SBI Cards Q1 Results Review - Asset Quality Concerns Continue To Haunt; Downgrade To Hold: Axis Securities

Axis Securities Report

SBI Cards and Payment Services Ltd.’s new card issuances decelerated with the company adding 9.0 lakh new cards (-18/12% YoY/QoQ) during Q1 FY25, thereby driving slower growth in CIF (+11/2% YoY/QoQ).

Spends growth was muted at 4% YoY and down 3% QoQ. Lower spends growth was owing to a sharp decline in corporate spends (-66/50% YoY/QoQ), while retail spends growth was healthy (23/4% YoY/QoQ).

SBI Cards lost market share by 10/190 bps in terms of CIF and Spends respectively. Receivables grew by 20/4% YoY/QoQ, while the share of interest-yielding assets improved marginally to 62% from 61% QoQ.

Net interest income grew by 21/2% YoY/QoQ. Net interest margins remained stable at 10.9% as the impact of increased cost of fund was offset by a marginal improvement in interest earnings assets. Fee income growth was impacted by slower corporate spends growth. It de-grew by 4% QoQ but registered a 2% YoY growth.

Opex growth was controlled as Opex de-grew sharply by 7/5% YoY/QoQ. Resultantly, the cost-income ratio declined to 48.8% from 56.4/51.1% YoY/QoQ. Pre-provision operating profit grew by 26/4% YoY/QoQ.

Credit costs continued to remain elevated at 8.5% versus 6.8/7.6% YoY/QoQ denting earnings which de-grew by 9% QoQ and was flat YoY. Gross non-performing asset/net non-performing asset climbed up 30/12 bps QoQ.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.