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Informist, Thursday, Apr. 24, 2025

 

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--SBI Cards: To pay INR 2.50 per share interim dividend for FY25 
--CONTEXT: Comments by SBI Cards mgmt in post-earnings analyst concall 
--SBI Cards: Expect cost of fund to be in gradual downward trend in FY26 
--SBI Cards: Expect credit cost to moderate in coming days 
--SBI Cards: NIM to be steady going forward 
--SBI Cards: Action on repo rate cut will give benefit but with lag 
--SBI Cards: See 18-20% growth in spending in FY26 
 

 

By Sachi Pandey

 

MUMBAI – SBI Cards and Payment Services Ltd. expects its cost of funds to fall gradually in 2025-26 (Apr-Mar), the management said in a post-earnings analyst call Thursday. "We expect cost of funds to be on a gradual downward trend in FY26, benefiting from the RBI's (Reserve Bank of India) rate action and expect the NIM (net interest margin) to be steady," the management said. The cost of funds fell to around 7.2% in Jan-Mar, the management said.

 

The credit card company's net interest margin rose to 11.2% in Jan-Mar, up 29 basis points on year and 54 bps on quarter. "The endeavour definitely will be to continue to ensure that the NIM remains steady and after a certain period of time we start seeing improvement as well," the management said.

 

Despite higher margins, net profit declined for the third straight quarter on a year-on-year basis due to rise in credit cost and weaker asset quality. The company posted a net profit of INR 5.34 billion for Jan-Mar, down 19.4% on year but up 39.4% from a quarter ago.

 

The credit cost rose 143 bps on year to 9.0%, though it fell 42 bps from the previous quarter. "We expect the credit cost to moderate in the coming days as we continue to refine and calibrate our underwriting and collection strategies," the management said.

 

On card spending, the company expects growth of 18–20% in FY26. "The growth in spends was slightly lower than last year, at 15.6%. We anticipate growth in the same range next year. Larger players are seeing higher spends, while smaller ones are more cautious, which has weighed on overall growth," the management said.

 

The management said benefits from rate cuts are passed on but with a lag. "Rate cut (by the RBI) in February didn't impact our cost of funds in Jan-Mar. We will benefit as liabilities mature and get repriced...we'll get some benefit and as more rate cuts happen, we'll continue to get that benefit during the year with a lag," the management said. The RBI has cut the repo rate by 50 basis points, slashing it by 25 bps each in the February and April monetary policy meetings.

 

In February, the board had declared an interim dividend of INR 2.50 per share for the year ending Mar. 31. On Thursday, shares of SBI Cards closed 1.2% higher at INR 926.55 on the National Stock Exchange.  End

 

Edited by Ashish Shirke

 

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