Fino Payments Bank Ltd. · NSE:FINOPB
Fino Payments Bank — Q4 FY2022 Earnings Presentation
66 slides from Fino Payments Bank's earnings presentation, May 16, 2022
Slide 1: Regulation 30 intimation letter to exchanges
May 16, 2022 BSE Limited National Stock Exchange of India Limited Corporate Relationship Department, Exchange Plaza, 5th Floor, 2nd Floor, New Trading Wing, Plot No. C/1, G Block, Rotunda Building, P.J. Towers, Bandra - Kurla Complex, Dalal Street, Mumbai- 400 001 Bandra (E), Mumbai - 400 051 (Scrip
Slide 2: Q4FY22 Investor Presentation
Classification: Public Q4FY22 Investor Presentation 16th May 2022 Classification: Public
Slide 3: Table of Contents
Classification: Public Table of Contents Strategic Overview FY22 Highlights Q4FY22 Highlights Q4FY22 Financial Performance Product Strategy and Performance Trends Inside India Insights Network Engagement and Expansion Core Technology and Digital Strategy Classification: Public
Slide 4: Strategic Overview
Classification: Public Strategic Overview 3 Classification: Public
Slide 5: A Revenue Milestone!!!
Classification: Public A Revenue Milestone!!! Achieved a major revenue landmark with only a transaction business at core Revenue of Fino Payments Bank in FY22 28% YOY growth A journey commenced in 2017 amid extraordinary speculation on the viability of the payments bank model Fino Bank rode thro
Slide 6: Commencement of Journey towards a New Star
Classification: Public Commencement of Journey towards a New Star Transition from a phygital focused Fino 1.0 to an end-to-end digital Fino 2.0 Fino 1.0 FinoPay App Fino 2.0 Digital DTP model – Distribution, Focus on more app downloads BAAS platform to directly Create more end-to-end Technol
Slide 7: Highlights from Fino 1.0 Journey
Classification: Public Highlights from Fino 1.0 Journey Product innovation and penetration of network are the core reasons for a sustained revenue growth Steep Revenue Growth Evolving Product Mix (in ₹ lac cr) 16% 5% 20% 8% 15% 2% 12% 21% CAGR 20% 4% 6% 27% 3% 6% FY20 33% FY21 FY22 6% 32% 51% 35% Re
Slide 8: Key Financial Ratios
Classification: Public Key Financial Ratios Operating leverage leading to consistent rise in PAT Margins even with a stable Take Rate and Gross Margins Take Rate (ex. UPI throughput) Blended Gross Margins 0.73% 0.60% 0.60% 33.97% 32.38% 32.50% FY20 FY21 FY22 FY20 FY21 FY22 PAT Margins 4.2% 2.6% Take
Slide 9: Pillars of Fino Payments Bank
Classification: Public Pillars of Fino Payments Bank An asset light, scalable and last mile fintech with a banking license Pioneering Branchless Banking Product and Customer Ownership Asset light merchant model with a variable payout Products like bank accounts will help own customers structure is l
Slide 10: FY22 Set Up a Strong Base for Transformation
Classification: Public FY22 Set Up a Strong Base for Transformation Scale and efficiency of transactions through the network will boost digital transformation Platform facilitating transactions at scale Digital customer ownership Offering digitization, payments and money transfer Leverage footfalls
Slide 11: Management Strategy for the Transition
Classification: Public Management Strategy for the Transition Differentiated allocation of management focus basis the stage of product lifecycle MATURE PRODUCTS – DMT, MATM & AEPS These are the hook products that will continue to grow at a reasonable pace owing to a brand, network and processes GROW
Slide 12: Digital Strategy
Classification: Public Digital Strategy Goal is to build Fino 2.0 into a scalable and profitable digital asset Invest in the right team and the right set of products 1 Build interactive omni-channel 2 Fino 1.0 Fino 2.0 platforms for all segments of customers Ubiquity of Fino 1.0 anchored on a will l
