SBI Cards Q1 FY27 earnings call

India's macroeconomic fundamentals provide a strong foundation for long-term growth, with GDP projected to expand around 6.6% in FY26-27. The rapid digital transformation, especially in payments, is reshaping financial services, with India emerging as a global leader in real-time digital payments, accounting for 49% of worldwide transaction volume. The convergence of payments and credit, driven by UPI and RuPay credit cards, is translating into sustained growth for the credit card industry.

SBI Cards maintained its strong market position, with 18.6% share in cards in force and 19.5% share in card spends (up from 18.1% in FY26). Cards in force grew 7% Y-o-Y to INR2.26 crores, and the company added over 1 million new accounts in Q1 FY27, a 17% Y-o-Y growth. Net card additions were INR4.84 lakhs, the highest in the industry for the quarter. Total spends reached a record INR1,18,475 crores, up 27% Y-o-Y, with retail spend at INR94,033 crores, growing 14% Y-o-Y.

The company reported a PAT of INR664 crores for Q1 FY27, a 20% Y-o-Y increase, driven by significantly improved credit costs. Total revenue stood at INR5,205 crores, growing 3% Y-o-Y. The portfolio yield for the quarter was 16%, resulting in a Net Interest Margin (NIM) of 10.8%. ROA improved to 3.9% (up 51 bps Y-o-Y and 26 bps Q-o-Q), and ROE reached 16.5% (up 72 bps Y-o-Y and 89 bps Q-o-Q). The capital adequacy ratio remained healthy at 25.6%.

Asset quality showed significant improvement, with gross credit cost reducing by 116 bps Q-o-Q and 301 bps Y-o-Y to 6.5%. Gross NPA decreased by 36 bps Q-o-Q and 102 bps Y-o-Y to 2.04%. Net NPA reached 0.83%, its lowest level since Q3 FY23. The NPA stock reduced by INR179 crores Q-o-Q and INR544 crores Y-o-Y to INR1,191 crores. Stage 2 assets also reduced to 3.57%, down 10 bps Q-o-Q and 116 bps Y-o-Y.

The company's strategy focuses on "spend to lend," converting customer spending into EMIs at the point of sale or post-purchase. Online spend contributed 63% of total retail spend, and UPI on credit card usage grew 13% Q-o-Q. Management noted that while personal loans from NBFCs might offer lower rates, the credit card market is underpenetrated, offering ample growth opportunities for both. The company is currently refraining from offering personal loans on credit cards to new customers, but is evaluating it internally.

SBI Cards leverages its association with State Bank of India, targeting 1.5-2 crore cardable customers from the bank's 53 crore customer base. The broader addressable market, based on credit bureau data, includes 35-40 crore credit-scorable customers. Strategic partnerships, like the co-brand with Flipkart (50 crore customers), further expand reach. The company emphasizes that the credit card industry in India remains highly underpenetrated, offering substantial growth potential for both credit card and personal loan products.