SBI Cards Q1 Review - Asset Quality Sustenance A Key Trigger Ahead: Prabhudas Lilladher

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Prabhudas Lilladher Report

SBI Cards and Payment Services Ltd.'s Q1 FY22 earnings stood impressive with 74% QoQ increase in profit after tax at Rs 3.0 billion (in-line with our estimate: Rs 3.3 billion) buoyed by improved funding costs and lower opex.

Loan receivables stock expanding 3% QoQ and Reserve Bank of India revenue expenditure declining to 6% of overall book aided SBI Cards' net interest income traction (12% q-o-q) for the quarter.

Spends reduced by 8% QoQ on account of drop in discretionary business impacting fee income returns that stood down 34 basis points yet the spends decline run-rate is on downward trajectory.

The big positive came in the nature of improved asset quality as stage-III declined 108 bps QoQ to 3.9%, credit costs steadying at 9%.

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