Summary
Fino Payments Bank Limited - Q3 FY 2026 Earnings Call Summary Friday, January 30, 2026 5:30 PM IST
Event Participants
Executives 3 Anup Agarwal (Head - Finance & IR), Ketan Merchant (CFO), Rishi Gupta (MD & CEO)
Analysts 6 Anand Dama, Dhruv Shah, Franklin Moares, Harsh, Majid Ahamed, Manish Srivastava, Rupesh Uttvani
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Total Deposits | ₹2,496 crores | +32% YoY; includes ₹2,500 cr CASA and ₹500 cr with other banks. |
| CASA Revenue | ₹162.8 crores | +17% YoY; high-margin business now contributes 41% of total revenue. |
| Average CASA Balance | ₹1,314 | +9% YoY; reflect shift from volume-led to quality-led acquisition. |
| Total Throughput | ₹1.18 lakh crores | +8% YoY for 9M FY26; digital throughput share rose to 55%. |
| Digital Payment Revenue | ₹62.7 crores | -43% YoY; impacted by heightened regulatory scrutiny and LEA monitoring. |
| CMS Throughput | ₹18,850 crores | +3% QoQ; revenue down due to pricing pressure (take rate at 0.16%). |
| EBITDA | ₹63.9 crores | +6% YoY; margins expanded 320 bps to 16.2% due to better product mix. |
| Net Profit (PAT) | ₹12.2 crores | Impacted by revenue moderation and one-off labor costs of ₹3.1 cr. |
| Cost of Funds | ~2.0% | Maintained sub-2% for 9M FY26; structural advantage for SFB transition. |
| Cost-to-Income | 33.1% | Reflects temporary revenue moderation; OPEX strictly controlled at ₹84 cr. |
Geographic & Segment Commentary
- CASA & Renewals: The cornerstone of growth with 1.68 crore total accounts. Renewal income grew 19% YoY to ₹57 crores, reinforcing the annuity nature of the subscription-based model.
- Digital Payments: Significant headwinds due to ecosystem-wide regulatory scrutiny and cyber-fraud monitoring. Management is pivoting toward PA-PG partnerships to stabilize throughput while maintaining a cautious onboarding stance.
- Transaction Business (MATM/AEPS/Remittance): Strategic decline of 14-50% YoY as customers migrate to UPI. These segments now serve primarily as customer “hooks” rather than primary revenue drivers.
Company-Specific & Strategic Commentary
- SFB Transition: Received in-principle RBI approval to convert to a Small Finance Bank, the first payments bank to do so. The strategy focuses on a “liability-first” model using existing low-cost CASA to fund secured assets.
- Technology Migration: Completed “hollow-the-core” project and migrated to Finacle core banking system. This provides a scalable backbone for SFB operations with “heavy lifting” on tech costs now concluded.
- Asset-Light Sourcing: Future lending will use the 20-lakh merchant network for lead generation, minimizing physical branch requirements. Annual infrastructure spend is capped at ₹15 crores.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| SFB Operationalization | Q4 FY2027 / Q1 FY2028 | 18-month window provided by RBI for final transition. |
| Loan Book Aspiration | ₹8,000 - ₹10,000 crores | Target by FY2030; focus on secured MSME, Housing, and Gold loans. |
| Return on Equity (ROE) | +20% | Medium-term target driven by 10% NIMs and operating leverage. |
| Tech Spend for SFB | ₹100 crores | Total estimated investment over the next year to build the SFB stack. |
Risks & Constraints
| Risk | Context |
|---|---|
| Regulatory Scrutiny | Heightened monitoring by LEAs and RBI on digital transactions has slowed merchant onboarding and impacted digital revenue growth significantly. |
| Execution Risk | Transitioning from a fee-based payments bank to a credit-taking SFB requires building new risk management and collection verticals from scratch. |
| Pricing Competition | CMS and transaction businesses face margin compression due to competitive intensity and structural shifts toward UPI. |
Q&A Highlights
Lending Strategy & Asset Quality
- Question: How will you manage risk with no prior lending experience? (Majid Ahamed)
- Answer: Fino will be a “liability-first” SFB with no legacy bad debt. Focus will be on low-velocity, secured products (Gold, Affordable Housing) to keep credit costs below 1% (Rishi Gupta).
Cost of Funds Advantage
- Question: Can you maintain 30% CASA growth at 1.7% interest rates? (Dhruv Shah)
- Answer: Yes, because our core customers (balances <₹1 lakh) are transactional. For higher balances, we will offer FD-linked accounts at ~6.6% to remain competitive while keeping the overall cost of funds at ~3.9% by FY30 (Rishi Gupta).
SFB Infrastructure & OPEX
- Question: Will cost-to-income spike during the transition? (Franklin Moares)
- Answer: We are avoiding the expensive brick-and-mortar branch model. We will use a “hub” model for asset centers and rely on merchants for lead generation, keeping incremental OPEX manageable (Ketan Merchant).
Digital Revenue Recovery
- Question: When will digital throughput stabilize? (Dhruv Shah)
- Answer: The environment remains under scrutiny for cyber-fraud. We are seeing early tailwinds and expanding via PA/PG tie-ups, but remain cautious based on regulatory directions (Rishi Gupta).
Key Takeaway
Fino Payments Bank delivered a transitional quarter characterized by its landmark in-principle approval for SFB conversion and the completion of its Finacle tech migration. Financial performance showed a shift toward high-margin quality, with CASA and renewal income now comprising 41% of revenue, offsetting a deliberate slowdown in digital and transaction segments due to regulatory caution. The bank enters its SFB journey with a unique structural advantage: a ₹3,000 crore low-cost deposit base and a sub-2% cost of funds. Management intends to build a ₹10,000 crore secured loan book by FY2030 through a merchant-led, asset-light sourcing model, targeting 20% ROE. While digital revenue remains pressured by ecosystem-wide scrutiny, the foundation for a high-margin, credit-led entity is now in place, with full SFB operations expected by early FY2028.
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