SBI Cards and Payment Services Ltd on Friday reported a surprise jump in its fourth-quarter profit, helped by strong consumer spending which outweighed higher funding costs.
Profit after tax for the quarter ended March 31 rose 2.7% to Rs 596 crore ($72.8 million) from the previous year, while analysts had expected decline in profit to Rs 542 crore, according to Refinitiv IBES data.
Card-in-force, or the number of cards issued and outstanding, grew 22% to 16.8 million, while total spends on the company's credit cards grew 32% to Rs 71,686 crore, the company said in an exchange filing.
The strong report card came amid a broader post-pandemic recovery in businesses and consumer spending, and improving asset quality at non-banking financial companies.
The company, backed by the country's top lender State Bank of India, said the cost of funds rose 185 basis points to 6.7% from last year as interest rates remained high. Net interest margins, a key measure of profitability, fell 170 basis points to 11.5% in the quarter.
Total expenses for the credit card services company climbed 39.3% to 31.17 billion rupees, including a 89.7% jump in finance costs.
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Total revenue from operations for the credit card services company grew 32% to Rs 3,762 crore from a year earlier.
Gross bad loans as a percentage of gross advances - a measure of asset quality - slightly worsened to 2.35% at the end of March, from 2.22% from the end of December.
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