SBI Cards and Payment Services , India's second-largest credit card issuer, reported mixed financial results for the recent quarter, with improved asset quality and significant growth in receivables.

Financial Performance

SBI Cards posted a net profit of ₹445.00 crore for the quarter, up 10% from ₹404.00 crore in the same period last year. However, this fell short of the average analyst estimate of ₹593.00 crore.

The company's revenue saw a healthy increase, rising 12.2% year-on-year to ₹4,961.00 crore from ₹4,421.00 crore in the previous year's corresponding quarter. This growth was primarily driven by higher spend-based income and increased interest income.

However, SBI Cards reported a decline in quarterly EBITDA to ₹1,220.00 crore, down from ₹1,250.00 crore in the same quarter last year. The company's EBITDA margin also decreased to 24.57% from 28.23% year-over-year, indicating reduced profitability efficiency compared to the previous year's performance.

Asset Quality and Receivables

SBI Cards reported significant improvements in asset quality:

• Gross Non-Performing Assets (GNPA) ratio stood at 2.85%, down from 3.07% in the previous quarter and 3.28% in the same quarter of the previous year.
• Net Non-Performing Assets (NNPA) ratio improved to 1.29%, down from 1.42% quarter-on-quarter, though slightly up from 1.19% in the same quarter last year.

The company recorded a substantial 31% increase in receivables, indicating strong growth in its credit card portfolio.

Business Growth

SBI Cards demonstrated strong growth in several key areas:

• Cards-in-Force: The total number of credit cards issued reached 2.15 crore, marking a 10% increase year-on-year.
• Spends: Total card spends surged by 31% to ₹107,063.00 crore, indicating robust consumer spending.
• New Accounts: The company added 9.36 lakh new accounts during the quarter, up 4% from the previous year.

Market Position

SBI Cards maintained its strong market position:

Future Outlook

SBI Cards is focusing on building a profitable card portfolio while reducing credit costs. The company plans a new growth phase emphasizing strong spending trends, digital growth, and operational expansion.

Despite the growth in profit and revenue, the decline in EBITDA and margin performance raises concerns about the company's operational efficiency. The focus on digital initiatives and strategic partnerships may continue to drive growth in the coming quarters, but investors and analysts will likely watch for the company's strategies to improve profitability and manage costs in the face of increasing competition in the credit card space.

Note: All financial figures are in Indian Rupees (₹).

SBI Cards And Payment Services Limited (SBI Card) has received significant relief in a recent Goods and Services Tax (GST) case, as confirmed by a regulatory filing. The Central Goods and Services Tax (CGST) Authority has dropped a substantial GST demand of ₹81.45 crore against the company.

Key Highlights

• CGST Authority drops ₹81.45 crore GST demand against SBI Cards
• A smaller demand of ₹47.54 lakh confirmed due to documentation issues
• SBI Cards plans to appeal against the smaller demand

Details of the GST Case

According to the order passed by the Hon'ble Additional Commissioner, CGST Gurugram Commissionerate, the details of the case are as follows:

The dropped demand of ₹81.45 crore was related to a mismatch between GSTR-2A and GSTR-3B forms. This favorable decision results in more than 99% of the proposed demand being decided in favor of SBI Cards.

Remaining Demand and Company's Stance

The confirmed demand of ₹47.54 lakh is attributed to supplies from units whose registrations were cancelled retrospectively or who have not filed GSTR-3B. This amount, along with applicable interest and an equal penalty, has been confirmed due to a lack of proper documentation.

SBI Cards has stated that it considers this remaining demand to be unsustainable and against well-settled principles of law. The company is confident that this demand will also be dropped at higher appellate levels. As a result, SBI Cards is in the process of filing an appeal against this demand before the Commissioner (Appeals), CGST Gurugram.

Impact and Next Steps

This development represents a significant victory for SBI Cards in its GST-related proceedings. The dropping of the major portion of the demand alleviates a substantial financial burden that was hanging over the company.

While the smaller demand remains, SBI Cards' decision to appeal against it demonstrates the company's confidence in its position and its commitment to resolving all outstanding tax issues.

Investors and stakeholders of SBI Cards will likely view this development positively, as it removes a significant financial uncertainty and reinforces the company's strong stance on tax compliance and dispute resolution.

As the situation continues to evolve, market participants will be keenly watching for the outcome of SBI Cards' appeal against the remaining demand and any potential impact on the company's financial position and market performance.