Fino Payments Bank announced its audited financial results for FY26 at a board meeting held on April 29, 2026, reporting significant profitability challenges across both quarterly and annual metrics. The bank subsequently held an earnings conference call with investors and analysts on April 30, 2026, where Interim CEO Ketan Merchant described FY26 as "the most defining year in Fino's journey since inception," highlighting resilience in deposits and progress on the Small Finance Bank (SFB) transition despite a challenging operating environment.

Annual Financial Performance

The bank's annual performance reflected substantial headwinds. Net profit for FY26 declined 43% to ₹5,246 lakhs from ₹9,253 lakhs in the previous fiscal year. Total income decreased 14% year-on-year to ₹1,58,793 lakhs from ₹1,84,710 lakhs in FY25. Interest earned showed positive growth of 27% to ₹24,818 lakhs from ₹19,523 lakhs, primarily driven by income on investments which increased to ₹18,136 lakhs from ₹15,174 lakhs. Management attributed the revenue decline to regulatory-driven contraction in digital payments from Q2 onwards, the industry-wide collapse of bank-led DMT remittances following the November 2024 RBI circular, and a slowdown in the NBFC and MFI sector.

Q4 Performance Highlights

The fourth quarter performance showed continued pressure on profitability. Net profit for Q4 dropped significantly to ₹710 lakhs compared to ₹2,400 lakhs in the corresponding quarter of the previous year, representing a 70% decline. Total income for the quarter decreased to ₹33,998 lakhs from ₹49,349 lakhs year-on-year. Interest earned during Q4 increased 21% to ₹6,410 lakhs from ₹5,278 lakhs, while other income declined 37% to ₹27,588 lakhs from ₹44,071 lakhs. Management noted that margins expanded by 250 basis points quarter-on-quarter and 500 basis points on a full year basis, reflecting a shift from low-margin to high-margin ownership business. Quarterly depreciation stood at ₹23 crores, primarily on account of the CBS capitalization following the Finacle core banking system migration completed during Q4.

Deposit Franchise and CASA Growth

Despite profitability challenges, the bank demonstrated strong balance sheet fundamentals and deposit momentum. Total deposits grew substantially to ₹2,37,949 lakhs from ₹1,93,944 lakhs in the previous year. The Capital Adequacy Ratio improved to 83.95% from 80.45%, significantly above the 15% regulatory requirement. Net worth increased to ₹60,391 lakhs compared to ₹57,186 lakhs in FY25. Total assets expanded to ₹5,31,190 lakhs from ₹4,20,593 lakhs, while borrowings increased to ₹1,53,530 lakhs from ₹83,946 lakhs. The CASA customer base stood at 1.75 crore accounts as of March 31, 2026, growing 22% year-on-year, with approximately 6.9 lakh new accounts added in Q4 alone. In March 2026, the bank opened 3.2 lakh new accounts — described by management as the highest in the last three years — and total deposit balance reached an all-time high of ₹2,957 crores.

Renewal Income and Digital Business

Renewal income emerged as a key performance highlight for the year. Q4 FY26 renewal income reached ₹62.2 crores, the highest single-quarter renewal in the bank's history. Full year renewal income grew 25% to ₹237 crores from ₹190 crores in FY25. Management described renewal income as the "cleanest measure of customer ownership." On the digital payments front, the bank paused its UPI P2M business to undertake a comprehensive review of monitoring systems and risk frameworks. Revenue from the digital segment declined from ₹63 crores in Q3 to ₹41 crores in Q4, with the active client base declining from 347 in December 2025 to 229 in March 2026. Management confirmed that from the point of the pause onwards, digital payment revenues would be zero until the review is completed and a new plan is announced. Operating expenses including depreciation grew only 9% year-on-year for FY26, absorbing the Finacle core banking system migration investment. The business correspondence segment recorded revenue of approximately ₹140 crores in FY26; management noted this business is not permitted under the SFB model and strategic options are being evaluated.

