The board of Fino Payments Bank has approved the transition into a Small Finance Bank (SFB) subject to necessary approvals.

“We intend to supplement payments bank business with lending to known customers through enhancement of license. Our opportunity to grow by transiting to SFB is significant on the back of optimal leveraging of our widespread network to cater the unmet credit demand of our merchants and customers,” MD and CEO Rishi Gupta said.

“Fino’s core business activity will continue to be that of a banking service provider to the existing target segment with credit as an additional service offering,” he added.

The bank posted its highest ever quarterly revenue of ₹348 crore in Q1 FY24 — up 21 per cent y-o-y, led by the focus on customer ownership business and high margin products, CFO Ketan Merchant said adding that the bank aims to continue to grow at 20 per cent y-o-y.

“Our SFB will be a Payments Bank++ model, different from existing players wherein the fee based income will constitute 75-80 per cent to the revenue in first few years of operation,” he said.

The bank has also received a letter from holding company Fino PayTech regarding a group corporate restructuring proposal, following which the board has constituted a committee to explore the possibility of group corporate restructuring and evaluate the implications and other considerations of the same.

Fino Payments Bank continues its thrust on acquiring new customers, and is progressively enhancing its sustainability and is well-positioned to leverage its network, it said in a release.

Q1 results

The payments bank posted a net profit of ₹19 crore for Q1FY24 — up 85 per cent on year, with the bank saying that this was the first quarter where total throughput crossed ₹75,000 crore of which ₹18,000 crore was processed by the digital network.

Digital throughput grew 94 per cent y-o-y to ₹18,351 crore accounting for 24 per cent of overall throughput during the quarter against 16 per cent a year ago. A total of 41 crore transactions were processed in the Fino ecosystem, up 63 per cent on year.

Registered merchants for the bank rose 26 per cent y-o-y to 14.4 lakh, whereas 7.7 lakh new bank accounts were opened, up 24 per cent. Total CASA (current and saving accounts) stood at 82.9 lakh as of June 30. Average deposits were up 13 per cent q-o-q to ₹1,221 crore at the end of June.

“Our annuity business experienced exponential growth as a result of CASA renewal income which grew 96 per cent in Q1 FY24 y-o-y to ₹26 crore,” the company said, adding that the product mix substantially improved in favour of high margin products.

Revenue from CASA and CMS (cash management services) was 29 per cent of total revenue, up from 21 per cent a year ago.