Slide 13: Trends across Digital & Digitization Products
Classification: Public Trends across Digital & Digitization Products Healthy growth across key digital and digitization products to hold the key in the 2.0 journey Cash Digitization in FY22 ₹ 64,948 cr Fino Bank’s cash digitization throughput from Domestic Remittance and Cash Management products inc
Slide 14: FY22 Highlights
Classification: Public FY22 Highlights 13 Classification: Public
Slide 15: Economy CIC continues to exhibit robust growth
Classification: Public Economy CIC continues to exhibit robust growth The digital shift is still not impeding growth of CIC and cash throughput in the economy Addressing problems of the present While investing for the future Cash In Circulation – Industry UPI Payments – Industry (in ₹ lac cr) (in ₹
Slide 16: The Journey of Profitability: Onwards and Upwards
Classification: Public The Journey of Profitability: Onwards and Upwards Fino Bank continues to chart disproportionate profit growth every quarter Reasonable and sustainable growth in revenue leading to…. …. Disproportionate growth in profits Total Revenue PAT (in ₹ cr) (in ₹ cr) 28% 109% 1,008.85 4
Slide 17: Industry Leading Performance Highlights in FY22
Classification: Public Industry Leading Performance Highlights in FY22 Demonstrating strong growth in business volumes, revenue and profitability 67 Cr+ ₹187,311 Cr* 10.2 lac ₹34.9 lac Transactions on Fino platforms Total Throughput in FY22 Registered merchants on Fino Revenue per employee in FY22 5
Slide 18: FY22 comparison over FY21
Classification: Public FY22 comparison over FY21 Financial performance and operating parameters Total Throughput Total Revenue EBITDA PAT (in ₹ cr) (in ₹ cr) (in ₹ cr) (in ₹ cr) 41% 28% 62% 109% 1,87,311 84.38 42.74 1,008.85 791.03 1,32,931 52.02 20.47 FY21 FY22 FY21 FY22 FY21 FY22 FY21 FY22 UPI Thr
Slide 19: Throughput Unit Economics
Classification: Public Throughput Unit Economics Average Size of Throughput per Transaction across different products Remittance Micro ATM AEPS CMS (in ₹) (in ₹) (in ₹) (in ₹) 38,971 2,732 2,723 2,869 2,555 3,753 2,691 27,766 2,391 3,602 3,542 13,113 FY20 FY21 FY22 FY20 FY21 FY22 FY20 FY21 FY22 FY20
Slide 20: Q4FY22 Highlights
Classification: Public Q4FY22 Highlights 19 Classification: Public
Slide 21: Industry Leading Performance Highlights in Q4FY22
Classification: Public Industry Leading Performance Highlights in Q4FY22 Demonstrating strong growth in business volumes, revenue and profitability 21 Cr+ ₹53,267 Cr 10.2 lac ₹986K Transactions on Fino platforms Total Throughput in Q4FY22 Registered merchants on Fino Revenue per employee in Q4FY22 7
Slide 22: Revenue and Margins on Own and Open Banking Channels
Classification: Public Revenue and Margins on Own and Open Banking Channels Strong margins in own banking channel and high revenue growth in open banking channel Own Banking Channel Open Banking Channel ₹72.97 Cr 19% Transaction Revenue (ex BC Banking) Revenue in Q4FY22 ₹285.29 Cr ₹107.53 Cr Transac
Slide 23: Strong Revenue Momentum in Q4FY22
Classification: Public Strong Revenue Momentum in Q4FY22 Emerging products like CMS, subscription and renewal income contributing to steady revenue growth alongside legacy products (in ₹ cr) 23% 4% 275.16 285.29 Revenue in Q4FY22 242.15 228.65 231.84 ₹285.29 Cr 206.24 179.20 151.32 23% growth over Q
Slide 24: Revenue Trajectory Mirroring Trends but at an Elevated Growth Level
Classification: Public Revenue Trajectory Mirroring Trends but at an Elevated Growth Level Revenue levels in FY22 is much higher than FY20 and FY21 levels, but mirroring similar sequential growth trends Revenue Q1FY21 started 12.1% higher over Q1FY20 (in ₹ cr) and then growth momentum picked up 28
Slide 25: Highest ever quarterly PAT in Fino Bank History!
