Jio Financial Services Q3: Profit Tanks 56% QoQ To INR 294 Cr As Revenue Falls To INR 413 Cr

Reliance-owned fintech juggernaut Jio Financial Services (JFS) saw its consolidated net profit narrow nearly 56% sequentially to INR 294 Cr in the third quarter (Q3) of the financial year 2023-24 (FY24). In contrast, JFS posted a net profit of INR 668 Cr in Q2 FY24. 

The decline in profit was primarily the result of fall in revenue and rise in expenses during the quarter under review.

The company’s revenue from operations dwindled nearly 32% to INR 413.6 Cr in the quarter ended December 2023 from INR 608.04 Cr in the previous quarter. Including other income, total income stood at INR 414 Cr in Q3 FY24, down 31.9% from INR 608 Cr in Q2 FY24.

The company earns revenue from interest, fees and commissions chargeable to customers, among others. 

This was the second quarterly financial results reported by JFS since listing on the bourses in August last year. The demerged arm of Reliance Industries operates in the financial services business through six subsidiaries, including Jio Payment Solutions Ltd (JPSL), Jio Insurance Broking Ltd (JIBL) and Jio Finance Ltd (JFL).

Apart from Jio Payments Bank, which it operates in a joint venture (JV) with SBI, JFS has also partnered with BlackRock to launch an asset management company (AMC).

Costs Drag Bottom Line

Even as revenue declined, JFS’ expenses surged. Total expenditure during the three-month period ended December rose to INR 98 Cr from INR 71 Cr in Q2 FY24. 

Of this, ‘other expenses’ jumped more than 70% to INR 59.4 Cr in Q3 FY24 from INR 34.86 Cr in Q2 FY24. Employee benefit expenses rose more than 8% to INR 33.87 during the quarter under review compared to INR 31.16 Cr in Q2 FY24. 

Together, employee and other costs accounted for more than 95% of the total expenditure. 

JFS’ Big Plans 

At a time when the Reserve Bank of India (RBI) has cracked the whip on unsecured lending, JFS too appears to have re-calibrated its lending play. 

In an investor presentation, the company said it has “increased focus on secured lending given current market and regulatory developments”. It added that ‘noticeable market reaction vis-à-vis unsecured lending’ has led to a ‘calibrated approach towards unsecured products’.

Touting its device-as-a-service (DaaS) model for the first time, JFS said it is ramping up focus on offering financing and operating leases for consumer devices such as phones, laptops.

Citing lower risk due to asset ownership for the DaaS model, JFS said that consumer insights from such products will enable it to target customers better for cross-selling opportunities. 

The company also announced that it plans to launch supply chain financing solutions for small businesses. In addition, it also has loans against securities (LAS) and home loans in the pipeline. It also claimed to have the capability for offering unsecured and consumer durable product loans. 

With regards to its insurance broking arm, the company said it has inked partnerships with 27 insurance companies till the end of December 2023. It also said that it has launched sachet insurance for retail customers.

On the payments bank front, JFS claimed to have undertaken the soft launch of its debit card, adding it has ‘re-platformed’ itself to launch digital savings bank accounts for customers.

With regards to its payments solution offerings, the fintech juggernaut has launched a merchants app while its soundbox product, Jio Voice box, continues to be in pilot stage. 

Meanwhile, the company’s board also approved the appointment of two senior management personnel. While Rupali Adhikari Sawant’s appointment as group head (internal audit) of JFS was confirmed at the board meeting, Sudheer Reddy Govula was appointed as the Group Chief Compliance Officer.

Shares of JFS surged 4.55% to end today’s trading session INR 266.80 on the BSE, ahead of the release of the Q3 results. The company declared the results after market hours.

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