No Plan to Buy Out GE Capital in Credit Card JV: SBI

Mumbai: State Bank of India has ruled out merging its credit card subsidiary into it or buying out its partner GE that has decided to exit the joint venture. "We are not looking at buying out GE Capital from our credit card JV nor merging it with the bank. We are scouting for a new partner, who can buy their 40 per cent stake in SBI Card," SBI managing director and group executive for associate and subsidiaries V G Kannan said. He further said: "GE is planning to exit from all financial related activities globally. Therefore, they are already on the lookout for a buyer." SBI Card is a joint venture between SBI and GE Capital wherein India's largest bank owns 60 per cent and the balance is with GE Capital. The JV is operated through two companies - SBI Cards & Payment Services, which focuses on marketing and distribution of SBI credit cards, and GE Capital Business Processes Management Services, which handles the technology and processing needs of SBI Card. In April, the American giant General Electric had announced it would be exiting financial services business and will sell majority of assets under GE Capital. He said the credit card business is a profitable venture and the company also declared dividend last year. SBI Card made a net profit of Rs 62 crore in the fiscal first quarter, almost 46 per cent lower as compared to Rs 116 crore a year ago, because of a huge tax outgo. "This quarter Rs 62 crore is after a huge tax payout. Last year, we had a profit of Rs 92 crore and a write back of Rs 24 crore without any taxation. So, the performance this quarter is much better, and we have declared the dividend last year." SBI Card has 2.7 million customers with offices in 63 cities. "We have paid tax on the profits this quarter so there is decline in profit. We have actually made a profit before tax of Rs 100 crore and paid the tax and so the net profit was of Rs 62 crore in Q1," SBI chairman Arundhati Bhattacharya said. Explaining the reason for not merging the card business, she said: "Taxation is a big issue for the entire sector. Also, if we merge with the bank, then we will not be able to play across the entire spectrum with tie-ups and co-branding." "Actually the credit card company is hit by taxes. They had accumulated losses and so weren't paying taxes till last year. Now they are out of it altogether and they have to pay taxes. One of the reasons the credit card company is still outside is that we wanted to play across the entire spectrum," Ms Bhattacharya said. "You have seen SBI Card coming out with co-branded products with smaller banks like Karur Vysya, Lakshmi Vilas and also with Future Group and Snapdeal. Those co-branding would have been tougher if they were within SBI," she added. In May, Ms Bhattacharya had said the bank might buy out GE Capital or can also bring in some new partner.

No Plan to Buy Out GE Capital in Credit Card JV: SBI

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