SFB Transition and Technology Investments

The bank received in-principle approval from the Reserve Bank of India on December 5, 2025, to transition into a Small Finance Bank — making it the first payment bank in India to receive such approval. Management confirmed that SFB preparation timelines remain intact and execution is on track across all regulatory conditions, including network thresholds, capital adequacy, promoter shareholding, and branch rollout. The core banking system migration to Finacle was completed during Q4, representing an investment of approximately ₹200 crores. The bank also developed a modular "Hollow the Core" architecture to decouple high-frequency transaction handling. An additional capex of approximately ₹100 crores is planned, primarily for technology infrastructure enhancement, with branch costs expected to be immaterial given the asset-light merchant-led model. The bank's SFB business model targets a 20% ROE by FY30, anchored on a cost of funds advantage of approximately 300 basis points relative to typical Small Finance Banks, an asset-light merchant-led model leveraging 20 lakh-plus merchants, and a secured lending portfolio focused on affordable housing, gold loans, MSME, and loan against property. Management indicated that the cost of funds in FY30 is projected at around 3.9%, with NIMs expected in the range of 8% to 10%, and that approximately two-thirds of both assets and liabilities are expected to be sourced through the merchant network. The referral lending business recorded disbursals of approximately ₹1,300 crores for FY26, with Q4 alone contributing approximately ₹592 crores — a 97% sequential increase. The bank earns approximately 100 basis points on the lending referral business. The CASA subscription renewal rate is being maintained at approximately 60% to 65%. Management also clarified that the reverse merger with the promoter entity, previously announced, will be explored subsequently after the SFB license is obtained, subject to regulatory permissibility. UPI incentives from the Government of India were not factored into FY26 results, and no line of sight exists for FY27 as of the call date.

Board Decisions and Leadership

The board approved the re-appointment of Mr. Aninda Mukherjee as Chief Risk Officer for a three-year term effective from May 3, 2026, to May 2, 2029. Mr. Mukherjee brings over 28 years of experience in banking and financial risk management, having previously served in senior roles at The Royal Bank of Scotland and ABN AMRO Bank. The earnings call was attended by Interim CEO Ketan Merchant, Interim CFO Anup Agarwal, Chief Business Officer Shailesh Pandey, and Chief Digital and Liabilities Officer Tejas Maniar.

Exceptional Items and Regulatory Compliance

The bank recognized exceptional items of ₹439 lakhs during FY26, including a one-time impact of ₹4.4 crores related to the implementation of new Labour Codes. The statutory auditors issued an unmodified opinion on the financial results for FY26. The audited financial results were published in Financial Express (English), The Free Press Journal (English), and Navshakti (Marathi) newspapers on April 30, 2026, pursuant to Regulation 47 of SEBI Listing Regulations. The earnings call transcript was submitted to stock exchanges on May 4, 2026, pursuant to Regulation 30 of SEBI Listing Regulations, and is available on the bank's website at www.fino.bank.in . Company Secretary Basavraj Loni confirmed all regulatory disclosures.

Fino Payments Bank has successfully completed its Core Banking System migration to Finacle, marking a significant milestone in the bank's digital transformation journey. The strategic initiative involved an investment of approximately ₹200 crore to establish a scalable, modular, and future-ready technology platform supporting the bank's transition to Small Finance Bank status.

Strategic Investment and Implementation

The migration was executed through a carefully phased approach, with temporary moderation in business volumes during implementation to prioritise system stability and data integrity. Despite the scale and complexity involved, the transition was completed within the anticipated timeline, demonstrating strong execution and operational discipline.

Leadership Perspective on Digital Transformation

Ketan Merchant, Interim CEO, commented on the development: "This migration represents a strategic investment of over ₹200 crore in building a robust digital foundation for the future. The new modular architecture allows efficient growth across liabilities, lending, and payments. It also significantly accelerates product launches, strengthening our readiness for the SFB journey."

Vinod Kumar, Chief Information Officer, added: "Finacle CBS delivers a step change in our technology capabilities. Its agile, scalable design enhances transaction throughput, improves system resilience, and shortens time-to-market across UPI, CASA transactions, merchant portal solutions, and upcoming lending platforms, creating a more integrated digital ecosystem."

Enhanced Technology Capabilities

The upgraded architecture introduces a decoupled, modular framework that allows independent scaling of business lines while improving processing efficiency. Key technological enhancements include:

• Enhanced transaction throughput and system resilience
• Shortened time-to-market for new products and services
• Improved integration across merchant platforms
• Support for virtual cards and National Common Mobility Card (NCMC)
• Extended Finacle license for upcoming Loan Management System (LMS)

The bank's 'Hollow the Core' (HTC) initiative further strengthens the architecture by offloading high-frequency transactions from the core system, improving performance and reducing failure rates.

Business Performance and Market Position

Fino Payments Bank processed ₹3.60 lakh crore in transactions, representing an 8.00% year-over-year increase, with 55.00% digital throughput. The bank operates as a technology-led, asset-light digital bank serving emerging India, backed by marquee investors including ICICI Group, BPCL, Blackstone, LIC, and IFC.

Small Finance Bank Transition

The bank received 'In-principle' approval from RBI to convert into a Small Finance Bank, making it the first Payments Bank to achieve this distinction. The Finacle CBS migration positions the bank strategically for this transition, providing the technological foundation necessary for expanded banking services and enhanced financial inclusion capabilities.