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Yes Securities Report
SBI Cards and Payments Services Ltd.'s delivered an in-line pre-provision operating profit but 7% miss on profit after tax owing to higher credit cost. New card addition further moderated to 1.1million during the quarter and was lower 4% QoQ and 33% YoY, driving a significant deceleration in CIF growth to 16% YoY (from 20% plus in preceding quarters).
Retail spends growth was robust at 20% QoQ/35% YoY owing to strong festive spends and attractive cashbacks/rewards offered by the company.
SBI Cards' receivables grew by solid 8.4% QoQ/26.5% YoY and share of interest earning balances was stable at 62% (though revolvers' share marginally declined within).
Sharp increase in cost of funds was almost offset by improvement in portfolio yield, and hence net interest margin was stable. Fee income growth was stronger-than-expected at 16% QoQ/37% YoY, and almost mimicked the significant growth in spends.
Non-employee opex grew sharply manifesting attractive cashbacks/rewards offered by the company in festive months. Cost/Income ratio rose to 60%.
Notwithstanding much lower share of revolvers, the portfolio continued to witness higher delinquencies and flows.
Gross non-performing loans rose to 2.6% and credit cost for the quarter stood at 7.5% (an eight-quarter high). Higher cost/income and provisions impacted return of assets/return of equity which stood at 4.1%/19.2%.
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