SBI Cards and Payment Services Limited (SBI Card) foresees adverse impact on its revenues due to the ongoing pandemic.
Revenues are likely to be adversely impacted due to the lower spends and disruption in new account acquisitions, which may not be compensated through higher interest income following the payment moratorium offered to its customers, said Hardayal Prasad, MD and CEO, in a business update on Covid-19.
However, with the lockdown being relaxed and economic activities resuming, the company is focussed to regain the momentum to create value to all stakeholders, said Prasad. This update was filed with the stock exchanges.
As of May 22, 11.8 per cent of its customers have opted for moratorium. The impact of the moratorium extension by the RBI on May 22 for additional three months till August 30 is still being assessed, said the country’s second-largest credit card issuer.
Prasad said the company believes that credit costs in the near term may be higher and has accordingly provided additional provision in FY20, based on internal assessment with an objective to cover future losses. SBI Card is also assessing the external situation closely and it’s impact on portfolio; it may revise the credit provision if there is a significant change from its previous assessment, said the business update.
Sales and new accounts
SBI Card had issued 8.5 lakh new cards in January-March 2020 at a daily run rate of 10,000 cards per day till mid-March 2020. In April, 27,000 new cards were issued, primarily from the applications already in the pipeline at a daily run rate of less than 1,000 cards per day. In May 2020, with zone-based relaxations, sourcing of new accounts gradually increased, and new cards’ run rate reached 2,500 plus cards per day. All sourcing channels are now active and sourcing of new accounts is being scaled up to the extent possible, said the company.
SBI Card said that spends on credit cards continued during lockdown through online and merchant outlets open during this period. Post-relaxation of lockdown, average daily spreads in May is trending at ₹175 plus crore against ₹290 plus crore in the January-March quarter. The daily spend level in last seven days of May is trending ₹200 plus crore. SBI Card is now averaging at 60 per cent plus of the pre-lockdown daily average spend. Online spends in January-March were 44 per cent of the total retail spends, which is trending at 55 per cent of the total spends in May.
The top online categories are departmental stores and groceries (D&G), utilities and services, and top point of sale categories are D&G, fuel, electronics and health and wellness. While certain categories of spends such as travel, dining and lodging have remained weak, new categories such as education, online health and pharmacies have come up.
The corporate card portfolio generated ₹6,000 crore of spends in January-March. The corporate card spends witnessed a moderate recovery with partial resumption of domestic air travel in the country since May 25.