- 30 Oct 2024
- ICICI Securities
SBI CARDS CONTINUED TO REPORT WEAK PERFORMANCE IN Q2FY25
News: SBI Cards continued to report weak performance in Q2FY25 with elevated credit cost and opex impacting earnings. While growth in receivable remained healthy at 23% YoY to ₹55601 crore, momentum of spends remain slower at 3% YoY to ₹81893 crore, thereby witnessing erosion in market share. Margins continued to slide at 10.6%, down 30 bps QoQ, despite 10 bps QoQ reduction in cost of funds. Opex increased 11% QoQ and provision continued to remain elevated at ₹1212 crore (9% of advances) impacted earnings momentum which reported de-growth of 33% YoY & 32% QoQ at ₹ 404 crore. Asset quality deteriorated further with GNPA increasing 21 bps QoQ at 3.27%.
Views: Decline in revolver remain transitory and should normalize in Q3FY25. Guidance on growth remain healthy at 17-18% growth in asset base for FY25E. Margins could continue to remain under pressure in Q3FY25, after which could stabilize. Flow rate to delinquencies seems to be near peak with stability expected by end of FY25E.
Impact: Negative