Earnings Outlook
SBI Cards PAT seen down on rise in credit cost, provisions
This story was originally published at 19:42 IST on 24 July 2025
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By Pratiksha
NEW DELHI – The net profit of SBI Cards and Payments Services Ltd. is seen sliding on year for the fourth consecutive quarter in Apr-Jun on the back of a rise in credit cost and provisions, according to brokerages tracking the company. However, an expansion in the net interest margin is expected to limit the fall in the company's net profit.
The non-banking financial company's bottom line is likely to decline 2.4% on year to INR 5.80 billion, according to the average of estimates from five brokerages. However, this will be an increase of 8.6% on quarter. The estimates for SBI Cards' net profit for the reported quarter range from INR 5.04 billion to INR 6.30 billion.
The Gurgaon-based company's net profit for the March quarter had fallen over 19% on year to INR 5.34 billion on rising credit cost and deterioration in asset quality. The company will release its June quarter results Friday. Shares of the company have fallen just over 3% since it declared earnings for the March quarter on Apr. 24. On Thursday, shares of SBI Cards ended over 1% lower at INR 885.80 on the National Stock Exchange.
According to Nuvama Wealth Management Ltd.'s forecast, the company's credit cost is likely to rise to nearly 9.1% in Apr-Jun from 9.00% a quarter ago and 8.5% a year ago. "We expect the credit cost to moderate in the coming days as we continue to refine and calibrate our underwriting and collection strategies," the company had said in March.
Most brokerages expect the credit card company's provisions to rise on year as well as on quarter. Both Motilal Oswal Financial Services Ltd. and Nuvama see provisions increasing around 20% on year to INR 13.2 billion in Apr-Jun.
The company's net interest margin is expected to expand after the Reserve Bank of India's Monetary Policy Committee cut repo rate by a total of 100 basis points so far in 2025. The rise in liquidity in the system and lower rates are expected to support the NBFC's net interest margins by reducing the cost of funds.
As per Emkay Global Financial Services' estimate, the company's net interest margin is likely to expand 57 bps on year and 27 bps on quarter to 11.5% while Motital Oswal expects it to increase 40 bps on year and 10 bps on quarter to 11.3%. "We expect margins to expand quarter-on-quarter, but higher LLP (loan loss provisions) to keep earnings range-bound," Emkay Global said in a pre-earnings report. State Bank of India's domestic net interest margin for Jan-Mar was 3.15%, unchanged from Oct-Dec but down 32 bps from a year ago.
The company's net interest income--the difference between interests earned and expended--is seen rising 43.8% on year and 31% on quarter to INR 21.22 billion in the quarter ended June, according to an average of estimates from the five brokerages.
Motilal Oswal sees the company's asset quality to deteriorate slightly, with the gross non-performing asset ratio seen at 3.2% as of Jun. 30, up from 3.08% a quarter and 3.06% a year ago. It expects the net non-performing asset ratio at 1.4% as on Jun. 30, against 1.46% a quarter ago and 1.11% a year ago.
Analysts will watch out for SBI Cards' commentary on the outlook for credit cost, margins, and recovery in revenue growth. Nine brokerages have a "buy" rating on the company with an average target price of INR 926 per share while four brokerage have a 'hold' rating on the company with an average target price of INR 816. Three brokerages have a 'sell' rating on the NBFC.
Following are the Apr-Jun earnings estimates for SBI Cards and Payments Services based on reports from five broking firms in descending order of net profit estimates:
|
Brokerage Name |
Net Interest Income (in INR million) |
Net profit (in INR million) |
|
Nuvama Wealth Management Ltd. |
16,800.00 |
6,300.00 |
|
Anand Rathi Share and Stock Brokers Ltd. |
16,741.00 |
6,171.00 |
|
Emkay Global Financial Services Ltd. |
17,141.00 |
5,759.00 |
|
Motilal Oswal Financial Services Ltd. |
16,706.00 |
5,744.00 |
|
Kotak Institutional Equities Ltd. |
38,731.00 |
5,039.00 |
|
Average |
21,223.00 |
5,802.60 |
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Subhojit Sarkar
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