Jio Financial Services Reports a 56% Quarter-on-Quarter Profit Decline to INR 294 Cr in Q3 as Revenue Drops to INR 413 Cr

Jio Financial Services (JFS) witnessed a significant contraction in its consolidated net profit, recording a nearly 56% decline sequentially to INR 294 Cr in the third quarter (Q3) of the financial year 2023-24 (FY24). 


This contrasts with the net profit of INR 668 Cr reported in Q2 FY24. The decline in profit of Jio Financial Services was primarily attributed to a decrease in revenue and an increase in expenses during the quarter.


The company’s revenue from operations witnessed a substantial drop of nearly 32%, falling to INR 413.6 Cr in the quarter ending December 2023 from INR 608.04 Cr in the previous quarter.


Including other income, the total income stood at INR 414 Cr in Q3 FY24, reflecting a 31.9% decrease from INR 608 Cr in Q2 FY24. JFS generates revenue from interest, fees, commissions, and other sources chargeable to customers.


These financial results mark the second quarterly report by JFS since its listing on the stock exchanges in August of the previous year. 


As the demerged arm of Reliance Industries, JFS operates in the financial services sector through six subsidiaries, including Jio Payment Solutions Ltd (JPSL), Jio Insurance Broking Ltd (JIBL), and Jio Finance Ltd (JFL). JFS has partnered with SBI and BlackRock for Jio Payments Bank and an asset management company (AMC), respectively.


Despite the decline in revenue, JFS experienced a surge in expenses, with total expenditure rising to INR 98 Cr in Q3 FY24 from INR 71 Cr in Q2 FY24. Notably, ‘other expenses’ rose by more than 70% to INR 59.4 Cr, and employee benefit expenses increased by over 8% to INR 33.87 Cr during the quarter under review.


In response to regulatory changes and market dynamics, JFS shifted its lending strategy, focusing more on secured lending. 


The company highlighted its device-as-a-service (DaaS) model, emphasizing financing and operating leases for consumer devices like phones and laptops.


JFS aims to leverage the lower risk associated with the DaaS model, utilizing consumer insights for targeted cross-selling opportunities.


Additionally, JFS revealed plans to launch supply chain financing solutions for small businesses, along with loans against securities (LAS) and home loans.


The company asserted its capability to offer unsecured and consumer-durable product loans. In the insurance broking segment, JFS detailed partnerships with 27 insurance companies and introduced sachet insurance for retail customers.


On the payments bank front, JFS disclosed the soft launch of its debit card and the re-platforming for the introduction of digital savings bank accounts.


Regarding payment solutions, the company launched a merchant app, while its soundbox product, Jio Voicebox, remains in the pilot stage.


The company’s board approved the appointment of two senior management personnel, confirming Rupali Adhikari Sawant as the Group Head (Internal Audit) and appointing Sudheer Reddy Govula as the Group Chief Compliance Officer.


JFS shares experienced a 4.55% surge to close the BSE trading session at INR 266.80, with the Q3 results released after market hours.