Fino Payments Bank Q2 FY26: Profit down 27% as income rises

Profit declines in September 2025 quarter

Fino Payments Bank reported a profit drop in the quarter ended September 2025 even as operating income rose sharply. Net profit for the quarter declined 27.42% to ₹15.35 crore versus ₹21.15 crore in the quarter ended September 2024. Total operating income increased 25.88% to ₹60.11 crore from ₹47.75 crore over the same period. The data points to a quarter where topline momentum did not translate into higher bottomline performance. The disclosure also showed profit before tax (PBT) at ₹21.22 crore compared with ₹25.93 crore a year earlier.

The September quarter numbers add to a broader FY26 trend in which profits have moderated compared with the previous year. In an internal summary shared for investment analysis, the bank also flagged that total income for Q2 FY26 declined versus Q1 FY26 and Q2 FY25. The same note said operating profit before provisions declined on both a sequential and year-on-year basis. While the bank continues to scale digital and deposit-led lines, the period highlights the sensitivity of profitability to cost and tax movements.

Operating income rises, but margins remain a focus

The quarter ended September 2025 showed a higher operating income base, but profitability weakened. Reported operating profit margin (OPM) was shown as negative in the quarter-wise table shared alongside the headline numbers, with OPM% listed at -484.28 for Sep 2025 versus -746.97 for Sep 2024. The statement did not provide granular drivers within the September 2025 snapshot, but it established the headline divergence between income growth and profit contraction.

In FY26’s first quarter ended June 2025, the bank explicitly attributed the decline in profit to a rise in tax expense. That quarter’s tax outgo was ₹68.7 crore versus nil in the year-ago period, according to the provided text. While that explanation is specific to Q1 FY26, it frames the broader point that tax and cost lines can materially affect earnings even when income grows. Investors typically track whether such profit pressure is episodic or persists across quarters as the business mix changes.

Q1 FY26: profit falls despite higher total income

For the quarter ending June 2025 (Q1 FY26), Fino Payments Bank reported net profit of ₹17.7 crore, down 27.4% year-on-year from ₹24.3 crore. Sequentially, profit fell 26.2% from ₹24.0 crore in Q4 FY25. In the same quarter, interest income rose 34.4% to ₹60.9 crore from ₹45.3 crore, and increased 15.3% sequentially from ₹52.8 crore. Other income was reported at ₹392.5 crore, almost flat year-on-year versus ₹391.5 crore, but down 10.9% sequentially from ₹440.7 crore.

Including other income, total income in Q1 FY26 rose 3.8% to ₹453.5 crore from ₹436.8 crore in the year-ago quarter. Total expenses increased 3.9% to ₹428.8 crore from ₹412.6 crore, and declined 1.8% sequentially from ₹436.8 crore in Q4 FY25. The provided details also broke down revenue streams for the quarter, with ₹119.6 crore from retail banking, ₹60.4 crore from treasury, and ₹272.8 crore from other banking operations. The cost-to-income ratio rose to 28.1% from 25.4%, while net revenue margin improved to 33.5% from 31%.

Customer and distribution metrics highlighted in FY26

The June 2025 quarter note also highlighted operating metrics that the bank believes support its transition. Customer account renewals grew, with income from CASA (Current Account and Savings Account) renewals rising 38% year-on-year to ₹55.9 crore. The merchant network expanded to 19.5 lakh outlets at the end of June 2025, covering 97% of India’s pin codes.

However, the same disclosure also pointed to weakness in traditional rails. Revenue from services such as cash remittance, micro-ATM transactions, and Aadhaar-enabled payments fell 43% year-on-year. The fall was attributed to regulatory changes and a consumer shift toward digital channels in the provided text. This mix shift matters because it can reshape revenue quality, growth stability, and the cost structure over time, but it can also create near-term volatility as older streams decline.

FY25: revenue rises 25%, profit grows 7%

In FY25, Fino Payments Bank reported total income (revenue) of ₹1,847.10 crore, up 24.94% from ₹1,478.38 crore in FY24. Net profit for FY25 was ₹92.53 crore compared with ₹86.22 crore in FY24, a 7.32% increase. The bank also reported EPS of ₹11.08 in FY25 versus ₹10.36 in FY24. In its FY25 update, the bank said PBT rose to ₹108.3 crore, up 26% in FY25, and it completed five years of profitability.

