“Faster-than-expected scale up of the lending business, resulting in improving profit profile and approvals for an SFB (small finance bank) license" are among the key catalysts for Paytm, the report further added. “Paytm’s lending business has been scaling up well, while maintaining good credit metrics, which should further help allay investor concerns," Goldman Sachs stated in its earnings review report. In 2021-22, Paytm’s losses widened to ₹2,396 crore from ₹1,701 crore in the previous fiscal. Two, lending is a high margin business and scale here would be crucial for the company’s path to profitability. Insurance and mutual funds-the two other important verticals in financial services-aren’t growing this fast. Why is lending so important for Sharma? One, it is probably the only business within its financial services universe that is showing the promise of scale. Our bet is distributing credit, leveraging payments, data and access that we have," Sharma told analysts during the company’s March quarter earnings call on 21 May. “I believe that credit, which is in its infancy, has started showing that it is a long-term sustainable space, and is going to become a pretty large business for us. Soundbox is a battery-operated device that provides voice-based confirmation of QR code payments to merchants. Devices include Soundbox and point of sale (PoS) machines. More than 75% of the value of loans disbursed in the fourth quarter was to merchants with a Paytm payments device. In many ways, the payments business feeds into the lending arm. It acts as a loan distribution and collection platform for non-banking financial companies (NBFCs) such as Aditya Birla Capital, Hero Fincorp and Fullerton India and earns through commissions. While nearly 69% of the company’s revenues today are generated from payments services to both consumers and merchants, lending is quickly emerging to be a rather bright spot. There is hope in numbers.įor the full year 2021-22, Paytm’s revenues from financial services jumped 240% compared to the previous year to ₹437 crore the number of loans disbursed through its platform rocketed 478% to 15.2 million the value of loans disbursed grew 441% to ₹7,623 crore. Indeed, 2022 may well turn out to be its year of lending. That’s comforting for Paytm, India’s best-known payments company that has now diversified into financial services, among other things. Indian banks don’t expect lending behaviour to change much-many lenders have projected a double-digit loan growth. But 2022 seems a tad different even with rising interest rates and all the nightmares around sky-high inflation.
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