Fino Payments Bank Limited
Q2 FY26
Call date · October 30, 2025

1 · Management Commentary

Key Positives

  • CASA deposits grew 36% YoY to INR2,306 crores, with over 9 lakh CASA accounts opened in the quarter.
  • CASA revenue up 21% YoY to INR159 crores, now contributing 40% of total revenues.
  • EBITDA margin improved to 15.4%, up 284 bps YoY and 180 bps QoQ, the highest in the bank’s history.
  • Renewal income rose 36% YoY to INR62 crores, indicating strong customer stickiness.
  • Cost of funds remains low at 1.9%, supporting profitability.
  • Merchant network expanded to 2 million, with 56,000 new merchants onboarded.

Key Negatives

  • Total revenue for the quarter declined 12% YoY to INR400 crores, mainly due to regulatory headwinds in digital payments and legacy transaction businesses.
  • PAT for Q2 fell 27% YoY to INR15.4 crores, impacted by higher tax provisioning.
  • Digital Payment Services revenue declined 20% YoY to INR63.4 crores.
  • CMS revenue dropped 24% YoY to INR30.9 crores; remittance revenue down 61% YoY.
  • Cost-income ratio increased to 29.8% in H1 FY26 from 25.6% in H1 FY25.

Forward Guidance

  • Capex of around INR70 crores in H1 FY26, focused on technology and core platform upgrades.
  • Core banking system migration expected by end-December 2025; first phase of AI product to go live in Q3.
  • New digital products: prepaid instrument launched (expected INR1–2 crores monthly revenue at steady state); payout product pending RBI clearance (expected INR3–5 crores monthly revenue).
  • Soundbox QR launched for merchant network; not immediately revenue accretive.
  • SFB (Small Finance Bank) license in final stages with RBI; management expects approval in coming months and is preparing differentiated SFB model leveraging existing network.
  • H2 profitability expected to be better than H1, with digital throughput recovery and continued CASA momentum.

2 · Q&A Highlights

Q 1 (Digital Payments moderation): Why did Digital Payment Services revenue decline sharply, and when is recovery expected?
A (Management):
• Decline due to industry-wide regulatory tightening and risk-calibrated approach, not loss of any large merchant.
• Recovery expected in H2 FY26 as regulatory clarity improves and new merchant onboarding resumes.

Q 2 (CASA account mix and margins): What is the mix of CASA account additions and margin difference between Gati and Shubh accounts?
A (Management):
• Of 9 lakh new accounts, ~30–35% are Shubh, ~25% Gati, rest other variants.
• Gati margins are ~20% higher than Shubh (as a percentage of 54% margin).

Q 3 (SFB license and impact): What is the status of the SFB license and expected impact?
A (Management):
• All queries answered; approval expected in next couple of months.
• SFB model will leverage existing network; expected to double NIMs due to higher yield on deposits.

Q 4 (Core banking migration): Is the core banking migration on track and will it impact margins?
A (Management):
• Migration expected by December 2025, pending FIS deliverables.
• Not expected to materially impact margins, but will enhance flexibility and speed for digital initiatives.

Q 5 (New digital products): What is the status and revenue potential of new digital offerings?
A (Management):
• Prepaid instrument launched (INR1–2 crores/month at steady state).
• Payout product pending RBI clearance (INR3–5 crores/month at steady state).
• Soundbox QR launched for merchant engagement, not immediate revenue driver.

Q 6 (CMS and BC business outlook): Is the CMS business stabilizing and what is the outlook for BC partners post-SFB?
A (Management):
• CMS considered stable; competition and take rate compression persist, but MFI sector revival expected to aid recovery.
• Not all BC partners will be exclusive post-SFB; even 10–15% exclusivity would be a strong base.

Q 7 (Regulatory risks and UPI monetization): Are further regulatory impacts expected and what is the outlook for UPI incentives?
A (Management):
• Regulatory interventions are ongoing; systems recalibrated for better resilience.
• No UPI incentive received in FY26 so far; P2P UPI unlikely to be charged, P2M possible but uncertain.
• UPI monetization mainly through CASA balances; payment business profitability remains challenging.

3 · Other Key Numbers

  • Total revenue for Q2 FY26: INR400 crores (down 12% YoY)
  • H1 FY26 total revenue: INR853.5 crores (down 4% YoY)
  • Net revenue for Q2: INR148.6 crores (up 4% YoY)
  • EBITDA for Q2: INR61.6 crores (up 8% YoY)
  • H1 EBITDA: INR123.3 crores (up 12% YoY)
  • Cash profit for Q2: INR46.8 crores (up 4% YoY)
  • Profit before tax for Q2: INR21.2 crores (down 18% YoY)
  • PAT for Q2: INR15.4 crores (down 27% YoY)
  • Cost-income ratio H1 FY26: 29.8% (vs 25.6% H1 FY25)
  • CASA revenue for Q2: INR159.4 crores (up 21% YoY)
  • CASA revenue for H1: INR313.4 crores (up 25% YoY)
  • CASA segment margin: 54% (Q2), 53% (H1)
  • Renewal income for Q2: INR62.1 crores (up 36% YoY)
  • Digital Payment Services revenue for Q2: INR63.4 crores (down 20% YoY)
  • Digital Payment Services revenue for H1: INR169.8 crores (up 16% YoY)
  • Digital Payment Services margin: 20%
  • CMS revenue for Q2: INR30.9 crores (down 24% YoY)
  • CMS revenue for H1: INR65.3 crores (down 19% YoY)
  • CMS margin: 34%
  • Remittance revenue for Q2: INR39.5 crores (down 61% YoY)
  • Micro ATM and AEPS revenue for Q2: INR39.1 crores (down 12% YoY)
  • Combined legacy transaction revenue for Q2: INR78.6 crores
  • Operating expenses for Q2: INR87 crores; H1: INR177.3 crores (up 5% YoY)
  • Merchant network: 2 million; 56,000 new merchants onboarded in Q2
  • Customer base: 1.59 crores liability accounts; 9.1 lakh new accounts in Q2
  • CASA subscription revenue for Q2: INR23.3 crores (vs INR21.9 crores previous quarter)
  • Capex in H1 FY26: INR70 crores
  • Digital transactions: 55% of total throughput; Fino’s UPI share: 1.45% of ecosystem in Q2
  • Cost of funds: 1.9% in Q2 FY26
  • Revenue margin after product cost: 37% (Q2, highest achieved)
  • Share of low-margin transaction revenue: 20% (Q2, down from 32% a year ago)
  • Net revenue margin improved by 365 bps QoQ
  • EBITDA margin for H1: 14.4% (up from 12.4% H1 FY25)
  • Referral loan disbursal: ~INR200 crores in Q2
  • UPI incentive received in FY26: Not disclosed (none received so far)

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