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Informist, Monday, Oct. 20, 2025

By Pratiksha

NEW DELHI - After falling for five consecutive quarters, SBI Cards and Payments Services Ltd.'s net profit is seen rising sharply on year in the September quarter on the back of healthy growth in business and expansion in net interest margin, according to brokerages tracking the non-banking financial company.

The credit card company's net profit is expected to jump 50% on year to INR 6.05 billion in the reporting quarter, according to an average of estimates from six brokerages. Sequentially, the net profit is expected to rise 9%. Emkay Global Financial Services Ltd. has the lowest estimate for the company's net profit for the September quarter at INR 5.91 billion while Nuvama Wealth Management Ltd. has the highest at INR 6.40 billion. The company will detail its September quarter earnings Friday.

The company's net interest income – the difference between interest earned and expended - for the reporting quarter is expected to have risen 15.4% on year to INR 17.33 billion, according to the average of estimates from six brokerages. The company's net interest income had risen 13.5% on year to INR 16.8 billion in the previous quarter.

Most brokerages expect the Gurgaon-based company's net interest margin to expand both sequentially and annually in the September quarter owing to reduction in cost of funds following the 100 bps rate cut by the Reserve Bank of India's Monetary Policy Committee so far in 2025. "We expect the cost of funds to drop in FY26, benefitting from the RBI rate action," Elara Securities said. SBI Cards' cost of funds had fallen 38 bps on year and 10 bps on quarter to 7.1% in the June quarter. 

Elara Securities sees the company's net interest margin expanding 102 bps on year and 17 bps on quarter to 12.1% while Nuvama expects it to increase 70 bps on year and 10 bps on quarter. SBI Cards' net interest margin had risen 28 bps on year and 3 bps on quarter to 11.2% in the June quarter.

However, a continued rise in credit cost in the September quarter may eat into the company's bottom line, according to most brokerages. Elara Securities expects credit cost to rise 16 bps on quarter and 83 bps on year. High credit cost has been weighing on quarterly net profit of the company for a year now, increasing 111 bps on year and 58 bps on quarter to 9.6% in the previous quarter. While the company expects the credit cost to fall 20-30 bps on quarter in the September quarter, it said in the last quarter that it was difficult to give guidance on credit cost for the entire financial year. For a credit card company, credit cost refers to the expenses incurred, which include the potential cost of unpaid loans and the fees charged to customers.

Brokerages will keep an eye on the company's commentary on the outlook for credit cost, margins, and asset quality. Shares of the company have risen almost 6% since it declared earnings for the June quarter on Jul. 25. At 1205 IST, shares of the company were 1.2% higher at INR 937.70 on the National Stock Exchange. 

The company's bottom line for the June quarter had declined 6.5% on year to INR 5.56 billion owing to high credit cost and expenses. Brokerages have a mixed view on the company's stock, with eight recommending a 'buy' with an average target price of INR 951 per share. Three brokerages have a 'hold' rating at an average target price of INR 820, while five recommend selling the stock with an average target price of INR 764 a share.

The following are the Jul-Sept earnings estimates for SBI Cards and Payments Services from six brokerages in descending order of the estimate of net profit in INR million:

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Vandana Hingorani

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