Fino Payments Bank Limited — Q4 FY25 earnings call

Call held 29 Apr 2025

Management summary

Fino Payments Bank reported a strong FY25, achieving its fifth consecutive year of profitability with 25% revenue growth and significant digital adoption. The bank saw robust growth in CASA and customer acquisition, while making strategic investments in technology for its upcoming SFB transition. However, certain segments like CMS and remittance faced headwinds due to market competition and regulatory changes.

Highlights

  • FY25 Revenue grew 25% YoY to INR 1,847 crores, aligning with revised upward guidance.

  • FY25 EBITDA rose 22% to INR234 crores and PBT increased 26% to INR108 crores, driven by operating leverage.

  • Customer base reached 1.43 crores, with 33 lakh new customers added in FY25, and 53 lakh digitally active users.

  • Digital revenue grew 4.2x YoY to INR390 crores in FY25, contributing 21% of total revenue, and digital throughput reached INR2.25 lakh crores.

  • CASA revenue increased 43% to INR544 crores and renewal income grew 48% to INR190 crores in FY25, reflecting strong customer trust and stickiness.

Concerns

  • CMS business faced headwinds in the past 2 quarters due to stress in the MFI sector and increased competition.

  • Remittance business was impacted in Q3 FY25 due to regulatory changes and a shift of customers to 'on-us' accounts.

  • CMS take rate moderated to 0.18% in FY25 from 0.21% in FY24 due to enhanced competition.

Key financials

2 periods

Q4 FY25

  • Revenue
    ₹493.5 Cr
    YoY +23%
  • EBITDA
    ₹63.9 Cr
    YoY +18%
  • PBT
    ₹29.7 Cr
    YoY +18%
  • UPI Market Share
    1.6%
  • New Customer Accounts
    8,60,000 accounts

FY25

  • Revenue
    ₹1,847 Cr
    YoY +25%
  • EBITDA
    ₹234 Cr
    YoY +22%
  • PBT
    ₹108 Cr
    YoY +26%
  • PAT
    ₹92.5 Cr
    YoY +7%
  • Cost-to-Income Ratio
    25.6%
  • Digital Revenue
    ₹390 Cr
    YoY +320%
  • CASA Revenue
    ₹544 Cr
    YoY +43%
  • Renewal Income
    ₹190 Cr
    YoY +48%
  • Total Throughput
    ₹4.60L Cr
  • Digital Throughput
    ₹2.25L Cr
    YoY +70%
  • CMS Throughput
    ₹83,451 Cr
    YoY +25%
  • mATM & AePS Throughput
    ₹39,705 Cr
  • mATM & AePS Revenue
    ₹185 Cr
  • New Customer Accounts
    33,00,000 accounts

What they filed

Q1 FY27: revenue up 18.0%, net profit down 177.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue48 49 53 61 60 +25%63 +29%64 +21%72 +18%
EBITDA-357 -358 -385 -339 -291 +18%-281 +22%-242 +37%-213 +37%
Net profit21 23 24 18 15 −29%12 −48%7 −71%-14 −178%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Capex ₹100 Cr
    • Core banking system migration and SFB technology/operations
    On the investment front, capital expenditure for FY '25 stood at INR165 crores, significantly higher year-on-year. This was driven by strategic investment in migration of our core banking system. These investments are critical to scaling our capabilities and ensuring platform resilience as we prepare for next phase of growth. (Ketan Merchant, page 9) and In our models, we have factored an INR 100 crores-plus of the capex cost coming for this year as well and on a BAU basis. (Ketan Merchant, page 13)

Guidance & targets

Revenue

  • Overall Revenue Growth Revenue · FY26 · Medium confidence 25% and above
    We expect this year to exceed to 25% and above, in FY '26.

    — Rishi Gupta

Digital Contribution

  • Digital Revenue as % of Total Revenue Digital Contribution · FY26 · Medium confidence 25% and above

    From 21% (FY25) today

    In FY '25, digital contributed to 21% of the overall revenue. And we expect this year to exceed to 25% and above, in FY '26.

    — Rishi Gupta

Loan Referral

  • Monthly Loan Referral Disbursement Loan Referral · first half of this year (FY26) · Medium confidence INR100 crores a month

    From INR200 crores (Q4 FY25 disbursement) today

    Our next target will be to reach INR300 crores, which means INR100 crores a month is something which we aspire to reach in this year, maybe in the first half.

    — Rishi Gupta

Profitability

  • Cost-to-Income Ratio Profitability · FY26 · High confidence in the range of 25%

    From 25.6% (FY25) today

    Looking ahead for FY '26, our priorities remain clear, accelerate CASA and deposit growth, enhance digital infrastructure, deepen finance Fintech partnership while maintaining our cost-income ratio in the range of 25%.

