Earnings Review
SBI Cards underwhelms in Jul-Sept, PAT falls by a third
This story was originally published at 18:48 IST on 29 October 2024
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--SBI Cards Jul-Sept net profit INR 4.04 bln
--Analysts saw SBI Cards Jul-Sept net profit INR 5.60 bln
--SBI Cards Jul-Sept net profit INR 4.04 bln vs INR 6.03 bln year ago
--SBI Cards Jul-Sept revenue INR 44.21 bln vs INR 40.87 bln year ago
--SBI Cards gross NPA ratio 3.27% as on Sept 30
--SBI Cards net NPA ratio 1.19% as on Sept 30
--SBI Cards Apr-Sept net profit INR 9.99 bln vs INR 11.96 bln year ago
--SBI Cards Apr-Sept revenue INR 87.80 bln vs INR 79.99 bln year ago
--SBI Cards: Jul-Sept NIM 10.6%, down 32 bps on quarter and 68 bps on year
--SBI Cards: Jul-Sept credit costs INR 12.12 bln, up 63% on year
--SBI Cards: Jul-Sept retail spends INR 763.98 bln, up 24% on year
--SBI Cards Jul-Sept card spends at INR 818.93 bln, up 3% on year
--SBI Cards Jul-Sept receivables at INR 556.01 bln, up 23% on year
--SBI Cards: Cards-in-force at 19.6 mln as on Sept 30, up 10% on year
By Aaryan Khanna
NEW DELHI – SBI Cards and Payment Services Ltd. underwhelmed for the second straight quarter in Jul-Sept, with its net profit falling by a third on year. The bottomline missed analyst estimates due to a surge in credit costs from a year ago.
The credit card company reported a net profit of INR 4.04 billion in the September quarter, down 32.9% on year and 32.0% on quarter. Brokerages had estimated the company to post a net profit of INR 5.60 billion.
The company's credit costs, or impairment on financial instruments, ballooned 63.5% on year to INR 12.12 billion in Jul-Sept, making up nearly a third of the total expenses. "Credit cost stay elevated at 9.0%," the company said in its investor presentation.
The rise in impairment costs was likely due to the card company's worsening asset quality. As of Sept. 30, the gross non-performing asset ratio was at 3.27%, rising 22 basis points sequentially and 84 bps on-year. The net NPA ratio was at 1.19% as of Sept. 30, up 8 bps from a quarter ago and 31 bps from a year ago.
While interest income grew 20.4% annually, other revenue segments, including fee income, were either flat or lower from a year ago. Total revenue from operations was up 8.2% on year to INR 44.21 billion in Jul-Sept. In contrast, total expenses rose 17.5% on year to INR 40.11 billion.
Cards in force rose to 19.6 million as of Sept. 30, up 10% from a year ago, accounting for 18.5% of the total credit cards issued in the country. The company's receivables in Jul-Sept rose 23% on year to INR 556.01 billion. The interest earning receivables as a percentage of total receivables fell to 60% in the reporting quarter from 62% in Apr-Jun.
New accounts opened during the quarter were muted. New accounts volume was 904,000 in Jul-Sept, down 21% on year and flat on quarter. Total spends on cards rose only 3% to INR 818.93 billion, of which nearly 60% were online, SBI Cards said. Retail spends –- which make up a bulk of the total spends – rose 24% on year to INR 763.98 billion, but corporate spends fell nearly 70% on year to INR 54.95 billion.
The credit card company's net interest margin fell to 10.6% in Jul-Sept, down 32 bps on quarter and 68 bps on year. Revenues were consistent, while operating expenses rose due to higher spending costs on campaigns and offers, SBI Cards said.
In the first half of the year, the credit card company reported a net profit of INR 9.99 billion, down 16.5% from a year ago. The firm's top line grew 9.8% from the same period a year ago, to INR 87.80 billion.
On Tuesday, shares of SBI Cards and Payments ended 2.6% higher at 685.20 on the National Stock Exchange. The company released its earnings just before the market closed for the day. End
Edited by Saji George Titus
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