FINOPB - Fino Payments Bank Limited Share Price

During the earnings call for Q4 FY'26, management provided an optimistic outlook for Fino Payments Bank's future, emphasizing the bank's resilience amid challenges faced in the past year. Key highlights and forward-looking points include:

1. Record Customer Base: The customer base grew by 22% year-on-year, reaching 1.75 crores, with 6.9 lakh new CASA accounts added in Q4 FY'26 alone.

2. Strong CASA Growth: The bank opened a historic 3.2 lakh new accounts in March 2026, leading to a total deposit balance of Rs.2,957 crores, an all-time high.

3. Renewal Income Increase: Renewal income for Q4 FY'26 reached Rs.62.2 crores, the highest in the bank's history, with a full year growth of over 25% year-on-year, indicating strong customer loyalty.

4. Digital Strategy Overhaul: The bank has paused its UPI P2M business to reassess its risk management framework, focusing on a sustainable digital payments model. There was a 17% sequential decline in B2B digital payments throughput, aligning with a deliberate risk-calibrated approach.

5. Core Banking System Migration: The migration to the Finacle core banking system has been completed, with an investment of approximately Rs.200 crores, expected to enhance operational efficiency and customer experience.

6. Transition to Small Finance Bank (SFB): Following RBI's in-principle approval in December 2025, management highlighted progress on various conditions required for final SFB licensing. The intent is to build a differentiated SFB focusing on secured lending, leveraging the existing merchant network of over 20 lakh.

7. Lending Strategy: Fino aims to roll out a referral book, with FY'26 referral disbursals standing at approximately Rs.1,300 crores, indicating significant progress towards establishing a lending franchise.

8. Cost of Funds Advantage: The bank's low-cost liabilities of around Rs.2,800 crores provide a 300 basis point advantage over traditional banks, positioning it for competitive lending.

9. Future Goals: Management reiterated its focus on sustainable, compliance-driven growth with a target of achieving a 20% return on equity by FY'30, supported by customer-centric strategies and operational efficiency.

In summary, Fino Payments Bank is charting a path toward sustainable growth, enhanced customer engagement, and a successful transition to a Small Finance Bank while maintaining operational discipline and transparency.

1. Question: "Sir, my first question is related to the SFB transition. If I understand the business correctly, we are currently doing a few services or products which will probably be in a conflict of interest when we start lending as an SFB..."

   Answer: We aim to avoid conflicts of interest by clearly separating our services. The lending referrals we created, rather than co-lending programs, are designed to test demand before launching our own lending operations. Services like cash management will continue without conflict, as we avoid the areas that could cause issues once we transition to SFB. Our business model reevaluates any services that might conflict, ensuring compliance with regulatory standards.

2. Question: "I read a news article that you are planning to sell this business correspondence. So do we have any progress on that front?"

   Answer: Typically, I refrain from commenting on media reports. However, I can confirm that we are exploring strategic options for our business correspondence segment, and will communicate updates as they develop.

3. Question: "As per the transition to SFB, we'll be doing a fundraise. So any timeline, any valuation or any kind of dilution numbers?"

   Answer: Currently, our capital adequacy ratio is about 83%, well above the 15% regulatory requirement. We do not need immediate capital for the SFB transition based on our business plan through FY'30. Should the need arise, we'll keep investors informed of any potential fundraising.

4. Question: "What explains the drop in the CASA opening in Q4?"

   Answer: The decline was primarily due to our core banking system migration, which caused temporary disruptions in account openings. Additionally, we are focusing on acquiring higher-quality customers rather than simply increasing numbers.

5. Question: "Do we expect that FY'27 or particularly first quarter FY'27 should be a normal quarter?"

   Answer: Yes, we anticipate a return to normalcy in FY'27, as the technology changes are complete. We aim to regain momentum in CASA account openings following the January disruption.

6. Question: "This event has happened late in the quarter. If you can comment on account openings pre and post this event?"

   Answer: Our account openings saw significant growth post-event, with March achieving a historic high by opening 3.2 lakh accounts despite earlier disruptions. This reflects robust customer confidence and business resilience.

7. Question: "Do we expect to see a loss of merchants or a slowdown in onboardings?"

   Answer: There has been no significant loss of merchants; our onboarding strategy is now risk-calibrated. We will be evaluating and implementing sustainable models going forward.

8. Question: "Do we receive any UPI incentive from the government given the throughput?"

   Answer: We did receive incentives in FY'25; however, there has been no further update on this for FY'26 though discussions are ongoing with the government.

9. Question: "Regarding our CASA revenue, could you give a breakup of how much float income is included in this?"

   Answer: Of the Rs.630 crores in CASA revenue, Rs.136 crores is derived from float income, reflecting our efficiency in managing deposits and liquidity.

10. Question: "How soon are we likely to achieve the 20% ROE outlined in our SFB plan?"

    Answer: Our aim is a 20% ROE by FY'30. Achieving this will depend on our asset-light model, strong CASA focus, and leveraging our existing infrastructure. We are committed to increasing profitability as rapidly as possible.