Summary of earnings call for SBI Cards and Payment Services Ltd published on 01 Aug, 2025
SBI Cards and Payment Services Limited
Q1 FY26
Call date · July 25, 2025
1 · Management Commentary
Key Positives
- Cards-in-Force grew to 2.12 crore, up 10% YoY; 8.73 lakh new accounts added in Q1 FY26.
- Spend market share increased to 16.6% (vs 15.9% YoY); total spend reached ₹93,244 crore (21% YoY growth).
- Online spends contributed 60.7% of total retail spends; corporate spends grew to ₹10,840 crore.
- UPI-on-Credit-Card usage up 20% QoQ, driven by RuPay and QR acceptance.
- New product launches: Tata Neu SBI Card, Apollo SBI Card; MoU with Bank of Maharashtra for co-branded cards.
- Net Interest Margin (NIM) improved to 11.2%; cost of funds declined to 7.1% (vs 7.3% in Q4 FY25).
- Asset quality stable: GNPA at 3.07% (vs 3.08% QoQ); Stage 2 balances reduced by ₹128 Cr QoQ and ₹569 Cr YoY.
- Capital Adequacy Ratio (CAR) at 23.2%; liquidity position strong.
Key Negatives
- PAT at ₹556 crore, down 6% YoY (though up 4% QoQ).
- Receivables growth moderated to 7% YoY.
- Gross credit cost increased by 58 bps to 9.6% (from 9.0% QoQ); credit cost up by ₹107 Cr QoQ.
- ROAA at 3.4% (down 67 bps YoY); ROAE at 15.8% (down 335 bps YoY).
- Management revised receivables growth guidance to 10–12% (from earlier 12–14%).
Forward Guidance
- Capex plans: Not disclosed.
- New products/segments: Continued focus on premium, co-branded, and wellness-focused cards; expansion in Tier 2/3 markets.
- Expected client wins/losses: MoU with Bank of Maharashtra for co-branded cards.
- Revenue/margin outlook: NIM expected to benefit from further reduction in cost of funds in Q2 FY26; portfolio yield to remain steady.
- Other strategic initiatives: Enhanced digital onboarding, data-driven credit decisioning, cautious underwriting, and ESG focus.
2 · Q&A Highlights
Q 1 (Credit Cost & ECL Reset): Will credit costs revert to previous levels post-ECL reset, and what is the outlook for the full year?
A (Management):
• ECL rates expected to remain between Q4 FY25 and Q1 FY26 levels; full-year guidance not provided due to external uncertainties and leverage in the system.
• Credit cost increase driven by model refresh and higher NEA; write-offs have been consistently reducing.
Q 2 (Receivables Growth & Guidance): Is the lower receivables growth temporary, and what is the revised guidance?
A (Management):
• Receivables growth expected at 10–12% for FY26 (down from earlier 12–14%), with potential uptick during festive season.
Q 3 (Margins & Cost of Funds): What is driving margin stability/improvement, and how will repo rate cuts impact?
A (Management):
• Margin improvement due to lower cost of funds and change in borrowing mix; further benefit from June repo rate cut expected in Q2 FY26.
Q 4 (New Account Acquisition & Underwriting): Why is new account growth slowing, and how is customer quality being managed?
A (Management):
• Slowdown is due to more selective and cautious underwriting, not demand; focus on quality acquisition and use of account aggregator data for better risk assessment.
Q 5 (RuPay/UPI Card Performance): What is the spend and profitability profile of RuPay cards?
A (Management):
• RuPay card spend per card is ₹3,000–₹5,000 higher than average; profitability broadly similar to other cards despite lower interchange, compensated by higher spends.
Q 6 (Delinquency & Asset Quality): What are the trends in delinquencies and portfolio quality?
A (Management):
• Delinquency and flow metrics have improved for three consecutive quarters; pace of improvement is steady.
Q 7 (ESG Initiatives): How is SBI Card approaching ESG and sustainability?
A (Management):
• ESG is a board-level priority with active oversight; metrics are tracked closely and detailed disclosures are available in the annual report.
Q 8 (Co-branded Cards & Portfolio Mix): What is the share of co-branded cards and tightened limits in the portfolio?
A (Management):
• Co-branded cards constitute 25–30% of the portfolio; early-teens percentage of portfolio has had limits tightened.
3 · Other Key Numbers
- Cards-in-Force: 2.12 crore (10% YoY growth)
- New accounts added in Q1 FY26: 8.73 lakh
- Spend market share: 16.6%
- Total spend: ₹93,244 crore (21% YoY growth)
- Retail spend: ₹82,404 crore (15% YoY growth)
- Online spends: 60.7% of total retail spends
- Corporate spends: ₹10,840 crore
- UPI-on-Credit-Card usage: +20% QoQ
- Total revenue: ₹5,035 crore (12% YoY, 4% QoQ growth)
- PAT: ₹556 crore (–6% YoY, +4% QoQ)
- Receivables: ₹56,607 crore (7% YoY growth)
- Interest Earning Assets: 60%
- Revolver Rate: 24%
- Cost of Funds: 7.1% (vs 7.3% in Q4 FY25)
- Portfolio yield: 17%
- Net Interest Margin (NIM): 11.2%
- GNPA: 3.07%
- Stage 2 balances: ₹2,673 crore (down ₹128 Cr QoQ, ₹569 Cr YoY)
- ECL rate: ~3.5% (up 8 bps QoQ)
- Gross credit cost: 9.6% (up 58 bps QoQ)
- Credit cost: ₹1,352 crore (up ₹107 Cr QoQ)
- Capital Adequacy Ratio (CAR): 23.2%
- ROAA: 3.4% (–67 bps YoY, +4 bps QoQ)
- ROAE: 15.8% (–335 bps YoY, +24 bps QoQ)
- Proportion of co-branded cards: 25–30%
- Proportion of portfolio with tightened limits: Early-teens percentage
- Interchange range: 0.75% (utilities) to 2.1–2.2% (merchant categories); usual range 1.35–1.45%
- RuPay card spend per card: ₹3,000–₹5,000 higher than average
- Data period for ECL model: 8 years
- Banca channel sourcing: 56% of new cards
- Open Market sourcing: 44% of new cards
Note: This is an AI generated summary of the earnings call. There may be inaccuracies in the summary. Please refer to the original transcript before making investment decisions.