SBI Cards , a leading credit card issuer in India, has announced updates to its financial guidance for the upcoming quarters and fiscal year 2026 (FY26). The company has shared insights on various financial metrics, including credit costs, cost-to-income ratio, and new account additions.

Credit Costs and Financial Outlook

SBI Cards anticipates that its credit costs will remain under 9% in the upcoming quarters, providing a positive outlook for the company's risk management strategies. This projection suggests that the company expects to maintain a stable credit environment in the near future.

FY26 Guidance Updates

The company has made several adjustments to its FY26 guidance:

The increase in the cost-to-income ratio guidance for FY26 is attributed to higher corporate spending. This adjustment may reflect the company's plans for expansion or investments in technology and infrastructure.

New Account Growth and Asset Quality

Despite the changes in other metrics, SBI Cards remains confident in its ability to add new accounts. The company has maintained its guidance of adding between 0.9 to 1.0 million new accounts, indicating a steady growth trajectory in its customer base.

The lowered guidance for IBNEA to 10-12% suggests a more conservative approach to managing interest-bearing assets. This adjustment could be a strategic move to optimize the company's balance sheet and risk profile.

Maintaining Net Interest Margins

SBI Cards aims to maintain its current Net Interest Margin (NIM) levels. This indicates the company's confidence in its ability to manage the spread between interest income and interest expenses effectively, even in a changing financial landscape.

The updated guidance from SBI Cards provides a comprehensive view of the company's financial strategy, balancing growth with prudent risk management. As the credit card industry continues to evolve, SBI Cards' adjustments to its financial targets demonstrate its adaptability to market conditions and commitment to sustainable growth.

SBI Cards and Payment Services , a leading credit card issuer in India, has reported its financial results for the second quarter, showing a mixed performance with growth in revenue and net profit but a decline in profitability margins.

Key Financial Highlights

Profit Growth and Revenue Expansion

SBI Cards reported a net profit of ₹4.40 billion for the quarter, representing a 10% increase from ₹4.00 billion in the same period last year. This growth in bottom line was supported by a robust 12.20% year-over-year increase in revenue, which rose to ₹49.60 billion from ₹44.20 billion.

Profitability Pressures

Despite the growth in revenue and net profit, the company faced some profitability pressures:

• EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) declined to ₹12.20 billion from ₹12.50 billion year-over-year.
• The EBITDA margin contracted significantly to 24.57% from 28.23% in the previous year, a decrease of 366 basis points.

Performance vs. Expectations

While SBI Cards demonstrated growth in key areas, it's worth noting that the company's net profit fell short of market estimates. Analysts had projected a net profit of ₹5.93 billion for the quarter, which the company missed by a considerable margin.

Conclusion

SBI Cards' Q2 results present a nuanced picture of the company's performance. While it achieved growth in revenue and net profit, the decline in EBITDA and margin contraction suggest potential challenges in maintaining profitability levels. The company's ability to manage costs and improve operational efficiency may be key focus areas for investors and analysts in the coming quarters.