Fino Payment Bank Q3 Review - CASA, CMS Continued To Remain Key Margin Expansion Driver: ICICI Securities

ICICI Securities Report

Fino Payment Bank Ltd. continued to sustain improving trajectory in profit after tax margin for the third consecutive quarter – as reflected in 150 bps QoQ profit after tax margin expansion to 6.1% in Q3 FY23 versus 3.5% / 4.5% in Q1 FY23 / Q2 FY23, respectively.

Increasing share of current account, savings account plus cash management system business (more than 40% margins) to 26% as on Dec-22 from 16% in Dec-21 and benefits arising from operating leverage remained key earnings drivers.

Overall Fino Payment Bank's profit after tax grew 38% QoQ to Rs 190 million, translating into 15% return on equity in Q3 FY23. While gross revenue grew by 4% QoQ, core revenue (excluding interest income) growth remained muted at 2% QoQ due to 11% QoQ decline in Aadhaar enables payment systems revenue and sequentially flat CASA revenue.

However, gradually improving its liability franchise as reflected in 66% YoY growth in deposits to Rs 9.76 billion and new customer acquisition of 0.7 million during Q3 FY23 resulted in 24% QoQ increase in interest income on deposit float.

Total throughput grew 9% QoQ to Rs 659 billion driven by 27% QoQ growth in CMS volumes. Mini ATM and AePS throughput continued to remain sluggish.

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