Fino Payments Bank Q1 FY27 earnings call

Q1 FY27 was a challenging quarter for Fino Payments Bank, primarily due to the temporary pause of its profitable B2B UPI P2M business for recalibration. Despite this, the bank achieved a net revenue margin of 42.8%, marking a significant improvement of 275 bps sequentially and 925 bps year-on-year. However, EBITDA declined to INR 43.1 crores from INR 56 crores in Q4 FY26, reflecting the impact of the B2B pause and ongoing investments in technology and risk management.

The bank is on track with its Small Finance Bank (SFB) transition, aiming to complete all required milestones within the 18-month timeline and submit its readiness to the RBI by the end of Q4 FY27. PricewaterhouseCoopers has been appointed to support the implementation, and technology partners are onboard for loan origination and management systems. Key leadership positions are being filled, with senior executives expected to join by the calendar year-end, and the end-to-end customer loan journey technology stack is anticipated to be ready by Feb '27.

Fino Payments Bank's referral lending business demonstrated strong momentum, with disbursements increasing to INR 628 crores in Q1 FY27, a 214% year-on-year growth. This segment now accounts for 50% of the total disbursal in FY26. The focus remains on building a predominantly secured lending portfolio, including gold loans, affordable housing, and loans against property, with a target of 90% secured book and an average portfolio yield of 14% as an SFB, aiming for NIMs of 8-9%.

The bank's liability franchise continues to be a key strength, with average CASA balance at INR 1,280 crores and average total deposits growing 12% YoY to INR 2,772 crores. The cost of funds remains low at 1.4%. CASA's contribution to revenue increased to 54% in Q1 FY27 from 45% in Q4 FY26. Customer acquisition was healthy, adding 8.4 lakh new accounts, bringing the total account base to 1.83 crore. Digital engagement also saw significant growth, with digitally active customers increasing 22% YoY to 64.6 lakhs and FinoPay app customers growing 38% to 8.4 lakhs.

The high-growth B2B UPI P2M segment is currently undergoing strategic recalibration, leading to a 10% YoY decline in overall throughput. Management expects a tentative relaunch in Q4 FY27. Despite this, the B2B CMS segment showed resilience, with throughput growing 26% sequentially to INR 18,000 crores and revenue increasing 5% sequentially. The bank remains committed to rebuilding this business and leveraging its merchant network of 20 lakh for future growth.

Fino Payments Bank's strategic priorities include strengthening its liability franchise, improving revenue mix quality, disciplined cost management, and selective investments for the SFB transition. The bank reaffirmed its long-term vision of achieving 20%+ ROEs as an SFB. It plans to open 40 new branches in the first year of SFB operations and aims for a credit deposit ratio of around 70% and a CASA ratio of around 65%.