Earnings Review
SBI Cards Oct-Dec net profit slumps on year, misses Street view
This story was originally published at 22:06 IST on 28 January 2025
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--SBI Cards Oct-Dec net profit INR 3.83 bln
--Analysts saw SBI Cards Oct-Dec net profit INR 4.12 bln
--SBI Cards Oct-Dec net profit INR 3.83 bln vs INR 5.49 bln year ago
--SBI Cards Oct-Dec revenue from ops INR 46.19 bln vs INR 46.22 bln year ago
--SBI Cards gross NPA ratio 3.24% as on Dec 31 vs 3.27% Sept 30
--SBI Cards net NPA ratio 1.18% as on Dec 31 vs 1.19% Sept 30
--SBI Cards Apr-Dec net profit INR 13.82 bln vs INR 17.45 bln year ago
--SBI Cards Apr-Dec revenue from ops INR 133.98 bln vs INR 126.21 bln year ago
--SBI Cards: Oct-Dec NIM 10.6%, down 31 bps on year
--SBI Cards: Oct-Dec credit costs 9.4%, up 214 bps on year
--SBI Cards: Oct-Dec retail spends INR 807.92 bln, up 10% on year
--SBI Cards: Oct-Dec receivables at INR 547.73 bln, up 12% on year
--SBI Cards: Cards-in-force at 20.2 mln as on Dec 31, up 10% on year
--SBI Cards: Oct-Dec card spends at INR 860.93 bln, up 11% on year
NEW DELHI – The net profit of SBI Cards and Payments Services Ltd. fell on a year-on-year basis for the second straight quarter in Oct-Dec due to the on-year rise in credit costs. The fall in net profit was as expected by analysts, but the bottom line was lower than consensus estimates.
The non-bank financial company posted a net profit of INR 3.83 billion for Oct-Dec, slipping sequentially and down 30.2% on year. An average of eight analysts' estimates had pegged the net profit at INR 4.12 billion.
Impairment of financial instruments rose 48.7% on year to INR 13.13 billion during the quarter. This drove up total expenditure to INR 42.49 billion, up 6.1% on year. Meanwhile, topline growth was non-existent – revenue from operations were virtually unchanged from a year ago at 46.19 billion. Rise in other income didn't help – the total income rose only 0.5% to INR 47.67 billion.
"Festival offers resulted in higher opex (operational expenses) and cost-to-income. Higher Credit Cost impacted PAT for Q3 (Oct-Dec)," the company said in its business presentation. The credit costs rose 40 basis points sequentially and 214 bps on year to 9.4%.
The company had guided for higher credit costs in the coming quarters following its Jul-Sept earnings, and impairments rose despite quality remaining consistent sequentially. As on Dec. 31, the gross non-performing asset ratio was 3.24%, down 3 basis points on quarter but up 60 bps on year. The net NPA ratio was 1.18% as on Dec. 31, down marginally from Sept. 30 but up 22 bps from a year ago.
The credit card company's net interest margin was steady at 10.6% in Oct-Dec, up 3 bps on quarter. However, it was 31 bps lower than the year-ago period.
Cards in force rose to 20.2 million as of Dec. 31, up 10% from a year ago, accounting for 18.7% of the total credit cards issued in the country. The company's receivables in Oct-Dec rose 12% on year to INR 547.73 billion, falling slightly from a quarter ago. The interest earning receivables as a percentage of total receivables remained consistent from Jul-Sept at 60% in the reporting quarter.
New accounts opened rose 7% on year, and nearly a third from a quarter ago, to 1.18 million in Oct-Dec. Total spends on cards in the quarter rose 11% to INR 860.93 billion, and nearly 60% of the spends were online in Apr-Dec, SBI Cards said. Retail spends, which make up a bulk of the total spends, rose 10% on year to INR 807.92 billion in the December quarter, but corporate spends fell by 77% on year to INR 53.01 billion.
In the first nine months of the financial year, the credit card company reported a net profit of INR 13.82 billion, down 21% from a year ago. The total revenue from operations grew 6.2% from the same period a year ago to INR 133.98 billion.
On Tuesday, shares of SBI Cards and Payments ended 0.7% higher at INR 759.10 on the National Stock Exchange. The company announced its earnings after market hours. End
Edited by Ashish Shirke
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