    — Ketan Merchant

  • PBT Margin Profitability · Post SFB process (long term) · Low confidence 10%
    The PBT margin 10% was basis on the TAM strategy, the monetization piece once we start the SFB process... I think then 10% is something which we would be able to achieve is what the guidance is.

    — Rishi Gupta

  • Gross Margin Profitability · Current (implied) · High confidence around 31.5%
    On the margin side, we are currently in the range of around 31.5%. That is a gross margin which we are looking at.

    — Ketan Merchant

CMS Business

  • CMS Take Rate CMS Business · FY26 · Medium confidence a bit more moderation

    From 0.18% (FY25) vs 0.21% (FY24) today

    Is on the CMS front, yes, we have seen a 3 basis point reduction in the take rate between FY '24 to '25. That, we anticipate a bit more moderation also essentially happening in FY '26.

    — Ketan Merchant

What to watch in Q1 FY26

SFB Regulatory Approval

Next few months / Next earnings call
Current Application submitted, awaiting regulatory approval
Target Positive outcome from regulator

Why it matters

Crucial for the bank's long-term strategy, including expanding into lending and achieving higher PBT margins.

As such, we are hopeful and hoping that, in the next few months, we hear a positive outcome from the regulator.

Risks & concerns

  • CMS business headwinds

    medium

    Stress in the MFI sector and increased competition led to moderation in take rates (0.18% in FY25 vs 0.21% in FY24) and overall business.

    Management acknowledged

  • Remittance business decline

    medium

    Impacted by regulatory changes in Q3 FY25 and customer shift from 'off-us' to 'on-us' accounts, leading to income cannibalization into CASA.

    Management acknowledged

  • Cyber fraud risk in digital ecosystem

    medium

    The overall digital ecosystem poses cyber fraud risks, leading to advisories from regulators and LEA; Fino focuses on balancing growth with risk mitigation.

    Management acknowledged

  • Intensifying competition

    medium

    Enhanced competition, particularly in CMS, is leading to moderation of take rates and requires exploring new industry use cases.

    Management acknowledged

Q&A highlights

7 direct
Key differentiators in UPI and digital services amidst intensifying competition Direct
Our key differentiation is that we are a bank which is there in every hook and -- nook and corner of the country. And so they can go to any of our outlet, deposit cash into their bank account which they opened with Fino. So they open a Fino bank account. They deposit cash into that Fino bank account and then start using UPI.

Highlights Fino's unique physical-digital hybrid model for financial inclusion in mass markets, differentiating it from pure digital players by enabling cash-to-digital conversion.

Asked by Priyesh (HSBC)

Operational and regulatory challenges for Small Finance Bank (SFB) transition Direct
On operational side, I think the challenge in terms of building up the distribution network, if you want to set up a very typical branch-led model, can be one of the challenges. PSL, you need to have 75% deployment under PSL, but I don't think that is a challenge because our because we are in that, catering to that particular segment of customers.

Provides insight into the operational and regulatory hurdles for SFB conversion, particularly around distribution and PSL requirements, and Fino's readiness to address them.

Asked by Dev Shah (Haitong)

Scalability of the loan referral model and its potential revenue contribution Direct
I think we have -- from INR30 crores in FY -- quarter 4 FY '24 to INR200 crores in FY '25. We have now reached INR200 crores. Our next target will be to reach INR300 crores, which means INR100 crores a month is something which we aspire to reach in this year, maybe in the first half.

Shows significant growth in the nascent lending business and sets a clear short-term target, indicating its potential to become a meaningful revenue contributor post SFB conversion.

Asked by Dev Shah (Haitong)

Impact of treasury income reclassification on CASA revenue and contribution margin Direct
We've added the float income to this particular scenario. Float income out here is earlier the entire treasury income... Now we strip that off and added that to CASA, typically which is in the range of around on a stand-alone basis, would be in the range of around 23%, 24%. So that's how it looks like. In terms of the breakup, if I look at it currently, which is around 30% for the year, would be around 24%-odd and stuff.

Clarifies a change in financial reporting, providing transparency on the true contribution of CASA and float income to the bank's revenue and its impact on reported margins.

Asked by Kunal

Outlook on declining remittance trends and overall revenue growth for FY26 Partial
Remittance, Rishi also mentioned it to the region that it's still in the stage of evolution what will come through. So the growth aspect, I do not want to put a number, but the broad range which we're seeing seems to be in that direction.

