Why Does Bajaj Finance Q2 Show Strong AUM Growth but Weaker Deposits?
Bajaj Finance, one of India’s largest non-banking finance companies (NBFCs), released its Q2 business update, highlighting mixed trends across key performance metrics. While customer franchise, assets under management (AUM), and overall loan book growth remained strong, there were signs of stress in deposit mobilization and quarterly momentum. This balance between long-term strength and near-term challenges offers important insights for investors tracking financials and Nifty/BankNifty-linked movements.
About Bajaj Finance
Bajaj Finance is a leading NBFC offering consumer loans, SME financing, and deposits. Known for its diversified loan portfolio and wide customer base, the company has consistently reported high growth rates over the last decade. Its financial updates are closely watched by market participants as they reflect broader trends in India’s retail credit, consumer demand, and deposit mobilization capacity in a competitive environment.
Key Highlights of Q2 FY26 Business Update
📉 New loans booked up 26% YoY to 26.6 million; down 10% QoQ.
💡 AUM up 24% YoY to ₹4.62 lakh crore; up 4.7% QoQ.
⚠️ Deposit book up 5.5% YoY to ₹69,750 crore; down 3% QoQ.
Customer Franchise and Loan Growth
Bajaj Finance continues to expand its customer base, crossing 110 million customers, a 20% year-on-year increase. However, quarterly momentum slowed, with just 3.8% growth. The number of new loans booked also showed a mixed picture: while YoY growth was strong at 26%, QoQ trends revealed a decline of 10%, signaling some moderation in demand or tighter underwriting standards.
⚠️ Sequential decline in new loans suggests near-term consumption softness.
✅ Diversified product mix cushions impact of cyclical demand shifts.
AUM Growth – A Continued Strength
The company’s AUM rose 24% YoY to ₹4.62 lakh crore, reflecting robust demand across segments. On a sequential basis, growth of 4.7% indicates steady momentum. AUM expansion continues to remain a key strength for Bajaj Finance, supported by consumer lending, personal loans, and SME financing. This trend underscores the company’s resilience despite changing macroeconomic conditions.
📉 Macro headwinds may still affect near-term disbursal volumes.
🎯 Long-term structural drivers remain intact for credit expansion.
Deposit Book Trends – A Red Flag?
One area of concern in the update was deposit growth. While deposits rose 5.5% YoY to ₹69,750 crore, they fell 3% QoQ. Deposits are critical for NBFCs to lower funding costs and ensure balance sheet stability. The sequential decline suggests either deposit withdrawals or slower mobilization compared to peers. This could put pressure on funding costs if sustained.
💡 Strong brand positioning still aids long-term deposit mobilization.
✅ Adequate liquidity ensures no immediate balance sheet stress.
Implications for Nifty and BankNifty Traders
Bajaj Finance is a heavyweight in the financial sector, and its business updates influence broader market sentiment. Strong AUM growth is a positive for long-term investors, but short-term traders may react negatively to the slowdown in deposits and QoQ decline in new loans. F&O traders should watch volatility in Bajaj Finance’s stock as it often sets the tone for financial sector momentum in BankNifty.
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Investor Takeaway
Bajaj Finance’s Q2 update underscores both its long-term strengths and near-term challenges. AUM and customer growth remain impressive, supporting its leadership in retail credit. However, the decline in deposits and QoQ moderation in new loans warrant close monitoring. For investors, this mix signals resilience but also highlights the need to track funding dynamics. Stay updated with financial sector insights and trading strategies at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
