Fino Payments Bank records third straight quarterly profit, achieves more than double PAT growth in Q2 FY21

Fino Payments Bank Limited (FPBL) today announced that it has recorded a 144% rise in PAT in Q2 FY21 over Q1. This is the third consecutive quarter wherein FPBL has registered growing profits achieving a PAT of Rs 1.3 crore in Q4 FY20, Rs 1.9 crore in Q1 FY21 and Rs 4.5 crores in Q2 FY21. 

FPBL turned profitable at the operating level in FY 2019-20, within three years of starting the operations in June 2017.

Rishi Gupta, MD & CEO, Fino Payments Bank said, “Our efforts have always been to achieve profitability. The prevailing unprecedented conditions challenged us but we stayed committed to our objective. We scaled up our asset light phygital network and created opportunities for customers, merchants and partners to maximise utilisation of banking services. The biggest positive for us is the change in customer’s banking behaviour resulting in increased transactions. We will continue to explore growth opportunities in payment services as well as the trillion dollar digital payments space and create value to all our stakeholders.”

Transactions, facilitated by the expanding merchant network in Bharat, are at the core of Fino Payments Bank’s success riding on DTP approach (Distribution, Technology and Partnerships).

Ketan Merchant, Chief Financial Officer, Fino Payments Bank said, “Our endeavour to tap the banking opportunity in Bharat through alternate banking channels (ABC) network is yielding consistent results. In Q2 FY21, our network facilitated transactions worth Rs 33000 crores, registering a 25% growth over Q1 FY21. Compared to the corresponding period last fiscal (Q2 FY20) our business grew by over 40%, when transactions worth Rs 23000 crores were processed. A lean variable cost ABC model riding on digital platforms, increasing transactions and high margin products helped us cut costs, increase revenue and achieve an operating profit of Rs 13 crores in Q2 FY21.”

Business drivers

The key business drivers for Fino are liability products, Micro ATM, AePS transactions, remittances, payment services partnerships, insurance (life, health including Covid19, motor) and gold loan referrals for partner bank.

From facilitating around Rs 10000 crores a month in Q1, FPBL’s digitally enabled ABC network currently processes transactions worth around Rs  12500 crores a month, a 4% month on month growth. Of these transactions domestic remittances contribute 25% to the business, while micro ATM / AePS withdrawals account for 38% and payment services 11%. 

Urban to rural domestic remittance business took the biggest hit during the initial days of lockdown as migrant worker wages were hit. However, the business bounced back growing by 80% in Q2FY21 to Rs 6400 crores from Rs 3540 crores in Q1FY21. During this period, the demand for gold loans picked up as people needed the money to tide over the crisis or restart their livelihood. In Q2 FY21 Rs 430 crores worth of gold loans through referrals were facilitated by FPBL network, registering a healthy growth of 147% compared to Q1 FY21.  

FPBL introduced subscription-based new savings products targeted at specific customers, including minors.  Thrust on innovative products helped Fino add close to 3 lakh customers in Q2, a 31% increase over those acquired in Q1. Currently the bank’s customer base stands at over 2.5 million. 

Network 

FPBL created entrepreneurship and employment opportunities to around 85000 local shop owners this fiscal with 50% of them being on boarded in Q2FY21. From having approximately 2 lakh banking points at FY20 end, the bank has nearly 3 lakh banking points of its own by Q2 FY21 end. This includes over 8000 outlets of FPBL’s strategic partner Bharat Petroleum (BPCL).

In addition, FPBL further has 2.5 lakh points through its partners making the total network at around 5.5 lakh, over half a million!

To further improve banking access, FPBL plans to increase the network to 10 lakh outlets over the next 3 years.   This is in keeping with the avowed purpose of being a bank that creates opportunities for the ecosystem.

Outlook

With over 45% of the merchants being graduates and tech savvy millennials comprising 50% of the new customers acquired, FPBL expects increased adoption of digital platforms.

An estimated 500 million under banked population and rapid adoption of digital payments augurs well for FPBL.  The bank’s multi-platform phygital network is expected to play a critical role in the digitalization journey of Bharat customers. As per MEITY, India has a trillion dollar digital opportunity, while a KPMG report states that the Indian digital payments industry is expected to touch USD 10.07 trillion by 2026.

With a hat trick of profitable quarters, Fino Payments Bank looks forward to challenging yet exciting remaining quarters.

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