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    SBI Cards

    SBICARD
    Financial Services·24 Apr 2025
    Management Summary

    SBI Cards delivered a robust Q4 FY25 with strong revenue and PAT growth, driven by increased spends and improved asset quality metrics. The company continued its focus on digital onboarding and strategic customer acquisition, while maintaining a healthy capital position. Despite macroeconomic headwinds, management expects NIM to remain steady with an upward bias and credit costs to moderate, though long-term predictions remain cautious.

    Highlights

    5

    • Total Revenue for Q4 FY25 reached INR 4,832 crores, marking an 8% Y-o-Y growth.

    • Profit After Tax (PAT) for Q4 FY25 was INR 534 crores, demonstrating a 39% quarter-over-quarter growth.

    • Gross NPA improved by 16 basis points to 3.08% from 3.24% in the previous quarter, indicating improving asset quality.

    • Net Interest Margin (NIM) improved to more than 11% in Q4, aided by a better yield and lower cost of funds (around 7.2%).

    • New account acquisition remained steady at over 1 million new accounts in Q4, registering 8% Y-o-Y growth, with a focus on high-value customers.

    Concerns

    3

    • Profit After Tax for FY25 was INR 1,916 crores, a decline from INR 2,408 crores in FY24.

    • Management noted macroeconomic headwinds leading to stress in the unsecured lending ecosystem, making long-term credit cost prediction difficult.

    • The company expects the Cost-to-Income ratio to increase to 55-57% for FY26, up from current levels, due to increased acquisition and spend activities.

    What Changed2

    vs Q2 FY26

    Guidance items9 → 6 (-3)Risks discussed3 → 1 (-2)
    Key financials

    Metrics

    12

    Periods

    2

    Headline

    10
    • Total Revenue
      ₹4,832 Cr
      YoY+8%
    • PAT
      ₹534 Cr
      QoQ+39%
    • Receivables
      ₹55,840 Cr
      YoY+10%
    • Gross NPA
      3.1%
    • Net Interest Margin
      11%

    Q4

    2
    • New Accounts
      1 Mn
      YoY+8%
    • Retail Spends
      ₹80,000 Cr
      YoY+15%

    Capital allocation

    2
    high confidence
    CategoryHeadline
    Dividend

    ₹2.5/share (interim)

    Liquidity

    Liquidity disclosed

    Capital adequacy ratio for FY25 is 22.9% and common equity Tier 1 ratio is 17.5%, indicating strong capital to grow. The company also enjoys the highest credit rating of AAA and A1+.

    Guidance & targets

    5
    CategoryTargetPriority
    Profitability
    Net Interest Margin (NIM)
    steady with upward bias
    		Medium
    Profitability
    Cost-to-Income Ratio
    55% to 57%
    		High
    Volume
    New Account Acquisition
    around 1.1 million per quarter
    		High
    Volume
    Receivable Growth
    12% to 14%
    		High
    Volume
    Corporate Spend Growth
    18% to 20%
    		High

    Net Interest Margin (NIM) trajectory

    FY26 onwards
    Currentmore than 11% in Q4
    Targetsteady with improved NIM

    Why it matters

    NIM is a key profitability driver, and management expects it to remain steady with an upward bias after a period.

    our endeavor definitely will be to continue to ensure that the NIM remains steady. And going forward⏳, after a certain period of time, we start seeing improved NIM as well.

    How to verify

    key_financials.metrics[label='Net Interest Margin']

    Risks & concerns

    1
    RiskSeverity

    Macroeconomic environment and unsecured lending ecosystem stress

    The macroeconomic environment continues to witness headwinds, leading to stress in the unsecured lending ecosystem, and there are many unknowns. — Management acknowledged

    medium

    Q&A highlights

    8

    “The overall ECL rate has remained within the range that we've seen in the last 2 years. It's changed from 3.6% in the previous quarter to 3.4% now. So, the 3.4% now is a result of full year changes.”

    Clarifies the methodology behind changes in provision coverage, particularly the shift in Stage 2 and Stage 3 balances, attributing it to model refresh and adherence to Ind AS/IFRS standards.

    asked by Anuj Singla

    2 min read6 chapters

    Detailed Narrative

    01

    Strong Business Performance and Digital Adoption

    SBI Card reported a robust Q4 FY25, with total revenue growing 8% YoY to INR 4,832 crores and PAT increasing 39% QoQ to INR 534 crores. The company maintained an 18.9% cards in force market share, crossing 2 crore cards-in-force in December 2024. Digital onboarding initiatives like SBI Card Sprint have significantly improved customer experience, with 51% of new accounts sourced through banca channels for FY25, contributing to over 4 million new accounts added during the year.

    02

    Growth in Spends and Receivables

    Overall spends in the March quarter reached INR 88,365 crores, an 11% YoY growth. Retail spends for Q4 were around INR 80,000 crores, up 15% YoY, and crossed INR 3 lakh crore for FY25 with around 18% YoY growth. Corporate spends saw a significant 60% QoQ increase to INR 8,600 crores in Q4, indicating a rebound. Receivables grew 10% YoY to INR 55,840 crores in March 2025, with IBNEA at 59% and EMI receivables at 35%.

    03

    Improving Asset Quality and Stable Margins

    Asset quality showed improvement, with Gross Credit Cost reducing by 40 bps QoQ to 9% and Gross NPA improving by 16 bps QoQ to 3.08%. Stage 3 balances decreased by INR 59 crores to INR 1,718 crores, and Stage 2 balances reduced by INR 282 crores to INR 2,801 crores. The cost of funds decreased to around 7.2% in Q4, leading to an improved Net Interest Margin of more than 11%. Management expects NIM to remain steady with an upward bias in FY26.

    04

    Strategic Focus on Profitable Growth and Customer Experience

    The company is committed to expanding its core portfolio, focusing on premium segments and co-brand partnerships, and accelerating digital onboarding. New products like SBI Card Miles (travel-focused) and KrisFlyer SBI Card were launched. SBI Card aims to acquire around 1.1 million new accounts per quarter, focusing on high-value, profitable customers, and expects receivable growth of 12-14% in FY26.

    05

    Capital Adequacy and Shareholder Returns

    SBI Card maintains a robust capital position with a Capital Adequacy Ratio of 22.9% and a Common Equity Tier 1 ratio of 17.5% for FY25, ensuring adequate capital for growth. The company also enjoys the highest credit ratings of AAA and A1+. For FY25, an interim dividend of INR 2.50 per equity share was declared, reflecting its commitment to creating value for stakeholders.

    06

    Outlook on Credit Cost and Operational Efficiency

    While credit cost has shown moderation, management remains cautious due to macroeconomic unknowns and refrains from providing a long-term target, emphasizing continued vigilance. The Cost-to-Income ratio is projected to be in the range of 55-57% for FY26, up from current levels, influenced by increased acquisition and spend activities. Corporate spend growth is estimated at 18-20% for FY26, contributing to overall business expansion.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.