Fusion Finance (FUSION) Q1 25/26 earnings summary

Executive summary

• Q1 FY 2026 began with strong momentum, reflecting strategic corrective actions and leadership transition, with a new Chief Credit Officer and robust governance initiatives.

• Credit costs declined for the third consecutive quarter to INR 178 crore in Q1 FY26 from INR 253 crore in Q4 FY25 and INR 571 crore in Q3 FY25; GNPA improved to 5.43% and NNPA to 0.19%.

• Disbursements of INR 950 crore in Q1 FY26 were focused on quality, with 76-80% to existing customers and 80% in top credit buckets.

• Collection efficiency rose to 98.5% in Q1 FY26 from 96.24% in Q1 FY25; new book achieved 99.5% CE.

• AUM at INR 7,688 crore as of June 2025, down 36.95% year-over-year and 14% sequentially; active borrower base at ~28.5 lakh, down 27.85% YoY.

Financial highlights

• Total income for Q1 FY26 was INR 445.57 crore, down 6% QoQ and 37% YoY; net interest income stable at INR 267.96 crore, down 32% YoY.

• Loss after tax at INR 92.25 crore, improved from INR 165 crore in Q4 FY25, driven by lower credit costs and improving NIMs.

• NIM improved by 172 bps Q-on-Q to 10.29%; average cost of funds at 10.3%.

• Cost-to-income ratio at 70.81%, up from 38.39% YoY, marginally higher than Q4 due to portfolio contraction.

• Pre-provision operating profit at INR 86.61 crore, down 70.91% YoY.

Outlook and guidance

• Focus remains on cautious, calibrated growth, leveraging existing customer base for the next 2-3 quarters before expanding to new customers.

• Profitability is expected soon, with further reduction in credit costs anticipated in the next 1-2 quarters.

• Operating leverage expected to improve as disbursements rise and tech initiatives enhance efficiency.

• MSME vertical identified as a second growth engine, with significant expansion and new products planned.

• Proceeds from rights issue to support future growth and liquidity.