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Fino Payments Bank posted a 27.5% decline in its net profit for Q2 FY26 to INR 15.3 Cr from INR 21.1 Cr in the same period last year. On a QoQ basis, profit fell 13.5% from INR 17.7 Cr.

The payments bank’s income from interest rose 26% to INR 60.1 Cr from INR 47.7 Cr in Q2 FY25. It was almost flat compared to INR 60.9 Cr interest income in the preceding June quarter.

Other income declined 16.6% YoY to INR 407.6 Cr. Sequentially, it fell 13.4% from INR 392.5 Cr.

The bank’s total expenses for the quarter under review stood at INR 378.8 Cr, a decline of 11.8% from INR 429.4 Cr in the same period last year. On a QoQ basis, the bank’s expenses declined 11.6% from INR 428.8 Cr.

Fino Payments Bank earns revenue primarily from three streams – retail banking, treasury and other banking operations.

In Q2, retail banking remained the largest contributor to revenue at INR 301.4 Cr, or roughly three-fourths of total revenue. This segment includes current and savings account (CASA) services, digital payment offerings, and traditional transaction businesses such as domestic money transfer (DMT), micro-ATM, and AePS.

While CASA and digital services continued to grow steadily, the traditional transaction vertical saw a decline, dragging overall retail banking revenue down about 15%.

Treasury income, which includes earnings from deployment of surplus funds, investments, and float income from deposits, rose 28% YoY to INR 33 Cr, supported by higher average deposits and a low cost of funds.

Meanwhile, revenue from other banking operations, mainly cash management services (CMS) and business correspondent (BC) banking, stood at INR 65.6 Cr, down 11% from the year-ago period amid a temporary slowdown in MFI-NBFC disbursals.

In its investor presentation, the bank highlighted a structural shift from transaction business toward CASA (customer deposits) and digital payment services.

Notably, the growing businesses (CASA + digital payments) contributed 56% of revenue in Q2 as opposed to 46% a year ago. By contrast, traditional transaction businesses (DMT, MATM, AePS) contracted sharply, mainly due to broader market movement to UPI and other channels.

In the quarter under review, the bank saw average deposits rising 36% YoY to INR 2,306 Cr at a low cost of funds of 1.9%. CASA subscription/ renewal income rose 36% YoY to INR 62.1 Cr.

The payments bank said that its application for a small finance bank licence is still under the RBI’s evaluation.

Shares of Fino Payments Bank ended 1.7% lower at INR 301.15 on the BSE.

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