Classification: Public Highest ever quarterly PAT in Fino Bank History! Q4FY22 PAT higher than H1FY22 PAT (in ₹ cr) PAT for Q4FY22 at 17.62 ₹17.62 Cr 14.10 6.52 7.58 7.89 4.52 132% growth over Q4FY21 1.85 3.13 Q1FY21 Q2FY21 Q3FY21 Q4FY21 Q1FY22 Q2FY22 Q3FY22 Q4FY22 20.66% 20.03% 18.67% 17.70% Annual
Slide 26: Q4FY22 Financial Performance
Classification: Public Q4FY22 Financial Performance 25 Classification: Public
Slide 27: Bank Level Profit & Loss
Classification: Public Bank Level Profit & Loss Revenue growth of 23% in Q4FY22 leading to a PAT growth of 132% Particulars Q4FY22/ Q4FY22 Q3FY22 Q4FY21 FY22 FY21 YoY Growth (in ₹ cr) Q4FY21 Revenue 285.29 275.16 231.84 23% 1008.85 791.03 28% Product Cost 195.81 188.85 159.53 23% 680.94 522.29 30% N
Slide 28: Balance Sheet
Classification: Public Balance Sheet ( ₹. Cr) Particulars As at 31st March 2022 As at 31st March 2021 Capital and Liabilities Capital 83.21 44.58 Reserves & Surplus 396.62 105.97 Deposits 500.69 242.84 Borrowings 249.66 180.80 Other Liabilities and Provisions 449.82 436.11 Total 1,680.00 1,010.29 As
Slide 29: Revenue Mix Across Parameters in Q4FY22
Classification: Public Revenue Mix Across Parameters in Q4FY22 Annuity subscription business to continue to boost contribution of subscription revenue in the overall revenue pie Income Breakup: Transaction & Subscription Income Breakup: Own and Open Banking Channel 42% 35% 58% 65% Transaction Income
Slide 30: Revenue Mix Across Products
Classification: Public Revenue Mix Across Products Shift in revenue mix towards higher margin products like CASA & CMS and high take rate products like Remittance in Q4FY22 23% Total Bank Level Revenues (in ₹ cr) 231.8 285.3 3.8%, 8.8 6.8%, 19.4 CMS & CASA occupy 20.5% 17.5%, 40.6 12.1%, 34.6 of the
Slide 31: Operating Leverage
Classification: Public Operating Leverage Strong operating leverage playing out despite addition in teams to support exponential future business growth Revenue per Employee & Total Employee count Growth in revenue per employee by 33.8% for Q4FY22 34.9 annualized for full year over FY21 29.5 This
Slide 32: Product Strategy & Performance Trends
Classification: Public Product Strategy & Performance Trends 31 Classification: Public
Slide 33: CASA and Debit Cards
Classification: Public CASA and Debit Cards A high margin-high growth product now showing robust annuity income through subscription renewal Accounts Opened Subscription Revenue (in ₹ cr) 25 55 20.2 (in lacs) 20 45 20.9 45.9 15 16.7 35 11.3 15.0 12.1 11.1 10 10.6 25 5.9 7.7 8.4 8.4 7.9 25.7 6.2 15 5
Slide 34: CMS: Transition through Sector Diversification (1/3)
Classification: Public CMS: Transition through Sector Diversification (1/3) FY22 was the year of diversification and FY23 will be the year of growth NBFC NBFC Cash management MFI E- Retail Earlier sector of Current sector of commerce partners in CMS partners in CMS till FY21 post FY21 Cab OTT aggreg
Slide 35: Cash Management Services (2/3)
Classification: Public Cash Management Services (2/3) Accelerated growth path helped by aggressive partner on-boarding Throughput (in ₹ cr) Revenue (in ₹ cr) Take Rate 18.1 7,864 0.29% 0.27% 0.28% 14.3 0.25% 6,074 12.9 13.0 0.24% 0.24% 0.24% 0.23% 5,389 10.3 11.4 4,510 4,558 3,830 2,622 6.3 866 2.5
Slide 36: Cash Management Services (3/3)
Classification: Public Cash Management Services (3/3) Despite a rapidly increasing business volume, the unit economics are on an upward curve Transaction Count (in ₹ cr) Average Ticket Size (in ₹’000 ) 0.17 46.4 0.15 0.16 0.14 0.14 39.2 0.13 35.1 33.8 29.2 31.3 0.1 26.5 16.3 0.05 Q1FY21 Q2FY21 Q3FY2
Slide 37: Micro-ATM & AEPS
Classification: Public Micro-ATM & AEPS A high margin-moderate take rate product where the one-time income implies first mover advantage Throughput (in ₹ cr) Revenue (in ₹ cr) Transaction Take Rates 15,203 47.8 14,308 14,655 14,356 14,221 44.4 45.5 42.5 46.2 43.3 46.8 46.6 13,753 0.34% 12,923 13,068
Slide 38: Remittance
Classification: Public Remittance A low margin-high take rate product that attracts more customers into Fino’s ecosystem Throughput Revenue (in ₹ cr) Take Rate (in ₹ cr) 105.9 103.4 0.89% 0.88% 12,236 11,966 0.85% 0.86% 0.86% 0.87% 0.87% 0.86% 84.3 86.0 81.9 9,426 9,826 9,449 7,412 63.9 6,391 54.9 3
