BankBazaar to miss FY21 profitability aim as covid-19 hits retail loan growth
- The online marketplace had expected making an operating profit by the end of March and launch an initial public offering by fiscal 2022
BENGALURU: Online financial services marketplace, BankBazaar will miss profitability target set for 2020-21 as coronavirus-led disruptions have slowed the pace of revenue growth in the financial services segment, said a top company executive.
The online marketplace had expected making an operating profit by the end of March and launch an initial public offering (IPO) by fiscal 2022, Mint had reported in February.
However, the ongoing nationwide lockdown, a moratorium on repayment of loans allowed by the Reserve Bank of India (RBI) and slowing retail loan growth have severely impacted BankBazaar's revenues in the past few months.
“We were on track to hit operational level profits for the year ended March 2020, however, due to the pandemic, and due to a general slowdown in retail loans in the country, we are shifting these targets to a later date this financial year,” said Adhil Shetty, chief executive officer (CEO), BankBazaar, in a phone interview.
On a year-on-year (YoY) basis, non-food credit growth fell by 7.3% in April 2020, compared to 12% growth in the same month last year, according to data sourced from the RBI. Data also showed that personal loan growth decelerated to 12.1% in April, against a growth of 15.7% in the year-ago month.
Besides slowing credit growth, an ongoing moratorium on repayment of loans has also impacted tech startups selling financial products and loans.
Late March, the RBI had allowed banks and financial institutions to provide a three-month moratorium on all term loans.
However, online lenders and non-banking financial companies (NBFCs) raised concerns over the moratorium's impact on digital startups focused in the financial sector.
“There is a pullback in retail and credit spending across both upper middle and middle class households as most of them turned discretionary with their wallets during the lockdown,” added BankBazaar’s Shetty.
However, the startup is confident that future credit and financial purchases such as personal loans and new credit cards will shift to an online structure with India's economy restoring to normalcy. BankBazaar said it is betting heavily on video-based KYC (know your customer) for processing loan applications online, without any physical interventions in the underwriting process.
Shetty said as the government relaxed the lockdown rules, consumers flocked to BankBazaar's site for credit card products that offered discounts and cash backs for online and essential purchase shopping.
“The most popular credit cards right now are those without offers for essential purchases. This is a huge shift from the earlier pattern of users purchasing credit cards depending on movies, travel, holiday and flight ticket offers,” he added.
For the fiscal ended March 2019, BankBazaar reported revenue at ₹109.3 crore, a 12.4% YoY rise, compared to ₹97 crore in FY18. Its losses also increased to ₹169 crore in FY19 from ₹130 crore in the previous financial year.
Catch all the Industry News, Banking News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
Business NewsIndustryBankingBankBazaar to miss FY21 profitability aim as covid-19 hits retail loan growth
First Published:2 Jun 2020, 06:20 PM IST
- Top Gainers
- Top Losers
- 52 Week High