Skip to content

    SBI Cards Q2 FY26 earnings call

    SBICARD
    Financial Services·24 Oct 2025
    Management Summary

    SBI Cards reported a robust Q2 FY26 with record total spend growth of 31% YoY and a 13% increase in revenue, driven by strong festive demand and strategic co-brand partnerships. Asset quality showed improvement with Gross NPA declining to 2.85% and credit costs reducing. However, profitability metrics like PAT growth (10% YoY) and ROAA/ROAE saw some moderation, and the cost-to-income ratio remained elevated at 56.8% due to increased operational expenses. The company remains optimistic about future growth and asset quality trends, guiding for stable NIMs and improving credit costs.

    Highlights

    5

    • Total spend reached a record INR 1,07,063 crores, growing 31% YoY.

    • Revenue grew 13% YoY to INR 5,136 crores.

    • Gross NPA improved to 2.85% from 3.07% in the previous quarter.

    • Cost of funds decreased by 51 basis points QoQ to 6.4%.

    • Launched three Marquee co-brand credit cards (Flipkart, PhonePe, IndiGo).

    Concerns

    4

    • Profit after tax growth was 10% YoY, lower than revenue growth.

    • Cost-to-income ratio remained elevated at 56.8% due to festive campaigns and corporate pass-back.

    • Portfolio yield declined to 16.5% from 17% QoQ due to higher transactor volume.

    • ROAA and ROAE were lower YoY by 4 bps and 37 bps respectively.

    Key financials

    Single quarter

    06 metrics
    1. 01Revenue₹5,136 Cr+13%YoY
    2. 02Profit After Tax (PAT)₹445 Cr+10%YoY
    3. 03Net Interest Margin (NIM)11.2%
    4. 04Gross NPA2.9%-7.2%QoQ
    5. 05Cost-to-Income Ratio56.8%

    Capital allocation

    1
    high confidence
    CategoryHeadline
    Liquidity

    Liquidity disclosed

    Liquidity position continues to be strong with a capital adequacy ratio of 22.5%.

    Guidance & targets

    8
    CategoryTargetPriority
    Cost of Funds
    Cost of Funds
    stable at current levels (6.4%)
    		Medium
    Credit Cost
    Credit Cost Trend
    improving trend
    		Medium
    Credit Cost
    Gross Credit Cost
    below 9%
    		Medium
    Profitability
    Cost-to-Income Ratio
    higher side of the range (54-56%)
    		Medium
    Profitability
    Net Interest Margin (NIM)
    hold on to the NIMs (11.2%)
    		High
    Profitability
    Interest Bearing Earning Assets (IBNEA) growth
    10% to 12%
    		High
    Volume
    New Card Sourcing (accounts)
    0.9 million to 1 million
    		High
    Portfolio Mix
    Revolver Percentage
    increase from 22%
    		Medium

    What to watch in Q3 FY26

    5

    Gross Credit Cost

    Next 2 quarters of FY26
    Current9% (Q2 FY26)
    TargetBelow 9%

    Why it matters

    Key determinant of profitability, management has guided for improvement.

    I can say it will be below nine.

    Risks & concerns

    3
    RiskSeverity

    Credit Cost Volatility and Elevated Write-offs

    Provisions were INR 12 crores this quarter vs INR 72 crores last quarter; gross write-off was INR 1,281 crores, leading to analyst concern about volatility. — Analyst acknowledged

    medium

    NIM Pressure from Higher Transactor Volume

    Yield for the quarter declined to 16.5% from 17% QoQ due to higher transactor volume during festive spend, but management expects NIM to hold. — Management acknowledged

    low

    Regulatory Impact on Rental Spends

    RBI's KYC norm for payment aggregators has stopped certain rental transactions, but SBI Card states the impact is minimal as they had already reduced exposure. — Analyst acknowledged

    low

    Q&A highlights

    7

    “I can say it will be below nine.”

    Addresses a key investor concern about asset quality and future profitability, with management providing a directional target for credit cost.

    asked by Mahrukh Adajania

    2 min read6 chapters

    Detailed Narrative

    01

    Overall Performance and Market Share

    SBI Cards reported strong operational growth in Q2 FY26, with cards-in-force reaching approximately 21.5 million, marking a 10% year-over-year increase. The company added 9,36,000 new accounts during the quarter, maintaining its position as India's second-largest credit card issuer with a 19% market share. Total spend reached a record INR 1,07,063 crores, demonstrating a robust 31% year-over-year growth, while retail spend grew 17% YoY to INR 89,611 crores.

    02

    Financial Performance Highlights

    Total revenue for the quarter stood at INR 5,136 crores, up 13% year-over-year. Profit after tax increased by 10% YoY to INR 445 crores. The cost-to-income ratio was 56.8%, influenced by higher festive campaign costs and corporate pass-back. The portfolio yield for the quarter was 16.5%, a slight decrease from 17% in the previous quarter, primarily due to higher transactor volumes during the festive season. Net interest margin (NIM) was reported at 11.2%.

    03

    Asset Quality Improvement

    Asset quality showed a positive trend, with Gross NPA improving to 2.85% from 3.07% in the previous quarter. Stage 3 stock reduced to INR 1,705 crores from INR 1,735 crores QoQ, and Stage 2 stock decreased to INR 2,485 crores from INR 2,673 crores. The ECL rate reduced by 17 basis points QoQ to 3.3%, and gross credit cost saw a 58 basis points reduction to 9% from 9.6%. The slippage ratio for the quarter was 2.07%.

    04

    Strategic Initiatives and Co-brand Partnerships

    SBI Card launched three new Marquee co-brand credit cards during the quarter: Flipkart SBI Card, PhonePe SBI Card, and IndiGo SBI Card, catering to diverse customer needs and aspirations. These partnerships are part of the company's strategy to deepen its presence in digital payments and e-commerce. The company also rolled out a nationwide festive campaign, 'Khushiyan Unlimited', offering over 1,250 deals with leading brands.

    05

    Cost Structure and Yield Dynamics

    The cost of funds for Q2 was 6.4%, a 51 basis points reduction from 7.1% in Q1, with management expecting stability at current levels. The higher transactor volume during the festive season, while boosting spend, led to a slight compression in portfolio yield. Management indicated that the cost-to-income ratio for FY26 is expected to be on the higher side of the 54-56% range due to increased corporate spend and festive offers.

    06

    Regulatory Environment and Rental Spends

    The company addressed the impact of RBI's KYC norms for payment aggregators on rental transactions. While this regulatory action has led to certain rental transactions being stopped, SBI Card noted that the impact on its overall spend is minimal. This is because the company had already seen a reduction in rental spends after imposing a fee and was cautious about these types of transactions.

    This is an AI-generated summary of a publicly available earnings call transcript.