management on the concall was that the company is entering FY27 with what it called “tailwinds” on credit costs. They linked this to two portfolio-specific factors: the wind-down of the captive two-wheeler and three-wheeler book, and the ongoing risk recalibration in MSME.

Financial summary (consolidated)

Note: Figures above reflect “after one-time actions and presentation change” as presented in the investor deck.

Asset quality: stable headline ratios, improving internal indicators

On headline asset quality, consolidated GNPA and NNPA stood at 1.01% and 0.41% as of 31 March 2026, compared with 0.96% and 0.44% a year ago. Provisioning coverage ratio on stage 3 assets improved to 60% from 54% in the prior year.

The segment-level table in the deck gives a sharper picture of where the stress sits. MSME lending had a GNPA ratio of 2.65% and NNPA ratio of 1.00% at the consolidated level. The captive two-wheeler and three-wheeler book stood out with elevated delinquencies (GNPA 14.35% and NNPA 8.09%), but it is in run-down mode and now forms less than 1% of consolidated AUM.

Management also pointed to internal credit metrics: stage 2 assets increased by 331 crore and stage 3 assets decreased by 761 crore in Q4, resulting in a net reduction of 430 crore for combined stage 2 and 3. They emphasized continued improvement in vintage credit performance across 3-month, 6-month, and 9-month buckets.

Portfolio mix: gold loans scaling, MSME cautious, mortgages steady

The consolidated AUM mix shows both growth engines and deliberate slowdowns.

Gold loans expanded rapidly. The gold loan book grew 115% year-on-year to 17,831 crore and increased its share of consolidated AUM to 3.5% from 2.0% a year ago. In the concall, management said they foresee gold loans potentially crossing 5% of total AUM by FY27, supported by branch expansion.

MSME lending was the laggard in FY26 with only 6% year-on-year growth to 51,570 crore. Management repeatedly described FY26 actions as “risk-first” in MSME, including pruning monthly business volumes versus previous levels. They expect MSME to return to double-digit growth by Q2 to Q3 of FY27.

Mortgages continued to grow in the mid-20% range at the consolidated level. Consolidated mortgages AUM rose 25% to 1,62,077 crore. Within mortgages, lease rental discounting grew 42% to 32,207 crore, loan against property grew 36% to 36,442 crore, and home loans grew 18% to 77,202 crore.

AUM composition highlights (consolidated, as of 31 March 2026)

FINAI: from use cases to transformation narrative

The company spent meaningful time in the deck and concall on its FINAI transformation, positioning it as an enterprise-wide change program rather than a list of pilots.

As of Q4 FY26, Bajaj Finance reported 203 dedicated employees in its AI unit (up from 145 in Q3 FY26). The FY27 assessment target is 363. The deck also reports scaling “Data for AI” through voice-to-data conversion and text-to-data conversion, and rolling out AI voice and text bots for customer engagement.

Management shared multiple FY27 roadmap items: re-architecting 22 business and 2 service journeys with embedded AI features by Q1 FY27, deploying AI-enabled experiences across app and web in FY27, enabling customer discovery on leading AI platforms such as ChatGPT and Gemini, and scaling agentic AI by implementing 800-plus autonomous agents in FY27.

In the concall, management highlighted that customers and employees should start experiencing measurable improvements through FY27, including AI-based customer communication bots, AI call center agents to reduce cost, and face recognition in branches and point-of-sale locations to reduce friction.

FY27 assessment: quantified guidance with a macro caveat

The company’s FY27 assessment is explicitly framed around easing geopolitical tensions and macro stability.

Key forward metrics include:

• Customer franchise addition of 15 to 17 million
• AUM growth of 22% to 24%
• NIM expected to see marginal moderation
• Non-interest income growth of 16% to 18%
• Opex to NTI improvement of 25 to 40 basis points
• Credit cost guidance of net loan loss to average AUF at 1.45% to 1.60%
• ROA range of 4.4% to 4.6% and ROE range of 19% to 20%

During Q&A, management confirmed that the 1.45% to 1.60% corridor is based on the updated credit cost metric after reclassifying recoveries, and that adverse macro escalation was not assumed in that base-case corridor.

Dividend, governance, and disclosures

The board recommended a final dividend of 6.00 per equity share (face value 1). This includes a special payout of 0.60 per share out of the exceptional gain on sale of Bajaj Housing Finance Limited shares. As per the corporate announcement, the record date is 30 June 2026 and the dividend, if approved, is expected to be credited on or about 03 August 2026.

Takeaways

Bajaj Finance’s Q4 FY26 prints are anchored by scale and consistency: strong AUM growth, steady profitability, and stable operating ratios despite expansion and a presentation change. The bigger investor question for FY27 will be execution against a clearly quantified guidance set, especially the credit cost corridor and opex improvement, while scaling newer businesses and the FINAI transformation.

Management’s confidence rests on portfolio tailwinds (run-down of the captive 2W/3W book and MSME risk recalibration) and on AI-led operating leverage. If these play out as described, FY27 could look like a year where operational discipline and transformation execution matter as much as growth.