Quarterly results for Q4 FY25 showed total income of ₹493.49 crore versus ₹461.34 crore in Q3 FY25, a sequential rise of 6.97%. Net profit in Q4 FY25 was ₹24.0 crore versus ₹23.11 crore in Q3 FY25, up 3.85% sequentially. On a year-on-year basis, Q4 FY25 net profit was lower than Q4 FY24 (₹25.21 crore). Separately, for Q4 FY24, the bank reported net profit of ₹25.2 crore, up 14% from ₹22 crore, while revenue rose 24% to ₹401.3 crore from ₹323.4 crore.

Digital throughput scales in FY25

The FY25 communication emphasised transaction scale and digital growth. The bank said it processed over ₹4.6 lakh crore worth of transactions in FY25, up 29% over FY24, and digital accounted for 49% of the total value of transactions in FY25. In the same release, FY25 throughput was presented as ₹4.61 lakh crore, with digital throughput at ₹2.255 lakh crore. Digital payments revenue was stated to have grown to ₹390 crore in FY25.

In earlier commentary around FY24 results, the bank said its platform facilitated more than 200 crore transactions with gross transaction value of over ₹3.58 lakh crore in FY23-24. It also reported Q4 FY24 throughput of ₹1.03 lakh crore, with ₹42,915 crore processed digitally, according to the text provided. These disclosures underline that the operating model remains anchored on transaction-led distribution and increasing digital contribution.

Cash flow: H1 FY26 turns positive on operations

Cash flow highlights shared in ₹ lakhs translate into meaningful movement in operating cash generation in H1 FY26. Net profit before tax in H1 FY26 was ₹45.85 crore versus ₹50.20 crore in H1 FY25, and ₹108.35 crore for FY25. Cash generated from operations in H1 FY26 was ₹144.35 crore compared with -₹173.76 crore in H1 FY25. Net cash from operating activities was ₹137.22 crore in H1 FY26 versus -₹171.70 crore in H1 FY25.

Liquidity also improved in the same period. Net increase in cash and equivalents was ₹93.47 crore in H1 FY26 compared with -₹163.60 crore in H1 FY25. Cash and cash equivalents at the end of the period stood at ₹1,197.66 crore in H1 FY26 versus ₹901.95 crore in H1 FY25, and ₹1,104.19 crore at FY25 end.

Market reaction and disclosed stock price move

On the day referenced in the June 2025 quarter disclosure, shares of Fino Payments Bank ended 1.46% lower at ₹259.55 on the BSE. The text also includes prior dates and headlines indicating earlier market reactions to results, including a 5% jump after Q1 net profit growth reported in July 2023, and a Q4 net profit increase reported in April 2024.

While the September 2025 quarter table presented operating income and net profit comparisons, it did not specify the same-day share price move. Investors typically focus on whether income momentum is sustained and how the bank manages costs, tax expenses, and compliance investments during its ongoing transition.

Transition priorities: core banking migration and licence application

The June 2025 note stated that the bank plans to move to a new core banking system during the ongoing financial year. It also said the bank continues to invest in compliance, including transaction monitoring and anti-money laundering. Separately, the bank has applied for a small finance bank licence from the Reserve Bank of India.

These initiatives can be material for a payments bank because technology migration and compliance strengthening can affect operating costs and execution focus, while a licence upgrade, if granted, would change the regulatory and business scope. The provided text does not include any timeline or regulatory decision, but it establishes these as active initiatives.

Key financial and operating figures at a glance

Conclusion

Fino Payments Bank’s recent disclosures show a clear split between income growth and profit softness in FY26 so far. The September 2025 quarter recorded a 27% drop in net profit despite a 26% rise in operating income, and Q1 FY26 also saw profit pressure alongside higher total income. FY25, however, reflected strong revenue growth and higher annual profit, supported by rising throughput and a larger digital contribution.

The next set of reported results and updates around the core banking migration and the small finance bank licence application will remain key reference points, alongside trends in cost-to-income and tax outgo that influenced recent quarters.