SBI Cards surprises with Q4 profit growth amid robust retail spending

SBI Card Q4 earnings: SBI Cards and Payment Services reported an unexpected 11 per cent increase in fourth-quarter profit on Friday, buoyed by higher retail spending that offset a rise in bad loans.

The company's profit after tax rose to Rs 662 crore for the January-March period, compared to Rs 596 crore a year earlier. Analysts had expected a profit of Rs 561 crore, according to LSEG data.

Strong credit demand, particularly in unsecured categories like credit cards, fuelled by robust retail consumer spending, has contributed to the company's performance. However, India's central bank has responded by increasing capital requirements for such loans.

During the period, spends by cardholders surged 11 per cent year-on-year to Rs 79,653 crore, driving interest income up nearly 28 per cent to Rs 2,139 crore.

Despite the rise in retail spend, SBI Card noted an impact on its income due to a slowdown in corporate spending. The company also experienced a decline in market share in industry spends in the last two months of the quarter, attributed to lower corporate spending and fewer new card issuances amidst increased bad loans.

Gross write-offs for SBI Card surged by 60 per cent to Rs 864 crore, while net interest margin (NIM) decreased by 60 basis points year-on-year to 10.9 per cent.

Delinquencies in the personal loans segment have been on the rise, primarily due to exuberant lending in unsecured segments. Gross bad loans as a percentage of gross advances for SBI Card worsened to 2.76 per cent at the end of March, compared to 2.64 per cent at the end of December.

Shares of the company closed 1 per cent lower ahead of the results.

(With Reuters inputs)