Despite incurring quarterly losses, fintech major Paytm continued to see steady growth in its lending business in the September quarter this fiscal. The platform disbursed 9.2 million loans worth Rs 7,313 crore in Q2, recording a 224 per cent year-on-year growth, Paytm said in its earnings statement.
“[Our] loan distribution business has scaled up significantly over the last 12 months, seeing increased adoption by users. We exited Q2 FY23 with disbursements in our loan distribution business at an annualised run-rate (ARR) of about Rs 34,000 crore,” Paytm shared.
The value of personal loans jumped 736 per cent to Rs 2,055 crore since last September (Q2 FY22). More than 40 per cent of the disbursements were made to existing Paytm Postpaid [the Buy-Now-Pay-Later product] users. The average ticket size (ATS) of personal loans stood at Rs 110,000, while ATS for merchant loans was at Rs 150,000 in Q2 FY23.
Total merchant loans disbursed amounted to Rs 1,208 crore, a YoY growth of 342 per cent. “Repeat loans continue to see a healthy take up with 50 per cent of merchants having taken a loan more than once. More than 85 per cent of value disbursed this quarter was to merchants with a deployed Paytm payment device,” the company said in exchange filings.
Meanwhile, Paytm Postpaid, which powers purchases at checkouts with instant credit, disbursed loans worth Rs 4,050 crore, growing at 449 per cent. This was driven by increasing user adoption and rising offline-online merchant acceptance, with the network reaching 15 million at the end of Q2 FY23. Paytm Postpaid’s signed-up user base has now crossed 6 million. “Postpaid continues to show significant cross-sell opportunities in personal loans and credit cards,” according to the company.
Even though Paytm’s lending business has grown consistently, the Vijay Shekhar Sharma-led company reckons it is still an under-penetrated market, with more headroom for growth and at high profit margins.
Paytm Postpaid penetration stands at 4 per cent of average Monthly Transacting Users (MTU); personal loans penetration is at a mere 0.6 per cent of average MTU; and merchant loans penetration is at 4.4 per cent of total devices deployed by Paytm. “Our penetration level for each product remains low, and gives us a long growth runway ahead,” the company said.
Overall, Paytm’s revenue in the ‘Financial Services and Others’ business was Rs 349 crore, up 293 per cent YoY, and now accounts for 18 per cent of the company’s total revenues. This is “driven by sourcing and collection revenues in our loan distribution business”, the company revealed.
It added, “Our collections efforts continue to deliver good performance, with indicative portfolio performance across loan products holding up well. We continue to seek growth and upsell opportunities as low penetration supports future growth potential, while working with our lending partners to maintain healthy credit quality.”
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