Fino Payments Bank has reported a profit after tax of Rs 4.5 crore in the second quarter of FY 2021, up 136 percent from Rs 1.9 crore in the previous quarter, the Mumbai-based bank said on November 25.
At an operational level, the bank had reported profitability in the last financial year. It reported a total transaction settlement of Rs 33,000 crore in the September quarter, up 43 percent from year-ago period. Overall, the bank had an operating profit of Rs 13 crore.
The performance came on the back of a network of 5.5 lakh businesses that offer banking services to consumers across the nation. These include Fino’s own and its partner’s physical network.
“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 for all our stakeholders,” said Rishi Gupta, chief executive officer, Fino Payments Bank.
Fino Payments Bank, which started off as a rural payments company, is on track to create a strong financial services entity for rural India.
It is strengthening its financials every quarter and is investing heavily in creating a large physical network of business correspondents across the nation
Among the reasons driving profitability are a lean variable cost of operations along with increasing revenue and pushing out of high-margin products.
Despite the pandemic posing a major challenge, the banking company has managed to stick to its path to profitability. It also set a target of creating a 10-lakh strong physical network in the country by 2023.
Fino offers liability products, Micro ATM services, AePS transactions, remittances, payment services partnerships, insurance (life, health including Covid19, motor) and gold loan referrals for partner bank.
Gupta added that the bank was processing transactions worth Rs 12,500 crore a month with 25 percent of the volumes coming from remittance, 38 percent in AePS withdrawals and micro ATM services and 11 percent in payment services.
The domestic remittance business was hit during the pandemic as migrant workers started going back to their home towns. That business for Fino has bounced back with 80 percent growth reported in the second quarter compared to the first quarter. It has gone back to Rs 6,400 crore compared to Rs 3,540 crore in the previous quarter.
During this lean period, the gold loan product worked well for the bank, when it facilitated Rs 430 crore of gold loans through its referrals programme.
As a payments bank, Fino cannot lend on its own balance sheet and works with partner banks and NBFCs for loan processing.