Slide 39: Competitive Landscape Across Industry
Classification: Public Competitive Landscape Across Industry Competition helps in the ecosystem to develop and expand At a macro level, Fino Payments Bank does not have a meaningful standalone competitor barring the active Whole Bank payments banks Banks, SFBs, Non-digital Payments Banks RRBs Fintec
Slide 40: Inside India Insights
Classification: Public Inside India Insights 39 Classification: Public
Slide 41: Fino Bank’s Cash Digitization Landscape
Classification: Public Fino Bank’s Cash Digitization Landscape 4 out of top 5 states in CMS cash digitization for Fino Bank are states having no metro cities A district in Bihar does more CMS than an entire state of Chattisgarh, Punjab & Kerala individually > Chattisgarh Darbhanga Punjab Kerala 5 2
Slide 42: AEPS to CASA Conversion Correlation is the Highest
Classification: Public AEPS to CASA Conversion Correlation is the Highest Amongst all off-us products, AEPS conversion to Fino Bank accounts (on-us) is positive in the most number of states States that majorly contribute to the off-us revenue pool have a much No. of States & UTs with positive correl
Slide 43: Average Balance >₹447 has the Highest Propensity to Renew Subscription
Classification: Public Average Balance >₹447 has the Highest Propensity to Renew Subscription Either higher average balance or more transaction frequency helps in higher renewal ratios 100% 54% Average Balance 46% No > ₹122 Yes Renewal rate: 20% Renewal rate: 77% 54% 46% 41% Debit 13% 17% 29% Avg. B
Slide 44: Network Engagement and Expansion
Classification: Public Network Engagement and Expansion 43 Classification: Public
Slide 45: Fino Bank’s Distribution Ecosystem
Classification: Public Fino Bank’s Distribution Ecosystem An operating framework that is similar to model followed by FMCG and telecom sector companies Employees of Fino Bank whose primary responsibility is Feet-on-street to onboard new distributors, maintain existing relationships and push them for
Slide 46: Distributor Engagement Initiatives
Classification: Public Distributor Engagement Initiatives Engagement rolled out for distributors will also be replicated for merchants in due course 45 Classification: Public
Slide 47: Network Expansion Initiatives
Classification: Public Network Expansion Initiatives Widening and deepening of the network will allow more products and partnerships to leverage the outreach Volume based pricing strategy for merchants on MATM & AEPS and for both merchants and distributors for DMT Aggression Distributor payout compo
Slide 48: Core Technology and Digital Strategy
Classification: Public Core Technology and Digital Strategy 47 Classification: Public
Slide 49: Core Technology Strengths
Classification: Public Core Technology Strengths A healthy balance of in-house developments as well as best-in-class tech developed with partners Video KYC RPA PTA Chatbot Implemented seamless Implemented with partner; Custom transaction system Integrated merchant and merchant on-boarding developmen
Slide 50: Customer Engagement Initiatives
Classification: Public Customer Engagement Initiatives Campaign strategy that is focused more on the value proposition than freebies 49 Classification: Public
Slide 51: Our Digital Footprint
Classification: Public Our Digital Footprint Omni channel presences on the digital landscape increases our ability to outreach Facebook Instagram 8,349 followers 1,46,164 Followers Merchant 3.5 lac leads sourced in FY22 YouTube Twitter 59,992 subscribers 5,746 followers Account Opening 4.4 lac leads
Slide 52: Digital Overlay Strategy
Classification: Public Digital Overlay Strategy A digital overlay on the physical model will add robustness to resilience Increasingly younger customer profile Favorable Demographics A millennial and Gen Z customer profile to use more digital platforms on long term basis Immense potential of online
Slide 53: Thank You
Classification: Public Thank You 52 Classification: Public
