SBI Cards Q1 net down 22.5% YoY on higher provisions, lower interest income

Pure play card issuer SBI Cards and Payment Services reported a 22.5 per cent year-on-year (YoY) drop in net profit in the April-June quarter of FY22 due to higher provisions and a dip in interest income. Its net profit dropped to Rs 305 crore in Q1FY22 compared to Rs 393 crore in the year-ago period. But, sequentially, its net profit was up 73.6 per cent.

While the interest income of the company was down 18.4 per cent YoY to Rs 1,153 crore, total income was up 11.6 per cent YoY to Rs 2,451 crore. Also, revenue from operations was up 9.7 per cent to Rs 2,362 crore in the reporting quarter over the year-ago period.

Impairment losses and bad debts rose by 33 per cent YoY to Rs 645 crore, but were down 8.4 per cent sequentially. SBI Cards' asset quality improved over the previous quarter as gross non-performing assets (NPAs) at the end of June quarter stood at 3.91 per cent compared to 4.99 per cent in the March quarter. Similarly, net NPAs have also come down to 0.88 per cent as against 1.15 per cent in the March quarter.

The company was holding a total expected credit loss on loan balances of Rs 1,396.8 crore as of June 30, which includes a management overlay of Rs 257.8 crore.

SBI Cards has the second-highest market share, both in terms of credit cards in force, with 11.2 million cards, and spends. HDFC Bank has still the highest market share, despite the RBI ban on issuing new credit cards.

In Q1FY22, it has acquired 609,000 new accounts, up 26 per cent sequentially and 111 per cent YoY. While corporate spends in the quarter improved to Rs 6,162 crore from Rs 6,080 crore in the March quarter, retail spends were down to Rs 27,098 crore from 28,863 crore in March. However, on a YoY basis, spends were up 74 per cent.

Under the Reserve Bank of India (RBI’s) August 6 circular for one-time covid related restructuring, the company has implemented resolution for 290,884 accounts amounting to Rs 2,668.03 crore. So far, there are no accounts where the resolution plan has been implemented under the May 5 resolution framework of RBI.

The company said there will be no significant impact on it from the RBI’s action on Mastercard.