SBI Card to release Q4 results on April 26; profit likely to drop on increase in provision

SBI Card Q4 preview: SBI Cards & Payment Services (SBI Card), one of the leading credit card issuers in India, is likely to report a drop in its profit for the quarter ended March 31, 2024 (Q4 FY24). The company is slated to release its numbers on Friday, April 26.

SBI Card, the subsidiary of India's largest lender, State Bank of India (SBI), by total assets, is expected to post a profit of Rs 570 crore against Rs 596.5 crore registered in the corresponding quarter of the previous fiscal—a decline of 4.5 per cent. Zee Business Research team notes that the profit is expected to slip due to an increase in provision on a year-on-year (YoY) basis. 

Net interest income (NII) is estimated to increase by 21.9 per cent to Rs 1,420 crore against Rs 1,165.1 crore logged in the year-ago period. Both gross and net non-performing assets (NPAs) are seen rising on a sequential basis. 

GNPA is seen at 2.8 per cent against 2.64 per cent in the previous quarter, while NNPA is estimated at 1 per cent against 0.96 per cent in the December quarter (Q3 FY24).

Another key metric, net interest margin (NIM), is estimated to be in the range of 10.8 to 11 per cent, compared to 11.3 per cent. Advances are expected to rise by up to 28 per cent.

Further, the research desk estimates that the company will see an increase in the cost of funds. Credit costs are also expected to rise. Receivables are likely to rise by 25 per cent.

Source: SBI Card Annual Report FY2022-23

Shares of the company have slipped over 2 per cent in the past one year.

What lies ahead for SBI Card?

Analysts at InCred Equities, in their report dated April 23, 2024, said that they reiterate their high-conviction "Reduce" rating on SBI Card with a target price of Rs 500. They continue to believe that SBI Card cannot sustain its premium valuation amid declining return ratios and the volatile asset quality trend. 

"We expect SBIC to continue to lose market share in overall spending due to weak capital adequacy and tighter risk weights. We expect the cost of funds for SBIC to increase, despite probable monetary easing, amid an increase in risk weight for the company," the brokerage's report said.