The country's biggest mobile financial service (MFS) operator bKash has yet again reduced its financial losses exhibiting further growth, as its net finance income increased by nine folds.
The MFS operator that currently has about 63 million registered customers across Bangladesh which leads the sector’s market share, registered a net loss of Tk42.46 crore- reducing its losses by 41% in the first half of 2022 from Tk71.99 crore in the same period last year.
At the end of June 2022, the MFS provider’s net finance income from fixed deposits stood at Tk59.49 crore, which was only Tk5.87 crore a year ago.
Its fixed deposits currently stand at Tk1,839 crore which is an increase in compared to last year.
The MFS provider also saw a rising trend in utility bill payments due to the convenience of cashless transactions, diversity of services and availability of the maximum number of billers.
The country’s biggest MFS platform bKash’s Pay Bill service is enabling 63 million users to pay all their utility bills digitally from one platform from anywhere 24/7.
Currently, all the electricity bills including Desco, DPDC, BPDB, Nesco and Palli Bidyut can be paid through bKash.
bKash has seen that utility bill payments through bKash have seen a remarkable growth in recent times.
On average, more than one crore utility bills are being paid through bKash monthly.
All transaction patterns like cash-in, cash-out, person to person, merchant payment, government to person and salary distribution also significantly increased in June, for both bKash as well as other MFS providers.
As per data, during the first half of this year, its gross profit was Tk413.85 crore, a 32% increase from the previous year in the same period.
However, it spent Tk502 crore for operating, administrative and commercial purposes, which caused the financial statement to record an overall loss despite bKash’s growth.
Earlier in April, the MFS declared a 22% increase in revenue hitting Tk3,196 crore in 2021, against Tk2,625 crore in the previous year.
However, the MFS incurred a loss of Tk123 crore in 2021, despite a consistent rise in the number of active customers and revenue due to coordinated investments that were expected to yield higher returns in the future.
Increasing investment in new technologies and services to meet the growing demand had affected its profitability, bKash officials explained.
Kamal Quadir, founder and CEO of bKash says: “During its foundational stage, any customer-centric fintech company with a sustainable business model needs patient capital and a growth mindset. It’s a prerequisite to expand technological capabilities, infrastructure, digital literacy and awareness. bKash, the country’s largest MFS provider, remains a textbook company by pursuing growth, including expansion of its service platform, customer acquisition, and maintaining its agent network. Now a steady return on those investments is bringing down any loss reflected earlier in the financial data."
As per the company, like most technology companies the growing years are investment hungry with investments focused on customer acquisition and customer retention which helps build a sustainable base and bkash made significant investments to create a scalable technology platform not only to cater to more transactions but also to provide a wide range of services.
Bkash also invested in hiring additional manpower like IT engineers, data scientists and software engineers and placed tremendous emphasis on regulatory and Anti-Money Laundering (AML) / Combating the Financing of Terrorism (CFT) compliance which were cost-intensive.
Despite bKash’s financial statement registering losses, it continued to grow revenue and contribute to the government exchequer, with its contribution in 2021 standing at Tk763 crores which was a 20% increase over the previous year.
The company was even recently honored as the best financial institution of the year 2021 for its contribution to the country's financial inclusion, with Japan’s SoftBank also agreeing to acquire a 20% stake in bkash last November.