Slide 54: Annexure: Understanding Fino’s Products
Classification: Public Annexure Understanding Fino’s Products Classification: Public
Slide 55: Current and Savings Account (1/2)
Classification: Public Current and Savings Account (1/2) Defining the problem statement, customer segment, potential and market size opportunity Use Case: A bank branch in tier 3 and below city is generally very crowded and is far away. It is also open during limited banking hours on weekdays. Throu
Slide 56: Current and Savings Account (2/2)
Classification: Public Current and Savings Account (2/2) Understanding the process flow of an account opening Fino Merchant Portal 2 Revenue source Subscription Fee Merchant charged to Customer 1 3 1 Customer approaches a merchant for account opening Customer 2 Merchant seeks various customer detail
Slide 57: Cash Management Services (1/2)
Classification: Public Cash Management Services (1/2) Defining the problem statement, customer segment, potential and Fino’s business value Use Case: Companies which collect cash from their customers need to deposit the same at a bank branch for money in the account. They do the same at a nearest Fi
Slide 58: Cash Management Services (2/2)
Classification: Public Cash Management Services (2/2) Understanding the process flow of a CMS transaction 3 Revenue source 2 Merchant Account with Fino Bank Fee Income from B2B partners Customer’s bank account Merchant 1 1 Delivery agent/ collection agent/ customer visits merchant point with cash th
Slide 59: Micro-ATM (1/2)
Classification: Public Micro-ATM (1/2) Defining problem statement, customer segment, potential and Fino’s business volume and value Use Case: Beyond the metro and tier 1 cities, ATM penetration is low. Customers have to travel a distance to withdraw cash. The genesis of micro- ATM is to facilitate c
Slide 60: Micro ATM (2/2)
Classification: Public Micro ATM (2/2) Understanding the process flow of an MATM transaction 3 Merchant Account with 2 Fino Bank Customer’s bank account 4 Merchant 1 1 Customer shares his debit card to the merchant 5 Merchant inserts the card in his/ her micro-ATM handheld device – 2 device is conne
Slide 61: AEPS (1/2)
Classification: Public AEPS (1/2) Defining problem statement, customer segment, potential, market size and Fino’s business value Use Case: Customers often don’t carry their ATM cards with them. Many at the bottom of the pyramid may not even have an ATM card. Most ATM kiosks will not be suitable for
Slide 62: AEPS (2/2)
Classification: Public AEPS (2/2) Understanding the process flow of an AEPS transaction 3 Merchant Account with 2 Fino Bank Customer’s bank account 4 Merchant 1 1 Customer gives his fingerprint on bio-authentication device of the merchant 5 2 The device is connected to network and also to the mercha
Slide 63: Remittance (1/2)
Classification: Public Remittance (1/2) Defining problem statement, customer segment, potential, market size and Fino’s business value Use Case: Customers having cash with them can visit a merchant point to transfer the same to a bank account on the beneficiary side. Remittance is essentially a cash
Slide 64: Remittance (2/2)
Classification: Public Remittance (2/2) Understanding the process flow of a remittance transaction 3 Merchant Credit in Account with beneficiary 2 Fino Bank bank account Merchant 1 Customer pays cash to the merchant for transfer to beneficiary account – separate charges for transaction is also paid
Slide 65: Open Banking Platform (1/2)
Classification: Public Open Banking Platform (1/2) Defining the problem statement, customer segment, potential and market size opportunity Use Case: Fintech players offering various payment products require a bank at the back-end to process a transaction. Being a bank, Fino can offer its technology
Slide 66: Open Banking Platform (2/2)
Classification: Public Open Banking Platform (2/2) Understanding the process flow of a remittance transaction 1 2 3 Customer of Open Merchant of Open Open Banking Fino’s Technology Banking partner Banking partner partner Platform 1 Customers visit the merchant points of the Open Banking partner (API