SBI Cards and Payment Services , a leading credit card issuer in India, saw its shares decline over 6% following the release of its quarterly results. The sharp decline came as the company reported a 6.5% drop in net profit for the June quarter.

Quarterly Performance Highlights

• Net profit decreased to Rs 556.00 crore, compared to Rs 594.00 crore in the same period last year
• Provision expenses increased 23% year-on-year to Rs 1,351.00 crore
• Asset quality remained stable:
  • Gross NPA at 3.07%
  • Net NPA flat at 1.42%
• Customer spends grew 21% to Rs 93,244.00 crore, driven by corporate spending recovery and retail spending pickup
• Receivables rose 7% to Rs 56,607.00 crore

Market Reaction

• The stock traded down 5.7% at Rs 830.00
• Trading volume was 1.9 times the 30-day average

Analyst Sentiment

Among 29 analysts covering the stock:

The average price target for SBI Cards stands at Rs 880.00.

Conclusion

The decline in SBI Cards' share price reflects investor concerns over the company's quarterly performance, particularly the drop in net profit and increase in provision expenses. Despite stable asset quality and growth in customer spends, the market reaction has been negative. The divided analyst opinions suggest caution, with a slight tilt towards a bearish outlook. Investors and market participants will likely monitor how the company addresses these challenges in the coming quarters.

SBI Cards and Payment Services Limited (SBI Card) has released its financial results for the first quarter, showcasing steady growth in revenue and profitability. The company continues to focus on expanding its presence in tier-2 and beyond cities, digital innovation, and strategic co-branded offerings.

Key Financial Highlights

• Total Revenue: ₹5,035.00 crore, up 12% year-on-year (YoY)
• Net Profit: ₹555.96 crore, increased 4% quarter-on-quarter (QoQ)
• Earnings per Share (EPS): ₹5.84 (not annualized)
• Cards-in-force: 2.12 crore, grew 10% YoY
• Spends: ₹93,244.00 crore, up 21% YoY

Financial Performance

SBI Card's total revenue from operations stood at ₹4,876.92 crore, compared to ₹4,358.64 crore in the same quarter last year, marking a 12% YoY increase. The growth was primarily driven by a rise in interest income and fees and commission income.

Interest income grew by 11% YoY to ₹2,493.15 crore, while fees and commission income increased by 13% YoY to ₹2,191.15 crore. The company's other income also saw a significant jump, rising 28% YoY to ₹158.47 crore.

Profitability and Efficiency

The net profit for the quarter reached ₹555.96 crore, showing a modest increase of 4% QoQ, although it decreased by 6% YoY. The company's cost-to-income ratio improved to 50.3%, down by 108 basis points QoQ.

Asset Quality

SBI Card maintained a stable asset quality with:

Capital Adequacy and Market Position

The company's capital position remains strong with a Capital Adequacy Ratio of 23.22%. SBI Card continues to hold a significant market share, maintaining its position as the second-largest credit card issuer in India in terms of cards-in-force.

Strategic Initiatives

SBI Card is pursuing sustained growth through several strategic initiatives, including:

1. Expanding penetration in tier-2 and beyond cities
2. Focusing on digital innovation
3. Developing strategic co-branded offerings

The company is benefiting from accelerating retail and UPI spending patterns, which is reflected in the 21% YoY growth in overall spends.

Conclusion

SBI Card's performance in the first quarter demonstrates its resilience and ability to capitalize on the growing credit card market in India. The company's strategic focus on expanding its reach, coupled with its strong capital position, positions it well for continued growth in the coming quarters.