Acknowledges the ongoing evolution and uncertainty in the remittance business, indicating a cautious stance on providing specific growth targets for this segment, while hinting at overall positive direction.

Asked by Kunal

Tracking digital growth on a sequential vs. year-on-year basis Direct
That's a fair question. My answer to that one will be -- the answer is yes, that you -- typically in the year 1, you look at a multiple times growth. However, the growth driver will always remain. Digital will continue to remain the growth driver on that as well... I would not agree with you on the moderation of this thing, but yes, can that be will it be a multiple time growth? The answer is no, but it will be an accelerated growth and not a typical matured business growth which typically comes through.

Clarifies the expected trajectory of digital growth, moving from hyper-growth to accelerated but not 'multiple times' growth, suggesting a maturing but still strong segment.

Asked by Dhruv Shah (Ambika Fincap)

Impact of remittance decline on other Fino brands and cannibalization Direct
So cannibalization of income on the transaction has moved to CASA income, but because now that our merchant network is quite entrenched into the entire ecosystem as such on the ground, so it -- we don't expect that the remittance DE growth will have an impact on our CASA numbers or reputation as such.

Addresses concerns about potential negative spillover from remittance decline, explaining that customers are shifting to CASA, thus retaining them within the Fino ecosystem and mitigating overall impact.

Asked by Prateek Giri (Subh Labh Research)

Reconfirmation of the 10% PBT margin target Direct
The PBT margin 10% was basis on the TAM strategy, the monetization piece once we start the SFB process. So that was basis that. Secondly, also because of the cost which is going up on our entire IT spends, opex -- the entire UPI transaction volumes have grown... I think then 10% is something which we would be able to achieve is what the guidance is.

Reaffirms the long-term PBT margin target, linking it to the SFB transition and TAM strategy, while acknowledging current cost pressures from IT and UPI growth.

Asked by Prateek Giri (Subh Labh Research)

2 min read 6 chapters

Detailed narrative

Strong FY25 Performance with Record Profitability

Fino Payments Bank delivered a robust FY25, marking its fifth consecutive year of profitability. Revenue grew 25% year-on-year to INR 1,847 crores, aligning with revised upward guidance. EBITDA increased 22% to INR234 crores, and PBT rose 26% to INR108 crores. The bank became a tax-paying entity from Q2 FY25, with PAT reaching INR92.5 crores, and has cleared all accumulated losses to date.

Digital Platforms Drive Significant Throughput and Revenue

The bank's digital throughput reached INR2.25 lakh crores in FY25, contributing 49% to the total throughput of INR4.6 lakh crores, demonstrating a significant shift in its business model. Digital revenue grew 4.2x year-on-year to INR390 crores in FY25, now accounting for 21% of total revenue. The UPI market share substantially increased from 1.27% in Q4 FY24 to 1.62% in Q4 FY25, highlighting strong digital adoption.

Robust CASA Growth and Expanding Customer Franchise

Fino Payments Bank's customer base reached an all-time high of 1.43 crores, with 33 lakh new customers added in FY25, including 8.6 lakh in Q4. CASA revenue increased 43% to INR544 crores, and renewal income grew 48% to INR190 crores, reflecting strong customer trust and stickiness. Average deposits grew 37% year-on-year, with peak deposits crossing INR 2,500 crores.

Strategic Progress Towards Small Finance Bank Conversion and Lending

The application for Small Finance Bank (SFB) conversion is with the RBI, with management indicating positive progress and building internal readiness. The bank is actively developing its loan referral business, with disbursements growing over 6x from INR30 crores in Q4 FY24 to INR200 crores in Q4 FY25 on its own merchant network. The target is to reach INR300 crores in monthly loan referrals in the first half of FY26.

Significant Investment in Core Banking and AI for Scalability

Fino Payments Bank is in advanced stages of overhauling its technology infrastructure, with its next-generation core banking platform scheduled to go live in Q1 FY26. FY25 capital expenditure for technology stood at INR165 crores, with an additional INR100 crores-plus planned for FY26. The bank is also embedding artificial intelligence in its tech stack to strengthen real-time risk management and operational efficiency.

Mixed Performance in CMS and Remittance Segments

The CMS business faced headwinds in the past two quarters due to stress in the MFI sector and increased competition, leading to a moderation in take rates from 0.21% in FY24 to 0.18% in FY25. The remittance business was impacted in Q3 FY25 by regulatory changes and a shift of customers to 'on-us' accounts, resulting in income cannibalization into CASA. Despite this, AePS showed signs of recovery in H2 FY25, with Q4 revenue growing 23% and throughput rising 10% YoY.

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