Earnings Outlook
SBI Cards PAT seen falling over 27% YoY as provisions rise
This story was originally published at 22:26 IST on 22 April 2025
Register to read our real-time news.Informist, Tuesday, Apr. 22, 2025
By Kshipra Petkar
MUMBAI - The net profit of SBI Cards and Payment Services Ltd. is seen falling on year due to a rise in provisions and slower growth in net interest income, brokerages said in their reports. The company's bottom line is seen falling over 27% on year to INR 4.8 billion for the quarter ended March, according to the average of estimates by seven brokerages. Sequentially, the bottom line is seen rising nearly 25%. The net profit for the company is seen in the range of INR 3.5 billion-INR 5.6 billion.
The net interest income is seen rising 13.3% on year to INR 16.03 billion in the latest quarter, according to the average of estimates by seven brokerage firms. On a quarter-on-quarter basis, the net interest income is seen rising by merely 2%. The range for net interest income is INR 15.8 billion-INR 16.2 billion for the latest quarter.
"While lower NII growth, fees on spends, and higher provisions are likely to hurt earnings, we expect the pace of fresh NPA formation to moderate," Emkay global said in its pre-earnings report. "We upgrade SBI Cards to ADD from Reduce; we raise our TP by 20% to INR 900, as SBIC will be a key beneficiary of the swift rate-cut cycle (in terms of margin) and the peaking out asset-quality stress," the report said.
In terms of asset quality, the gross non-performing asset ratio fell to 3.24% as on Dec. 31 from 3.27% a quarter ago and the net NPA ratio at 1.18% as on Dec. 31 as compared to 1.19% a quarter ago. Motilal Oswal expects the asset quality to see mild improvement in the quarter ended March.
Kotak Institutional Equities said that they expect provisions to start declining from current levels, although this quarter should see a lower change. "This would imply that we are at the peak of credit costs for the franchise," the report said. In the previous quarter the sharp rise in credit cost affected the net profit of the company, according to the investor presentation of Oct-Dec of the company.
Nomura in its report said, "We expect the credit cost of SBI Cards to peak to 9% during 4QFY25F (Jan-Mar) and should normalise from hereon." The management's comments on the margins and revolver mix will be monitored.
On the National Stock Exchange on Tuesday, shares of the company closed 0.7% higher at INR 915.80. The company will announce its results on Thursday.
Following are the Jan-Mar earnings estimates for SBI Cards and Payments Services Ltd. based on reports from seven brokerage firms in descending order by the estimate of net profit:
| Brokerage Name | Net Interest Income (in INR million) | Net Profit (in INR million) |
| Motilal Oswal Financial Services Ltd | 15,903.00 | 5,637.00 |
| Elara Securities (India) Pvt Ltd | 16,187.00 | 5,417.00 |
| Anand Rathi Share and Stock Brokers Ltd | 16,157.00 | 5,227.00 |
| Nomura Equity Research | 15,900.00 | 4,900.00 |
| Equirus Securities Pvt Ltd | 15,950.00 | 4,377.00 |
| Kotak Institutional Equities | 16,201.00 | 4,362.00 |
| Emkay Global Financial Services Ltd | 15,882.00 | 3,534.00 |
| Average | 16,025.71 | 4,779.14 |
Edited by Deepshikha Bhardwaj
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