SBI Cards Q3 Results Review - Asset Quality Concerns Continue To Haunt: Axis Securities

Axis Securities Report

Healthy Business Metrics:

SBI Cards and Payment Services Ltd.'s new card issuances reported a slight slowdown, with gross card addition at ~11 lakh cards versus 16.3/11.4 lakh customers. Thus, customer identification file growth was slower at 16/3% YoY/QoQ. Resultantly, the company lost market share in terms of CIF by ~70/30 basis points YoY/QoQ.

However, driven by the festive season, spends growth continued to remain robust at 41/22% YoY/QoQ. Thus, small business investment company gained market share in terms of spends by ~40 bps QoQ.

Financial Performance:

SBI Cards' receivables grew by 26/8% YoY/QoQ, while the receivables mix remained largely stable with the share of interest-earning assets at 62%, flat QoQ. net interest margin stood at 11.3%, flat QoQ as increase in yields offset the rise in cost of fund. Net interest income grew by 21/7% YoY/QoQ.

Fee income growth was robust at 37/16% YoY/QoQ. Credit costs (7.5% versus 5.6/6.7% YoY/QoQ) continued to remain elevated, denting earnings. Profit after tax grew by 8% YoY and de-grew by 9% QoQ. Gross non-performing assets/net non-performing assets climed up 21/7 bps QoQ and stood at 2.6/1.0%.

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